Equinox Gold, alongside other entities, has reached an agreement to sell its stake in the Koricancha ore processing facility in Peru to Inca One Gold.

Under the terms of the agreement, Inca One will acquire 100% ownership of Anthem United, which owns a 90.14% interest in the Koricancha mill, which has a potential production of 350 tonnes per day (TPD).

The deal is valued at a total consideration of C$16.3m and includes certain recoverable taxes, including C$6m in common shares of Inca One, a C$9m promissory note payable in three annual instalments.

“This transaction allows Equinox Gold to retain upside exposure to Koricancha as a meaningful stakeholder of Inca One while staying consistent with the company’s strategy.”

The consideration also comprises working capital adjustments of about C$1.3m payable in cash to Equinox Gold within three years from the completion of the transaction and certain additional recoverable taxes as collected.

Through the divestment, the company intends to focus on advancing its core Aurizona and Castle Mountain gold mines.

Equinox Gold CEO Christian Milau said: “Further to the recently-announced copper company spinout, this transaction allows Equinox Gold to retain upside exposure to Koricancha as a meaningful stakeholder of Inca One while staying consistent with the company’s strategy of building and operating significant gold projects.

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“Combining Koricancha with the operations of Inca One achieves operating efficiencies and meaningful scale in an industry characterized by smaller, single-asset operations, and provides a strong foundation for Inca One to build an industry leader in the Peruvian gold milling space.”

The company will also terminate the existing 3.5% stream on gold production from Koricancha.

In exchange, the stream holder will receive C$2.8m in common shares of Inca One and C$2.5m in cash two years from closing.

The acquisition will allow Inca One to more than double its current throughput from 100TPD to around 250TPD.

Koricancha is located around 50km from Inca One’s ore processing facility and is currently operating at 150TPD.

It was first commissioned in July 2015 and achieved commercial production in October the same year.

Inca One president and CEO Edward Kelly said: “The transaction is aligned with our long-term growth objectives and is an important milestone in the consolidation we foresaw in the processing space.”

The completion of the transaction is conditional upon approval by the TSX Venture Exchange and fulfilment of other customary conditions.