Equinox raises US$75 million, Beaty adds to holdings
Equinox Gold Corp. [EQX-TSXV; EQXGF-OTC] said Friday October 12 that it has closed the US$75 million equity financing for the acquisition of the Mesquite gold mine in southern California from New Gold Inc. [NGD-TSX, NYSE American]. News of the acquisition was announced on September 19, 2018.
The financing was comprised of brokered and non-brokered private placements of subscription receipts priced at $0.95 per receipt.
Each subscription receipt entitles the holder to receive one common share of Equinox Gold upon satisfaction of certain conditions. The common shares issued upon conversion of the subscription receipts are subject to a four-month hold period that expires on February 12, 2019.
Ross Beaty, Equinox Gold’s Chairman and largest shareholder, invested $10 million in the private placements to purchase an additional 13.6 million common shares upon conversion of the subscription receipts.
The brokered private placement consisted of 34.2 million subscription receipts issued under an underwriting agreement entered into with Scotia Capital and BMO Nesbitt Burns Inc. as co-lead underwriters. The non-brokered private placement consisted of 68.4 million subscription receipts issued pursuant to agreements with investors.
Net proceeds will be held in escrow and released immediately prior to closing of the Mesquite gold mine which Equinox has agreed to buy for $158 million cash.
Led by financier Ross Beaty, Equinox Gold is a well-funded, multi-asset company. Its portfolio includes the wholly-owned, past-producing Aurizona Gold Mine, and wholly-owned past-producing Castle Mountain gold mine in California near the Nevada border.
The acquisition of the Mesquite Mine immediately establishes Equinox as a gold producer as Mesquite is on track to produce an expected 140,000-150,000 ounces of gold this year. It has produced an average of 135,000 ounces of gold annually for the past 10 years, after commencing operations in 1985.
Forecast production at Mesquite will be bolstered by near-term production from the company’s 136,000 ounce-per-year construction-stage Aurizona gold mine and its development-stage Castle Mountain Mine.
Equinox said Mesquite adds a stable, producing asset in an established mining jurisdiction, diversifies future operating cash flow and expands Equinox’s portfolio with a third cornerstone asset. As of the end of December, 2017, proven and probable reserves at Mesquite stood at 1.13 million ounces. On top of that is 1.18 million ounces of measured and indicated resources.
The company has said its primary focus is on completing construction and achieving production at Aurizona.
However, Equinox recently completed a prefeasibility study for Castle Mountain with the objective of commissioning Phase 1 production by the end of 2019.
On Friday, Equinox Gold shares rose 2.04% or $0.02 to $1.00, on active volume of 507,345. The 52-week range is 88 cents and $1.39.