Canadian miner Equinox Gold has agreed to acquire the producing Mesquite gold mine in California, US from New Gold for $158m in an all-cash deal.
As per the terms of the deal, Equinox Gold will indirectly purchase all the outstanding shares of New Gold’s subsidiary Western Mesquite Mines, which is the holding company of the Mesquite gold mine.
Through the acquisition of the Californian gold mine, Equinox Gold is expected to immediately establish itself as a gold producer with the mine on course to reach 140,000-150,000 ounces of gold production in 2018.
Over the last ten years, the Mesquite gold mine had an average annual production of 135,000 ounces. The open-pit, run-of-mine (ROM) heap leach gold mine, which had started operations in 1985, is located in Imperial County with its mineral rights spread over an area of nearly 1,890 hectares.
According to Equinox Gold, the production from the Mesquite gold mine will be strengthened further by near-term production from the company’s Aurizona gold mine, which is under construction in Brazil and also its development-stage Castle Mountain gold mine in California.
Equinox Gold CEO Christian Milau said: “Mesquite is the perfect fit for our portfolio of gold assets at this stage of growth and advances our strategy of becoming a major gold producer over the next few years.
“In 2019, Equinox Gold will own and operate both the Mesquite and Aurizona gold mines and have substantial near-term growth from development of Castle Mountain.”
Through the sale, New Gold expects to consolidate its balance sheet and improve its overall financial flexibility.
New Gold president and CEO Renaud Adams said: “Today’s announcement allows New Gold to immediately crystallize several years’ worth of future free cash flow as part of our strategy to prudently manage our balance sheet, providing the Company with the financial flexibility to focus on our core assets.”
The acquisition of Mesquite gold mine by Equinox Gold, which is expected to be completed during the fourth quarter of 2018, will be subject to customary closing conditions.