Equinox Gold has divested its entire stake in the Pilar Gold Mine in Brazil to Canadian firm Pilar Gold in a $38m cash deal.

Under the arrangement, Equinox will receive a 9.9% equity interest in the mine from Pilar Gold and a 1% net smelter return royalty on production.

Equinox Gold CEO Christian Milau said: “With existing production and growth potential, the Pilar Gold Mine is an excellent foundation mine for an emerging gold company.

“We look forward to participating in the success of Pilar Gold as a supportive shareholder as they launch a new Brazil-focused gold producer.”

The sale of the Pilar mine marks a step ahead in Equinox Gold’s portfolio optimisation strategy to shift its focus on larger production and development assets.

Of the total deal value, Equinox Gold has already received $10.5m. The remaining amount will be paid in two tranches.

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Pilar Gold Mine is required to pay $10m before the end of next month and the remaining $17.5m by the end of this July.

Pilar Gold CEO Jeremy Gray said: “We are privileged to acquire an asset of the calibre of the Pilar Gold Mine, which will be our foundation asset for the company.

“The operation has an outstanding production history, high-quality infrastructure and a substantial gold resource that we believe will support a long mine life.

“We look forward to working with the Pilar Gold Mine’s existing team and investing in the operation to increase production and gold reserves.”

The Pilar Mine accounts for about 5% of Equinox’s previously reported 2021 production guidance of 600,000oz to 665,000oz of gold.

Equinox Gold recently acquired an additional 10% stake in the fully permitted Greenstone Project in Ontario, Canada, from Orion Mine Finance Group for $51m in cash.

The deal increased Equinox’s stake in the project to 60%.