Gold M&A Heating Up as Equinox and Orla Announce Merger
Deal follows Equinox’s combination with Calibre last year
Equinox Gold Corp (TSX: EQX) and Orla Mining (TSX: OLA) have entered into an agreement for an at-market combination to create a new North American senior gold producer.
The combined entity, which will carry the Equinox name, is expected to have a market capitalisation of US$18.5 billion and annual production of 1.1 million ounces of gold from six mines in Canada, the US, Mexico and Nicaragua, with an organic pathway to 1.9Mozpa.
The larger Equinox expects to be the second-largest producer of Canadian gold behind Agnico Eagle Mines (TSX: AEM) from the Greenstone, Valentine and Musselwhite mines.
The two will combine via a plan of arrangement with Orla shareholders to receive one Equinox share and US0.01c for each share held, giving them 33% of the enlarged company.
The merged company expects to generate free cashflow of around US$1.4 billion this year, based on analyst consensus estimates and is expected to have US$1.4 billion in liquidity.
Equinox CEO Darren Hall will retain his role, with Orla CEO Jason Simpson to join the company as president.
Orla chair Chuck Jeannes will join Equinox as chair with continued support from current Equinox chair Ross Beaty as chair emeritus.
‘Icing on the cake’
Beaty described today as a momentous day for Equinox.
“Just over eight years ago, we began our journey to build Equinox Gold,” he said on a conference call on Wednesday.
“From the beginning, we had one big goal – to build a great new gold company at scale.
“Why have we focused on scale? Because it creates better resilience and diversification against risk, better valuation multiples, better liquidity, a stronger financial condition, and, most importantly, greater leverage to gold.”
The deal with Orla marks Equinox’s fourth deal since 2018 and follows on from last year’s combination with Calibre Mining Corp.
“We built mines. We’ve sold mines that were non-core, and we’ve spun out three companies, each with over US$1 billion in market value today,” Beaty said.
“The Orla deal will add icing on the Equinox cake.”
Both companies were asked about the timing of the deal.
“If we consider both companies, we’ve both got credible operations, we’ve both got a clear platform to grow, we believe we’re both equally undervalued in the space,” Hall said.
“Both sets of shareholders will benefit from the continued re-rate that will come from demonstrated delivery of both asset bases, the growth that comes from it, and then the additional re-rate that comes as a consequence of size.”
Simpson said the deal accelerated both companies’ existing growth stories.
“Often we were complimented on our platform, but in the same conversation, the patience of waiting for that platform to unfold was a question that I would get, and so this satisfies an accelerated growth platform that I think will be to the benefit of both of our groups of shareholders,” he said.
Growth projects include the Valentine phase 2 expansion in Canada, South Railroad and Castle Mountain in the US, and Los Filos and Camino Rojo underground in Mexico.
Both companies’ shareholders will vote on the deal in July.
Directors and management of Orla, Pierre Lassonde, and certain affiliates of Fairfax Financial Holdings, who collectively hold approximately 20% of Orla, have entered into voting support agreements.
The transaction is expected to close in the third quarter.
Gold M&A ramping up
The Equinox-Orla combination continues a run of major gold sector consolidation.
Last week, Western Australian producers Regis Resources (ASX: RRL) and Vault Minerals (ASX: VAU) announced a nil-premium merger to create a A$10.7 billion, 700,000ozpa producer.
Two weeks earlier, Agnico Eagle Mines (TSX: AEM) announced three transactions worth nearly US$2.8 billion which will consolidate its position in Finland’s Central Lapland Greenstone Belt.
The company is acquiring Rupert Resources (TSX: RUP) for C$2.9 billion and Aurion Resources (TSXV: AU) for C$481 million, as well as B2Gold’s (TSX: BTO) 70% interest in the Fingold JV for US$325 million in cash.
Earlier in April, G Mining Ventures Corp (TSX: GMIN) announced the C$3 billion acquisition of G2 Goldfields Inc (TSX: GTWO), combining the Oko West and Oko-Ghanie gold projects in Guyana.
According to Canaccord Genuity, there had been US$13.7 billion in gold deals announced up until April 21, when Agnico’s Finnish transactions were announced.
That was more than double the pace of last year, when a record US$28.4 billion in precious metals deals were announced for the year.
“We expect to see more consolidation in the sector in 2026, with companies flush with cash and cashflow,” analyst Carey MacRury said.