Loading ...ALIO GOLD AND RYE PATCH GOLD ANNOUNCE BUSINESS COMBINATION
March 19, 2018, Vancouver, BC – Alio Gold Inc (TSX, NYSE AMERICAN: ALO) (“Alio Gold” or the “Company”) and Rye Patch Gold Corp. (TSX.V: RPM; OTCQX: RPMGF; FWB:5TN) (“Rye Patch”) are pleased to announce they have entered into an agreement whereby Alio Gold will acquire, through a plan of arrangement (the “Arrangement”) all of the outstanding shares of Rye Patch. Alio Gold will host a conference call at 11:00am EDT (Toronto) time today to discuss the transaction and the details of the call can be found at the end of the release. Management from both Alio Gold and Rye Patch will participate in the conference call.
Under the Arrangement, each common share of Rye Patch will be exchanged for 0.48 common shares of Alio Gold. The offer implies a value of C$1.57 per Rye Patch share, a 35% premium to Rye Patch shareholders, based on the 20-day volume weighted average trading price of Alio Gold shares on the TSX and Rye Patch shares on the TSX.V for the period ending March 16, 2018. The offer values Rye Patch’s outstanding equity (undiluted) at approximately C$128 million. The number of Alio Gold shares to be issued will be approximately 39.0 million based on the issued and outstanding shares as of the announcement date, subject to adjustment for options, warrants and restricted stock units vested prior to the Arrangement. The transaction is expected to close on or about May 25, 2018. Existing Alio Gold and Rye Patch shareholders will own approximately 53% and 47% of the combined company, respectively, following the close of the transaction.
Transaction Highlights
•Increased asset diversification – 165,000 ounces of gold production1 in 2018 from two open-pit, heap leach operations in the stable jurisdictions of Sonora, Mexico and Nevada, USA
•Enhanced growth profile – potential for low-capital expansion to increase expected annual gold production at Florida Canyon
•Improved cash flow generation to support development project – cash flow generation from two mines to support development of the feasibility stage Ana Paula project which is anticipated to produce 115,000 ounces of gold per year2
•Enhanced capital markets profile and potential re-rating – increased market capitalization of the combined company has the ability to appeal to a broader shareholder base and improve share trading liquidity
•Strong balance sheet – combined pro forma entity has approximately $74 million in cash and equivalents3 and $29 million in total debt3
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