* Says not willing to pay break fee to Hecla
* Alamos CEO reiterates not considering raising offer
* Hecla CEO says expects commission to leave poison pill in
By Bhaswati Mukhopadhyay and Garima Goel
March 12 Alamos Gold Inc said it was
likely to walk away from a bid to buy Aurizon Mines Ltd
if it loses a regulatory ruling on the merits of a
poison pill adopted by Aurizon and the break fee committed to
rival bidder Hecla Mining Co.
"We are not willing to pay a break fee to Hecla that
essentially makes the transaction more expensive for us than it
does for Hecla," Alamos CEO John McCluskey told Reuters.
Alamos, Aurizon's largest shareholder with a 16.11 percent
stake, made a C$780 million hostile offer for the Canadian gold
miner in January.
McCluskey said the C$27.2 million break fee pushes Alamos's
cost of acquiring Aurizon beyond that of Hecla's.
"Hecla is bidding so little over and above our current bid
that the break fee that is in place alone makes it even more
expensive. That is quite an absurd situation," McCluskey said,
reiterating that Alamos was not considering raising its offer.
At the center of the takeover battle is Aurizon's Casa
Berardi gold mine, located in the Abitibi region of
mining-friendly northwestern Quebec. The mine has easy access to
infrastructure and labor, making it attractive at a time when
miners are grappling with rising capital costs.
Hecla made a friendly offer to buy Aurizon at C$796 million,
or C$4.75 per share, earlier this month.
Alamos, which last week extended its tender offer deadline
to March 19, had offered about C$4.65 per Aurizon share.
Aurizon rejected Alamos's unsolicited offer in January, and
adopted a new poison pill on Monday.
Alamos, in turn, filed an application with the British
Columbia Securities Commission on Tuesday, seeking an order to
immediately remove the poison pill and prevent the payment of
the improper break fee to Hecla.
"We would expect that the securities commission will leave
the pill in place in order to give all the shareholders a chance
to vote ... otherwise it's allowing the minority to control and
that's just inconsistent with what the commission is trying to
do," Hecla Chief Executive Phillips Baker told Reuters.
Aurizon said in a statement on Tuesday that it would oppose
Alamos's application at the hearing.
The hearing has been scheduled for March 15.
Alamos CEO McCluskey said the company's offer had the
support of the next four largest Aurizon shareholders.
"This is going to be something that will play like a soap
opera," said John Goldsmith, vice-president, deputy head of
equities at Montrusco Bolton Investments, Aurizon's
Montrusco Bolton Investments tendered its shares to Alamos
in January, Goldsmith said.
"I would like to stay with Alamos. I want exposure to gold,"
Hecla shares closed at $4.38 on the New York Stock Exchange
on Tuesday. Shares of Aurizon closed at C$4.55, while those of
Alamos closed at C$14.75 on the Toronto Stock Exchange.