I will be sending out your new issue of Frontier Fortunes very soon—but I wanted to get this important update on Orla Mining to you asap…
Orla has triggered the 55% trailing stop loss we had on this position—but I am updating my recommendation to a HOLD for now. I outline the important reasons below…
First, Orla is no longer Orla—or soon won’t be.
Orla and Equinox Mining recently agreed to a merger, in which Orla will fold into Equinox at a 1:1 basis and will take on the Equinox name. That deal is expected to close in Q3.
The Merger—What Lies Ahead
The combined Equinox-Orla entity will produce approximately 1.1 million ounces of gold annually, creating the second-largest gold producer in Canada behind Agnico Eagle.
The deal structure means that existing Equinox shareholders will own approximately 67% of the combined company, while former Orla shareholders will own approximately 33%. So, we’re not being cashed out, so much as we’re rolling into a much larger, more diversified senior gold producer.
At 1 million ounces per year, Equinox with Orla inside is officially a major miner. Again, this goes to something I’ve routinely talked about in my mining coverage: Owning mid-tier miners, as well as junior miners already in production, almost always ends with you owning a major miner.
Either two mid-tiers marry to form a major miner, or a major miner snaps up the smaller player.
It’s just the way the game is played.
The deal has strong insider support. Legendary mining investor Pierre Lassonde and Prem Watsa’s Fairfax Financial Holdings, who collectively control approximately 20% of Orla’s shares, both favor the transaction. And when Pierre Lassonde—one of the most respected names in gold investing—signs on, well, that’s a signal.
Though there is no buyout premium for Orla shareholders, with gold above $4,000 per ounce, the combined company trades at a discount to peers. And the growth pipeline—potentially 1.9 million ounces annually over time—creates substantial upside for all shareholders. So, Orla shareholders aren’t getting sold out; they’re getting merged up into a larger vehicle at a moment when scale matters in the gold sector.
We sold half our position in Orla last summer for a 173% gain.
The other half will become Equinox in a few months.
RECOMMENDATION: Orla’s current price is just over $9. If you can grab these shares under $10 and then hold onto the Equinox shares when the merger is complete, you’re going to be holding a major miner at an undervalued price.
I’ll be back in touch soon with your full Energy and Metals Portfolio update…
