The massive Hardrock open-pit gold project, to be constructed south of Geraldton, has new owners.
Just hours after Premier Gold Mines announced the resolution of a legal fight with a former 50/50 joint venture partner at the shovel-ready open-pit mine project, with the arrival of Orion Mine Finance, Vancouver's Equinox Gold has swooped in to replace Premier Gold as the co-developer in the northwestern Ontario development.
The transaction is being called a "friendly acquisition" in an all-stock deal worth $612 million. Included in the deal is Premier's Hasaga and Rahill-Bonanza gold exploration properties in Red Lake, and the Mercedes Mine in Mexico.
Equinox runs seven gold mines in North and South America.
In connection with the deal, Equinox Gold plans to complete a $75 million equity financing, fully underwritten by Equinox chairman and mine financier Ross Beaty.
At the same, Premier is creating a U.S. gold-based spinoff company centred on its mining and exploration assets in Nevada, namely South-Arturo and McCoy-Cove properties, and the Getchell Project. This new production and development company will be dubbed i-80 Gold Corp.
The board of directors of Equinox and Premier have approved the transaction. Premier is directing its shareholders to do the same at an upcoming meeting.
When the transaction is expected to close in the first quarter of 2021, existing Equinox Gold and Premier shareholders will own approximately 84 per cent and 16 per cent of Equinox Gold, respectively; and Equinox Gold and existing shareholders of Premier will own 30 per cent and 70 per cent of i-80 Gold, respectively, on an issued share basis.
Hardrock contains 5.54 million ounces of proven and probable mineral reserves grading 1.27 grams per tonne of gold. Gold production will average 414,000 ounces, at an average head grade of 1.45 grams per tonne for the first five years. Over a 14-year mine life, average annual gold production is 358,000 ounces.
The date for the start of construction has not been set.
Premier CEO Ewan Downie gets a seat on the Equinox board. Downie will steer i-80 Gold with the stated objective of becoming a leading U.S. mid-tier gold miner.
“Premier has delivered on its commitment to create value for our shareholders through the disciplined approach of prudently managing our operating assets while advancing our peer-leading development portfolio," said Downie in a statement.
"This transaction builds on that commitment, bringing increased value and optionality to our shareholders from meaningful ownership in two companies: a diversified intermediate gold producer with a portfolio of high-quality assets, and ownership in an exciting new Nevada-focused gold company.
"Importantly, our shareholders will maintain exposure to the Hardrock Project, which we believe is the most attractive advanced-staged development project in North America, and which will be developed by a proven management team that shares our commitment to creating long-term sustainable value."
“This transaction is exactly the kind of accretive Americas-focused growth we promised shareholders when we started Equinox Gold at the beginning of 2018," said Beaty in a release.
"The addition of a top-tier, low-risk mining jurisdiction in Ontario, Canada creates a lower risk profile, with greater asset and country diversification. Hardrock will be an excellent, low-cost, long-life gold mine with significant exploration upside, further enhancing our existing peer-leading growth profile without stretching our financial capacity."