TORONTO (miningweekly.com) – Canadian miner Alamos Gold will acquire project developer Carlisle Goldfields through an all-scrip deal that will see Alamos consolidate its holdings of the Lynn Lake gold camp, in Northern Manitoba.

Alamos already owned 19.9% of Carlisle and a 25% interest in the Lynn Lake project, with an option to earn up to a 60% interest in the project by spending C$20-million and delivering a definitive feasibility study on the project within a three-year period.

Carlisle shareholders would receive 0.0942 of an Alamos share, as well as 0.0942 of a warrant with a C$10 strike price, which would expire three years after closing, for every Carlisle share held. The offer, excluding the warrant, represented C$0.60 a share, a 62% premium to Wednesday’s close and a 117% premium to Carlisle's 30-day volume-weighted average price.

Carlisle’s TSX-listed stock on Thursday shot up more than 70% to C$0.64 apiece, having added nearly 90% in value over the past 12 months. Alamos shares closed down 5%, at C$6.09 each.

The acquisition cost of the remaining Carlisle shares, net of Carlisle’s current cash reserves, was $22.1-million. Alamos would issue about 5.4-million shares, or just more than 2.1% of its current share balance.

Desjardins Capital Markets said the 62% premium was generally in line with the average 54% premium paid for developers since 2011; however, it was considered steep when compared with acquisitions since 2014, where the average premium paid was 46%.

“However, the acquisition cost of $4/oz of mineral inventory is relatively low. We believe the market may take a negative view of the issuance of shares over using some of the company’s large cash balance to fund the deal,” analyst Michael Parkin stated in a note to clients.

Meanwhile, Alamos also on Thursday announced that it had slashed its quarterly dividend by a third to $0.01 a share, which, it said, reflected both the weak gold price environment and the company's focus on reinvesting capital into growing production and reducing costs at the Young-Davidson mine, in Ontario, and the Mulatos mine, in Mexico. This included completing the ramp-up of underground mining at Young-Davidson and developing the higher-grade satellite deposits at Mulatos, both of which the company expected would drive strong free cash flow growth in the coming years.