Equinox Gold Corp. agreed to acquire Canada’s Orla Mining Ltd. for about US$5.1 billion, the latest in a wave of gold-mining deals as producers seek to boost output and reserves after a massive price rally in bullion over the past year.
Equinox will pay almost entirely in stock, the companies said Wednesday. The transaction will give Equinox two operating mines in Mexico and Canada, plus development projects in Nevada and Panama. The merged company’s production to 1.1 million ounces a year, with the potential to grow to more than 1.9 million ounces.
Gold prices rose to a record in January and have mostly traded above US$4,500 an ounce since then, spurring acquisitions in the sector. Still, extreme bouts of price volatility in metals markets have raised investor concerns about supporting acquisitions they see as overpriced. That’s led to more zero-premium and low-premium transactions. The Equinox-Orla merger fits that pattern, offering no takeover premium to Orla shareholders.
Orla shares rose nearly 1 per cent before paring gains in New York, while Equinox fell as much as 7.3 per cent.
The deal is set to create a company with an implied market capitalization of US$18.5 billion. That boost in scale will allow Equinox to pitch itself as a senior North American gold producer to large institutional investors that often favour bigger, more liquid names. The added heft comes as gold is drawing renewed investor interest as a hedge against currency debasement and reduced confidence in paper money.
