Equinox Gold Corp. (TSX: EQX) (NYSE American: EQX) has released its audited consolidated financial and operating results and related management’s discussion and analysis for the fourth quarter and fiscal year ended December 31, 2022.

Greg Smith, President and CEO of Equinox Gold, commented: “Equinox Gold finished 2022 with its strongest quarter of production at the lowest costs for the year, bringing full-year production to 532,319 ounces of gold at all-in sustaining costs of $1,622 per ounce. We made significant progress at our assets in 2022, achieving commercial production at Santa Luz, advancing permitting for expansions at both Aurizona and Castle Mountain, completing the Los Filos expansion study and advancing the Greenstone project to 65% complete at year end and over 70% complete today.

“Looking forward, we expect to produce between 555,000 to 625,000 ounces of gold in 2023 at all-in sustaining costs of $1,575 to $1,695 per ounce. Growth capital of $324 million in 2023 is directed primarily to Greenstone construction. We entered 2023 with $327 million in total liquidity which, along with cash flow from our operating mines and marketable investments currently worth about $220 million, leaves us well funded to complete construction at Greenstone and pour gold in the first half of 2024.”

HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2022

Operational

• Produced 150,439 ounces of gold
• Sold 149,386 ounces of gold at an average realized gold price of $1,733 per oz
• Total cash costs of $1,223 per oz and AISC of $1,523 per oz⁽¹⁾
• No lost-time injuries

Earnings

• Earnings from mine operations of $32.0 million
• Net income of $22.6 million or $0.07 per share
• Adjusted net income of $7.5 million or $0.02 per share⁽¹⁾⁽²⁾

Financial

• Cash flow from operations before changes in non-cash working capital of $80.0 million ($45.5 million after changes in non-cash working capital)
• Adjusted EBITDA of $74.7 million⁽¹⁾⁽²⁾
• Expenditures of $43.1 million in sustaining capital⁽¹⁾ and $108.7 million in non-sustaining capital
• Filed a base shelf prospectus on November 21, 2022 that allows the Company to make offerings of up to $500 million of common shares, debt securities, subscription receipts, share purchase contracts, units, warrants, or any combination thereof, over a 25-month period
• Entered into an equity distribution agreement dated November 21, 2022 providing for an at-the-market equity offering program (“ATM Program”) for up to $100 million effective until December 21, 2024, unless terminated earlier
• Sold 11 million common shares of Solaris Resources Inc. (TSX: SLS) for aggregate gross proceeds of $51.9 million

Construction, development and exploration

• Advanced Greenstone construction to 65% complete at December 31, 2022, while remaining on budget and on track to achieve first gold pour in the first half of 2024
  • Spent $97.9 million of non-sustaining capital in Q4 2022 (Equinox Gold’s 60% share)
  • Building enclosure and heating completed for the process plant west end, power plant, truck shop, ore bin tower of the high-pressure grinding rolls building and site mixed emulsion plant, with the rest of the buildings on track for enclosure in Q1 2023 as planned
  • Completed the Ministry of Transportation Patrol Yard, the Goldfield Creek diversion, and the permanent effluent water treatment plant
  • First four bays of the truck shop are complete and in use
  • The 14-km natural gas pipeline is complete and ready for commissioning in Q2 2023
• Achieved commercial production at Santa Luz effective October 1, 2022
• Increased Los Filos Mineral Reserves by 44% and completed a feasibility study for construction of a carbon-in-leach plant to process higher-grade ore concurrent with existing heap leach processing, which would extend the mine life and increase production to on average 280,000 ounces per year, with peak production of 360,000 ounces per year

RECENT DEVELOPMENTS

• Provided 2023 production and cost guidance of 555,000 to 625,000 ounces of gold at cash costs of $1,355 to $1,460 per oz and AISC of $1,575 to $1,695 per oz⁽¹⁾
• Provided 2023 sustaining and non-sustaining expenditure guidance of $460 million
  • $137 million of sustaining expenditures, of which $127 million is sustaining capital⁽¹⁾
  • $324 million of non-sustaining expenditures, of which $300 million is non-sustaining capital. Non-sustaining capital includes $277 million to advance Greenstone construction
• At the date of this news release, the Company has issued 6,651,017 common shares under the ATM Program at an average share price of $3.75 per common share for total gross proceeds of $24.9 million
• In February 2023, published the Company’s inaugural Climate Action Report in alignment with the Task Force on Climate Related Financial Disclosures
• In January 2023, sold 4.5 million common shares of the Company’s investment in Solaris for proceeds of $20.0 million
• In January 2023, entered into gold collar contracts with a put strike price of $1,900 per ounce and an average call strike price of $2,065 per ounce, for 10,644 ounces of gold per month beginning February 2023 through to March 2024

FULL-YEAR 2022 HIGHLIGHTS

Operational

• Produced 532,319 ounces of gold
• Sold 532,137 ounces of gold at an average realized gold price of $1,784 per oz
• Total cash costs of $1,328 per oz and AISC of $1,622 per oz⁽¹⁾
• Achieved a total recordable injury frequency rate⁽³⁾ of 2.12, a 30% improvement compared to 2021
• Achieved a significant environmental incident frequency rate⁽³⁾ of 0.63, a 7% improvement compared to 2021

Earnings

• Earnings from mine operations of $85.0 million
• Net loss of $106.0 million or $0.35 per share
• Adjusted net loss of $90.8 million⁽¹⁾ or $0.30 per share⁽¹⁾⁽⁴⁾

Financial

• Cash flow from operations before changes in non-cash working capital of $144.3 million ($56.5 million after changes in non-cash working capital)
• Adjusted EBITDA of $168.7 million⁽¹⁾⁽⁴⁾
• Expenditures of $139.2 million in sustaining capital⁽¹⁾ and $457.7 million in non-sustaining capital
• Cash and cash equivalents (unrestricted) of $200.8 million at December 31, 2022
• Net debt⁽¹⁾ of $627.3 million at December 31, 2022

Corporate

• Strengthened capital flexibility
  • Expanded the corporate revolving credit facility to $700 million with an additional $100 million accordion feature, and extended the maturity date to July 2026 with the option for a one-year extension
  • Sold a portion of the Company’s shares in Solaris for proceeds of $51.9 million and received $40.1 million from the sale of Solaris shares on the exercise of warrants the Company granted in 2021
  • Closed the sale of the Mercedes mine (“Mercedes”) for $75 million cash, a $25 million note receivable, a 2% net smelter return and 24.73 million shares of Bear Creek Mining Corporation (TSXV: BCM)
• Improved financial resilience by filing a $500 million base shelf prospectus and implementing a $100 million ATM Program
• Launched Sandbox Royalties Corp., a new diversified metal royalties company in which Equinox Gold holds a 34% interest
• Greg Smith, President of Equinox Gold, succeeded Christian Milau as Chief Executive Officer and a Director of Equinox Gold on September 1, 2022

Construction, development and exploration

• Greenstone 65% complete at December 31, 2022
  • More than 2 million work hours complete project to date with no lost-time injuries
  • 71% of total capital costs contracted
  • 54% of the $1.23 billion construction budget (100% basis) spent
  • Inflationary pressures to date have been mitigated through offsetting savings opportunities or absorbed through the contingency included in the construction budget
• Completed construction and achieved commercial production at Santa Luz
• Commenced permitting for the Castle Mountain Phase 2 expansion, which would extend the mine life to 21 years and increase production to on average more than 200,000 ounces per year
• Completed feasibility study for construction of a carbon-in-leach plant at Los Filos
• Received permits for three portal locations for an exploration ramp in anticipation of underground development at Aurizona, continued to drill the underground Mineral Resource and advanced the expansion feasibility study
• Drilled 187,000 metres across the portfolio with a focus on Mineral Reserve growth and mine life extension
• Exploration confirmed district potential from multiple near-mine and regional mineral discoveries in the Bahia Belt between Fazenda and Santa Luz

Responsible mining

• Entered into wind and solar power arrangements for select Brazil operations, which will result in reduced greenhouse gas emissions and are expected to achieve approximately $70 million in cost savings over the 10-year contract periods
• Approved a greenhouse gas emissions reduction target of 25% by 2030 compared to the “business-as-usual” emissions forecast if no intervention measures were taken
• Submitted second year of data to the Carbon Disclosure Project and updated the Company’s Tailings Management Report
• Expanded environment, social and governance reporting disclosure to include Global Reporting Initiative and Sustainability Accounting Standards Board metrics

CONSOLIDATED OPERATIONAL AND FINANCIAL HIGHLIGHTS

In Q4 2022, the Company sold 30% fewer gold ounces compared to Q4 2021 primarily due to lower production at Mesquite, Los Filos and Aurizona, offset partially by higher production at Fazenda and the contribution of production at Santa Luz, which achieved commercial production at the end of Q3 2022. Lower production at Mesquite was mainly due to mine sequencing, with fewer ounces added to the leach pad during the Quarter. Lower production at Los Filos was mainly due to a shortage of explosives due to union strikes at a supplier, which reduced the amount of open pit and underground material moved and delayed ounces being delivered to the leach pad, and by slower recovery curves for a portion of the ore that has a higher copper content. Lower production at Aurizona was mainly due to ore access issues caused by an abnormally long rainy season in 2022 and by lower-than-expected levels of waste movement, both of which impacted access to higher-grade ore in the lower benches of the Piaba open pit. Higher production at Fazenda was mainly due to higher grades and larger volumes mined from the open pit, offsetting lower volumes and grades mined from underground ore sources.

For the year ended December 31, 2022, the Company sold 12% fewer gold ounces compared to the year ended December 31, 2021. The decrease was mainly due to lower production at Aurizona, RDM, Mesquite and Los Filos. Aurizona experienced a longer rainy season in 2022 and lack of productivity in waste movement, both of which affected ore access during the year. As a result, throughout most of the year Aurizona relied on processing ore that was lower grade than expected. RDM was impacted by a temporary suspension of mining and plant operations in mid-May due to a delay in receiving permits for the scheduled tailings storage facility raise. RDM transitioned in Q3 2022 to processing low-grade stockpile material rather than mining in-situ ore. RDM production was also impacted by a temporary stoppage of mining operations for most of December while the Company applied for a license to process low grade ore from additional stockpiles. Mesquite production was lower driven by a longer leach cycle for ore tonnes stacked in 2022 compared to 2021. Los Filos production was lower impacted primarily by a shortage of explosives due to union strikes at a supplier, which reduced the amount of open pit and underground material moved and delayed ounces being delivered to the leach pad, and by slower recovery curves for a portion of the ore that has a higher copper content.

The decreases were partially offset by increased production at Fazenda, attributable to higher grades and volumes mined from the open pit, and the contribution of production at Santa Luz, which commenced production at the end of Q1 2022 and achieved commercial production at the end of Q3 2022.

In Q4 2022, earnings from mine operations were $32.0 million (Q4 2021 – $99.4 million) and for the year ended December 31, 2022 were $85.0 million (year ended December 31, 2021 – $230.6 million). Earnings from mine operations were lower in Q4 2022 compared to Q4 2021 mainly due to lower gold production and higher operating costs resulting from inflationary pressures, particularly from increased prices of oil and key consumables such as cyanide, lime and explosives.

Earnings from mine operations were lower for the year ended December 31, 2022 compared to the comparative period of 2021 primarily due to lower earnings from mine operations at Aurizona and Los Filos. Aurizona’s earnings from mine operations decreased by $60.9 million due to selling 24% fewer ounces of gold and incurring higher processing costs, including power, cyanide and grinding media costs, as well as increased maintenance costs. Los Filos’ earnings from mine operations decreased by $57.6 million primarily due to selling 8% fewer ounces of gold, as well as an increase in open pit and underground mining costs.

Net income in Q4 2022 decreased to $22.6 million compared to net income of $109.0 million in Q4 2021. For the year ended December 31, 2022, the Company had a net loss of $106.0 million compared to net income of $554.9 million for the comparative period in 2021. The lower net income in Q4 2022 and net loss for the year ended December 31, 2022 were impacted by lower earnings from mine operations. Results for the year ended December 31, 2022 were also impacted by a loss on the change in fair value of share purchase warrants of $69.9 million and a foreign exchange loss of $7.8 million, compared to gains of $85.8 million and $0.2 million, respectively, during the comparative periods in 2021. Results for the year ended December 31, 2021 also included a $186.1 million gain on reclassification of investment in Solaris, a $81.4 million gain on bargain purchase price of Premier, and a $95.7 million gain on the sale of the Pilar mine and sale of a partial interest in Solaris.

In Q4 2022, adjusted EBITDA was $74.7 million (Q4 2021 – $130.4 million) and for the year ended December 31, 2022 was $168.7 million (year ended December 31, 2021 – $305.0 million). In Q4 2022, adjusted net income was $7.5 million (Q4 2021 – adjusted net income of $68.3 million) and for the year ended December 31, 2022 was a net loss of $90.8 million (year ended December 31, 2021 – adjusted net income of $62.0 million). Adjusted EBITDA and adjusted net income were impacted by lower earnings from mine operations compared to the comparative periods in 2021.

2023 GUIDANCE AND OUTLOOK

For 2023, the Company expects to produce 555,000 to 625,000 ounces of gold. The midpoint of 2023 guidance of 590,000 ounces represents an increase of more than 71,000 ounces compared to normalized 2022 gold production of 519,000 ounces (calculated by deducting 13,631 ounces of production from Mercedes, which the Company no longer owns). Cash costs for 2023 are estimated at $1,355 to $1,460 per oz, with AISC of $1,575 to $1,695 per oz.

Cash costs for 2023 are forecast to be similar to 2022 and reflect management’s expectation that inflation has largely plateaued, but input costs are expected to remain high throughout 2023. In addition, management expects relative stability in the Brazilian and Mexican currency exchange rates against the US dollar. Relative to many other countries’ currencies, the Brazilian Réal and Mexican Peso were top performers against the USD in 2021 and 2022.

Sustaining expenditures in 2023 of $137 million includes investing: (i) $38 million in capitalized stripping programs, with the largest investments at Los Filos and Aurizona, (ii) $25 million in refurbishing equipment, most of which relates to the Los Filos open pit and underground fleets and processing equipment, and (iii) $37 million for TSF lifts at all four Brazilian operations.

Production is expected to grow each quarter through 2023 and costs are expected to decrease accordingly. Approximately 55% of gold production and 85% of operating cash flow is weighted into the second half of the year. Assuming the Company achieves the mid-points of cost guidance, cash costs per oz in the first half of 2023 are expected to be $1,460 per oz, decreasing to $1,360 per oz in the second half of the year. Likewise, AISC in the first half of 2023 are expected to be $1,755 per oz, decreasing to $1,530 per oz in the second half of the year.

The Company’s primary development focus for 2023 continues to be construction at Greenstone, with Equinox Gold’s 60% share of construction capital in 2023 forecast at $277 million. In addition, the Company expects to spend $8 million on Castle Mountain phase two optimization, engineering and permitting, and $8 million on Fazenda underground development and exploration.

The Company may revise guidance during the year to reflect changes to expected results.

SELECTED FINANCIAL RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 AND 2021

Additional information regarding the Company’s financial results and the Company’s business strategy are available in the Company’s 2022 audited consolidated Financial Statements and accompanying MD&A for the three months and year ended December 31, 2022, which will be available for download on the Company’s website at www.equinoxgold.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

ABOUT EQUINOX GOLD

Equinox Gold is a growth-focused Canadian mining company with seven operating gold mines, construction underway at a new project, and a clear plan to achieve more than one million ounces of annual gold production from a pipeline of development and expansion projects.