Toronto-listed miner Equinox Gold on Wednesday announced that it would buy fellow-listed Premier Gold Mines in an all-stock deal valued at C$611.7-million, gaining the Mercedes mine, in Mexico, and half a share in the Hardrock project, in Canada, for which an optimised feasibility study was announced.

The companies simultaneously announced the spin-out Premier's US production assets in a new company called i-80 Gold, which would be led by Premier CEO Ewan Downie.

Equinox would retain Premier’s interest in the Hardrock project, the Mercedes mine, and the Hasaga and Rahill-Bonanza properties in Red Lake, Ontario, while i-80 would own the South Arturo and McCoy-Cove properties and would complete Premier’s previously announced acquisition of the Getchell project, in Nevada.

“This transaction is exactly the kind of accretive Americas-focused growth we promised shareholders when we started Equinox Gold at the beginning of 2018. The addition of a top-tier, low-risk mining jurisdiction in Ontario, Canada creates a lower risk profile, with greater asset and country diversification. Hardrock will be an excellent, low-cost, long-life gold mine with significant exploration upside, further enhancing our existing peer-leading growth profile without stretching our financial capacity,” commented Equinox CEO CEO Ross Beaty.

On Tuesday, Premier announced that Centerra had agreed to sell its 50% shareholding in the Hardrock project to Orion Mine Finance for $225-million plus contingencies of about $75-million.

Equinox would now own the project, which has 5.54-million ounces of proven and probable mineral reserves grading 1.27 g/t gold, in joint venture with Orion.

Premier on Wednesday announced an optimised feasibility study for Hardrock, which detailed plans for a $952-million project that would produce an average of 414 000 oz/y of gold in the first five years and 358 000 oz/y over the initial 14-year mine life. All-in sustaining costs have been estimated at C$618/oz.

The optimised study calculated an afternax net present value, at a 5% discount, of C$1.05-billion, based on a gold price of $1 400/oz. The aftertax internal rate of return was 20.1% and the project would have a payback period of 3.2 years.

In terms of the transaction, Premier shareholders would receive 0.1967 of an Equinox share for each share held, representing an at-market acquisition based on the 10-day volume-weighted average closing prices for both Equinox Gold and Premier shares on the TSX, and 0.4 of a share of i-80 Gold for each Premier share held, providing a meaningful opportunity to participate in the new company.

Premier's stock jumped 15% to C$2.92 a share on Wednesday, while Equinox traded 3% lower at C$12.75 a share.