On April 19th, Equinox Gold Corp. (TSX: EQX) announced that they sold their Pilar Gold Mine in Brazil to Pilar Gold Inc for a total of $38 million. Consideration is to take the form of $10.5 million up front, $10 million payable before May 31st, 2021 and an additional $17.5 million payable before July 31st, 2021. They also receive a 9.9% interest in the company plus a 1% NSR.
Equinox Gold currently has ten analysts covering the company with a weighted 12-month price target of C$18.70. One analyst has a strong buy rating while eight analysts have buy ratings and only one analyst has a sell rating. The street high comes from Cormark with a C$24 price target, while CIBC Capital Markets has the lowest at C$14.
BMO Capital Markets reiterated their C$18.50 12-month price target and outperform rating after the news. Their analyst Ryan Thompson says that this move doesn’t come as a big surprise to him as management has previously telegraphed. He writes, “although we can’t assess the value of the 9.9% interest (Pilar Gold is expected to be listed later this year), the proceeds look to be broadly in line with or slightly below our $65M carrying value.”
Pilar accounts for roughly 5% or 35k ounces of Equinox’s 2021 production guidance. Thompson adds that they will be eager to see the updated guidance in May, as it will reflect the sale of Pilar and the addition of production from Mercedes.
Haywood almost commented on the announcement, while also reiterating their C$22 price target and buy rating. Their analyst Kerry Smith writes, “The sale of the Pilar Mine will allow Equinox to focus on their larger production and development assets.” They add that the sale will minimally impact their net asset value as they valued the mine at U$46, or 0.7% of their total nav.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
