Equinox-Orla Merger Creates $18B North American Gold Giant

Equinox Gold and Orla Mining have announced a planned all-stock transaction to create a North American-focused senior gold producer with roughly 1.1 million ounces of annual production and a development pipeline to 1.9 million ounces. Darren Hall, President and CEO of Equinox Gold, and Jason Simpson, President and CEO of Orla Mining, join Kitco Mining’s Paul Harris to discuss the May 13, 2026, deal and what it means for gold-sector consolidation.

The transaction is expected to create a company with 23 million ounces of reserves and an expected market capitalization of about $18 billion to $19 billion. Hall said the companies are combining from a position where both are undervalued, while the merger could create a senior-producer profile “which no company on its own could do in the next few years.” Simpson said the timing reflects a push to accelerate value creation, with the combination “propelling us into a senior space.”

The discussion covers why now is the right time for gold M&A, how the combined company plans to fund about $2 billion of development projects with projected free cash flow from 2026 to 2030, why U.S. and Canadian exposure matters, and the catalysts ahead at Greenstone, Valentine, Musselwhite, Castle Mountain, Los Filos, and South Railroad.

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00:49 - Why Merge Now
04:42 - Leadership And Strategy
06:18 - North America Focus
09:35 - Exploration Upside
12:49 - Funding And Returns
15:50 - Debt And Balance Sheet
16:53 - Approvals And Timeline
21:13 - Synergies And Scale
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Transcript

SPEAKER_00 0:06

Big MA is in the air in the gold space. Hello and welcome to Kitco Mining with me, Paul Harris. Today is Wednesday, May the 13th, and this morning Econox Gold announced it is to merge with Ola Mining and an at-the-market all-stock transaction to create a 1.1 million ounce a year gold producer focused on North America with a market capitalisation expected to be 18 to 19 billion US dollars and with a development pipeline to 1.9 million ounces. Joining me to discuss the deal is Darren Hall, president and CEO of Equinox Gold, and Jason Simpson, president and CEO of Orla Mining. Darren and Jason, welcome to Kitco.

SPEAKER_01 0:43

Thanks, Paul. Appreciate it. Thanks, Paul.

SPEAKER_00 0:46

Well, first off, gentlemen, congratulations. A very intriguing deal, a very interesting deal. And for Darren, the deals do not stop. I want to start with you, Darren. One thing I've always admired about Equinox before that, caliber mining, was that your eye for making deals when deals are there to be made. Not long ago you did the Equinox Caliber Fusion, and some would say you're still in the process of digesting that, and now you're engaging or entering into another major transaction. I want to start with, you know, we've spoken in the past about the gestation of the caliber Equinox Get Together. What's the desk uh the gestation of this particular deal?

SPEAKER_01 1:27

Yeah, no, thanks, Paul. And I guess is that you know, we've you know, we've we've been thoughtful in terms of how we organize ourselves going forward as you know through the the transactions that you referenced, as has Aula, with you know under the leadership of Shark and Jason over the last few years as well. And and I think that's what we see in this combination. We see two like-minded groups that are singly focused on creating shareholder value, and they're going to do it through sensible and deliberate deployment of capital, creating expectations and delivering into them. So, you know, that we look at the gestation of of this transaction, it's happened relatively quickly over the last three or four months as part of the formal process. But yeah, in full disclosure, you know, we labeled this as KISSME, right? And if you look at the you know what the what what that means, if you go back through, it's it's kind of meant to be. It's an old Arabic word and it's Genesis. And because we've been talking to each other for the last four or five years, and again, not looking for the right time, just keeping the door open as we sit here and we look at what each other is doing in the business, and it's just like kind of mirroring, if you will. Hey, you're doing a good thing, hey, you're doing a good thing. And thought, hey, this could this could really come together, right? And that this happened to be the right time for that transaction. It was just like, you know, Jason and team done a great job at at transacting on Muscle White and been able to paint a picture for what Muscle White can look like in the future by recapitalizing some of the mining fleet, doing some exploration, and clearly there's a there's a 10 to 15 to 20 year life in front of it at current or even increased production rates. We just went through the caliber transformation or kind of acquisition, if you will. Um, coming out of the other side of that, we've disposed of some assets, we've cleaned up the balance sheet. Um, so we're in a logical place. And you know, we think about where we sit today. You know, we're both equally undervalued in our in each other's eyes in terms of the market. So we see, hey, this is a good time too. And we're starting to see that play out in terms of the feedback we get from our shareholders, is that no one's saying, What about the premium here? What about the premium there? I think people are looking through and seeing that each company would continue to deliver and would re-rate in its own right, but putting them together with the implied premium there is what you'll get as a as a senior producer, which no company in its own could do in the next few years. So uh again, it just makes a lot of sense, uh Joyce.

SPEAKER_02 3:55

Yeah, no, I absolutely. And and we often get asked, uh Darren and I, you know, why now? And and my answer to that is uh because now is the right time to uh accelerate our value creation. Uh both companies uh uh had very robust uh pipelines in front of them and and could grow, but over a more lengthy period of time. And the combination uh uh propelling us into a senior space uh as well as uh um the multiple that we can expect from that and uh that accelerated appreciation is the answer to why now. Um and so our combined business uh uh that I look forward to partnering with Darren on uh is going to deliver that value uh not only on an accelerated basis, but I predict an amplificate, amplified basis as well.

SPEAKER_00 4:46

Excellent. Now, uh of the resulting entity, Darren, you're gonna continue as presidents and CEO. The company will continue to be called Equinox Gold. Jason, you're gonna become president of the new entity. On the conference call this morning, um, Darren, I think you said that this transaction allows you to do together what you couldn't do separately in terms of propelling the companies to become a senior producer in a short order of time. Um Jason, let me turn to you for this question. What is the opportunity that you both see that this deal accelerates?

SPEAKER_02 5:18

Well, uh one of the important aspects of this deal is we are not overcomplicating our independent uh portfolios. We're in fact consolidating our portfolios, uh, you know, uh focused on uh North America and in a particular uh four countries. And so uh amongst the uh peers that that we will join, uh we're a senior producer uh with uh concentration in the four in four countries within North America. And so what this enables is for us to together uh focus on uh a bigger business, make sure we're organized to run that bigger business. Uh clearly uh um uh we'll need to focus on the internal uh production delivery, construction, and growth to that 1.9 million ounces that uh that we'll move towards all the while, making sure that we uh stay in tune with our shareholders in the external market. And so Darren and I have uh have talked about how we'll organize uh us as a senior producer so that we can uh deliver into that.

SPEAKER_00 6:21

Okay, the the zeitgeist for this kind of deal definitely seems to be there. Uh and I say that, bearing in mind that Barrack Mining is looking to IPO its North American assets later this year. That's perhaps fan the flames for large North American-focused gold companies. Other large gold miners have flocked to North America, Angler Gold Ashanti, Goldfields, they've all come in. Um so you, Darren and Jason, you both seem to have read the tea leaves very well for creating a company that will um resound very well, very positively in the market.

SPEAKER_01 6:53

Yeah, no, I think so. I mean, again, you know, we're both Canadian companies that went abroad to be able to develop a business that allowed us to come back home to Canada, right? Um, and you look at the construct of what we see today with 1.1 million ounces growing to 1.9, and with 70 plus percent of our mining NAV within the US and Canada, you know, the premium that that results in is significant. Stable jurisdictions, quality assets, long life, good margins produce a really durable, resilient product that allows us to, you know, continue to build lots of shareholder value. So I don't think there's any true science in it. It's just like it's sticking to the fundamentals.

SPEAKER_02 7:40

Yeah, and one thing Darren has pointed out is on those land packages that he talks about in the US and Canada, the the prospect for additional discovery through exploration, uh, which we'll be uh very uh heartily uh doing, is uh is tremendous. Uh Valentine is a great example of that. Uh, we've demonstrated that at Mussel White. Uh, you know, we've got a large land package in Nevada in our combined company. And so we're we're not only excited about the growth that we have on the books and our 23 million ounces of reserves, uh, in addition to the 1.1 million ounces of production, uh, but also the ground that surrounds our territories in those four countries is going to be very prolific for discovering more gold and setting up the pipeline into the next decade.

SPEAKER_01 8:29

And and and again, Jason's covered it really well, particularly on the exploration. But if we think of it, we're currently operating in the four jurisdictions. Our jurisdictional complexity does not change as a consequence of a 70% headline growth number in production to 1.9 million ounces. So we're going to add two plus or minus assets into our production portfolio of six assets. So our business doesn't become complicated any more complicated than it is today. So it's keeping it simple, it's keeping it predictable, and that's where the exploration piece comes in. You know, the best place to find gold is where gold is, and we know where gold is because that's where we're mining from. So being able to generate the cash to be able to reinvest back into the land package is significant. If you look at the genesis of the the muscle white transaction, it wasn't an asset turnaround, right? It was about being able to demonstrate there's longevity in the asset through exploration and then turnaround the assets, the same as Nicaragua, it's the same as as to a degree Ballantine, right? So, you know, again, we're kind of we're kind of explorers, you know, backed by you know five, six billion dollars a year in in revenue.

SPEAKER_00 9:38

Okay, let's dig into a bit more of the exploration and development potential. Um, your 1.1 million ounces now more or less, you've got 800,000 ounces development potential. Um, if I remember correctly, you've got 23 million ounces of proven and probable reserves, a similar amount of uh measured and indicated resources. So a very good, strong, robust resource base. How do you intend to unlock that development potential for that other 800,000 ounces a year of additional production? What are the priorities and how are you planning to move forward on that?

SPEAKER_01 10:10

I'll let Jason talk about the things we're going to add and the sequence we're going to add them in. But I won't underestimate the opportunity that exists to extract value from our existing asset base before we look at bolting things on. If we took a muscle white, muscle white has underutilized milk capacity. So whatever we can do from an operational perspective to be able to deliver into and fully utilize that capacity is going to be very, very accretive from a cash flow perspective. So I'll call it sweating our assets to realize the full potential of those assets is going to be underlying everything we do because that's what generates maximum return on invested capital because the capital's already been spent. Right. So extracting that value is going to be key.

SPEAKER_02 10:52

But talk about the growth. Yeah, and and just to build off what Darren said, we need to ramp up uh Greenstone and Valentine well. Uh so that'll be sweating the assets as he just described. Uh and then uh following onto that, Darren and I have outlined uh the sequence in which we'll uh build uh the next uh growth of the company, you know, beginning with phase two at Valentine, uh, followed very quickly by uh the South Railroad project, uh which is underway and subject to permits, uh, we'll uh move into the field. Uh and then just as we're wrapping up construction in in Nevada, we'll move over to California, not far away, and and uh get into Castle Mountain. And then we have the longer-term prospects that will, throughout those times of building those assets, be engineering and preparing for for their subsequent construction. And of course, that looks like the transition in Mexico uh to underground. Uh, and then upon restart at Los Filos, uh, you know, those 16 million ounces and resources that they have there, uh uh surely we can liberate those ounces to create tremendous value for shareholders. So we've got uh short uh uh term aspirations to ramp up uh all of our assets well, medium-term aspirations to grow ourselves to 1.9 million ounces, and then longer term uh growth potential in our very same portfolio. And that is not counting any expiration we have success at uh in the coming years.

SPEAKER_01 12:19

And just one thing to layer on that is that you know the expiration and the capacity that we're providing from from a treatment perspective is significant. Now, building heap bleach operations are very easily scalable, right? Um, you're more constrained in a mill scenario, but we've got excess capacity at muscle-wide, right? We're going to provide for the additional capacity of doubling the mill throughput at Valentine to five million tonnes. So we're setting ourselves up for what can be significantly higher than what even we foreshadowed in the presentations this morning.

SPEAKER_00 12:52

I think one of the uh attractive things about this development pipeline that you mentioned is that you can finance this, you can fund it internally. Uh, if I remember correctly, the presentation said you've got, let's say, two billion dollars worth of development projects, but during the time you'll execute that, uh, you'll be generating sort of nine billion dollars of free cash flow. So that uh I imagine the market is or the investors are very, very interested in and attracted by.

SPEAKER_01 13:18

Yeah, no, absolutely. I mean, and they're on consensus numbers on the period between 2026 and 2030, and you nailed the numbers, it's 2 billion and generating 9 billion in free cash flow. So, you know, even if we said that the 2 billion was 4 billion, just double it to allow it, you know, a management reserve, if you will, it's still going to generate $7 billion of free cash flow in excess of what's required to deliver into that $1.9 million ounces of production. So, you know, the return of capital to shareholders here is going to be significant through buybacks and dividends and yeah, aside from the return on invested capital growth we'll see from share price.

SPEAKER_00 13:57

Well, that's another aspect, isn't it? Because you also mentioned that while you're going through this investment period, you're going to maintain your dividend payout, you're going to maintain the share buybacks. Um, I imagine it's perhaps a little bit preliminary to talk about what the resulting shareholder returns policy will be. But do you have an idea of what you're going to be sort of pointing at as and when the two companies are come together in one?

SPEAKER_01 14:20

No, we've got some work to do, and as Jason and the team work through exactly what that schedule looks like in terms of the ramp up and exactly the funds that are required. And we'll ensure that we, before we make commitment to any project, that we're absolutely fully funded in advance of that full funds decision. And we'll ensure that we have an adequate level of management reserve above to ensure that we never run into a situation where we've got to go out and raise money or and create debt to be able to do it. And with that, that'll be the basis by which we we come out with a return of capital to shareholders basis. But given the magnitude of what we've foreshadowed, um, yeah, it'll be significant. It'll be soon.

SPEAKER_02 15:02

Yeah, we the capital allocation equation for for our company is no different than other companies. Uh shareholders uh need us to invest in the business to uh produce more gold and create more value uh through what it is our gold mining business. Uh secondarily, we need to make sure that we're running a healthy balance sheet. Darren and his team have demonstrated enormous strides in that regard. Uh, and and we're delivering into that as well. And so we can use the cash to uh uh to uh you know remove debt uh from the company. And then the and then in terms of decisions about uh return to shareholders, as Darren described, that needs to be balanced with our our planning on a project-by-project basis to make sure that we're uh comfortably self-funded uh and then uh have sufficient uh access to return to shareholders.

SPEAKER_00 15:53

Now, in the the first quarter, Darren, Equinox paid down almost $1 billion of debt. Uh the new entity at the moment, you both have, let's say, about an aggregate of $800 million in long-term debt. Um, what's your view there? Will there be some kind of structure, restructure of that? Will be there a pay down? Um, will they be continuing to strengthen the balance sheet?

SPEAKER_01 16:15

Yeah, no, absolutely. And again, we've just recently refinanced our revolving credit facility, and we've been able to increase that facility for a lower level of cost as we approach on almost investment grade quality debt as a consequence of the improved balance sheet we see today. So, you know, the the facility that sits under all of it will get rolled into that facility, and we'll look at extinguishing that debt as soon as we possibly can so we can maintain um you know a good level of liquidity outside of cash flow from operations. So we never run into that situation where we have to do something as a knee-york reaction to.

SPEAKER_00 16:56

Okay. Now, my understanding is the transaction is scheduled to close around September. Um, there needs to be a special meeting of all uh all the shareholders, two-thirds need to vote in favor of it. It seems you've got a lot of key shareholders and supporters on side. Um, but you also need regulatory approval in in Canada and Mexico, I believe. What's the uh the the regulatory approval timeline? What are some of the things there that uh people can watch out for?

SPEAKER_01 17:23

No, I think that the uh yeah the Canadian regulatory approval, we don't anticipate any issues, nor do we in Mexico. It's just part of the governance and the court approvals and things that are required. I think that you know, for all intents and purposes, the rate of close sits with getting shareholder approvals, which was us being able to get pro forma financials done, get the information circular out, get it in front of shareholders so they can uh express their support for the transaction, which, you know, based on early feedback, has been very encouraging of what we've seen in the last uh, what have we been, eight hours live now on this transaction? Um it's been very, very positive. So no, we're we're singly focused on ensuring that we manage the businesses uh as best we can between now and get to close as expedient as we can and work through how we organize ourselves such that we come out of the gate that we're well positioned too. And Jason and I have had some great conversations over the last couple of weeks, and we understand how things are gonna look, which is not typical at announcement day. I mean, we've significantly further progressed than what any other traction transaction I've ever been involved in in terms of what things are gonna look like and where things are positioned. We're in a great space.

SPEAKER_00 18:36

Without wanting to put the cart before the horse, and let me direct this question to you, Jason. Uh given what you said, Darren, and the sort of close collaboration and the closeness of the vision, are there things that both companies can do separately in terms of preparing for this to you know perhaps get a head start on some things, assuming that everything will go through as planned?

SPEAKER_02 18:56

Yeah, and and trust that we're doing exactly that. And as Darren uh correctly characterized, I think we that's well advanced. Uh you have complete alignment here, which is which is important. Uh, you know, Ross will continue to be a strong advisor and contributor at the board level. Uh Chuck is a great leader that I've worked with uh throughout my uh tenure at Orla. So there's great alignment at the top of this business. And now what we need to do to your point is is drive organization and planning uh over the coming months uh throughout both of our businesses, whilst uh not uh relinquishing on the delivery of our product, which is uh safe uh uh uh gold production at the cost that are predictable. So we need to do that as independent companies uh uh until the close, uh, but simultaneously with delivering um to our guidance, uh we also need to plan uh for the combined company so that once we close, as Darren describes it, we come out of the gate fully organized, uh ready to run the senior gold producer and uh immediately begin to create the value that uh that we predict will come.

SPEAKER_01 20:08

And and I don't want to underestimate the work that goes into that, but you know, we both have relatively small corporate structures. And you know, what happens at Greenstone or what happens at Kumunorojo, you know, at each of those assets is somewhat independent of the way the corporate group is structured. So given we've got alignment, we know what it's gonna look like. To get to that, I think it's gonna be relatively straightforward. There's always going to be a little bit of work around integrating ERPs, but that's the responsibility that I'll be more focused on with Etian and Daniela Dimitrov and Pete Hardy on making sure that those things are prepared so that Jason has everything that he needs to do to ensure that we know what trains need to arrive at what station at what time and they deliver on those commitments. That's going to be key too, because that's underlying everything we do in the business. So we need to make sure that the the, I'll call it the back office, if you will, is is absolutely aligned in that space. So no, I again I don't see anything here as insurmountable. And given where we're at and the discussions that we've had, we're really, really well positioned for that.

SPEAKER_00 21:16

And when big MA transactions are announced, a lot of people ask about, okay, great, what what are the synergies here? Obviously, there'll be some head office synergies. You've got projects, development projects, and mines in similar jurisdictions. Do you anticipate being able to deliver a telling number of synergies?

SPEAKER_01 21:34

No, I think that yes is a short answer, but I don't like the word synergies because straight away people go to, okay, you had $10 a G and A, now it's going to be eight. Right? What I see is that the symmetry in the business that allows us to leverage off the strengths within the business, and that's so think about it as a supply chain. Think about scope and scale, being able to negotiate really competitive and strong resilient commercial arrangements with OEMs on equipment supply. Or with commodities in terms of price, so that, you know, the people running the business, right, have what they need at the lowest possible cost and can work out how to best utilize those units as opposed to what those units are going to cost. Those sort of benefits, I think, are going to be real and material, particularly as we go into a growth phase and we're looking at, you know, at buying equipment, for example, right? Leveraging off the capacity that that we have in terms of where we come from and the history is going to allow us to be able to get a very competitive deal. So I think those sorts of things are probably the more uh quote unquote synergistic savings. Um, so yeah, leveraging off complementary skill sets is really going to be the advantage here. And is there a few dollars to be picked up around the edges on on GNA related costs, insurances and things? Yeah, for sure. But yeah, they're de minimis in the value proposition that we provide.

SPEAKER_00 22:51

Okay, so uh greater purchasing power, perhaps is a better way of saying that. Okay, so what the key catalyst is obviously gonna be the closing of the deal later this year in the in the third quarter. Going forward for the remainder of this year and into 2027, what are gonna be some of the key catalysts that uh our viewers should watch out for from the new Equinox Gold?

SPEAKER_01 23:11

Well, I think it's gonna be what each of those companies would have been doing independently, yeah, right? So it's gonna be continued ramp up of the Canadian assets, it's gonna be expiration success at Muslewide, it's gonna be you know getting the uh getting the approvals in handier at community at um at South Railroad, yeah. Right. I mean, what else would you throw on the head?

SPEAKER_02 23:26

Yeah, so and and then moving into the next phase of uh expansion and Valentine and getting all the engineering and preparation. And throughout all of those steps, we'll be able to update the market on how we're doing. Where where are we with the with the completion of the ramp up of the of the two acids? Where are we with the initiation of construction in Nevada? Uh, where are we with the with the projects that are further down the line and and progressing them towards construction start uh is what uh people should expect as milestones post-close and for the for the six months to 12 months of of the business. And of course, uh, you know, setting guidance in 2027 will be quite exciting as a as a senior.

SPEAKER_00 24:07

Excellent. Well, congratulations to both of you on a great deal and best of luck uh for the future there. Darren Hall and Jason Simpson, thank you very much for joining me today.

SPEAKER_01 24:16

Thanks, Paul. Thanks, Paul, appreciate it.

SPEAKER_00 24:18

And of course, if you like what you see, don't forget to hit that subscribe button. I'm Paul Harris, and this is Kitco Mining.