Equinox consolidates ownership of Greenstone Gold Mine

"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," said Greg Smith, President and CEO of Equinox Gold. "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." 

Equinox Gold Corp. has entered into a binding share purchase agreement with certain funds managed by Orion Mine Finance Management LP to acquire Orion's 40% interest in Greenstone Gold Mine GP Inc., giving Equinox Gold 100% ownership of the Greenstone Mine  in Ontario. 

Under the terms of the SPA, Equinox Gold will pay $995 million to acquire Orion's 40% interest in Greenstone, payable as follows:

• 42.0 million common shares of Equinox Gold valued at $250 million;
   
• $705 million in cash payable on closing; and
   
• $40 million in cash payable by December 31, 2024.

Equinox Gold will fund the cash consideration with net proceeds from both a new $500 million three-year term loan and a bought deal equity financing of common shares of Equinox Gold for approximately $260 million. 

Anticipated Benefits to Equinox Gold Shareholders 

• Rare opportunity to consolidate a world-class gold mine - Consolidates 100% ownership of Greenstone, one of the largest and highest-grade open pit gold mines in Canada, a top mining jurisdiction, at the beginning of its expected 14+ year mine life and into a historically strong gold price environment.
   
• Increases production and is significantly accretive to near-term EBITDA and cash flow - Increases the Company's annual gold production by an expected 160,000 low-cost ounces per year with significant near-term EBITDA and cash flow per share accretion. Consolidated Greenstone will be Equinox Gold's largest mine, producing an expected average of 400,000 ounces of gold per year over the first five years, and is expected to be one of the world's lowest-cost open-pit gold mines, with cash costs in the industry's lower quartile.

• Delivers substantial growth and exploration potential - Consolidates the Greenstone underground deposit, a key expansion opportunity at Greenstone, as well as multiple gold deposits in a highly prospective land package over a 100-km trend to the west of Greenstone, enhancing the Company's long-term growth profile with both expansion and exploration potential. 

Ross Beaty, Chairman of Equinox Gold, stated: "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."

Istvan Zollei, Managing Partner of Orion, stated: “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.”

Transaction Funding

A syndicate of banks comprising The Bank of Nova Scotia, Bank of Montreal, ING Capital LLC and National Bank of Canada have provided underwritten commitments for a term loan of $500 million to be used to partially fund the cash consideration pursuant to the SPA (the "Term Loan"). The Term Loan will have a three-year term with no principal payments during the first two years. Commencing two years after the closing date, the Term Loan will be repaid in quarterly installments equal to 10% of the then outstanding principal amount of the Term Loan, with the remaining principal amount to be repaid at maturity. Interest, covenants and other terms are substantially consistent with the Company's existing revolving credit facility. The Term Loan is expected to be completed in connection with closing of the Transaction. 

In addition, Equinox Gold has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, National Bank Financial Inc. and Scotiabank as joint book-runners (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 49,060,000 common shares of Equinox Gold (the "Common Shares") at a price of $5.30 per Common Share (the "Offering Price"), for aggregate gross proceeds of approximately $260 million (the "Offering").

The Company has granted the Underwriters an over-allotment option, exercisable in whole or in part at any time at the Offering Price up to 30 days after closing of the Offering, to purchase up to an additional 15% of the number of Common Shares issued pursuant to the Offering. 

The Company intends to use the net proceeds of the Offering to fund a portion of the cash consideration pursuant to the SPA due at closing of the Transaction with any excess net proceeds used for general working capital and corporate purposes, including repayment of certain indebtedness.

Closing of the Offering is expected to occur on or about April 26, 2024, subject to customary closing conditions, including the receipt of all necessary approvals of the Toronto Stock Exchange (the "TSX") and the NYSE American in accordance with their applicable listing requirements.

 

Tags: Northern Ontario / Deals & Financial / Gold / All Articles