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Equinox Gold Announces Friendly Acquisition of Premier Gold Mines

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Equinox Gold Corp. (TSX: EQX) (NYSE American: EQX) and Premier Gold Mines Limited (TSX: PG) (OTCPK: PIRGF) are pleased to announce that the companies have entered into a definitive agreement whereby Equinox Gold will acquire all of the outstanding shares of Premier. Concurrently, Premier will spin-out to its shareholders shares of a newly created US-focused gold production and development company to be called i-80 Gold Corp. that will own the South-Arturo and McCoy-Cove properties and will complete Premier’s previously announced acquisition of the Getchell Project, all in Nevada. Equinox Gold will retain Premier’s interest in the world-class Hardrock Project in Ontario, the Mercedes Mine in Mexico, and the Hasaga and Rahill-Bonanza properties in Red Lake, Ontario. On closing of the Transaction, existing Equinox Gold and Premier shareholders will own approximately 84% and 16% of Equinox Gold, and Equinox Gold and existing shareholders of Premier will own 30% and 70% of i-80 Gold, respectively, on an issued share basis.

 

Transaction Highlights

 

  • Equinox Gold to acquire a 50% interest in the permitted, development-ready, multi-million-ounce Hardrock Project through a joint venture between Equinox Gold and Orion Mine Finance
    • 5.54 million ounces of Proven and Probable Mineral Reserves grading 1.27 grams per tonne gold1,2
    • 414,000 ounces average annual gold production with average head grade of 1.45 g/t gold for the first five years; 358,000 ounces average annual gold production over the initial 14-year mine life1
  • Maintains Premier shareholders’ exposure to Premier’s current asset base and adds exposure to a larger, diversified gold producer – Equinox Gold has seven operating gold mines with construction underway at an eighth site, a peer-leading growth pipeline and the financial capacity to fund development of Hardrock
  • Reinforces Equinox Gold’s position as the Premier Americas Gold Producer – Hardrock bolsters Equinox Gold’s robust pipeline of growth projects and will add approximately 200,000 attributable ounces of long-term, low-cost annual gold production, when in operations, in Ontario, Canada, one of the world’s top mining jurisdictions
  • Enhances Equinox Gold’s existing portfolio of operating gold mines in the Americas with the addition of the producing Mercedes Mine in Sonora, Mexico – Mercedes adds approximately 50,000 ounces of gold per year (with expansion potential to 80,000 to 90,000 ounces of gold annually) to the estimated 700,000 ounces of gold production expected in 2021 from Equinox Gold, based on consensus estimates
  • Delivers longer-term growth and exploration potential ­– Expansion and exploration potential at Hardrock and the Mercedes Mine and exploration potential from the Hasaga and Rahill-Bonanza properties, both located in the heart of the prolific Red Lake gold camp
  • Provides exposure to i-80 Gold, a new high-growth US-focused gold company – High-quality portfolio of producing and development properties to be owned 70% by Premier shareholders and 30% by Equinox Gold
  • Equinox Gold to undertake a C$75 million equity financing fully underwritten by its Chairman, Ross Beaty
______________________
1 Highlights from the Hardrock Feasibility Study, shown on a 100% basis. See Premier news release dated December 16, 2020.
2 At a 0.35 g/t cut-off grade. A breakdown of Mineral Reserves is provided at the end of this news release.

 

Transaction Details

 

Pursuant to the Transaction, Premier shareholders will receive:

  • 0.1967 of an Equinox Gold share for each Premier share held, representing an at-market acquisition based on the 10-day volume-weighted average closing prices for both Equinox Gold and Premier shares on the Toronto Stock Exchange; and
  • 0.4 of a share of i-80 Gold for each Premier share held, providing a meaningful opportunity to participate in a new high-growth, US-focused gold company

 

Ross Beaty, Chairman of Equinox Gold, stated: “This transaction is exactly the kind of accretive Americas-focused growth we promised shareholders when we started Equinox Gold at the beginning of 2018. The addition of a top-tier, low-risk mining jurisdiction in Ontario, Canada creates a lower risk profile, with greater asset and country diversification. Hardrock will be an excellent, low-cost, long-life gold mine with significant exploration upside, further enhancing our existing peer-leading growth profile without stretching our financial capacity. The Mercedes Mine also brings an immediate increase to our production and cash flow, and our investment in i-80 Gold brings us significant real value and optionality with exposure to several high-potential US gold assets. This transaction creates value for both Equinox Gold and Premier Gold shareholders, and further solidifies Equinox Gold’s position as the premier Americas-focused gold producer.”

 

Christian Milau, CEO of Equinox Gold, stated: “Combining a 50% interest in the permitted, development-ready Hardrock Project with our strong balance sheet and operating cash flow provides a clear path to production for Hardrock that I believe will unlock substantial value for both Equinox Gold and Premier Gold shareholders. We look forward to developing Hardrock with Orion as our partner, integrating the Mercedes Mine into our portfolio of producing gold mines, and being a substantial and supportive shareholder of i-80 Gold. We also expect to welcome Ewan Downie to our Board of Directors upon closing of the Transaction. Ewan is a well-respected company builder who will bring additional expertise for the exploration and management of our properties in Mexico, the United States and now Canada.”

 

Ewan Downie, CEO of Premier, stated: “Premier has delivered on its commitment to create value for our shareholders through the disciplined approach of prudently managing our operating assets while advancing our peer-leading development portfolio. This transaction builds on that commitment, bringing increased value and optionality to our shareholders from meaningful ownership in two companies: a diversified intermediate gold producer with a portfolio of high-quality assets, and ownership in an exciting new Nevada-focused gold company. Importantly, our shareholders will maintain exposure to the Hardrock Project, which we believe is the most attractive advanced-staged development project in North America, and which will be developed by a proven management team that shares our commitment to creating long-term sustainable value.”

 

i-80 Gold Corp.

 

i-80 Gold will be a well-financed, growth-focused gold company with a high-quality portfolio of production and development properties in Nevada, including the producing South Arturo joint venture with the Barrick Gold/Newmont-affiliated Nevada Gold Mines, the McCoy Cove Property and the Getchell Project (on closing of the previously announced acquisition, see Premier news release dated August 10, 2020). i-80 Gold will be led by Ewan Downie and will work to rapidly grow and develop its asset base with the objective of becoming a leading mid-tier, US-focused gold miner. In connection with a planned public listing3 prior to or concurrent with closing of the Transaction, i-80 Gold intends to conduct a financing of up to $75 million. Equinox Gold has committed to subscribe for 30% of the aggregate amount of the financing up to a maximum subscription amount of $22.5 million. Pursuant to the Transaction, it is expected that i-80 Gold’s initial working capital will include approximately $15 million in cash, pre-financing.

 

In connection with the Transaction, Equinox Gold plans to complete a C$75 million equity financing, fully underwritten by Ross Beaty, at a price per share to be set in the context of the Transaction and the market after at least five clear trading days. The financing is subject to completion of definitive documentation, customary closing conditions and regulatory approvals, including the approval of the Toronto Stock Exchange for the pricing and other terms of the financing.

 

Officers, directors and certain shareholders of Premier, who collectively hold approximately 17% of Premier’s outstanding common shares, have entered into voting support agreements in favour of the Transaction.

 

The Directors of Equinox Gold and the Directors of Premier have unanimously approved the Transaction, and the Board of Directors of Premier recommend that Premier shareholders and optionholders vote in favour of the Transaction. CIBC World Markets Inc. has provided a fairness opinion to the Board of Directors of Premier stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Equinox Gold share consideration to be received by shareholders of Premier pursuant to the Transaction is fair, from a financial point of view, to shareholders of Premier. RBC Capital Markets has provided an independent fairness opinion to the Special Committee of the Board of Directors of Premier stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Equinox Gold share consideration to be received by shareholders of Premier pursuant to the Transaction is fair, from a financial point of view, to shareholders of Premier.

 

The Transaction is subject to court approval and approval of Premier shareholders and optionholders (including minority shareholder approval under Part 8 of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions). A special meeting of Premier shareholders and optionholders to consider the Transaction is expected to be held in February 2021. An Information Circular detailing the terms and conditions of the Transaction will be filed with regulatory authorities and mailed to Premier shareholders and optionholders in accordance with applicable securities laws.

 

The Agreement provides for, among other things, customary representations, warranties and covenants including non-solicitation and rights to match superior proposals in favour of Equinox Gold, as well as a C$35 million termination fee payable to Equinox Gold under certain circumstances. The Transaction is further subject to certain regulatory approvals, including the approvals of the Mexican Comisión Federal de Competencia Económica, the Toronto Stock Exchange and the NYSE American Stock Exchange, and other customary closing conditions. The Transaction is expected to close in the first quarter of 2021.

 

Blake, Cassels & Graydon LLP is acting as legal advisor to Equinox Gold.

 

CIBC World Markets Inc. is acting as financial advisor to Premier and RBC Capital Markets is acting as financial advisor to the Special Committee of Premier. Bennett Jones LLP is acting as legal advisor to Premier and its Special Committee.

 

The securities to be offered by i-80 Gold have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or any state securities law, and may not be offered, sold or delivered, directly or indirectly, within the United States, or to or for the account or benefit of U.S. persons, absent registration or an exemption from such registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful.

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3 Listing of i-80 Gold is subject to approval of the applicable stock exchange(s). There is no guarantee that i-80 Gold will receive approval for such listing(s).

 

About Equinox Gold

 

Equinox Gold is a Canadian mining company with seven operating gold mines, construction underway at an eighth site, a multi-million-ounce gold reserve base and a clear path to achieve one million ounces of annual gold production from its pipeline of growth projects. Equinox Gold operates entirely in the Americas, with two properties in the United States, one in Mexico and five in Brazil. Equinox Gold’s common shares are listed on the TSX and the NYSE American.

 

About Premier

 

Premier is a gold producer and respected exploration and development company with a high-quality pipeline of precious metals projects in proven, accessible and safe mining jurisdictions in Canada, the United States and Mexico.

 

 

Hardrock Mineral Reserve Estimate (100% basis)

Proven Reserves Probable Reserves P&P Reserves
Tonnes
(Mt)
Grade
(g/t Gold)
Contained Gold
(koz)
Tonnes
(Mt)
Grade
(g/t Gold)
Contained Gold
(koz)
Tonnes
(Mt)
Grade
(g/t Gold)
Contained Gold
(koz)
5.62 1.28 232 129.70 1.27 5,307 135.32 1.27 5,539
Notes: Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014, were followed for Mineral Reserves. Effective date of the estimate is August 8th, 2019. Mineral Reserves are estimated at a cut-off grade of 0.35 g Au/t. Mineral Reserves are estimated using a long-term gold price of $1,250/oz and an exchange rate of C$/US$ of 1.30. A minimum mining width of 5 m was used. Bulk density of ore is variable but averages 2.78 t/m3. The average strip ratio is 5.10:1. Dilution factor is 17.2%. Numbers may not add due to rounding.

 

Hardrock Qualified Person

 

GMining Services Inc., under the supervision of Louis-Pierre Gignac, P.Eng., Réjean Sirois, P.Eng., and James Purchase, P.Geo., each of whom are Qualified Persons within the meaning of National Instrument 43-101 (“NI 43-101”), was the lead consultant for the Hardrock Feasibility Study update. An NI 43-101 technical report detailing the update will be filed with Canadian Securities regulators within 45 days.

 

Technical Information

 

Stephen McGibbon, P. Geo., Executive Vice President, Corporate and Project Development, for Premier, is the Qualified Person for the information contained in this news release regarding Hardrock, is a Qualified Person within the meaning of NI 43-101, and has approved the technical content of this document as it relates to Hardrock.

 

Posted December 16, 2020

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