AGI

Business Context and Reporting Period

This Form 6-K filing, dated December 2002, reports on the proposed amalgamation of Alamos Minerals Ltd. and National Gold Corporation to form a new entity, Alamos Gold Inc. (Amalco). The filing includes a Joint Management Information Circular, proxy materials, and an early warning report regarding institutional holdings. The reporting period covers the execution of the definitive Amalgamation Agreement on December 16, 2002, with shareholder meetings scheduled for January 24, 2003.

Key Financial Metrics

The filing provides pro forma financial data for the combined entity and historical data for the individual companies. Specific revenue, profit, and cash flow figures for the full year 2002 are not provided; data is limited to the nine months ended September 30, 2002.

Note: Alamos financials are reported in US Dollars; National and Pro Forma financials are reported in Canadian Dollars. Exchange rate used for pro forma conversion was approximately US$1.00 = CDN$1.5625.

Material Changes and Transaction Details

• Amalgamation Agreement: Executed on December 16, 2002. The transaction combines the interests of both companies in the Salamandra Property in Sonora, Mexico.
• Exchange Ratio:
  • Alamos shareholders receive 1 Amalco share for every 2 Alamos shares.
  • National shareholders receive 1 Amalco share for every 2.352 National shares.
• Ownership Structure: Post-amalgamation, former Alamos shareholders will hold approximately 55.55% of Amalco, and former National shareholders will hold approximately 44.45%.
• Debt Cancellation: The amalgamation will extinguish a $2,000,000 obligation Alamos owed to National under a Joint Venture Agreement and a $675,000 convertible loan National owed to Alamos.
• Institutional Holding Change: Sprott Asset Management Inc. reduced its holdings in Alamos Minerals by 325,000 common shares as of November 30, 2002, resulting in a net decrease of 3.4% in its security holding percentage (assuming warrant exercise).

Guidance, Outlook, and Risks

Outlook and Management Commentary:

• The amalgamation is expected to create operational efficiencies, reduce overhead, and facilitate access to capital markets.
• The primary asset is the Salamandra Property, specifically the Mulatos gold deposit. A scoping study suggests a smaller-scale "Estrella Development Alternative" could be economically viable with a Net Present Value (NPV) of $19.0 million (10% discount rate) and a DCFROR of 19.3%.
• Completion of the merger is anticipated before March 15, 2003, subject to shareholder and regulatory approvals.

Risks and Contingencies:

• Regulatory Approvals: The transaction requires approval from the Supreme Court of British Columbia, the TSX Venture Exchange, and vendors of the Salamandra Property (Tenedoramex and Kennecott).
• Financing: Both companies have a history of losses and no operating cash flow. They rely on equity financing, which may cause dilution. A $7.5 million debenture is due if gold prices exceed $325/oz or by December 31, 2010.
• Legal Disputes:
  • Surface Rights: The Ejido Mulatos has filed a legal action disputing lease payments, claiming US$337,000 plus interest for 2002.
  • Tax Liability: A potential under-payment of US$215,000 in Mexican mineral concession taxes is under verification.
  • Royalty Claim: Randol International Ltd. claims a 0.25% Net Smelter Return (NSR) royalty on the Mulatos deposit, which Alamos disputes.
• Resource Uncertainty: The filing notes that "Indicated" and "Inferred" mineral resources have significant uncertainty and may not be converted to reserves. There is a noted potential positive grade bias (4-15%) in historical resource estimates.

Investor Verification Checklist

• Shareholder Approval: Verify the outcome of the shareholder meetings scheduled for January 24, 2003, as the transaction requires a special resolution (75% vote).
• Court Approval: Confirm the Supreme Court of British Columbia's order approving the amalgamation, scheduled for hearing on February 4, 2003.
• Vendor Consents: Verify that Tenedoramex and Kennecott have provided necessary consents for the reorganization of the Salamandra Property.
• Resource Validation: Review the Behre Dolbear & Company Ltd. report regarding the potential 4-15% positive grade bias in the Mulatos resource model and the status of the "Estrella Development Alternative" scoping study.
• Legal Status: Monitor the status of the Ejido Mulatos surface rights lawsuit and the Randol International royalty claim.
• Debt Triggers: Monitor gold prices relative to the $325/oz trigger for the $7.5 million debenture repayment.