• Equinox Gold & Calibre Mining are merging in a transaction expected to close by end of May 2025, creating one of the top 15 gold producers globally with combined production of 950,000 ounces in 2025.
• The merged company will have substantial Canadian assets (Greenstone & Valentine mines) producing 600,000 ounces annually, plus operations in the US, Mexico, Brazil, and Nicaragua.
• The merger will accelerate debt reduction, with plans to pay down at least $200 million in 2025 and reach a debt-to-EBITDA ratio of 1x by early 2026, enabling dividend payments and share buybacks.
• The company has significant growth built into its portfolio, including the Castle Mountain expansion (+200,000 oz/year) and Los Filos expansion (+150,000 oz/year), resulting in 60% production growth over the next few years.
• Post-merger integration plans include potential portfolio rationalization of smaller, higher-cost mines to focus on larger (150-200,000 oz/year), lower-cost operations with long mine lives.

Equinox Gold is poised for significant transformation following the announcement of its merger with Calibre Mining. In a recent interview, Rhylin Bailie, VP of Investor Relations for Equinox Gold, outlined the strategic rationale behind the transaction and the company's vision for creating a premier gold producer in the Americas. This merger represents a pivotal moment in Equinox's seven-year journey from a single-asset developer to becoming one of the top 15 gold producers globally. With operations spanning Canada, the United States, Mexico, Brazil, and soon Nicaragua, the combined entity is expected to produce approximately 950,000 ounces of gold in 2025, with substantial growth opportunities on the horizon.

The Strategic Merger with Calibre Mining

The merger with Calibre Mining originated from informal discussions between the leadership teams of both companies. What began as a casual lunch conversation between Equinox's chairman Ross Beaty and Calibre's leadership evolved into a compelling business case. The strategic logic became clear as they assessed the potential combination of Equinox's newly consolidated Greenstone mine in Ontario (400,000 oz/year) with Calibre's Valentine project in Newfoundland (expected 200,000 oz/year).

"If we put these two companies together, we will be the second largest producer of gold from Canada." 

Canadian gold producers typically trade at a premium in the market, around 1.1 to 1.2 times net asset value, whereas both companies were trading at approximately 0.6 times prior to the merger discussions.

The transaction structure reflects the collaborative approach, with Bailie noting: 

"Calibre wasn't looking for a takeover, that's why we've structured this transaction as a merger of equals. We both recognize the logic of coming together to turn two mid-tiers into a senior producer that's in this sort of elite group and that's going to add value for both shareholders."

Leadership and Integration

The merger brings together complementary assets and teams. In terms of leadership structure, Darren Hall, Calibre's President and CEO, will join Equinox as President and Chief Operating Officer (COO), working alongside Greg Smith who will remain CEO. This dual leadership approach is designed to distribute responsibilities more effectively.

"Running a big mining company is a lot of work. Now you have these two guys who can each focus on the things that they're best at. Darren Hall is going to be the operations person, Greg Smith will be running the company, but now they can bounce ideas off each other."

The integration process will begin after the transaction closes, which is expected around the end of May 2025 following shareholder votes in April and regulatory approvals in Canada and Mexico. The combined team will then evaluate all assets to identify optimization opportunities and determine the longer-term portfolio composition.

Production Profile and Financial Strength

The merger creates an immediate and substantial production boost. Equinox shareholders gain approximately 250,000 ounces of annual production from Calibre's assets, while Calibre shareholders benefit from Equinox's 700,000 ounces of annual production. Combined with record gold prices, this is expected to generate exceptional cash flow.

"The consensus estimates at spot gold prices see EBITDA more than quadrupling in the next 12 months." 

This improved financial position will support accelerated debt reduction, with plans to pay down at least $200 million in 2025.

The company's 2025 production guidance for the combined entity is 950,000 ounces, notably without contribution from Valentine (still under construction) or Los Filos (temporarily suspended). With these operations coming online, annual production could exceed one million ounces.

Growth Pipeline

Despite already achieving significant scale, the combined company maintains substantial organic growth opportunities. The Castle Mountain expansion in California is expected to add approximately 200,000 ounces per year of low-cost production, while the planned Los Filos expansion in Mexico could contribute an additional 150,000 ounces annually.

Further growth potential exists at both Greenstone and Valentine through underground deposits and potential throughput expansions. Both companies have demonstrated exploration success, suggesting opportunities to extend mine lifes across the portfolio.

"We still have all this growth built into the portfolio. Our growth potential is the highest—60% production growth expected in the next couple of years, plus more beyond that. It's pretty compelling."

This organic growth pipeline reduces the need for further acquisitions and supports the company's vision of creating a long-term, sustainable mining company.

Interview with VP Rhylin Bailie

Portfolio Optimization Strategy

With the merger bringing the combined company to 11 operating mines, management is considering portfolio rationalization to focus on larger, lower-cost operations. The target profile for preferred assets is mines producing 150,000 to 200,000 ounces per year with all-in sustaining costs around $1,200 per ounce.

Equinox has previously demonstrated willingness to optimize its portfolio, having sold two smaller mines and spun out non-core assets to create three new companies. After the transaction closes, the new management team will evaluate whether to divest smaller or higher-cost operations that don't fit the long-term strategic vision.

Capital Allocation and Shareholder Returns

Debt reduction represents the primary capital allocation priority for the near term. Prior to the transaction, Equinox targeted reaching a net debt-to-EBITDA ratio of less than 1x by the end of 2026. The merger and resulting increased cash flows could accelerate this timeline to early 2026.

Once the company achieves its deleveraging objectives, management plans to initiate shareholder returns through dividends and share buybacks. The improved financial flexibility will also enable the company to pursue opportunistic investments when compelling opportunities arise.

"Our number one capital allocation priority for 2025 was paying down debt... This [transaction] lets us accelerate that... Our target is to be at a debt-to-EBITDA ratio of less than 1x by 2026. This will accelerate that, allow us to rapidly deleverage the balance sheet. We could be at that 1x ratio this time next year, which lets us start returning capital to shareholders much faster."

Market Positioning and Investor Appeal

The transaction elevates the combined company into a different peer group, transitioning from the crowded mid-tier space (with approximately 40 similar-sized competitors) to the elite senior producer category. Only eight companies globally occupy the $4-10 billion market capitalization range, with just four listed on North American exchanges.

This reclassification is expected to attract increased investment from generalist investors and index funds that require larger market capitalization and greater liquidity. The company anticipates significant inflows from ETFs and indices that will need to rebalance as the combined entity becomes a larger constituent.

Despite the increased scale, the company maintains its growth-oriented profile, distinguishing it from the largest gold producers that struggle to meaningfully increase production. The combination of current scale, strong cash flow, and substantial growth opportunities positions the company attractively within the gold mining sector.

The Investment Thesis for Equinox Gold

• Creating a Senior Gold Producer: The merger with Calibre Mining elevates Equinox into the elite senior producer category with 950,000+ ounces of annual production, placing it among the top 15 gold producers globally and one of only four large North American-listed gold companies in the $4-10 billion market cap range.
• Premium Canadian Assets: The combination creates the second-largest gold producer from Canada with approximately 600,000 ounces annually from Greenstone and Valentine mines. Canadian gold producers typically command valuation premiums (1.1-1.2x NAV vs. 0.6x pre-merger).
• Exceptional Cash Flow Generation: In the current gold price environment, consensus estimates suggest EBITDA could more than quadruple over the next 12 months, providing significant financial flexibility.
• Accelerated Deleveraging: The transaction speeds up debt reduction, with the company targeting a debt-to-EBITDA ratio of 1x within a year, compared to the previous target of 2026, enabling faster implementation of shareholder returns.
• Substantial Organic Growth Pipeline: The company has 60% production growth built into its portfolio over the next few years, including the Castle Mountain expansion (+200,000 oz/year) and Los Filos expansion (+150,000 oz/year).
• Portfolio Optimization Potential: With 11 mines post-merger, the company can rationalize its portfolio to focus on larger (150-200,000 oz/year), lower-cost assets, potentially divesting smaller or higher-cost operations.
• Path to Shareholder Returns: Once deleveraging targets are achieved, management plans to implement dividends and share buybacks, creating a clear path to enhanced shareholder value.
• Index Fund and ETF Inflows: The increased market capitalization and liquidity could trigger significant buying from ETFs and index funds that need to rebalance their portfolios.
• Proven Management Track Record: Led by Chairman Ross Beaty, who has created significant shareholder value throughout his career and "has never sold a share in any company that he started," demonstrating alignment with shareholders.
• Attractive Valuation Versus Growth Potential: Trading at a discount to peers despite having the highest growth profile in the sector, suggesting potential for multiple expansion as integration progresses and growth is realized.

Gold Sector Macro Analysis

The gold mining sector is currently operating in a highly favorable macro environment characterized by record-high gold prices, which provides substantial margin expansion opportunities for producers. This price strength comes amidst global economic uncertainty, geopolitical tensions, and shifting monetary policy expectations.

For gold miners like Equinox Gold, the elevated price environment is transformative for cash flow generation. As Bailie noted in the interview, 

"With these all-time high gold prices, the cash flow that's going to come out of this combined company is exceptional." 

This price strength creates a virtuous cycle that enables accelerated debt reduction, portfolio optimization, and eventually shareholder returns through dividends and buybacks.

From a capital markets perspective, the gold mining sector remains highly fragmented, particularly in the mid-tier space where approximately 40 companies compete for investor attention and capital. This fragmentation creates opportunities for consolidation, as evidenced by the Equinox-Calibre merger. Companies that can achieve scale, reduce costs through synergies, and demonstrate sustainable growth are likely to attract premium valuations and greater investor interest.