March 27 (Reuters) - Canadian gold miner Alamos Gold ( AGI )

will acquire smaller rival Argonaut Gold ( ARNGF ) for

$325 million in an all-stock deal, the companies said on

Wednesday.

The deal would increase Alamos' gold production to 600,000

ounces per year, with a longer-term production potential of over

900,000 ounces per year, the companies said. Alamos produced

529,300 ounces of gold in 2023.

The deal would give Alamos access to Argonaut's Magino mine,

located adjacent to Alamos' Island Gold mine in Ontario, Canada.

The companies expect long-term synergies of about $515

million from the acquisition.

The companies will also spin off Argonaut's mines in the

U.S. and Mexico to their existing shareholders as a newly

created junior gold producer, SpinCo.

A junior gold miner is typically an exploration company with

a smaller production capacity that searches for new deposits of

gold.

Under the terms of the deal, each Argonaut common share

would be exchanged for 0.0185 Alamos common shares and 1 share

of SpinCo.

The exchange ratio implies a total consideration of 40

Canadian cents per Argonaut share, the companies said.

Gold prices hit a record high last week after Fed

policymakers indicated they still expect to reduce interest

rates by three-quarters of a percentage point by the end of the

year.

U.S.-listed shares of Alamos edged lower before the bell.