Alamos Gold Inc. is asking the British Columbia Securities Commission to remove takeover target Aurizon Mines Ltd.'s poison pill.
Alamos said on Tuesday it wants Aurizon's new shareholder rights plan, as well as what it says is an "improper" break fee, to be ruled out by the B.C. securities agency.
Alamos president and chief executive officer John McCluskey said in an interview Tuesday it simply doesn't make sense at this point for Aurizon's board to put in place a poison pill. Such a tactic is supposed to give the board time to find a white knight suitor, but Aurizon already has one – Hecla Mining Co. – he said.
U.S. silver miner Hecla launched a friendly, $796-million bid for Vancouver-based Aurizon Mines last week with what it says is a superior offer to the Alamos bid.
Aurizon's board said on Monday that the shareholder rights plan – or poison pill – is to prevent Alamos from using its minority stake to defeat Hecla's offer. Alamos owns 16.1 per cent of Aurizon's shares and claims that four major Aurizon shareholders are committed to the Alamos offer.
"The new poison pill is solely designed to prevent Aurizon shareholders from tendering to the Alamos offer," Mr. McCluskey said.
Aurizon CEO George Paspalas has said it would be unfair to shareholders for an investor with a minority stake to block a higher bid.
A spokesman for Aurizon said on Tuesday the company plans to respond to Alamos' move with a news release later in the day.
The $27.2-million break fee is also irregular in that it appears to be more a defensive tactic than the usual fee paid to an acquirer if a deal is terminated, said Mr. McCluskey. The fee would be triggered in the event that Alamos raised its stake to about 33 per cent, a low threshold.
Alamos claims that Hecla's $4.75-per-share offer has only a marginally higher cash-per-share amount – 10 cents – than its own proposal and is generally an inferior bid that represents greater risk for Aurizon shareholders.
"This is a very weak company that the Aurizon board is trying to create with Hecla management. We think that would be an inferior outcome to our proposal," Mr. McCluskey said.
Aurizon's main asset is the Casa Berardi underground gold mine in Quebec.
Mr. McCluskey said a hearing before the B.C. regulator is scheduled for Friday.