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Equinox Gold buying out its Greenstone mine development partner

Vancouver gold company makes billion-dollar offer to Orion to take full ownership of open pit
Greenstone Gold processing plant (Company photo)

Equinox Gold is out to consolidate majority ownership of its new open-pit mine, south of Geraldton.

In a friendly manner, the Vancouver company seeks to dissolve a 60-40 joint venture with Orion Mine Finance Management, first struck in 2021, by acquiring Orion’s 40 per cent interest in Greenstone Gold Mine GP.

Under the terms of the agreement, Equinox will pay US$995 million in a cash-and-share deal to acquire Orion’s stake in the project. Orion will remain aboard as a shareholder. 

Equinox said it will fund the cash consideration with proceeds from a $500-million three-year term loan from a syndicate of banks, plus bought deal equity financing of Equinox common shares, amounting to $260 million.

The Greenstone mine is in the operational ramp-up stage in commissioning equipment and systems n anticipation of the start of gold production this year. Equinox said the first gold pour will sometime during this year's first half.

The large open-pit gold mine is at the start of an estimated 14-year mine life, expected to produce 400,000 ounces of gold a year in the first five years of operation. The company sees further mine expansion opportunities in the district with gold potential at depth and at “multiple gold deposits” running over a 100-kilometre trend, west of Greenstone.

“When we acquired our 60 per cent interest in Greenstone in 2021, our goal was to ultimately own the whole mine,” said Ross Beaty, chair of Equinox, in a statement. He spoke highly of the “outstanding scale and quality” of the mine in a mining-friendly jurisdiction that provides the opportunity to boost production, cash flow and gold reserves.

“Opportunities to own gold mines like Greenstone are incredibly rare in our industry,” added Equinox president-CEO Greg Smith, “and the Greenstone Mine will now be the foundation for long-term value creation in our company. 

Istvan Zollei, managing partner at Orion, said the relationship with Equinox “has been outstanding and synergistic.”

“We’ve been very pleased to see the crucial construction and operational milestones being delivered by the team and look forward to seeing the mine achieve its full potential.”

The transaction is expected to close by month’s end. Equinox said this transaction doesn't require shareholder approval.