Calibre Mining – Unpacking The Merger With Equinox Gold To Form A New Major Gold Producer
Ryan King, Senior VP of Corporate Development and IR at Calibre Mining (TSX:CXB – OTCQX:CXBMF), joins us to unpack the key takeaways and synergies of the merger with Equinox Gold (TSX: EQX) (NYSE American: EQX).
We start off higher level with how the operating Calibre assets in Nicaragua and Nevada in combination with the Valentine Gold Mine under construction in Newfoundland, will combine with the Equinox Gold assets in Canada, the US, Mexico, and Brazil, in particular the newly built Greenstone Mine, to form a major gold producer, with a production profile of 950,000 ounces in 2025, and a pathway to 1.2 million ounces in 2026 once the Valentine Mine has ramped up into production.
Next we have Ryan address the speculation from some Calibre shareholders that there would have been more value creation by staying a standalone company through the production ramp up of Valentine. Ryan conceded that it could be that staying standalone may have provided more short-term torque as they moved into production at Valentine, but points out that they may also have then missed the opportunity to merge with Equinox, which was their desired partner that they’ve been in discussions with for many months. Both management teams believe that both companies are quite undervalued compared to peer gold producers on a price/NAV basis, and that by combining that they can unlock the rerating higher.
We also pointed to questions and concerns from some investors about the timing of this announcement and if there are some challenges with the buildout of this new mine that played into the need to merge. Ryan dispelled the notion that there have been any challenges with the build out of Valentine and stated that was not the rationale for the business combination. Instead, they truly believe that the Equinox assets can be optimized with the strengths of both teams working together to provide a bigger upside value for Calibre shareholders that stick with the pro-forma combined company, compared to any near-term gains they would have received by staying standalone.
Wrapping up we reviewed how elements like jurisdictional diversification, a larger production profile, a larger market capitalization, and a dual-listing on both the Canadian and US exchanges will allow larger institutions and more American investors to participate in enhanced liquidity. Ryan points out that while all those elements will play a part, that it is really more about unlocking the value in the current portfolio of projects over the next few quarters and showing the marketplace why they should be valued a better price/NAV metric, more in line with peers that have even smaller production profiles
If you have any questions for Ryan regarding Calibre Mining, then please email us at Fleck@kereport.com or Shad@kereport.com.
- In full disclosure Shad is a shareholder of Calibre Mining at the time of this recording.
