Equinox forks out $1.5 billion to consolidate Greenstone mine ownership

Equinox Gold (TSX:EQX) has sought to make the most of an “incredibly rare” opportunity by coughing up US$995 million — more than A$1.53 billion — to consolidate its ownership of the Greenstone mine in Ontario, Canada.

According to a binding share purchase agreement, Equinox will acquire Orion’s 40% interest in Greenstone Gold Mine GP, which holds the Greenstone mine.

The total consideration will consist of 42 million Equinox shares valued at US$250 million, US$705 million in cash payable upon closing of the transaction, and another US$40 million in cash payable by the end of 2024.

Much of the cash component will be supported by a US$500 million three-year loan provided by a syndicate of banks including the Bank of Nova Scotia, the Bank of Montreal, ING Capital, and the National Bank of Canada.

Equinox has also signed a separate agreement, under which BMO Capital Markets, National Bank Financial, and Scotiabank will purchase just over 49 million shares at US$5.30 each for another US$260 million.

“Opportunities to own gold mines like Greenstone are incredibly rare in our industry, and the Greenstone mine will now be the foundation for long-term value creation in our company,” Equinox President and CEO Greg Smith says.

“I also welcome Orion as a shareholder of Equinox Gold and thank them for being a great partner over the last few years, as together with the Greenstone team we have executed a very successful mine build. Greenstone is well into hot commissioning, with first gold in sight. Now, as full owners, we remain focused on advancing Greenstone to commercial production and look forward to surfacing its full potential.”

Located in Geraldton, 275km north-east of Thunder Bay, Greenstone is a multi-million-ounce gold project expected to produce 400,000 ounces of gold annually for an initial five years.

In December 2020, Premier Gold published a Feasibility Study outlining an open-pit mine that would produce more than five million ounces of gold for 14 years. Equinox subsequently acquired premier Gold and its 50% stake in Greenstone in April 2021, and later another 10% interest to form its current 60% stake.

In October 2021, Equinox heralded the start of full-scale construction, with the first pouring of gold expected in the first half of 2024.

The acquisition is anticipated to boost Equinox’s annual gold production by 160,000 “low-cost ounces” and consolidate the Greenstone underground deposit, a key expansion opportunity at the mine.

Istvan Zollei, Managing Partner of Orion, says Orion has been an investor in the Greenstone gold project since 2016, and collaborative joint venture partners with Equinox Gold since 2021.

“We’ve been very pleased to see the crucial construction and operational milestones being delivered by the team and look forward to seeing the mine achieve its full potential. Our partnership with Equinox Gold has been outstanding and synergistic, and we look forward to our ongoing cooperation with the Equinox Gold team as a supportive shareholder.”

The transaction comes at a time of strength for the price of gold, which has been on a run this year thanks to higher-than-expected inflation in the US, and general anxieties including tensions in the Middle East and the upcoming presidential election in America.

As of Wednesday morning, gold was hovering at around US$2,321.23 per ounce.

Write to Oliver Gray at Mining.com.au

Images: Equinox Gold
Author Image
Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.