New Gold has agreed to sell one of its operations, as it looks to “crystallise” several years’ worth of future free cash flow.
In an announcement made this week, New Gold has revealed that it has entered into a definitive share purchase agreement with Equinox Gold Corp to sell its Mesquite Mine in California in a deal valued at $158 million.
Located in Arizona, the Mesquite Mine has averaged more than 135,000 oz of gold per year since 2008 when the mine was brought back into production.
Renaud Adams, President and Chief Executive Officer of New Gold said; “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."
"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," added Mr. Adams.
Mesquite’s gold deposit at December 31, 2017 was estimated at 1.13 million ounces of Proven & Probable Reserves and an additional 1.18 million ounces of Measured and Indicated Resources (exclusive of reserves), representing a 25% and 40% increase, respectively, to Equinox Gold’s current reserve and resource base.
“The Mesquite Gold Mine will bring immediate production and cash flow to Equinox Gold from a well-established operation in an attractive mining jurisdiction,” said Christian Milau, CEO of Equinox Gold. “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.”