Minera Alamos raises $98M to pay for Equinox assets

[Ben Graham]

Minera Alamos (TSXV: MAI) said it closed a C$135 million ($98 million) equity financing that will help the company pay for three Nevada assets it’s in the process of buying from Equinox Gold (TSX, NYSE-A: EQX).

Proceeds will cover the $90 million upfront cash portion of the Equinox deal, which includes the Pan gold mine, Gold Rock project and Illipah project, Minera Alamos said Thursday. Equinox will also receive about 96.8 million Minera Alamos shares, worth around $25 million. The deal, which was announced in August, should close by Sept. 30, Toronto-based Minera Alamos said.

The addition of Pan and Gold Rock is “transformational to Minera Alamos as the company stands to benefit from immediate cash flows from the producing Pan Gold mine during the currently strong gold price environment,” National Bank Financial analyst Rabi Nizami said in a note.

Key asset

Pan, an open-pit operation centered around a Carlin-style deposit located along the Battle Mountain–Eureka gold trend, is the key asset in the transaction. Located about 28 km southeast of the town of Eureka, 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 acquisition of Canada’s Calibre Mining in June.

Pan holds proven and probable reserves of 19.5 million tonnes grading 0.34 grams per tonne gold for contained metal of 247,000 oz., according to a presentation on Equinox’s website.

Gold Rock, meanwhile, is a proposed open-pit, heap-leach gold development project located 8 km from the Pan site. A 2021 economic assessment for the project outlined a 6.5-year mine life with average annual production of about 56,000 ounces.

Pan and Gold Rock have a combined consensus net asset value of $279 million, based on analyst reports, Minera Alamos said in August.

Late stage

“This acquisition offers the potential to unlock significant value in our late-stage project development pipeline and allows the company to leverage internal cash flow to significantly grow the company’s production profile over the next few years,” CEO Darren Koningen said in the statement. He underlined “the significant interest from the investment community,” which included the full exercise by the underwriters of their over-allotment option.

Under Koningen’s leadership, Minera Alamos is working to develop “very low” capital-expenditure assets while expanding the projects’ resources and seeking complementary acquisitions. Its properties are located in Mexico and the US.

Minera Alamos shares were unchanged at C$0.36 Thursday morning in Toronto, giving the company a market value of about C$198 million. The stock has traded between C$0.25 and C$0.49 in the past year.