Eastmaque, Equinox merger gains shareholder approval

Shareholders of both Equinox Resources (TSE) and Eastmaque Gold Mines (TSE) recently approved the merger of the two companies leaving Equinox the surviving entity. The companies expect to complete the combination by the end of March.

The merger, initiated late last year, gives Eastmaque common shareholders one share of Equinox in return for eight shares of Eastmaque. Two preferred shares can be exchanged for one Equinox common share plus one common share purchase warrant exercisable at $3.40 for four years. Preferred holders will also receive one production participating preferred share with a par value of $1.50 in return for two Eastmaque preferred shares.

The production preferred does not pay a dividend and is redeemable by Equinox at 105% of par value. The company will set up a sinking fund from 25% of the cash flow generated from Eastmaque’s assets for redemption purposes. Eastmaque’s principal asset is a 50% interest in the American Girl gold mine in southern California.

Ross Beaty, president of Equinox, said the American Girl mine is expected to produce about 87,000 oz. gold this year at a cash cost including royalties of about US$238 per oz.

With about 10.6 million Eastmaque common shares outstanding and 2.7 million preferred, Equinox will issue a total of 2.7 million common shares, 1.35 million warrants and 1.35 million production preferred shares. As a result, Equinox will have about 15.5 million common shares outstanding, or about 18 million on a fully diluted basis.