Top Calibre investor opposes Equinox’s $1.8 billion takeover
Calibre Mining Corp.’s top shareholder has come out against Equinox Gold Corp.’s $1.8 billion bid for the gold miner, casting uncertainty on the biggest bullion deal so far this year.
The combination of the two Canadian companies “dilutes the quality and potential” of Calibre, Imaru Casanova, a portfolio manager at Van Eck Associates Corp. who oversees the firm’s International Investors Gold Fund, wrote in an email Tuesday.
“We are not supportive of this transaction. We don’t see any synergies between any of the companies’ operations,” Casanova wrote. “Both operate in the Americas, but in vastly different locations.”
Calibre and Equinox both rose as much as 2.6% in Toronto on Tuesday. Equinox declined to comment. Calibre didn’t immediately respond to inquiries.
Vancouver-based Equinox agreed to buy Calibre in an all-stock deal in February in a bid to boost production of the precious metal and consolidate assets across the Americas. Equinox operates gold mines in Canada, Mexico, Brazil and the US, while Calibre operates mines in the US and Nicaragua. The transaction still requires shareholder and court approvals, and is supposed to close this quarter.
Van Eck owned 8.69% of Calibre as of March 17, making it the firm’s top shareholder, according to data compiled by Bloomberg. It was also the second-largest investor in Equinox as of Dec. 31 data.
Both Equinox and Calibre are planning to hold shareholder votes that require support from two-thirds of ballots cast to approve the deal.
Gold miners are flush with cash after bullion prices hit repeated record highs over the past year, filling company coffers and boosting stocks. Some miners have pounced on the opportunity to consolidate assets and grow gold output, though the industry has previously been punished for mergers that hurt balance sheets and share prices. Equinox chairman Ross J. Beaty warned in September of “really stupid deals.”
Casanova said Van Eck expected to see Calibre’s stock climb as it moved forwards on a flagship project in Canada.
“Calibre was on the cusp of a rerate as it advanced Valentine to production,” she said. “The proposed combination dilutes the quality and potential of Calibre.”
(By Jacob Lorinc)
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7 Comments
Arnold Dyck
My feelings are exactly the same as Casanova:s. Although I also hold Equinox shares, my holdings in Calibre are 3 times as great and I was really surprised and disappointed to hear of the merger because of a greater % growth rate by quite a bit by Calibre and much more to come once the Valentine mine comes into production in a few months time. The breakup fee does deter opposition but if more Calibre shareholders object at the very least their shares should represent more than 31% of the merger. I’ve held Calibre shares for at least 4 years and supported their Valentine purchase so it saddens me considerably to see their name and business disappear in this manner.
Arnold Dyck
I have been a shareholder of Calibre for 4 years and was a strong supporter of its acquisition of Marathon:s Valentine project and have been anticipating a rerate once production is scheduled to start in a few months: time. I am also a shareholder of Equinox but to a lesser extent, so I was surprised and disappointed to hear of the merger and even more so at a disadvantageous % of the deal. Equinox has a few mines of lesser interest whereas Calibre’s Nicaragua holdings are proceeding nicely and drilling results on the Valentine property also are very encouraging, so I don’t understand the motive or benefit to Calibre shareholders. The breakup penalties are daunting and I don’t want to see a dogfight between 2 of my holdings, but unless Calibre’s % of the new Equinox is increased I will oppose the merger as well.
Jay Bee
Will vote AGAINST. Not interested in owning EQX’s dependency on Brazil, or Mexico… Came into Calibre only when it bought Fiore for “too cheap.” Long amazed at how they’ve managed to keep potentially politically-deadly Nicaragua / Limon productive, and diversifying further away from Nicaragua by buying Marathon in CA was a great move. If EQX gets Calibre at this initial offer, I will have sold all of an overweight and moved into more KGC, TFPM /others.
John Noakes
I have held CXB shares since 2012. I agree with Van EcK . I am not in favor of this transaction..
Rod Forsey
I agree 100%. I will be voting against it!!
Calibre is worth 4.00$ today.
Bryan Morrow
I own Calibre and was disappointed when I saw the news. However, now that Van Eck is opposed, I am as well – unless Calibre shareholders get a substantially larger piece of New Equinox. I got rid of Equinox because it became apparent that their debt load was going to continue to hurt the stock until it got substantially reduced. While I do think they will I am not so convinced the market will wait for them. Meanwhile, Calibre is on a strong growth curve and its value in the New equinox will be greatly diminished. For tat reason and because Van Eck is opposed I will join the chorus and vote no as well.
Adrian McCall
I agree 100% with Van Eck and will also be voting against this merger. I hold both companies but like most who have already commented my weighting is vastly in favor of Calibre. I hope we can see an alternative more realistic bid made, however will anyone have the guts to go up against Ross Beaty?