Equinox Gold Snaps Up Greenstone Gold Mines For $995M In 'Incredibly Rare' Deal

Vancouver-based miner Equinox Gold EQX has solidified its ownership of the Greenstone Gold Mine in Ontario, Canada, by acquiring the remaining 40% stake from Orion Mine Finance for $995 million. Despite Australian miner Gold Roads showing interest in Orion's stake, Equinox managed to gain full ownership of what they describe as a "rare opportunity" in a stable and industry-friendly jurisdiction.

“Opportunities to own gold mines like Greenstone are incredibly rare. This acquisition strengthens our position and allows us to focus on advancing the mine toward commercial production,” stated Equinox's CEO Greg Smith.

Greenstone Gold Mines is among the Canada’s largest and highest-grade open-pit gold mines. It is at the beginning of an expected 14-year mine life in a historically strong gold price environment. Equinox anticipates that acquiring the remaining stake will enhance its annual gold production by about 160,000 ounces per year, with production costs in the industry's lower quartile.

Beyond the immediate production boost, this acquisition is expected to deliver substantial benefits to Equinox shareholders in the long term. These include owning a world-class gold mine, increased production with significant growth in near-term earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow per share.

Equinox will also benefit from Greenstone’s underground deposit and multiple prospective gold deposits located nearby, which present a key expansion opportunity.

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Under the terms of the transaction, Equinox Gold will pay $995 million for Orion’s 40% stake, comprising 42 million shares valued at $250 million and $745 million in cash.

Equinox Gold will utilize a combination of funds to finance the cash portion of the deal. A new $500 million three-year term loan will come from a banking syndicate involving The Bank of Nova Scotia, Bank of Montreal, ING Capital and National Bank of Canada.  Meanwhile, an equity financing agreement for the issuance of common shares should raise an additional $260 million.

GenCap Mining Advisory acts as financial and debt advisor, while Blake, Cassels & Graydon and Paul, Weiss, Rifkind, Wharton & Garrison serve as Equinox Gold’s legal counsel. RBC Capital Markets is Orion’s financial advisor, and Torys provides legal counsel.

The transaction is expected to close in the second quarter of 2024, subject to customary closing conditions and receipt of regulatory approvals. It’s worth noting that this acquisition does not require shareholder approval from Equinox Gold.

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