Equinox-Orla get OK to create No. 2 Canada gold miner

Equinox Gold (TSX: EQX) (NYSE: EQX) and Orla Mining (TSX: OLA) (NYSE: ORLA) have secured shareholder approval for their $18.5 billion merger, creating Canada’s second-largest gold producer with expected annual output of 1.1 million ounces.

The all-share transaction, approved by shareholders of both companies, will leave existing Equinox investors owning about 67% of the combined company, while Orla shareholders will receive one Equinox share for each Orla share they hold. The merged company will operate six mines in North America and rank behind only Agnico Eagle Mines (TSX, NYSE: AEM) among Canadian gold producers.

“The combination with Equinox dramatically enhances our North American portfolio and propels us to a senior gold producer with industry leading growth potential,” Orla CEO Jason Simpson said. “I am excited for what’s to come next from this combination with Equinox.”

Independent proxy advisers endorsed the transaction earlier this month, saying the merger would diversify Equinox’s asset base, improve strategic flexibility and strengthen long-term production potential. 

Growth pipeline

Canadian mines Greenstone, Valentine and Musselwhite, which together represent 57% of the combined company’s projected 2027 production, will anchor its asset base, National Bank Financial mining analyst Mohamed Sidibé said in a note published earlier this month.

Production should climb about 70% to more than 1.9 million oz. annually as development projects come online, giving the combined company one of the sector’s strongest growth profiles in politically stable mining jurisdictions, Equinox and Orla say. Projects such as Valentine Phase 2, South Railroad, Castle Mountain Phase 2 and a restart of the Los Filos mine in Mexico will support the expected growth, Sidibé said.

The merger extends an industry consolidation trend that has seen gold miners pursue greater scale, lower operating risk and stronger balance sheets while bullion prices remain near record highs. On Monday, Novagold Resources (NYSE-A, TSX: NG) agreed to buy the Donlin Gold stake in Alaska it doesn’t already own from Paulson Advisors in an all-stock transaction that will create a gold miner worth about $4.2 billion and simplify ownership of one of the world’s largest undeveloped projects.