Equinox Gold Corp.: Gold and Precious Minerals: Small Cap Canadian Mining Stock

Reflecting upon key performance highlights from Equinox Gold Corp. (TSX: EQX, NYSE: EQX) for Q2 2024. Stay tuned for more company updates.

Started in 2017, Equinox Gold (TSX: EQX, NYSE: EQX) is a growth focused Canadian mining company which has grown from a single asset developer to a diversified gold producer having 7 producing gold mines, a new mine which poured its first batch of gold in May 2024 and 3 growth projects.

Q2 2024 Performance Summary

In Q2 2024, Equinox Gold Corp reported mixed financial performance. The company generated $269.4 million in revenue, which was slightly lower than the $271.6 million in Q2 2023 and missed analyst estimates by 12%. However, the company achieved significant net income of $283.8 million compared to just $5.4 million in Q2 2023, mainly due to a favorable non-cash revaluation of its warrants.

Gold production faced some challenges, with a 16% drop in gold ounces sold compared to the same period in 2023. This was primarily due to a suspension of operations at the Aurizona mine caused by geotechnical issues, although production partially resumed later in the quarter. The Greenstone project, however, achieved its first gold pour in May 2024 and continued ramping up.

Despite these operational setbacks, the company saw improved gold prices, realizing an average of $2,328 per ounce sold in Q2 2024, which was 19% higher than the previous year. This helped partially offset lower production. However, costs also increased, with all-in sustaining costs (AISC) rising 36% year-on-year.

Overall, while production issues impacted revenue, the company benefited from higher gold prices and a significant non-operational gain, leading to a strong net income.

Key Q2 2024 Highlights

·??????? In May 2024, the company completed acquisition of the remaining 40% interest in Greenstone mine from Orion, consolidating 100% ownership to Equinox Gold. The company had acquired its initial 60% interest in Greenstone in April 2021 and construction was advanced as a joint operation with Equinox holding 60% and Orion holding 40% interest.

·??????? It is expected that commercial production for Greenstone Mine would initiate in Q3 2024. Greenstone is an open pit mine with the expectation of producing more than 5 million ounces of gold over an initial 14-year mine life. As per company guidance, gold production for the first five years of operations is estimated at more than 400,000 ounces annually with life-of-mine production expected to average 360,000 ounces annually.

·??????? In Production terms, the company produced 122,221 ounces of gold and sold over 115,423 ounces at an average realized gold price of $2,328 per oz in Q2 2024. Meanwhile, the total cash costs of Equinox Gold Corp. stood at $1,747 per oz and AISC at $2,041 per oz. Also, in Q2 2024, the company reported ~19 Moz of proven and probable gold reserves and ~17 Moz of measured and indicated gold resources.

·??????? The company has updated its guidance for 2024 production and cash costs. Production from 100% owned Greenstone project would be between 175,000 to 205,000 oz. Given the increasing costs associated with contract mining, crushing and agglomeration, and increasing complexity and variability in mining low-grade historical backfill, the Company will suspend mining at Castle Mountain for the duration of the Phase 2 permitting process. Accordingly, Castle Mountain will be reported as a development project going forward.

·??????? Meanwhile, Mesquite production guidance for 2024 stands at 75,000 to 85,000 ounces of gold. However, while recoverable ounces stacked in 2024 is exceeding plan, the mine is realizing slower-than-expected recoveries from the heap leach pad and guidance has been adjusted to 55,000 to 65,000 ounces of gold.

·??????? On account of a geotechnical event, the production guidance for Aurizona Mine for 2024 has been reduced from 110,000 to 120,000 ounces of gold to 70,000 to 80,000 ounces of gold. Meanwhile, the consolidated production for all mines is forecasted at 655,000 to 750,000 oz of gold compared to 660,000 to 750,000 oz of gold.

·??????? During Q2 2024 and H1 2024, the company’s income from mine operations was $26.6 million and $38.0 million, respectively, compared to $30.7 million and $45.2 million for the same periods in 2023. Income from mine operations in the same period benefited from the contribution of pre-commercial production from Greenstone, as well as higher income from mine operations at Mesquite driven by a higher realized gold price, offset partially by lower income from mine operations at Aurizona, Fazenda and Santa Luz.

·??????? Meanwhile, the company reported $199 million in operating expenses in Q2 2024 compared to $193 million in Q2 2023. Operating expenses in Q2 2024 increased by 3% compared to Q2 2023 primarily due to the contribution of operating expenses at Greenstone, which was a construction project in 2023 and did not have operating expenses, and a higher operating expense at Los Filos, which was driven by an increase in underground mining activity, offset by lower operating expense at Aurizona.

·??????? Net Income for Q2 2024 was $283.8 million and for six months ended 30th June 2024 was $241.0 million. The increase in net income during the same period compared to last year was due to an increase in other income, driven by a gain of $470.4 million on remeasurement of the Company’s 60% share of assets and liabilities of Greenstone held immediately before the business combination to their acquisition date fair values.

·??????? Equinox Gold was created with a strategic vision of building an American focused gold company that shall produce more than 1 million ounces of gold annually. To achieve its growth objectives, Equinox intends to expand production from its current asset base through exploration and development and will also consider opportunities to acquire other companies producing mines and development projects that fit the company’s portfolio and strategy.

Source: Company Reports

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