Equinox Gold has agreed to acquire the remaining 40% stake it previously did not own in the Greenstone gold mine from certain funds managed by Orion Mine Finance Management in a deal worth $995m.
According to the terms of the share purchase agreement (SPA), Equinox Gold will gain full ownership of the Canadian gold mine by issuing 42 million of its common shares valued at $250m and by paying $705m in cash on the closing of the deal.
The Canadian mining company will also pay $40m in cash by 31 December 2024.
Equinox Gold intends to finance the deal with net proceeds from both a new three-year term loan of $500m and a bought deal equity financing of common shares of Equinox Gold for about $260m.
Orion Mine Finance Management managing partner Istvan Zollei said: “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.”
Located in Ontario, the Greenstone gold mine is said to be among the largest and highest-grade open pit gold mines in Canada.
The gold project comprises the former Hardrock, MacLeod-Cockshutt, and Mosher underground mines which operated from the late 1930s until about 1970.
Consolidated Greenstone is slated to become Equinox Gold`s largest mine, with an anticipated average annual gold production of 400,000 ounces during the initial five-year period.
Through the acquisition of the remaining stake, the company intends to increase its overall annual gold production by nearly 160,000 low-cost ounces per year with significant near-term EBITDA and cash flow per share accretion.
Equinox Gold chairman Ross Beaty said: “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.”
Subject to customary conditions and receipt of certain regulatory and other approvals, the deal is anticipated to be completed in Q2 2024.
The acquisition does not require any approval from shareholders.
GenCap Mining Advisory is serving as financial and debt adviser to Equinox Gold while Blake, Cassels & Graydon and Paul, Weiss, Rifkind, Wharton & Garrison are acting as legal counsel.
RBC Capital Markets is financial adviser and Torys is serving as legal counsel to Orion Mine Finance Management.
