Equinox Gold Acquiring Mesquite Mine From New Gold
(Kitco News) - Equinox Gold Corp. (TSXV: EQX)has entered into an agreement to acquire the Mesquite Gold Mine in Californiafrom New Gold Inc. (TSX, NYSE American: NGD) for $158 million, the companiesreported.
Equinox said the acquisitionimmediately establishes the developing company as a gold producer andaccelerates growth. New Gold said the deal allows it to focus on core assetsand “crystallize” future cash flow.
Mesquite is on track to achieveNew Gold’s production guidance of 140,000 to 150,000 ounces of gold in 2018 andhas produced an average 135,000 ounces annually over the previous 10 years,Equinox said. Mesquite is an open-pit, run-of-mine heap leach gold mine inImperial County with a long history of operations, producing more than 4million ounces of gold since it opened in 1985.
Equinox said the acquisition isexpected to close in the fourth quarter and does not require shareholderapproval. The purchase will be funded through a combination of debt andequities, with the company announcing a private placement for gross proceeds of$75 million.
Equinox said this production willbe bolstered in the not-too-distant future by production from the company’s136,000-ounce-per-year construction-stage Aurizona Gold Mine in Brazil and itsdevelopment-stage Castle Mountain Gold Mine in California.
“The Mesquite Gold Mine willbring immediate production and cash flow to Equinox Gold from awell-established operation in an attractive mining jurisdiction,” saidChristian Milau, chief executive officer of Equinox Gold. “Mesquite is theperfect fit for our portfolio of gold assets at this stage of growth andadvances our strategy of becoming a major gold producer over the next fewyears.”
As of the end of 2017, theMesquite gold deposit was estimated at 1.13 million ounces of proven andprobable reserves, plus 1.18 million ounces of measured and indicatedresources. This represents increases of 25% and 40%, respectively, from EquinoxGold’s current reserve and resource base, the company said.
The transaction “allows New Goldto immediately crystallize several years’ worth of future free-cash flow aspart of our strategy to prudently manage our balance sheet, providing thecompany with the
financial flexibility to focus onour core assets,” said Renaud Adams, president and chief executive officer ofNew Gold.
By Allen SykoraFor Kitco News
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