Equinox exits Brazil in $1B China deal

Equinox Gold (TSX, NYSE-A: EQX) has sold its Brazilian operations to China’s CMOC Group in a deal worth over $1 billion (C$1.38 billion) to focus on North America, the Canadian miner says.

The assets include the Aurizona mine in Maranhão, the RDM mine in Minas Gerais, and the Bahia complex, consisting of the Fazenda and Santa Luz mines, Equinox said on Sunday. Together, they are expected to deliver 250,000–270,000 oz. of gold production this year, according to company guidance.

The total consideration comprises an upfront cash payment $900 million due on closing, plus a contingent cash payment of up to $115 million linked to the mines’ production, due one year after closing. The sale marks another example of M&A activity in the precious metal sector where metals prices have rocketed this year. 

“Monetizing our Brazil operations simplifies the portfolio and enables the company to deploy capital toward higher-return, lower-risk, organic-growth opportunities in Canada and the United States,” CEO Darren Hall said in a release. The “pivotal step” is “underpinned by robust cash flow and a tier-one growth profile,” he said. 

Pivot to North America

The Valentine mine in Newfoundland and the Greenstone mine in Ontario, both of which were brought into commercial production over the past 13 months, now form the crux of Equinox’s operations, along with the older Mesquite mine in California that’s been active since the late 1980s.

Equinox said it intends to use the Brazil sale to repay debt, such as a $500-million term loan and a $300-million facility with Sprott, and fund organic growth. That includes planned expansions at the Valentine mine as well as the Castle Mountain project in California, and a new development plan at the Los Filos project in Mexico.

The future growth profile of Equinox, which is chaired by Canadian Mining Hall of Fame member Ross Beaty, also includes El Limón and Libertad mines in Nicaragua. The company acquired them through its $1.8-billion takeover of Calibre Mining earlier this year.

Canada

This year, the Greenstone mine is expected to contribute 220,000 – 260,000 oz. of gold, nearly matching the total combined output of the Brazilian assets. The Valentine mine, which hit commercial production a month ago, is expected to add 175,000–200,000 oz. a year once in full operations. The Mesquite mine is also forecast to produce 85,000–95,000 this year.

The company forecasts total output between 700,000–800,000 oz. next year. A formal production and cost guidance is due in early 2026. 

Shares in Equinox Gold closed at C$20.23 apiece on Friday in Toronto, valuing the company at C$15.9 billion. Like most gold producers, the stock has more than doubled this year on record bullion prices.