10:42 AM EDT, 03/28/2024 (MT Newswires) -- RBC Capital Markets said Wednesday that Alamos Gold Inc. ( AGI ) 's planned acquisition of Argonaut Gold Inc. (AR.TO) for US$276 million makes sense for Alamos.

RBC said that the transaction would boost Alamos' production by 20% while increasing synergies given the proximity of Argonaut's Magino mine to Alamos' Island Gold mine.

"We see the deal as accretive on a pro forma basis on valuation and production metrics, and a low risk, high potential reward asset in AGI's portfolio given the relative valuation and potential upside," RBC said. "We see this transaction as mitigating potential investor concerns about larger scale M&A and capex."

RBC gave Alamos an outperform rating with a US$16.00 price target.

Price: 19.88, Change: +0.16, Percent Change: +0.81