The combination of Alamos and Richmont Mines has been projected to have diversified gold production of over 500,000 ounces in the current year, led by three major, low-cost, long-life operations in Canada and Mexico.

Richmont Mines is currently engaged in gold extraction from the Island Gold Mine in Ontario which Alamos calls as a high-quality, free cash flowing mine.

Alamos president and CEO John McCluskey said: “The Island Gold Mine is a high quality asset in every respect. We see excellent potential for reserve and production growth from one of the highest grade, lowest cost gold mines in Canada.

“With this production base, growth, and balance sheet strength, Alamos will be the leading intermediate producer and presents a compelling revaluation opportunity for both Alamos and Richmont shareholders."

As per the terms of the agreement, Alamos will issue 1.385 of its shares for each of the Richmont share. The transaction values Richmont’s shares at C$14.20 ($11.7).

After the completion of the deal, existing Alamos shareholders will own 77% stake in the enlarged company while Richmont shareholders will hold the remainder stake of 23%.

Richmont president and CEO Renaud Adams said: “This transaction builds on that commitment as our shareholders will benefit from having meaningful ownership in a diversified intermediate producer with a portfolio of high-quality assets and a proven and experienced management team that shares our commitment to creating long-term sustainable value.”

In a separate deal, Richmont had agreed to divest all its mining assets in Quebec which include the Beaufor Mine, the Camflo Mill and the Wasamac development project to Monarques Gold.

Richmont’s deal with Monarques Gold, which is expected to close by the month end, will have no bearing on its transaction with Alamos. Instead, it is an outcome of a strategic review process it had implemented in the first quarter.