A lamos Gold Inc. has dropped its hostile takeover offer for Aurizon Mines Ltd.
The company said its conditions have not been met due to a $27.2-million break fee that would be payable to Hecla Mining Co., which emerged with a white knight offer for Aurizon.
"The Aurizon board, by adopting this unique type of break fee, has foreclosed the opportunity for Aurizon shareholders to tender to Alamos' superior offer," Alamos president and chief executive officer John McCluskey said in a statement.
"In pursuing our growth objectives, we will not deviate from the fiscal discipline that has made us one of the world's most successful gold companies, and the payment of this break fee in these circumstances would violate that discipline."
Alamos already owns a 16 per cent stake in Aurizon and had made an hostile offer for the rest of the company.
However, Aurizon signed a deal to be bought by Hecla Mining in an agreement valued at $796-million in stock and cash.
Hecla's offer, valued at $4.75 per Aurizon share when it was announced, is 10 cents more than the Alamos Gold bid, valued at $4.65 per share when it was announced.
Apart from a nominally higher total value, the $513.6-million maximum cash component offer from Hecla is almost $210-million above the cash cap in the Alamos stock and cash bid.
The Hecla offer also requires approvals from two-thirds of votes cast at a shareholder meeting.
"We stand by our determination that the Alamos offer was inadequate, and with its expiry, we will continue to move forward with the Board-supported Hecla arrangement," said George Brack, chair of the special committee of Aurizon's board, in a statement.
"The Hecla arrangement offers an attractive premium, a substantial cash component, and the compelling opportunity to participate in a North America focused precious metals company with exploration potential and significant upside."
Aurizon has eight properties in Quebec, including the Casa Berardi gold mine, as well as several development and exploration projects.