Equinox Gold Divests Brazil Operations to CMOC Subsidiary for $1.01 Billion, Pivoting to North American Growth

Canadian gold producer Equinox Gold Corp. (EQX) has agreed to sell its entire portfolio of Brazilian operations to a subsidiary of CMOC Group for a total consideration of $1.01 billion (C$1.39 billion). The transaction, announced recently, marks a pivotal strategic shift for Equinox Gold as it seeks to consolidate its focus on North American assets and improve its overall financial profile.

Strategic Divestment Fuels North American Focus

The sale encompasses all of Equinox Gold’s Brazilian operations, including the Aurizona, RDM, Fazenda, and Santa Luz mines. The divestment is being executed through the sale of issued and outstanding shares of certain non-Brazilian, wholly owned Equinox Gold subsidiaries that indirectly hold the Brazil operations.

This move is central to Equinox Gold’s strategy to streamline its production platform and concentrate capital on assets located in politically stable, lower-risk jurisdictions. Following the completion of the sale, Equinox Gold’s core production platform will be comprised of:

• The Valentine and Greenstone mines in Canada.
• The Mesquite mine in California.
• The El Limón and Libertad mines in Nicaragua.

The company views this restructuring as a necessary step to reduce exposure to high-cost operations and geopolitical risk associated with the Brazilian assets, which collectively produce a significant amount of gold annually.

The sale of our Brazil operations is a pivotal step to position Equinox Gold as a North American-focused gold producer underpinned by robust cash flow and a tier-one growth profile. The transaction will be effected through the sale of issued and outstanding shares of certain non-Brazilian, wholly owned Equinox Gold subsidiaries that indirectly hold the Brazil operations.

— Darren Hall, CEO of Equinox Gold

Financial and Operational Benefits

The $1.01 billion cash infusion is expected to significantly enhance Equinox Gold’s financial flexibility, allowing the company to improve cash flow and reduce debt. Analysts have re-affirmed a 'Buy' rating on EQX, noting that the portfolio restructuring positions the company for improved free cash flow and lower operating costs.

Although the divestment may lead to a temporary dip in overall production volume, the strategic benefit lies in the expected downward correction in the company's All-in Sustaining Costs (AISC). By shedding higher-cost operations, EQX anticipates achieving strong free cash flow generation, even if the broader gold price environment turns bearish.

The capital reallocation is specifically aimed at accelerating development and maximizing potential at key Canadian assets, such as the Valentine and Greenstone mines, which are central to the company’s tier-one growth profile.

Forward-Looking Guidance and Market Impact

The acquisition by a subsidiary of CMOC Group is seen as a significant move in the precious metals market, signaling CMOC’s intent to expand its footprint in the gold sector. While the immediate market reaction for CMOC was not detailed, the strategic benefits for Equinox Gold were clear, with the company emphasizing its future financial strength.

Equinox Gold’s forward-looking information suggests several key outcomes are dependent on the successful closing of the transaction, including:

• The satisfaction of all conditions precedent to the Transaction.
• The timely receipt and anticipated effects of necessary regulatory approvals.
• The realization of potential contingent cash consideration tied to the deal.

Furthermore, the company is focused on achieving design capacity and anticipated production and cost guidance at its remaining core assets, particularly Greenstone and Valentine. Equinox Gold also highlighted ongoing efforts related to the Castle Mountain Phase 2 expansion, which requires required approvals and permits, and the effectiveness of its FAST-41 designation.

The successful execution of this sale is expected to solidify Equinox Gold’s position as a robust, North American-centric gold producer, underpinned by more predictable and lower-cost operations.