Stifel Canada on Thursday maintained its buy rating on the shares of Equinox Gold (EQX.TO) while raising its price target to C$35.00 from C$31.00 after the company agreed to acquire Orla Mining (OLA.TO) to create a senior gold producer.
"Equinox Gold (EQX) and Orla Mining (OLA) announced a definitive agreement for an at-the-market, all-share combination to create a new North American intermediate gold producer with an implied market cap of approx. $18.5Bln. Under terms of the transaction, OLA shareholders will receive 1.00 EQX common shares for each OLA share held, with existing EQX and OLA shareholders owning approx. 67% and 33% of the combined entity, respectively, on a fully diluted in-the-money basis. We are most positive on Internally funded organic growth opportunities of 800+Koz/yr from four advanced projects that represents one of the strongest growth profiles among senior and intermediate peers and the multiple-uprate from a transition to 1.0+Moz/year of gold production. We estimate the transaction is NAVPS-neutral with 53% of combined NAV residing in Canada (85% in North America) and growth projects internally funded from operating cash flow and available liquidity," analyst Ralph Profiti wrote.
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Price: $19.37, Change: $-0.54, Percent Change: -2.69%