Equinox Gold Corp (TSE: EQX) (NYSEAMERICAN: EQX) (FRA: 1LRC) has chosen to divest its Brazilian gold mining assets and become primarily focused on North American operations. The company will still be retaining its Nicaraguan mines.
On Dec. 14, the mid-tier gold producer revealed that it has agreed to sell the South America projects to China Molybdenum Ord Shs A (OTCMKTS: CMCLF) (FRA: D7N) for a total consideration of US$1.015 billion. The multi-commodity Chinese mining company will be providing Equinox with US$900 million upfront once the deal closes early next year.
“Considering the rich resources and stable geopolitical environment in Brazil, the transaction offers a strategic addition to our existing assets, creating stronger synergy and growing CMOC presence in South America,” said CMOC Chairman Liu Jianfeng.
The remaining US$115 million is a contingent payment tied to the performance of the mines. If they collectively produce between 200,000 to 280,000 within one year, Equinox will receive 12.5 per cent of the revenue from the sale of those ounces. Should they produce more than 280,000 during that period, Equinox will get the entire US$115 million sum.
Producing under 200,000 will result in the North American gold mining company receiving nothing except the initial lump amount, set to be received by the end of Q1, 2026. Chinese and Brazilian regulators still need to give their assent.
“The proceeds will transform our balance sheet and immediately strengthen our financial position by fully repaying our US$500 million Term Loan and US$300 million Sprott Loan,” stated CEO Darren Hall, “and reducing our revolving credit facility.”
Overall, the Board of Directors views the decision as a strategic performance optimization measure for the company. They deliberated the move extensively before agreeing to follow through with it. As highlighted by Hall, the deal will also enable Equinox to strengthen its financial position by paying off a large amount of debt.
The transaction reflects a broader trend in the mid-tier gold sector where producers relieve themselves of operations in higher-risk jurisdictions to focus on projects in low-risk regions amid soaring gold prices. Although CMOC views Brazil’s environment favourably, Equinox sees it as higher-risk than other international regions it is present in.
Fortuna Mining Corp‘s (TSE: FVI) (NYSE: FSM) (FRA: F4S0) divestment of its Burkina Faso interests in May is another recent instance where a company has relieved itself of mining stakes it sees as being undesirable.
“We’re taking the opportunities a strong gold market provides to streamline our asset portfolio,” said Fortuna CEO Jorge A. Ganoza on May 13. “We received a compelling offer that provided a prudent exit from a jurisdiction where we are no longer pursuing exploration activities and where the operating and security landscape remains challenging.”
Iamgold Corp‘s (TSE: IMG) (NYSE: IAG) (FRA: IAL) decision to sell its Karita operation in West Africa at the end of 2024 is also notable.
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