Earnings call transcript: Equinox Gold Q4 2024 misses EPS forecast, stock rises

Equinox Gold Corp (NYSE:EQX) reported its Q4 2024 earnings, revealing earnings per share (EPS) of $0.17, which fell short of the forecasted $0.2067. Despite this miss, the company’s revenue exceeded expectations, coming in at $575 million compared to the anticipated $534.42 million. The company, currently valued at $3.18 billion, trades at an attractive P/E ratio of 10.35. According to InvestingPro analysis, Equinox Gold appears undervalued based on its Fair Value metrics. In response, Equinox Gold’s stock rose by 2.57% in after-hours trading, closing at $6.98.

Key Takeaways

• Equinox Gold’s Q4 revenue surpassed forecasts by $40.58 million.
• The company’s EPS missed expectations by $0.0367.
• Stock price increased by 2.57% in after-hours trading.
• Greenstone mine achieved commercial production, boosting future prospects.
• 2025 production guidance set between 635,000 and 750,000 ounces of gold.

Company Performance

Equinox Gold demonstrated strong revenue growth in Q4 2024, driven by increased gold sales, which totaled 218,000 ounces. The company has maintained impressive momentum, with revenue growing 17.84% over the last twelve months. The company’s strategic initiatives, including the commercial production at the Greenstone mine and the start of operations at the Tata Juba open pit, are expected to enhance future performance. InvestingPro data reveals 12 additional key insights about Equinox Gold’s financial health and growth prospects, available exclusively to subscribers. Despite missing EPS forecasts, the company has shown resilience in maintaining a solid financial position.

Financial Highlights

• Revenue: $575 million, exceeding the forecast of $534.42 million.
• Earnings per share: $0.17, below the forecast of $0.2067.
• Q4 EBITDA: $185 million ($218 million adjusted).
• Q4 net income: $28 million ($0.06/share).

Earnings vs. Forecast

Equinox Gold’s actual EPS of $0.17 was below the forecasted $0.2067, representing a miss of approximately 17.8%. However, the revenue beat by $40.58 million, or about 7.6%, highlights robust sales performance despite the earnings shortfall.

Market Reaction

Following the earnings release, Equinox Gold’s stock rose by 2.57% in after-hours trading, reflecting investor confidence in the company’s long-term strategy. The stock has delivered impressive returns, gaining 47.83% over the past year and 19.51% in the last six months. The stock’s performance is notable given its 52-week range of $3.95 to $7.09, indicating a positive market sentiment despite the EPS miss. Get deeper insights into Equinox Gold’s performance with InvestingPro’s comprehensive research report, part of our coverage of 1,400+ US equities.

Outlook & Guidance

For 2025, Equinox Gold projects gold production between 635,000 and 750,000 ounces, with cash costs ranging from $10.75 to $11.75 per ounce. The company is also considering debt repayment of $200 to $340 million, contingent on maintaining favorable market conditions.

Executive Commentary

Greg Smith, CEO, emphasized the company’s leverage to gold prices, stating, "We have excellent leverage to the gold price." CFO Peter Hardy highlighted the focus on reducing debt, saying, "Our focus going forward is deleveraging." These statements underscore the company’s strategic priorities in enhancing financial stability and capitalizing on market conditions.

Risks and Challenges

• Community agreements at the Los Filos mine could impact operations.
• Fluctuations in gold prices may affect revenue and profitability.
• Potential delays in project expansions, such as Castle Mountain, could hinder growth.
• Environmental and safety regulations pose ongoing compliance challenges.

Q&A

During the earnings call, analysts inquired about the ramp-up of the Greenstone mine, with expectations of reaching 1.6-1.7g/t grades by year-end. Discussions also covered the potential for extending the Mesquite mine’s life and ongoing negotiations for community agreements at the Los Filos mine.

Full transcript - Equinox Gold Corp (EQX) Q4 2024:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Fourth Quarter and twenty twenty four Results and Corporate Update. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would now like to turn the conference over to Rilynn Bailey, Vice President, Investor Relations for Equinox Gold. Please go ahead.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Thank you, operator, and thank you, everybody, for joining us today. We will, of course, be making a number of forward looking statements. So please do visit our website, SEDARNEGGER, to learn more about the company. I will now turn the call over to our President and CEO, Greg Smith.

Greg Smith, President and CEO, Equinox Gold: Thanks, Rilynn. Good morning, everyone, and thanks for joining the call today. On the line with me is our COO, Doug Reddy our CFO, Peter Hardy our EVP of Exploration, Scott Heffernan and our VP of Investor Relations, Rilynn Bailey. Again, today, we are discussing Equinox Gold ’20 ’20 ’4 fourth quarter and full year financial and operating results. For those of you that are new to the company, Equinox Gold is a fast growing America’s focus gold producer.

We’ve got producing mines across Canada, The United States, Mexico and Brazil, as well as several mine expansion development opportunities. Our production is supported by a large gold endowment, including 20,000,000 ounces in reserves and an additional 18,000,000 ounces in measured and indicated resources across our portfolio of gold deposits. I’m going to start first with a broad overview of the fourth quarter and the year, and then I’ll turn the call over to Pete and Doug for more details. Well, we once again had a strong finish to the year with fourth quarter production of approximately 214,000 ounces and sales of approximately 218,000 ounces. That’s the highest quarterly gold production in the company’s history.

Cash cost per ounce sold in the quarter was $14.58 per ounce, our lowest quarterly cash cost this year with all in sustaining cost per ounce sold of $16.52 that’s $16.52 dollars We also finished 2024 with record annual gold production of approximately 622,000 ounces and sales of 623,000 ounces at a cash cost of $15.98 dollars per ounce and all in sustaining cost of $18.70 dollars per ounce. Our safety performance this year was good. Four of our sites had no lost time injuries in 2024 with a total recordable injury frequency rate across the company of two point two one, beating our target for the year. These are good results. However, we must also acknowledge that we regrettably had a fatality during the year at our Faizenda mine.

On the environmental side, we had a substantial improvement to our significant environmental incident frequency rate compared to last year, and we also improved our S and P global corporate sustainability assessment score by over 13% compared to the prior year. This puts us right near the top of our peer group on that score. Our major focus for the company during 2024 was commissioning our Greenstone mine in Ontario and ramping up production. In April, we introduced first gold sorry, first ore to the processing plant and we poured first gold in May. We also consolidated ownership of Greenstone in May with the acquisition of the 40% in the mine held by our joint venture partner.

And in November, we achieved commercial production and Doug will have more details on Greenstone later in the call. During 2024, we continue to advance our plans to develop an underground mine at the Piava deposit at Arizona and we started mining at our new Tata Juba open pit. We now plan to start development of the underground portal at Piazza later this year. We also continue to advance permitting of the planned expansion at our Castle Mountain project, which would increase the production profile at Castle Mountain to over 200,000 ounces of gold per year. We received the notice of completion from the Federal Bureau of Land Management during the year and we now expect to receive the notice of intent in the second quarter of this year.

Depending on final timing of receipt of the notice of intent, permitting for the expansion should finish up in late twenty twenty six or early twenty twenty seven. In the meantime, we’re continuing to advance engineering and design so that when the permit is received, we’ll be well prepared to make a construction decision at Castle Mountain. Across our mines, exploration drilling in 2024 successfully replaced our reserves and we completed three technical reports during the year, including for our Haseaga project in Red Lake, our Greenstone mine and more recently for Fezenda in Brazil, which demonstrates mine life extension at Fezenda to 02/1933. Looking forward, we expect an increase in production in 2025 to 635,000 ounces and 750,000 ounces with cash costs of between $10.75 and $11.75 per ounce and all in sustaining costs of between $14.55 and $15.5 per ounce. The increase in production is driven by Greenstone, which we expect to continue to ramp up through the course of the year.

You should note that we have not included any guidance for Los Filos in Mexico. As we have been reporting for some time now, we’ve been working toward new long term agreements with the local communities at Los Filos. These agreements are necessary to help ensure the long term economic viability of the mine, which requires investment in the construction of a new carbon and leach plant to increase recoveries from higher grade open pit and underground ores that are not suitable for stacking on the leach pad. We have made substantial progress and in January reached consensus with the three communities on terms for the new agreements. Two of the communities have already approved and signed new long term agreements with the company.

However, one company has not yet approved and signed the new agreement and unless we can complete agreements with all three communities in the near term, we will not continue to operate the Los Filos mine. So given the current uncertainty, no guidance will be provided for Los Filos at this time. Finally, you should also note in our guidance that we have combined our Fezenda and Santa Luz mines into a single reporting unit called the Bahia Complex. We are in the process of completing a formal combination of the two mines into one operating unit to take advantage of their close proximity and the resulting operating costs and other benefits and efficiencies. And with that, I’ll turn it over to Pete to discuss our financial results.

Peter Hardy, CFO, Equinox Gold: Thanks, Greg. We’re now on Slide eight in the presentation. But first a little housekeeping, while we’re reporting today on the Q4 and annual 2024 operating and financial results, I’ll note that the company’s financial results are unaudited and subject to change pending release of the audited financials, which we expect to publish around mid March. Now let’s get back to talking about the quarterly results. Equinox had a great operating and financial quarter that saw improvements in almost all operating and financial metrics compared to Q3 this year and Q4 last year.

For the 218,000 ounces of gold we sold, we realized the realized price of $26.36 per ounce for revenues of $575,000,000 The increase in revenues over prior quarters is driven by the higher realized price and by an increase in ounces sold with the increase in gold ounces sold attributable primarily to Greenstone coming online and achieving commercial production in Q4. In addition, Los Filos and RDM had record quarters and Prezenda had its second highest quarter for gold sales since Equinox acquired them in early twenty twenty. For the quarter, income from mine operations was $170,000,000 That’s an increase of $69,000,000 from Q3’s income from mine operations of $101,000,000 and it’s $131,000,000 more compared to Q4 twenty twenty three. The increase in income from mine operations compared to previous quarters is driven by the increase in revenue. Our cash cost per ounce of $14.58 dollars for the quarter decreased compared to Q3’s ’17 ’20 dollars per ounce, but increased compared to Q4’s ’20 ’20 three’s cash cost per ounce of $13.30 dollars Our all in sustaining cost per ounce for Q4 was $16.52 dollars and as Greg mentioned, it decreased when you compare it to Q3.

Q3 is $19.94 dollars per ounce, but is on par with twenty twenty three’s ’16 ’50 ’7 dollars per ounce. Our EBITDA in Q4 twenty twenty four was $185,000,000 or $218,000,000 on an adjusted basis, which is a significant improvement over Q3’s ’1 hundred and ’14 million dollars or $142,000,000 on an adjusted basis and doubled last year’s Q4 of $85,000,000 or $95,000,000 on an adjusted basis. The increase in EBITDA is also mostly attributable to the increase in revenues during this quarter. We had net income of $28,000,000 for basic and fully diluted earnings per share of $0.06 On an adjusted basis, we had net income of $77,000,000 or $0.17 per share. For the quarter, cash flow from operations before changes in non cash working capital was $213,000,000 or $0.47 per share of basic and $248,000,000 after changes in non cash working capital.

With respect to our sustaining spend, year to date, we spent $152,000,000 which was $36,000,000 less than our guidance of $187,000,000 Moving on to Slide nine, we had a busy year in 2024. Two of our main focuses for the year were one, to fund the completion, commissioning and ramp up of Greenstone and second, to In addition, during In addition, during 2024, we retired one hundred and eighty million dollars in debt, namely a $140,000,000 convertible note that was converted to shares on maturity and we paid down or paid off a $40,000,000 note related to the acquisition of the Greenstone forty percent interest. Now that Greenstone is in commercial production, a focus area for the company in 2025 is deleveraging the balance sheet. If gold prices were in the mid-2000s, which they were not that long ago, the company would target to repay about $200,000,000 in debt during 2025, including $140,000,000 in convertible notes that mature in September. Should those notes be converted to shares on maturity, then the $140,000,000 will go towards reducing the revolving credit facility and we would expect to retire about $340,000,000 on the year.

If gold prices remain at or near current spot rates, we expect to retire significantly more than that and exceed our deleveraging goals for 2025. Moving to Slide 10, in terms of liquidity and capital position, we ended the quarter with $239,000,000 of unrestricted cash. In addition to our cash flow from operations, we had $105,000,000 available to draw on the revolving credit facility and had the $100,000,000 accordion feature also available. A quick mention of the gold hedges the company put in place last year. As of January one of this year, the company had hedge collar arrangements on 140,000 ounces of gold that were put in place for the $500,000,000 term loan used to help fund the Greenstone ownership consolidation.

Hedges on $100,000 of the ounces mature in a straight line through the first half of twenty twenty five. The average ceiling on those ounces is about $2,900 per ounce. The hedges on the remaining 40,000 ounces mature at 10,000 ounces per quarter from Q3 this year through the end of Q2 next year and have a ceiling of about 3,500 per ounce. With that, I will turn things over to Doug for a review of the operations.

Doug Reddy, COO, Equinox Gold: Thanks, Pete. We’re now on Slide 11 of the presentation. And we had a great 10% to 2024%, thirty four % of our gold production came in the quarter. At Greenstone, the mine produced 53,022 ounces with an all in sustaining cost of $11.41 dollars an ounce. We declared commercial production on November 6 and in December the plant throughput was at 77% of capacity and recoveries for the quarter were 82%.

And contrary to what I put in the presentation, I am told that we were just under 86% for December. So good progress there. The teams have been resolving issues that were identified in end of Q3, start of Q4 on wet screens, pumps and conveyors. And our CIP tanks including valve calibrations and replacements have largely been done on the calibrations in Q4 and we’ll be doing the as we noted in Q4, we’ll be doing the valve replacements coming into Q1 of twenty twenty five. Feed grade was 1.26 grams, which is in line with the long term average grade.

And the plant had a record for daily crush tons at over 34,400 tons and also for milled tons of record day at 28,800 tons. On the mining front, the fleet now has 25 CAT seven ninety three haul trucks in operation and we’ll be adding four more during this quarter. Two have just come online and two more are in assembly. There are four PC-five 500 shovels in operation. We will add one more later this year.

By the end of twenty twenty four, ’30 ’3 point ’6 million tons had been moved and 3,900,000 tons of ore was stockpiled. Strip ratio for the quarter was 2.93 with 3,100,000 tons of ore being moved and 9,200,000 tons of waste mined. Mining costs were $2.66 per ton mined in the quarter. And as we are now done with mining through an area of contaminated soil is in the center of our pit that inhibited our mining efficiency. And with this gone, it allows us to open up the pit and become more efficient overall in mining.

The largest blast reported so far was 800,000 tons. We’re targeting getting to 1,000,000 tons. So that just happened this last week.

: All

Doug Reddy, COO, Equinox Gold: positions on-site have been filled and we’re currently still looking for additional people for operators for hot seating on the mobile equipment. And we plan to reach nameplate in late twenty twenty five. So on to the next page. At the Mesquite Mine, gold production was 17,129 ounces with an all in sustaining cost of $13.92 dollars per ounce for the quarter and production was 71,984 ounces with an all in sustaining cost of $13.00 $6 per ounce for the year. No ore was mined in the quarter.

All the gold production was from previously stacked material. Waste stripping continued in the Ginger Pit during the quarter and the ore from that pit will start going to leach pad this quarter and it represents 93% of ore mined in 2025. Mesquite continues to have very good mining costs at $1.71 per tonne in the quarter and $1.47 per tonne for the year. For 2025, production is coming from the Ginger Pit and will begin waste stripping in the Brownie 4, Rainbow North and Big Chief 8 Pits. And that will provide ore for the tail end of 2025 and going into 2026.

At Castle Mountain full year production was 20,511 ounces with all in sustaining costs of $19.20 dollars per ounce. Mining was suspended at Castle Mountain in August and residual leaching will continue into 2025. And as we’ve noted, it will carry on while we’re doing care and maintenance during Phase two permitting. At Los Filos, the mine had the highest quarterly and annual production since Equinox acquired the mine. Production increased during Q4 to 60,521 ounces with an all in sustaining cost of $2,051 per ounce.

Full year production was 170,369 ounces with an all in sustaining cost of $2,185 per ounce. Filos has a high cost per ounce, so we continue to work towards reductions. And as discussed earlier in the call, we continue to work towards establishing new agreements. On to the next page, in Brazil, at the Aurizona Mine production was 24,277 ounces with an all in sustaining cost of $2,229 per ounce. Full year production was 71,624 ounces at an all in sustaining cost of $2,233 per ounce.

In Q4, the majority of ore was coming from Tata Zuba, which is lower grade compared to the Piava Open Pit. If you recall, we did have geotechnical issues in the Piava Pit early in 2024 and we brought Tata Zuba online earlier than originally planned, but it’s worked out well for us and we’ve also gone back into the Piava Pit. We’ve been mining in the eastern and western ends of the pit at Piava and also we brought the did some small amount of mining in the Boas Barranza as well. Remediation work on the Piava pit wall was taking place in two areas in 2024. We drilled 14 dewatering holes which are working out very well and we completed our external reviews of geotechnical and hydrogeological information.

We are in the midst of the rainy season at the moment, so we continue to monitor the areas on the south wall of Piava Pit and we plan to start work on the underground portal and ramp late in 2025 once the rainy season is over. At the Fezenda Mine production was 18,522 ounces and the all in sustaining cost was $12.51 dollars per ounce for the quarter. For the full year, production was 62,382 ounces, all in sustaining cost was $16.47 dollars per ounce. In 2025, we will be developing a larger open pit, that’s the CLX Pit that was mentioned in our technical report that was recently filed. That pit will encompass several smaller pits and areas that were mined from underground in the earlier years of Fasenda’s forty year mine life.

So we’ll be taking out crown pillars and unmined areas and additional zones that were not part of the mine plan in the early years of the life. And we’re also accelerating our underground development to open up areas for sustained long hole retreat mining. I’ll note that mostly we’ve been doing remnant mining during 2024, so it will be good to be able to switch over to long hole retreat. At RDM, gold production was 21,320 ounces and all in sustaining cost was $13.18 dollars per ounce for the quarter and full year was 56,400 ounces produced at an all in sustaining cost of $16.00 $8 per ounce. The new dry stack tailings facility has worked out well at RDM.

We use cyclones to remove water from the tails, then we continue draining them in our TSF and after the moisture content has dropped sufficiently, we transfer those tails over to a dry stack facility where we spread them out, use evaporation to bring down the moisture content further and then we use stack and compact on the dry stack tailings to a storage facility. We will be changing over to an owner fleet for haulage of those tails and that will help us to further reduce costs at RDM. At Santa Luz, production was 14,793 ounces and the all in sustaining cost was $18.68 dollars per ounce. And for full year, it was 56,906 ounces and all in sustaining cost of $2,224 per ounce. Recovery was below plan at 63.5% for Q4.

I’ll note that the new trend in that we installed middle of the year has worked out well. It’s given us increased throughput, but we did need to back off the throughput to maintain residence time while we were servicing several of our tanks in Q end of Q3 and into Q4. We are adding a six leach tank and so that should allow us to be able to ramp back up with our overall throughput. We do plan on starting mining in the A2 and A3 pits in H1 as well at Santa Luz. And on that, I’ll hand it back to Greg.

Greg Smith, President and CEO, Equinox Gold: Thanks, Doug. I’ll just sum up quickly before we move on to Q and A. On our last few quarterly calls, I’ve noticed or noted that we were at an inflection point at Equinox with Greenstone coming online. We only just hit commercial production at Greenstone in November and we’re still ramping up, but you can see the quarter over quarter impact that Greenstone is having. We had record gold sales for our third quarter in 2024 and then again in the fourth quarter.

And with strong gold prices, we also had the all time highest revenue and adjusted EBITDA and adjusted operating cash flow in Q3 and then once again in Q4. In short, we have excellent leverage to the gold price and at these prices 2025 should be a great year for us as we continue to reduce our debt as well as investing in our portfolio of mines for the long term. I’m going to wrap up there and turn it back over to Rulun for Q and A.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Thanks, Greg. Operator, can you please remind people how to ask a question? Certainly.

Conference Operator: Corner of the webcast frame. We will pause momentarily for callers to join the queue.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Thank you very much. I’ll take a couple of questions from online. This is for Peter. If gold prices remain high, what are you going to do with the extra free cash flow?

Peter Hardy, CFO, Equinox Gold: Yes, great question. First, we love this gold price environment. You can see the impact that the higher gold price has throughout our financials. As I mentioned several times, a number of our metrics are the best we’ve had for a quarter and that’s primarily driven by the top line, which is revenue. Obviously, in 2025 with our guidance, we are looking to expand production, sell more gold and selling it into this environment at higher prices will enable more free cash flow.

If you look in the press release, we’re showing mine site free cash flow for just Q4 of $184,000,000 and we would look to expand that as we move forward. And as I mentioned as well during my comments, our focus and I think we’ve been saying it for a couple of quarters now, our focus going forward not just 2025 is deleveraging. So any cash we generate that’s excess outside of what’s needed by the business is going to go to strengthen the balance sheet.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Perfect. Thank you. Operator, can you please take a couple of questions from the phone?

Conference Operator: Sure thing. The next question will come from Anita Soni with CIBC (TSX:CM) World Markets. Please go ahead.

Anita Soni, Analyst, CIBC World Markets: Hi, good morning, Greg and team. So a couple of questions. So firstly, on Greenstone, could you give us some idea about the grades, tons and recoveries that you’re looking for this year on average?

Doug Reddy, COO, Equinox Gold: Hi, Anita. Sure. Our budget mine plan has us around a gram in first quarter, but we ramp up to about 1.6, one point seven grams towards the end of the year.

Anita Soni, Analyst, CIBC World Markets: Okay. 1.6, one point seven and that I’m assuming that’s because the mining rate will pick up and then you’ll be able to

Doug Reddy, COO, Equinox Gold: sort

Anita Soni, Analyst, CIBC World Markets: of be more selective about the mining, but at the beginning you’re more sort of hand to mouth on that?

Doug Reddy, COO, Equinox Gold: Yes. Well, you’ve seen the pit and it was all about opening up that pit, getting the bigger blast enabled and getting rid of the contaminated soil from the center area of the pit, which was unfortunate. It took so long, it was so finicky to have to remove that. But yes, that combined with adding the additional four trucks, we stepwise will increase our tonnes per day being moved ex pit during the course of the year.

Anita Soni, Analyst, CIBC World Markets: Okay. And then just another question on the unit costs and this might be more financially driven. So there’s two questions that I have. The first is the difference between the ASIC and the total cash cost guidance. I’m coming up to about $255 per ounce between the two guidance ranges.

But if I take your sustaining capital and I divide it by the number the midpoint of the guidance, I get to about $350,000 3 hundred and 50 thousand dollars per ounce differential. So I’m trying to understand the discrepancy there between the ASIC and the total cash costs and what this and the sustaining capital that you have.

Greg Smith, President and CEO, Equinox Gold: You know what, Anita, I will take that question and we’ll take it away and we’ll get back to you. I don’t think we’re going to be able to do the math here in real time on the call, if that’s all right.

Anita Soni, Analyst, CIBC World Markets: All right. No, that’s fine. And then just a second question, this one is more along the lines of, I guess, in the fourth quarter, you mined in terms of ore, you mined sort of double what you actually put through the mill. So those costs are the costs associated with the ore and the waste that would have

Rilynn Bailey, VP Investor Relations, Equinox Gold: been associated with that. Are they being inventoried or

Anita Soni, Analyst, CIBC World Markets: are they going into working capital? And then going forward in 2025, where does that kind of appear? Does it appear in the CapEx or is that somehow embedded in the unit cost? I’m just trying to understand the cost guidance.

Peter Hardy, CFO, Equinox Gold: Sure. And sorry, are you referring to Greenstone in particular or just generally what our policy is?

Anita Soni, Analyst, CIBC World Markets: Yes. Greenstone in particular.

Peter Hardy, CFO, Equinox Gold: Great. So the approach we take is, generally speaking I’ll speak generally and then Greenstone. So generally, we obviously look at our strip ratio. Well, first, when opening up a pit, we determine how much of it is considered development. And then at a certain point, obviously, it becomes operational.

So development would fall into non sustaining and not appear in the all in sustaining metric. And then with respect to once we’re in operation, all of the movement will fall into either OpEx depending on strip ratio or sustaining capital depending again depending on strip ratio, but all of that cost if you’re just looking at the all in sustaining metric will be captured in the all in sustaining metric.

Conference Operator: Okay. Just so in 2025,

Anita Soni, Analyst, CIBC World Markets: I don’t see any in your sustaining capital. When you say what’s included in sustaining capital, I don’t see any classification for stripping. So did you call it something else?

Peter Hardy, CFO, Equinox Gold: No. I think it’s probably because we’re right around the strip ratio. And so it’s all going in OpEx and won’t show up in sustaining.

Doug Reddy, COO, Equinox Gold: We’re actually below fourth quarter is 2.93.

Peter Hardy, CFO, Equinox Gold: Yes, so we’re below. So it’ll all be in the cash cost then, Anita.

Anita Soni, Analyst, CIBC World Markets: Okay. I think we might have to comment offline. And then lastly on loss filos. So I appreciate you’re not giving any guidance and this one might also be one that you take offline given sensitivities. But I was just wondering if you do decide to proceed with lost Filos, what does the sustaining capital look like going forward for the next couple of years?

I know that you have been not investing in that mine over the last couple of years given the community challenges. And I’m trying to understand if you pick back up, what would that look like? But at the very least, I was hoping that you could tell us what standby costs are as well on suspension?

Peter Hardy, CFO, Equinox Gold: Yes. So as to standby, so we’re as we get clarity on and it’s like as Greg mentioned, it’s very near term. So as we get clarity on what the near term and it’s very binary as you can appreciate and as you mentioned highly sensitive. But as we get clarity near term on which path we will be going down, we will provide obviously more on what that given path looks like. If you want to approximate for now, that’s what you’re hoping to do, when the mine was on, care and maintenance during the blockades previously, we incurred about $3,000,000 to $4,000,000 in standby charges per month.

We would expect to be significantly lower than that on an indefinite suspension. We would pare down quite a bit more, but we will again, we’ll provide clarity on that as we move forward.

Anita Soni, Analyst, CIBC World Markets: Okay. That’s it for my questions and congratulations on commercial production at Greenstone and delivering good free cash flow in Q4.

: Thanks, Amir.

Conference Operator: Thank you. The next question is from Wayne Lam with TD Securities. Please go ahead.

Wayne Lam, Analyst, TD Securities: Yes, thanks guys. Yes, just wondering at Los Filos, just wondering if you might be able to provide a bit of color on the parameters of the agreement in terms of the length or term of that arrangement. Is that a shorter term agreement like the three years outlined in the Carrizolio letter or would it be a longer term agreement? And then kind of similar to Anita’s question, but just wondering if you got a deal imminently, is there a catch up in capital that would be required? Or what would be the quantum of that kind of capital for things like the underground development?

Greg Smith, President and CEO, Equinox Gold: Yes, I’ll take this on my end. This is Greg speaking. And apologies, I’m mildly under the weather. Listen, we’re not going to give any terms of an active discussion on the call. It’s fair to say that the agreements that we’re talking about are long term.

And when we talk about long term, we’re talking about encompassing an entire mine life plus. So nothing like three years would work for us when you’re talking about an investment in the construction of a new CIL plant. In terms of where we are at with the mine, just because of the situation, we have slowed down mining, particularly in the open pit and particularly around pre stripping. So any kind of ramp back up would require that pre stripping in 2024. Again, we’re not providing any guidance at this time and that would only come if that’s a path that we’re able to take.

And of course, it’s a path we’d like to take. Nobody wants to see the mine shutdown. But as we stated in the press release, if we’re not able to get agreements with all three communities, then we’re not going to be able to continue operating the mine.

Wayne Lam, Analyst, TD Securities: Okay, great. Thanks. And then maybe just wondering on the underground development at Aurizona, is there going to be an update on economics before moving ahead with that? It just seems like that’s been accelerated a bit and just wondering if that’s a function of being a bit more constrained on additional open pit material even with the Piava pit reopened and what kind of capital that might entail versus the 2021 study?

Doug Reddy, COO, Equinox Gold: So for us the portal and ramp is similar to doing an exploration program. We need to be able to get this done so we can confirm mine ability, access, get in touch the ore, drill from underground, do all the things necessary that you’d normally do as part of a feasibility study. We’re dimensioning it so we can go right into production, but we feel that it’s prudent to do all of this before we commit to everything else. But it is all part

Greg Smith, President and CEO, Equinox Gold: of a larger plan to be able to roll right onwards. Yes, Wayne, it’s Greg speaking. Actually, we’re not accelerating it. We would have preferred to have started earlier. We pushed it off because of the geotech issue we were dealing with in 2024.

So, we’re actually quite anxious to get underground. It’s not because of open pit constraints, it’s because we see a very robust ore body underground that we think is going to drive production in Arizona for many, many, many years. Our goal here is get underground, get our hands on that ore body, do some additional work. And at this point, it’s kind of an organic, a more organic expansion, I would say, at the mine. But as we proceed and as we get more data and we get underground, then of course, we’ll come to the market and give more details on the longer term plan there.

Okay. I mean, right now in terms of quantum, I think we have a $20,000,000 budget that would be spread across back end of twenty twenty five and into 2026.

Wayne Lam, Analyst, TD Securities: Okay. Thanks for that color. And then just wondering, Mesquite, do you see additional opportunities to extend the mine life there with the higher gold price? Or do you become ore constrained pretty shortly, absent the ability to move the highway?

Peter Hardy, CFO, Equinox Gold: Well, for

Doug Reddy, COO, Equinox Gold: Mesquite, obviously with Ginger, it gave us the lifespan to be able to evaluate those other pits that I mentioned, the Brownie 4, Rainbow North and Big Chief 8. At the same time, we continue with evaluating other opportunities and it’s probably best for Scott to address that. So I’ll hand it over to him.

Scott Heffernan, EVP of Exploration, Equinox Gold: Yes, there is we do have a budget for this year. We are focused on these near term opportunities within the fence as we like to refer to it. Rainbow North, Big Chief eight. We did drill and expand Ginger last year and Ginger remains open to the Northwest. This would be our highest priority and highest potential target.

And then of course as you mentioned there is still potential to the Southeast across the highway. That’s just a bit more of a permitting challenge to work through and we are efforting that now.

Wayne Lam, Analyst, TD Securities: Okay, great. And then maybe just last one, just on the renewal of that base shelf, does that include an ATM component?

Greg Smith, President and CEO, Equinox Gold: It gives us the ability to do ATMs, but no, we did not include an ATM on the renewal.

Peter Hardy, CFO, Equinox Gold: Okay. And I’ll just add to that if I can, Greg, that we don’t currently have plans to renew or put in place an ATM.

Wayne Lam, Analyst, TD Securities: Okay. Sounds good. All right. Thank you for taking my questions.

Greg Smith, President and CEO, Equinox Gold: Thanks, Brian.

Conference Operator: Thank you. The next question comes from John Tumazos with John Tumazos Very Independent (LON:IOG) Research. Please go ahead.

: Thank you for taking my questions. Concerning the $200,000,000 I guess minimum debt repayment goal for the year, we had $2.00 $6,000,000 fall in net debt in the fourth quarter alone. Could you explain the gold price you’re using for this calculation and any other factors you mentioned to convert? You didn’t include the $267,000,000 in deferred revenue and derivatives that are current liabilities, presumably that has to be repaid too?

Peter Hardy, CFO, Equinox Gold: Yes. So just on the gold prepaid, those will basically on a straight line basis be repaid starting March through September of this year through September of twenty twenty seven. So they’re not of 2026, pardon me, so not all current, but mostly. And yes, I didn’t mention those, but those will simply roll off straight line basis as we deliver the ounces into them. And that will go towards strengthening our balance sheet as we eliminate those obligations moving forward.

So, good point. With respect to gold price on deleveraging, we used the mid-two thousand dollars gold price, so just a little under $2,500 in calculating that figure. And that’s about it. It’s kind of as simple as that, John.

: So, I don’t want to get you in hot water with your attorneys, but if we take the $200 you forecast and $140 if the convert converts and then $267,000,000 for the other liabilities and then mark up the gold price without even having a favorable outcome at Los Filos, it could be almost $600,000,000 of liabilities addressed this year as if the current gold price were to hold. Now if you pay down debt successfully for one or two years at that rate, at what point do you pivot to CapEx? And if Los Filos or Castle Mountain are not ready for CapEx, what would you pivot your cash flow to? Conceivably, you could have almost enough money to finance both of those in one year.

Greg Smith, President and CEO, Equinox Gold: Hey, John, it’s Zack. Which is

: great to hear.

Greg Smith, President and CEO, Equinox Gold: Yes. I mean, listen, we’re all loving these gold prices and we do have a number of development projects in our pipeline. Both Filos and Castle are subject to certainly we’ve talked about Filos on this call, but Castle is also subject to getting a permit. And at the time, we have a permit based on the economic conditions of that time and the detailed engineering we’re done, we’ll make a construction decision in that context. But yes, we had a robust discussion of this actually at our Board meeting yesterday around the 2024 results.

And it’s the first time in a long time that we were broaching the idea of share buybacks and dividends and what is the timing where we could implement a dividend. So as we reduce leverage and that is the current priority, some of these other opportunities for capital allocation will start to become more relevant. And those in that context again, where can we get the best return for our shareholders, investing in our assets, paying out dividends, doing share buybacks. I think it’s fair to say we would like to get to a normal course dividend at some point. And so that’s something that’s on our radar and something we’ll be working toward here.

And again, the gold prices hold at this level that’s something that could come sooner than later.

: Thank you. I’m very happy to be a shareholder.

Greg Smith, President and CEO, Equinox Gold: Thanks, John. Appreciate it.

Conference Operator: Thanks, John. I’ve got lots

Rilynn Bailey, VP Investor Relations, Equinox Gold: of questions online. We’ll start with exploration. Your main presentation talks about the upside potential at Greenstone, Underground, Near Mine. When are you going to start to look at those?

Scott Heffernan, EVP of Exploration, Equinox Gold: We are efforting that now to kind of break that down. We do have significant exploration potential within pit. There’s significant deferred resources within the design pit. That’s obviously some low hanging fruit that we will look to drill off. It’s just a function of drill density.

We’ll start that a little bit this year and that’s really a focus for 2026 in my mind at this point. The next phase would be the underground. So this year it’s desktop internally looking at it geologically, also the engineering side of things, really understanding and starting to work out a plan how and when would be optimal to bring the underground into the operation. Further afield, there’s significant exploration potential to District, but it’s a substantive District, 100 plus kilometers in length. We’ve got work underway already.

What we need to do again similar to the underground is our homework geologically engineering wise looking at Brookbank for example. The past producers that are east sort of west of that Leach Sand River and the Beardmore area. Looking at that from a geological perspective, doing the compilation target generation, what’s the real potential in the engineering side looking at how if and how those would be bolt on or accretive to Greenstone itself or whether they represent another standalone opportunity. These are all things that are going to take some time. And then in conjunction with that, we also have to work through the process with our partners, First Nations and communities to develop those agreements for long term stability in those areas.

And it’s going to be two plus years I’d imagine kind of in this homework phase before we’re seeing any significant exploration regionally.

Conference Operator: Okay. Thank you. Lots of

Rilynn Bailey, VP Investor Relations, Equinox Gold: questions about the Bahia complex. So you talk about the synergies between those two projects, does that include

Anita Soni, Analyst, CIBC World Markets: the potential of lending ore

Rilynn Bailey, VP Investor Relations, Equinox Gold: to help with the Santa Luz recoveries?

Greg Smith, President and CEO, Equinox Gold: I’ll start, maybe I’ll turn it over to Doug here. For those that have been there, I guess for those that have not been there, both of these mines are as a crow flies maybe 50 miles, 60 miles from each other, the plants. We have all the concessions between them, contiguous concessions and we’ve got a fair amount of prospectivity across that overall portfolio. So when we looked at the two mines, we looked at what we could do obviously to make it more efficient and in terms of management administration costs, tax, etcetera. And really what this is, it’s a corporate amalgamation down in Brazil and then a administrative amalgamation in terms of how we run the two mines together.

There’s a number of benefits, supply chain, working capital, etcetera. I’ll pass it over to Doug and Scott here more on the ability to triage material between the two plants. Suffice to say that we do have a fairly large land package there. It is very prospective. We are very active on it.

And so that opportunity certainly exists. It’s just a matter again of time and I’m probably putting words in Scott’s mouth, but I’ll pass it over to him.

Doug Reddy, COO, Equinox Gold: I’ll go first. I mean, obviously, with having two process plants different in nature, but Santa Luz is in process high total organic carbon or low total organic carbon material. It’s quite flexible with the resin. It means that we would just be adding less kerosene to the process to suppress the activity of the carbon. But it gives us flexibility to send ore in either direction.

We’ve got lots of targets, which Scott can talk about in a moment, but that is part of Santa Luz is constantly looking for opportunities to blend down the TOC levels. And I will note that even it’s the same Greenstone belt, there’s many similarities in the overall rock package. Even at Fazenda, we blend down a small amount of total organic carbon that’s in some of the bodies. It’s just that we operate with a standard carbon plant there and we don’t have to use resin to be able to get keep our recoveries in the around the 90% level. If you want to talk about deposits, I’ll pass it back to Scott.

Scott Heffernan, EVP of Exploration, Equinox Gold: Sure. Vynia has been the focus of committed exploration now for three years. In the immediate Pesenda area, we saw the results of that in the updated technical report with substantive mine life growth. Those efforts will continue, which is exciting there because it does give us the opportunity that resource reserve base to contemplate mine expansion opportunities at present itself. But regionally, the focus for the last few years has been to maintain our mineral rights of trying to take around to small positive small resources to be able to support Brazilian regulatory reporting requirements to maintain these mineral rights.

We’ve been very successful at that. And now with a whole bunch of regional targets identified just still to the Zendesk (NYSE:ZEN), north and south of Santa Luz right across the whole length of the 75 plus kilometer belt, we will now look to go back and flush out our understanding of that again to really map out the full potential. The medium term is where it’s going to get interesting because that’s where we start to contemplate pours of different types and natures that might be blended or more optimal for one or the other and these sorts of opportunities. But that’s kind of a medium term approach.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Perfect. Thank you. I’ve got lots of online questions that I think have already been answered during the presentation. So I will get back to all of you by email if you’ve got any follow-up questions. But we’ve got a whole bunch about Filos.

So I’ll do one Filos wrap up question. So can you just provide a bit more clarity on what you mean that you’ve reached agreement with all three communities that only two have signed?

Doug Reddy, COO, Equinox Gold: Well, we’ve had a dialogue with the three communities. We’ve always agreed with the communities that we would talk to them altogether. We worked through key terms and ultimately had agreement on the three the key terms. But when it came to signing a final document that laid out those key terms, we got two groups that signed and the third one who has not. So essentially, we need an overall final agreement from with all three communities to be able to move forward.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Great. That’s everything. Greg, do you have any wrap up comments?

Greg Smith, President and CEO, Equinox Gold: Only to say I appreciate everyone joining the call today. And of course, if you have any other questions, you can always reach out to Rillyn or me or anyone here at Equinox. We’re always happy to respond.

Rilynn Bailey, VP Investor Relations, Equinox Gold: Perfect. Thank you very much. Thank you, everybody, for joining us. Operator, you can now conclude the call.

Conference Operator: Thank you, Rylan. This brings to a close today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.