Calibre Mining’s (TSX:CXB,OTCQX:CXBMF)largest shareholder has come out against Equinox Gold’s (TSX:EQX,NYSEAMERICAN:EQX) US$1.8 billion takeover bid, casting doubt over the year’s biggest gold deal.
According to Bloomberg, Van Eck Associates, which holds an 8.69 percent stake in Calibre, has voiced its opposition, citing a lack of operational synergies and concerns over the dilution of Calibre’s quality.
Van Eck was also the second largest investor in Equinox as of December 31, 2024.
The proposed all-stock transaction, announced in February, aims to create a mid-tier gold producer with annual output of approximately 1.2 million ounces. However, the deal still requires shareholder and regulatory approval. Both companies have scheduled shareholder votes, with two-thirds majorities required for approval.
“We are not supportive of this transaction. We don’t see any synergies between any of the companies’ operations,” Imaru Casanova, portfolio manager at Van Eck’s International Investors Gold Fund, said in an email to Bloomberg on Tuesday (March 18). “Both operate in the Americas, but in vastly different locations.”
Casanova also emphasized that Calibre was poised for a revaluation as it advanced its flagship Valentine project in Newfoundland, Canada. Valentine is set to become Atlantic Canada’s largest gold mine.
Equinox operates mines across Canada, Mexico, Brazil and the US, while Calibre’s assets are concentrated in Nicaragua and the US. The deal would make the combined company one of the top 15 global gold producers.
Equinox declined to comment on Van Eck’s opposition, while Calibre did not immediately respond to inquiries.
The Equinox-Calibre deal is part of a broader trend of consolidation in the gold sector, driven by gold’s surging price and strong company balance sheets. However, investors remain cautious, given the industry’s history of high-priced mergers that fail to generate expected returns. Many mining mergers since 2010 have struggled to deliver, with industry reports highlighting skepticism due to overvalued acquisitions and underperforming transactions.
As mentioned, the purchase still requires approval from shareholders and regulatory bodies.
With Van Eck’s significant opposition, other institutional investors may reconsider their stance before the vote.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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