Canadian mining company Equinox Gold has entered into an agreement with Mubadala Investment Company to sell convertible notes worth $130m.
Equinox intends to use the proceeds from the investment to refinance a portion of existing corporate and project debt, for general and working capital purposes and toward construction of Phase 1 at Castle Mountain.
The transaction includes investment of $130m in 5-year convertible notes with a 5% interest rate convertible at $1.05 per share, a 25% premium to the 10-day volume weighted average share price (VWAP).
Equinox Gold CEO Christian Milau, said: “Mandala’s investment underscores the value and upside of Equinox Gold’s existing asset base and significantly enhances our near-term financial capacity as we prepare for Phase 1 construction at the Castle Mountain project.”
Equinox said that the transaction significantly reduces its borrowing costs and increases near-term financial flexibility by deferring principal payments up to five years.
The transaction will make Mubadala as a long-term financial partner to Equinox Gold as the company executes on its growth strategy.
Mubadala metals and mining director Mohamed Al Suwaidi said: “Equinox Gold combines experienced leadership with a strong suite of assets and a clear value creation strategy. We see a great opportunity to develop our partnership with the business over the years ahead.”
In connection with the nvestment, Equinox Gold and Mubadala are entering into an investor rights agreement, providing Mubadala with certain other rights including the right to appoint a nominee on the board of directors and standard anti-dilution rights.
The completion of the investment is subject to receipt of all necessary regulatory and stock exchange approvals, along with satisfaction of customary closing conditions.
Equinox Gold chairman Ross Beaty said: “Mubadala has an excellent reputation for being a long-term supportive shareholder. I warmly welcome them as partners in our mission to build a great gold mining company.”
With a multi-million-ounce gold reserve base, Equinox Gold produces gold from its Mesquite Gold Mine in California. Commercial production at its Aurizona Gold Mine in Brazil is expected to take place around the end of the first quarter of 2019.