Canadian firms AuRico and Alamos Gold to merge

Canadian gold companies AuRico and Alamos announced a plan to merge on Monday, in a share swap valued at US $1.5 billion.

The deal would create a medium-sized gold company with two operating mines in Mexico (Mulatos and El Chanate) and one in the Canadian province of Ontario (Young-Davidson).

As well shareholders would receive a stake in a spinoff company that is developing gold and copper deposits in British Columbia province.

"The combination of diversified production from three mines and a pipeline of low-cost growth projects in safe jurisdictions equate to a leading gold intermediate and a significant re-rate opportunity for our collective shareholders," said Alamos chief executive John McCluskey.

According to the terms of the deal, Alamos shareholders would receive $0.0001 in cash per share plus a share in the merged company, while AuRico shareholders would get half a share in the new entity. This would result in shareholders of both companies each holding 50 percent of the new company.

The deal, which comes amid depressed prices for precious metals over the past two years, is subject to shareholder and regulatory approvals.