A haul truck placing ore on the leach pad at Pan gold mine in Nevada. Credit: Fiore Gold
Minera Alamos (TSXV: MAI) has agreed to buy the Pan gold mine in Nevada from Equinox Gold (TSX: EQX) (NYSE-A: EQX), a move that it says would provide quick and strong cash flow to support the company’s existing development-stage projects.
The Pan gold mine — located along the Battle Mountain–Eureka gold trend, is an open-pit operation centred around a Carlin-style deposit that Equinox acquired through its recent acquisition of its Canadian peer Calibre Mining. The mine entered production in 2017 and now produces gold from two pits using a conventional crush and heap-leach process.
Last year, Calibre sold 35,228 oz. of gold produced from the mine at a cash cost of $1,473 per ounce, and had set a guidance targeting 30,000–40,000 oz. at an all-in sustaining cost of $1,600–$1,700 per ounce for 2025.
The entire Pan gold complex currently hosts 288,000 oz. of measured and indicated resources, including 247,000 oz. in reserves, according to Calibre’s latest estimates.
Minera Alamos CEO Darren Koningen said the acquisition of Pan would unlock “significant value” in its late-stage project development pipeline and allow the company to leverage internal cash flow to significantly grow its production profile over the next few years.
“The cash generated will provide our exploration team with the resources they require to demonstrate the true size potential of all the existing projects including Cerro De Oro, Copperstone and the newly acquired Pan complex,” he said in a press release Thursday.
Shares of Minera Alamos plunged nearly 20% by midday on the announcement, sending its market capitalization to C$220 million ($160 million).
Transaction details
In addition to Pan, the company will also be acquiring the Gold Rock and Illipah projects from Equinox. The former is a proposed open-pit, heap-leach gold development project located 8 km from the Pan mining operations. A 2021 economic assessment for the project outlined a 6.5-year mine life with average annual production of approximately 56,000 oz.
According to Minera Alamos, the Pan and Gold Rock deposits have a combined consensus net asset value of $279 million, based on published analyst reports.
To acquire the assets, the company will pay Equinox $90 million in cash and $25 million in equity, for a total consideration of $115 million. To raise funds, Minera Alamos has arranged a bought deal financing for gross proceeds of at least C$110 million ($80 million) to cover the cash portion of the deal.
In connection with the acquisition, the gold miner has also appointed Jason Kosec, a mining veteran with 15 years of experience, as its chairman to lead its growth initiatives. Kosec is also expected to participate in the financing.
Growing Portfolio
The transaction, says Minera Alamos, would create a diversified, Americas-focused precious metals producer with immediate production and cash flow and a suite of low-capital, quick-build gold projects to drive production growth.
The Pan mine, with 40,000 of expected gold production this year, is expected to generate strong cash flow given the current record gold price environment, it adds.
When fully developed, the company’s asset base will hold the potential to produce, in aggregate, over 175,000 oz. gold annually based on the current development plans for Copperstone, Cerro de Oro and Gold Roc.
Copperstone is a fully permitted project located in Arizona. A preliminary economic assessment this year outlined an approximate six-year underground mine life with annual production of 40,000-50,000 oz. gold. The study estimated an initial capex of $36 million, an after-tax net present value (at 5% discount) of $227 million and an internal rate of return of 171%.
Cerro de Oro is a heap-leach project located in Mexico’s Zacatecas state, with permits pending. A 2023 PEA demonstrated an 8.2-year open-pit mine life, producing approximately 60,000 oz. of gold per year with initial capex of $28 million, returning an after-tax NPV of $151 million and IRR of 111%.
