Equinox, Orla combine to form $18.5B gold miner

Equinox Gold (TSX:EQX)(NYSE: EQX) said on Wednesday it would acquire Orla Mining (TSX: OLA)(NYSE: ORLA) in a deal valued at about $18.5 billion, creating a North America-focused gold producer expected to generate 1.1 million ounces annually.

The combined company would become Canada’s second-largest gold producer, after Agnico Eagle Mines (TSX, NYSE: AEM), which is also the country’s largest miner.

Existing Equinox shareholders will own about 67% of the combined company, while Orla shareholders will hold the remaining 33%, the companies said Wednesday. The merged miner will operate mines in Canada, the US, Mexico and Nicaragua, including Orla’s Musselwhite mine in Ontario and Equinox’s Greenstone and Valentine mines in Ontario and Newfoundland and Labrador. The transaction is expected to close in the third quarter.

“The strategic fit is excellent and can leverage the geographic focus in Canada and the U.S.,” Haywood Securities mining analyst Jamie Spratt said in a note. “And there appears to be a logical growth plus development pipeline sequencing over the next three to four years.” 

Scale, growth

Equinox CEO Darren Hall highlighted the combination’s strong project portfolio for growth and its current long-life assets. 

“By combining our operating teams, financial strength, and complementary asset bases, we are creating a differentiated North American gold producer with the scale, growth profile, and asset quality to drive a meaningful re-rate and deliver long-term value for shareholders,” Hall said in the statement.

Hall will remain chief executive of the combined company, while Orla CEO Jason Simpson will become president.

“Orla was built on a simple idea: acquire the right assets, develop them with discipline, and operate them well,” Orla CEO Jason Simpson said. “Together, we have the production base, the balance sheet, and the team to compete at a level otherwise unattainable by either company on its own.”

Equinox shares closed 1.9% weaker on Wednesday in Toronto at C$19.90 apiece, valuing the company at C$15.6 billion as most stocks aside from tech fell on higher U.S. inflation. Orla shares gained 0.8% to C$19.93 for a market capitalization of C$6.85 billion.

“It may take time for the market to digest the deal, but we expect that the business should attract investor capital with the ingredients to garner a premium North American multiple with successful operational execution,” Haywood’s Spratt said. 

Output boost

The companies said the merged entity could increase annual gold production by about 70% to 1.9 million ounces through its development pipeline, positioning it among the larger gold producers focused on stable mining jurisdictions in North America. 

The combined company would also inherit Orla’s arbitration claim against Panama tied to the stalled Cerro Quema gold project. The miner is seeking about $400 million in damages after the government blocked key permits amid a wider anti-mining backlash. The dispute would likely be seen by the market as secondary to the merger’s core rationale centred on producing mines and growth assets across the Americas.

The deal continues a wave of consolidation among gold miners seeking scale, lower operating risk and stronger balance sheets as bullion prices remain near record highs.