Equinox's Greenstone mine in Ontario, in 2021.Greenstone Gold Mines
Equinox Gold EQX-T said on Wednesday it would acquire Orla Mining OLA-T in an all-stock deal to create a North American gold producer worth about US$18.5-billion.
U.S.-listed shares of Orla Mining rose 3.4 per cent in premarket trading.
A record rally in gold prices has bolstered miners’ cash flows and improved their access to capital, encouraging producers to expand reserves of the precious metal and grow their presence in safer mining regions such as Canada and the United States.
Under the deal, Orla shareholders will receive one Equinox common share and a nominal cash payment for each share held, valuing the transaction at about $7.02-billion (US$5.13 billion), according to Reuters calculations.
The merger would create Canada’s second-largest gold producer, led by Equinox’s Greenstone mine in Ontario and Valentine mine in Newfoundland and Labrador, and Orla’s Musselwhite mine in Ontario, which together are expected to produce about 685,000 ounces in 2026.
Overall, the combined company is expected to produce about 1.1 million ounces of gold this year from six operating mines across Canada, the United States, Mexico and Nicaragua.
The combined entity would have “the production base, the balance sheet, and the team to compete at a level otherwise unattainable by either company on its own,” Orla’s CEO Jason Simpson said.
Equinox’s CEO Darren Hall will lead the combined company, while Orla’s chief executive will serve as the president.
Once the transaction closes, existing Equinox shareholders will own about 67 per cent of the combined company, while Orla shareholders will hold the remaining 33 per cent.
The transaction is expected to close in the third quarter, after which the combined company will continue operating as Equinox Gold.