Minera Alamos buys Equinox’s Nevada assets for $115M

Minera Alamos (TSXV: MAI) agreed to buy some Nevada assets from Equinox Gold (TSX: EQX; NYSE-A: EQX), a move that it says will provide cash flow to support the company’s existing development-stage projects. The stock plunged.

Toronto-based Minera Alamos will pay Equinox $115 million ($159 million), including $90 million in cash and $25 million in equity, according to a statement issued Thursday. It has arranged a bought deal financing for gross proceeds of at least C$110 million to cover the cash portion of the acquisition.

A key asset included in the deal is the Pan gold mine, an open-pit operation centered around a Carlin-style deposit located along the Battle Mountain–Eureka gold trend. The mine entered production in 2017 and now produces gold from two pits using a conventional crush and heap-leach process. Equinox acquired Pan through its recent acquisition of Canada’s Calibre Mining. 

The transaction would create a diversified, Americas-focused precious metals producer with immediate production and cash flow and a suite of low-capital, quick-build gold projects to drive production growth, Minera Alamos says.

Costs rise

Last year, Calibre sold 35,228 oz. of gold produced from the mine at a cash cost of $1,473 per ounce. It had set an output target of 30,000–40,000 oz. for 2025 at an all-in sustaining cost of $1,600–$1,700 per ounce.

The Pan gold complex hosts 288,000 oz. of measured and indicated resources, including 247,000 oz. in reserves, according to Calibre’s latest estimates.

Minera Alamos CEO Darren Koningen said the acquisition of Pan would unlock “significant value” in its late-stage project development pipeline and allow the company to leverage internal cash flow to significantly grow its production profile over the next few years.

“The cash generated will provide our exploration team with the resources they require to demonstrate the true size potential of all the existing projects including Cerro De Oro, Copperstone and the newly acquired Pan complex,” Koningen said in a press release Thursday.

Shares of Minera Alamos dropped about 23% to 36¢ late Thursday afternoon in Toronto on the announcement. That sent the company’s market capitalization down to about C$198 million.

Transaction details

In addition to Pan, Minera Alamos will also be acquiring the Gold Rock and Illipah projects from Equinox. The former is a proposed open-pit, heap-leach gold development project located 8 km from the Pan mining operations. A 2021 economic assessment for the project outlined a 6.5-year mine life with average annual production of about 56,000 ounces.

Pan Gold Rock have a combined consensus net asset value of $279 million, based on published analyst reports, Minera Alamos says.

In connection with the acquisition, the gold miner has also appointed Jason Kosec, a mining veteran with 15 years of experience, as its chairman to lead its growth initiatives. Kosec is also expected to participate in the financing.

Growing Portfolio

With 40,000 oz. of expected gold production this year, Pan is expected to generate strong cash flow given the current record gold price environment.

When fully developed, the company’s asset base will hold the potential to produce more than 175,000 oz. gold annually based on the current development plans for Copperstone, Cerro de Oro and Gold Roc.

Copperstone is a fully permitted project located in Arizona. A preliminary economic assessment this year outlined a six-year underground mine life with annual production of 40,000-50,000 oz. gold. Based on a 5% discount rate, the study estimated an initial capex of $36 million, an after-tax net present value (NPV) of $227 million and an internal rate of return (IRR) of 171%.

Cerro de Oro is a heap-leach project located in Mexico’s Zacatecas state, with permits pending. A 2023 PEA demonstrated an 8.2-year open-pit mine life, producing about 60,000 oz. of gold per year with initial capex of $28 million, returning an after-tax NPV of $151 million and IRR of 111%.