Alamos Gold (AGI) to Boost Capacity With Argonaut Acquisition
Alamos Gold Inc. AGI announced that it would acquire its rival Argonaut Gold. This move will boost AGI's gold production to 600,000 ounces per year, with a long-term production capacity of approximately 900,000 ounces per year.
Alamos Gold will now get access to Argonaut's Magino mine, which is adjacent to Alamos' Island Gold mine in Ontario, Canada.
The companies will also spin off Argonaut's mines in the United States and Mexico to current shareholders, forming SpinCo, a new junior gold producer. A junior gold miner is an exploratory company with limited production capability that seeks out new gold deposits.
The deal is fixed at $325 million in an all-stock agreement. Under the terms of the agreement, each Argonaut common share would be swapped for 0.0185 Alamos Gold common shares and one SpinCo share. The exchange ratio suggests a total consideration of 40 Canadian cents per Argonaut share.
The transaction is expected to provide $515 million in long-term synergies for Alamos Gold. AGI produced 529,300 ounces of gold in 2023.
In the fourth quarter of 2023, Alamos Gold delivered earnings per share of 12 cents, in line with the Zacks Consensus Estimate. The company posted earnings of 9 cents in the year-ago quarter. Revenues increased 10% year over year to $255 million in the quarter.
Price Performance
AGI shares have gained 20.5% in the past year compared with the industry’s 2.3% growth.
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Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Ecolab Inc. ECL, Carpenter Technology Corporation CRS and Hawkins, Inc. HWKN. ECL and CRS sport a Zacks Rank #1 (Strong Buy) at present, and HWKN has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 41.8% in a year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 33.5% in a year.
The Zacks Consensus Estimate for Hawkins’ fiscal 2024 earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 30.6%. The company’s shares have rallied 70% in the past year.
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Ecolab Inc. (ECL) : Free Stock Analysis Report
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Hawkins, Inc. (HWKN) : Free Stock Analysis Report
