Equinox Gold (TSX: EQX) is set to pay big dollars to obtain whole ownership of the Greenstone Mine in Ontario. The company has agreed to acquire the remaining 40% interest in the mine that it does not currently hold from Orion Mine Finance for a total of US$995 million.
The transaction as a whole effectively values the Greenstone Mine at US$2.49 billion, or roughly US$449 per ounce of gold currently in reserve.
Consideration for the purchase is to come in the form of cash and shares, with 42.0 million shares of Equinox, valued at US$250 million, to be issued to Greenstone, along with US$745 million in cash, US$705 million of which is payable upon closing of the transaction.
Funding for the cash payment is to be provided via a new US$500 million three year loan, in combination with a bought deal financing for US$260 million at $5.30 per share.
The purchase, as per Equinox, is expected to increase annual gold production by an estimated 160,000 ounces per year over a 14 year mine life, which is expected to result in significant near-term EBITDA and cash flow accretion. The Greenstone Mine will be Equinox’s flagship asset, producing 400,000 ounces per year over the first five years.
READ: Equinox Gold Guides To Cost Increases For 2024, Including Up To $1,740 An Ounce AISC
“When we acquired our 60% interest in Greenstone in 2021, our goal was to ultimately own the whole mine. Consolidating 100% of Greenstone into Equinox Gold delivers our shareholders full exposure to a mine of outstanding scale and quality, in one of the best mining jurisdictions in the world, while meaningfully growing our expected production, cash flow and reserves,” commented Ross Beaty, Chairman of Equinox.
Completion of the acquisition is expected in Q2 2024.
Equinox Gold last traded at $7.82 on the TSX.
The author has no securities or affiliations related to any organization mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
