New Gold to sell Mesquite gold mine in California to Equinox Gold
Equinox Gold acquisition of Mesquite gold mine : New Gold has announced the sale of the Mesquite gold mine in California to rival Canadian mining company Equinox Gold for $158m in an all-cash transaction.
Mesquite gold mine in California
The open-pit, run-of-mine heap leach Mesquite gold mine, which is located in Imperial County, has been in production since 1985. The mineral rights of the gold mine in California are spread across an area of around 1,890 hectares.
The Mesquite gold mine production is expected to be 140,000 to 150,000 ounces of gold this year, as per a production guidance issued by New Gold. Over the last 10 years, the gold mine in California has been averaging 135,000 ounces in annual production.
Equinox Gold acquisition of Mesquite gold mine
Through the addition of the Mesquite gold mine to its portfolio, Equinox Gold will immediately become a gold producer while New Gold will strengthen its balance sheet and enhance its overall financial flexibility to focus more on its core assets.
New Gold to offload Mesquite gold mine in California to Equinox Gold. Photo courtesy of swm/Freeimages.com.
Renaud Adams – President and CEO of New Gold, commenting on Equinox Gold acquisition of Mesquite gold mine, said: “Mesquite has generated significant value for New Gold, averaging more than 135,000 ounces of gold per year over the last 10 years since Western Goldfields, a predecessor to New Gold, brought the mine back into production.
“On behalf of New Gold, I would like to thank the Mesquite team for their tremendous contributions to New Gold’s portfolio of assets, and we wish them continued success as they join the Equinox team.”
As per the terms of the Equinox Gold acquisition of Mesquite gold mine, the Canadian mining company will be indirectly buying all the outstanding shares of Western Mesquite Mines, a subsidiary of New Gold and also the holding company of the Californian gold mine.
The transaction will be funded by Equinox Gold through a combination of debt and equity.
For Equinox Gold, the Mesquite gold mine production will be complemented by near-term production from its under-construction stage Aurizona gold mine in Brazil along with its Castle Mountain gold mine in California, which is in development-stage.
Commenting on Equinox Gold acquisition of Mesquite gold mine, Christian Milau – CEO of Equinox Gold, said: “The Mesquite Gold Mine will bring immediate production and cash flow to Equinox Gold from a well-established operation in an attractive mining jurisdiction.
“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.
“We thank our key shareholders and our lenders, Sprott and Scotiabank, for their support and for sharing our vision of building a company that is focused on creating and returning value to its stakeholders.”
Equinox Gold acquisition of Mesquite gold mine is likely to be wrapped up during Q4 2018 should it satisfy customary closing conditions.