Aurizon gets Casa Berardi back up and running

Operations at Aurizon Mines’ (ARZ-T, AZK-N) flagship Casa Berardi mine in Quebec are back to normal.

The company says regular shifts have resumed after mining was suspended yesterday when an underground worker was killed in a vehicle accident. The deceased was an employee of a sub-contractor at the mine, Dumas Contracting.

Underground operations were suspended yesterday so that Dumas and representatives of the Workplace Health and Safety Commission of Quebec could investigate the cause of the accident.

With the investigation complete, Aurizon says underground operations won’t be further affected.

Aurizon was in the news last week for completely different reasons. One of its suitors, Alamos Gold (AGI-T, AGI-N), dropped its hostile bid for the gold miner thus clearing the way for a rival, friendly offer, from Hecla Mining (HL-N) to succeed.

Alamos dropped its $780 million offer after the B.C. Securities Commission would not strike down the break-fee connected to the Hecla bid.

The break fee was set at $27.2 million, and is payable to Hecla should shareholders not vote for the offer. That is a steep price to pay, and Alamos argued it would unduly influence shareholders to vote for the Hecla offer, not because it was superior, but to avoid the hefty expense.

While Hecla’s offer placed a higher valuation on Aurizon, $796 million compared to the $780 million being offered by Aurizon, and also has a larger cash component, $513 million in cash compared to Alamos’ $305 million, Alamos argued that on closer inspection the flashy numbers hid some serious warts.

The chief argument was that Hecla would finance its offer via a $500 million loan, secured by hedging production at Casa Berardi, whereas Alamos could fund its offer out of its cash reserves and thus would leave the mine hedge-free.

That is a moot point now.

Aurizon shares finished the day where they began, at $4.43, on 2.56 million shares traded. At that price the company’s market cap rings in at $729 million, based on 164.6 million shares outstanding. Its share price has moved between $5.55 and $3.15 over the last year.

BMO Capital Markets analyst Brian Quast has Aurizon rated as ‘underperform’ with a $4.50 target price.