Equinox Acquires Premier, i-80 Gold Spins Out
Premier shareholders will receive 0.1967 of an Equinox Gold share for each Premier share held and 0.4 of a share of i-80 Gold for each Premier share held. On closing of the transaction, existing Equinox Gold and Premier shareholders will own approximately 84% and 16%, respectively, of Equinox Gold. Equinox Gold and existing shareholders of Premier will own 30% and 70%, respectively, of i-80 Gold.
Equinox Gold will have seven operating gold mines with construction under way at an eighth site, a healthy project pipeline and the financial capacity to fund development of Hardrock, which has 5.54 million ounces (oz) of proven and probable mineral reserves grading 1.27 grams per metric ton (g/mt) gold, the company said. It is expected to produce an average 414,000 oz/y of gold with average head grade of 1.45 g/mt gold for the first five years and 358,000 oz/y of gold over the initial 14-year mine life. The Mercedes mine in Sonora, Mexico, adds approximately 50,000 oz/y of gold (with expansion potential to 80,000 oz/y to 90,000 oz/y) to the estimated 700,000 oz/y gold production expected in 2021 from Equinox Gold.
“This transaction is exactly the kind of accretive Americas-focused growth we promised shareholders when we started Equinox Gold at the beginning of 2018,” Equinox Gold Chairman Ross Beaty said. “The addition of a top-tier, low-risk mining jurisdiction in Ontario, Canada, creates a lower risk profile, with greater asset and country diversification.” Beaty said Hardrock will be an excellent, low-cost, long-life gold mine with significant exploration upside and the Mercedes mine will bring an immediate increase to production and cash flow.
“Combining a 50% interest in the permitted, development-ready Hardrock Project with our strong balance sheet and operating cash flow provides a clear path to production for Hardrock that I believe will unlock substantial value for both Equinox Gold and Premier Gold shareholders,” Equinox Gold CEO Christian Milau said. “We look forward to developing Hardrock with Orion as our partner, integrating the Mercedes mine into our portfolio of producing gold mines, and being a substantial and supportive shareholder of i-80 Gold.”
i-80 Gold will be led by Premier CEO Ewan Downie. i-80 Gold intends to conduct a financing of up to $75 million. Equinox Gold has committed to subscribe for 30% of the aggregate amount of the financing up to a maximum subscription amount of $22.5 million. Pursuant to the transaction, it is expected that i-80 Gold’s initial working capital will include approximately $15 million in cash, pre-financing.
In connection with the transaction, Equinox Gold plans to complete a C$75 million equity financing, fully underwritten by Beaty, at a price per share to be set in the context of the transaction and the market after at least five clear trading days. The directors of Equinox Gold and the directors of Premier have unanimously approved the transaction and the Board of Directors of Premier have recommended that Premier shareholders vote in favor of the transaction. The transaction is also subject to court approval.
Orion will purchase Centerra Gold Inc.’s 50% interest in the Greenstone Gold Mines Partnership (GGM) for $225 million plus certain contingent payment obligations of approximately $75 million (assuming a $1,500/oz gold price). Premier currently owns the other 50% of GGM, whose principal asset is the Hardrock Mine project located on the Trans-Canada Highway near Geraldton, Ontario, Canada, and represents one of the most significant large-scale, permitted, mine development opportunities in North America, according to the company.