The combination of Equinox Gold (TSX, NYSE-A: EQX) and Calibre Mining (TSX: CXB) should move the new company up to the fourth largest gold producer in Canada even as it looks to trim its portfolio of non-core assets. 

The C$2.56 billion ($1.83 billion) all-stock deal, set to close this month, will bring to nine the number of producing mines under Equinox from the current seven, as well as Calibre’s Valentine project in Newfoundland that’s currently under construction. Calibre operates one mine in Nevada, and its three sites in Nicaragua are counted as one under the company’s hub and spoke model. Equinox will have gold reserves of about 24 million ounces. 

“It makes sense where one and one is what becomes three,” Equinox board chair Ross Beaty told The Northern Miner in an early May phone interview. “We should graduate to a subset of gold producers that are very large, as opposed to mid-cap. To the extent that we end up producing more than 1 million oz. [of gold] a year, we expect to trade at a higher multiple as a result of getting bigger. We also have the effect of having many operational synergies to drive our costs down.” 

The combination, approved by shareholders on May 1 will create the newest large Canadian producer.  

It will also bring two low-cost assets under the same umbrella – Equinox’s Greenstone open-pit mine in northern Ontario, which achieved commercial production last November; and Valentine, where the first gold pour is expected at the end of the third quarter. The move gives Equinox exposure to Canada’s east coast and further expands its reach into Latin America.

The deal follows a series of other gold sector transactions over the past 18 months, including Gold Fields’ (NYSE, JSE: GFI) purchase of Osisko Mining, Newmont’s (TSX: NGT; NYSE: NEM) Newcrest purchase and AngloGold Ashanti’s (NYSE: AU) acquisition of Centamin.