Equinox Gold Corp. [EQX-TSXV, EQXGF-OTC] has entered into a definitive purchase agreement with New Gold Inc. [NGD-TSX, NYSE American], to acquire the Mesquite gold mine in California 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 by 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.
“Further development of the Castle Mountain will benefit from Mesquite’s highly qualified open-pit heap leach operations team with extensive experience operating in California,” the company said.
Equinox recently said construction is proceeding on schedule, and it hopes to achieve the first gold pour at its Aurizona Mine in Brazil before the end of 2018. The overall project was 60% complete at the end of June 2018, the company said.
The company has said its primary focus is on completing construction and achieving production at Aurizona.
However, Equinox recently competed a Prefeasibility Study for Castle Mountain with the objective of commissioning Phase 1 production by the end of 2019.
The company spent $1.7 million on exploration and related technical activities during the second quarter to support the completion of a prefeasibility study at Castle Mountain. Results of the Prefeasibility Study were announced on July 16, 2018. The study envisages a low-cost heap leach mine that will produce 2.8 million ounces of gold and generate $865 million in after-tax cash flow over a 16-year mine life.
Equinox shares eased 5.71% or $0.06 to 99 cents Thursday September 20 on active trading of 1.93 million. The 52-week range is $1.39 and 88 cents.
New Gold was down 11% or 16 cents to $1.28 on volume of 3.95 million. The stock is down from a 52-week high of $5.03 as the company continues to grapple with operating problems at its flagship Rainy River Ontario mine. New Gold recently shuffled its executive suite for the second time in four months, naming Renaud Adams as President and CEO as a replacement for Raymond Threlkeld, who was appointed to the role in early May, 2018.