(Kitco News) - Equinox Gold and Calibre Mining have agreed to merge in a deal valued at $7.7 billion CAD, according to Ross Beaty, Chair of Equinox Gold. The transaction aims to create one of the largest gold producers in the Americas.
"It's a smart deal for shareholders of both companies, and it's going to be a very value-enhancing transaction," Beaty told Kitco Mining at the BMO Global Metals Mining and Critical Minerals Conference.
Merger details
The merged company will have 24 million ounces of reserves and 22 million ounces of measured and indicated resources. Production is forecast at 950,000 ounces for 2025, with the potential to grow to more than 1.2 million ounces per year.
Beaty emphasized the "merger of equals" concept, citing synergies in assets and complementary management teams. "We're going to bring the best people from both companies together," he said.
The board will consist of four directors from Calibre and six from Equinox, with the chair and CEO from Equinox and the COO and president from Calibre.
Strategic rationale
The deal is structured as a zero-premium merger to avoid arbitrage issues. "Let's combine at market. Let's not give … any opportunity to game the transaction," Beaty explained.
He anticipates a positive re-rate due to the company's increased size, attracting new investors, including generalist investors, passive investors, and ETFs.
"The big reason for this is you bring together two preeminent, cornerstone assets from each company together. Оver 50 percent of our data assets will be in Canada with low cost, long life, brand new mines," according to Beaty.
Management and integration
Beaty highlighted the long-standing relationships with Calibre's key players, Doug Forster and Blayne Johnson. "We like each other, we trust each other, and we're going to work together in this new company," he stated, adding, "We have exactly the same ideas about value creation."
Equinox plans to continue deleveraging, with enhanced capacity from Calibre's cash flow and the completion of the Valentine mine. "Our strategy is still 100 percent to delever as quickly as we can," Beaty affirmed.
Asset portfolio
Following the merger, Equinox will evaluate rationalizing its portfolio. "We will definitely, once the acquisition and merger are complete ... look at rationalizing the portfolio and trying to simply enhance the quality of the overall portfolio."
While all assets are currently profitable at $2,900 gold, the company will consider offloading smaller or higher-cost mines if it makes financial sense.
The transaction is expected to close around May. Key milestones for the year include the completion of the Valentine mine and significant debt reduction. Beaty expressed enthusiasm about the company's growth prospects and numerous opportunities.
"From today, say to the end of this year, we're going to put the deal to bed, get Valentine up and running, complete the ramp-up of Greenstone, get rid of some of our debt," Beaty said.
Beaty also addressed the current disconnect between high gold prices and low valuations of gold equities. "You have this absolutely bizarre disconnect between the gold price, which is at a record high of $2,900 an ounce and has just been on wheels for the last year, and the gold equities, which are still trading as if gold was $1,800 an ounce," he noted.
He expects this gap to close, benefiting larger, more liquid names like the new Equinox.
Special thanks to our sponsor, First Majestic, for making this coverage possible. Visit https://www.firstmajestic.com/ to learn more.
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