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 in late March when an underground worker was killed in a vehicle accident. The deceased was an employee of subcontractor Dumas Contracting. (Dumas said it would not release the deceased’s name “out of respect for the employee and privacy for his family.”)

Underground operations were suspended for a day so that Dumas and representatives of Quebec’s Occupational Health and Safety Commission could investigate the cause of the accident.

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

Aurizon has been in the news lately for various reasons. One of its suitors, Alamos Gold (AGI-T, AGI-N), dropped its hostile bid for the gold miner, clearing the way for a rival, friendly offer from Hecla Mining (HL-N).

Alamos dropped its $780-million offer because the British Columbia Securities Commission would not strike down the break-fee connected to the Hecla bid.

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

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

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

This makes a moot point now.

When the reopening was announced on March 26, Aurizon’s shares were flat at $4.43, for a market capitalization of $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 an “underperform” rating on Aurizon with a $4.50 target price.