Equinox Gold Corp (TSX-V: EQX) has struck a deal to receive $172 million (US$130 million) in convertible notes from Mubadala Investment Co, an affiliate of the Abu Dhabi government.
With full conversion of the notes, Mubadala would hold an 18 percent stake in Equinox. The investor will also be able to nominate a board member.
The Vancouver-based mining company will use the deal’s proceeds for refinancing debt, working capital and construction of Phase One of its Castle Mountain Gold Mine in California.
Equinox was established in 2017 through a merger. It is also backed by Australian mining private equity firm Pacific Road Resources Funds.
Equinox Gold Announces $130 Million Strategic Investment by Mubadala Investment Company
VANCOUVER, Feb. 25, 2019 /PRNewswire/ – Equinox Gold Corp. (TSX-V: EQX,OTC: EQXFF) (“Equinox Gold” or the “Company”) is pleased to announce it has entered into a definitive agreement with Mubadala Investment Company (“Mubadala”) whereby Mubadala has agreed to purchase $130 million in convertible notes (the “Notes”) from Equinox Gold (the “Investment”). Proceeds from the Investment will be used 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.
Investment of $130 million in 5-year convertible notes with a 5% interest rate convertible at $1.05 (C$1.38) per share, a 25% premium to the 10-day volume weighted average share price (“VWAP”).
Significantly reduces the Company’s borrowing costs and increases near-term financial flexibility by deferring principal payments up to five years.
Establishes Mubadala, which actively manages its diversified portfolio to deliver sustainable returns to its shareholder, the Government of Abu Dhabi, as a cornerstone and long-term financial partner to Equinox Gold as the Company executes on its growth strategy.
“Mubadala’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,” said Christian Milau, CEO of Equinox Gold.
Ross Beaty, Equinox Gold’s Chairman, added, “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.”
“Equinox Gold combines experienced leadership with a strong suite of assets and a clear value creation strategy,” said Mohamed Al Suwaidi, Director of Metals and Mining at Mubadala. “We see a great opportunity to develop our partnership with the business over the years ahead.”
The Notes will have a 5-year term and bear interest at 5% per year payable quarterly in arrears. The Notes will be convertible at the holder’s option into common shares of the Company (the “Shares”) at a conversion price of $1.05 (C$1.38), representing a 25% premium to the 10-day VWAP of the Shares on the TSX Venture Exchange. Assuming full conversion of the Notes, the holder would be entitled to receive approximately 123.8 million Shares of the Company, representing approximately 18% of Equinox Gold’s outstanding Shares on a partially diluted basis.
The Notes will be secured against all assets of the Company and subordinate to existing senior credit facilities. The Company and the holder of the Notes will have certain early redemption and other rights subject to the provisions of the Notes.
In connection with the Investment, Equinox Gold and Mubadala will enter into an investor rights agreement providing Mubadala, among certain other rights, the right to a nominee on the Company’s board of directors and standard anti-dilution rights.
Closing of the Investment is subject to receipt of all necessary regulatory and stock exchange approvals, as well as satisfaction of customary closing conditions, the consent of certain lenders to the Company, execution of intercreditor agreements and execution of definitive documentation.
The Notes, and the Shares into which the Notes are convertible, have not been and will not be registered under the U.S. Securities Act of 1933, as amended or qualified by a prospectus in Canada. This news release is neither an offer to sell nor the solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
Mubadala invests globally and actively manages a diversified portfolio to deliver sustainable returns to its shareholder, the Government of Abu Dhabi. Mubadala’s $225 billion portfolio spans four continents with priority sectors including aerospace, ICT, semiconductors, metals and mining, renewable energy, oil and gas, petrochemicals, utilities, healthcare, real estate, defense services, pharma and medtech, agribusiness and a global portfolio of financial holdings. Mubadala is a trusted partner, an engaged shareholder and a responsible global company that is committed to ethics and world-class standards. For more information about Mubadala please visit www.mubadala.com.
About Equinox Gold
Equinox Gold is a Canadian mining company with a multi-million-ounce gold reserve base, gold production from its Mesquite Gold Mine in California, and near-term production growth from two past-producing mines in Brazil and California. Commissioning is underway at the Company’s Aurizona Gold Mine in Brazil with the objective of achieving commercial production around the end of Q1-2019, and the Company is advancing its Castle Mountain Gold Mine in California with the objective of ramping-up Phase 1 operations in early 2020. Further information about Equinox Gold’s portfolio of assets and long-term growth strategy is available at www.equinoxgold.com or by email at firstname.lastname@example.org.