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Equinox Gold Reports Third Consecutive Quarter of Record Results with 128,400 Ounces of Gold Sold and Earnings from Mine Operations of $98 Million

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Equinox Gold Reports Third Consecutive Quarter of Record Results with 128,400 Ounces of Gold Sold and Earnings from Mine Operations of $98 Million

 

 

 

 

 

Equinox Gold Corp. (TSX: EQX) (NYSE American: EQX) is pleased to report its third quarter 2020 summary financial and operating results. The Company’s unaudited condensed consolidated interim financial statements and related management’s discussion and analysis for the three and nine months ended September 30, 2020 are available for download on SEDAR, on EDGAR and on the Company’s website.

 

The Company will host a conference call and webcast today commencing at 8:00 am PT (11:00 am ET) to discuss third quarter results and upcoming milestones. Further details are provided at the end of this news release.

 

“Equinox Gold again delivered record results with more than 128,000 ounces of gold sold, $98 million in earnings from mine operations and adjusted net income of $39 million,” said Christian Milau, Chief Executive Officer. “Proactive COVID-19 testing and enhanced health and safety protocols have allowed us to safely operate our mines while protecting both the health and economic wellbeing of our workforce and local communities. Unfortunately, a community blockade has temporarily suspended operations at Los Filos. We have been meeting with the community to understand and discuss their concerns and continue to seek a long-term solution so Los Filos can resume normal operations and continue to provide benefits to all stakeholders.

 

“We continue to deliver on our organic growth projects, which will bring additional production and cash flow to the Company. We commenced production at our seventh gold mine in October with first gold pour at Castle Mountain, and advanced the Castle Mountain Phase 2 expansion study with results expected in Q1 2021. We have also commenced full construction of the Santa Luz project in Brazil, which will add 100,000 ounces of annual gold production for an initial 9.5-year mine life.”

 

HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

 

Operational and financial

 

  • Produced 124,867 ounces and sold 128,437 oz of gold
  • Proactive response to COVID-19 global pandemic, including widespread testing of the workforce
  • Completed more than 3.2 million work hours with two lost-time injuries across all sites
  • Earnings from mine operations of $97.7 million
  • Net income of $11.8 million or $0.05 per share
  • Adjusted net income of $39.3 million(1,2) or $0.16 per share(1,2) after adjusting for non-cash expenses
  • Mine cash costs of $866/oz(1) and mine AISC of $1,035/oz(1,3)
  • Cash flow from operations before changes in working capital of $89.6 million ($61.3 million after changes in working capital)
  • Adjusted EBITDA of $99.4 million(1,2)
  • Expenditures of $19.3 million in sustaining capital and $13.5 million in expansion capital
  • All mines operating in line with guidance except for Los Filos, where mining activities have been temporarily suspended since September 3, 2020 as the result of a community blockade

 

Corporate

 

  • Cash and cash equivalents (unrestricted) of $310.7 million at September 30, 2020
  • Net debt(1) of $232.4 million at September 30, 2020, which includes $254.0 million of in-the-money convertible notes
    – Repaid $200 million of revolving credit facility
  • Promoted Doug Reddy from EVP Technical Services to Chief Operating Officer

 

Construction and development

Castle Mountain

  • Completed construction and commissioning of Castle Mountain Phase 1 Mine with no lost-time incidents
    – Ramp-up ongoing with full commercial production expected in Q4 2020
  • Phase 2 feasibility study targeted for completion in Q1 2021

 

Los Filos

  • Guadalupe open pit and Bermejal underground development activities proceeded for July and August but were temporarily suspended on September 3, 2020 as the result of a community blockade
  • Optimization study for new carbon-in-leach plant, heap leach expansion, updated mine planning and a Mineral Reserve and Mineral Resource update targeted for completion in early 2021

 

Santa Luz

  • Advanced early works construction activities, construction cost estimates and engineering for the retrofit and refurbishment of existing infrastructure in order to recommence production

 

Aurizona

  • Advanced underground drilling and technical studies to support a prefeasibility study for the potential to develop an underground mine to complement the existing open-pit mine

 

 

RECENT DEVELOPMENTS

 

  • Received Board of Directors approval to commence full construction of the Santa Luz project, with an approved construction budget of $103 million and expected gold pour in Q1 2022
  • Poured first gold at Castle Mountain Phase 1 Mine
  • Increased Mesquite Mineral Reserves by 28% and Measured & Indicated Mineral Resources by 94%
  • Withdrew Los Filos production and cost guidance; guidance for other mine sites remains unchanged
  • Announced changes to the Board of Directors, with Dr. Sally Eyre joining the Board of Directors and Mr. Peter Marrone stepping down
  • Investment in Solaris Resources Inc. (TSX-V: SLS) accounted for as an equity investment; the Company holds 25.8 million common shares with a market value of approximately C$126 million(4) at October 30, 2020
______________________
1 Mine cash cost per oz sold, AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted earnings per share and net debt are non-IFRS measures.  See Non-IFRS Measures and Cautionary Notes.
2 Primary adjustments were $8.6 million loss on the change in fair value of share purchase warrants and $10.2 million unrealized loss on the change in fair value of gold hedge contracts.
3 Consolidated AISC per oz sold excludes corporate general and administration expenses.
4 Based on closing share price on October 30, 2020 of C$4.90 per share.

 

MANAGING COVID-19

 

Equinox Gold continues to proactively manage issues related to the COVID-19 pandemic to help protect the health, safety and economic wellbeing of its workforce and local communities. Designated site teams continue to respond to daily changes, circumstances and directives of government and health authorities, and maintain open communication with the Company’s workforce, community leaders and local health providers to develop and share strategies to manage COVID-19. The Company has initiated routine COVID-19 testing at all of its sites with the objective of identifying carriers early so they can self-isolate before inadvertently spreading the virus to others. Additional information regarding Equinox Gold’s COVID-19 response plan, preventive measures taken to date and the potential impact on operations is available in the Q3 2020 management’s discussion and analysis and on the Company’s website at www.equinoxgold.com.

 

OPERATING AND FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

 

 

    Three months ended Nine
months
ended
Operating data Unit Sep 30,
2020(1)
Jun 30,
2020(2)
Mar 31,
2020(2)
Sep 30,
2020(1)
Gold produced oz 124,867 127,016 88,951 340,834
Gold sold oz 128,437 125,824 82,629 336,891
Realized gold price $/oz 1,899 1,712 1,574 1,748
AISC per oz sold(3,4) $/oz 1,035 950 994 993
           
Financial data          
Revenue M$ 244.5 215.4 130.0 589.9
Earnings from mine operations M$ 97.7 78.0 41.7 217.4
Net income (loss) M$ 11.8 (66.9) 10.5 (44.5)
Earnings (loss) per share $/share 0.05 (0.29) 0.08 (0.22)
Adjusted EBITDA(4) M$ 99.4 77.4 46.4 223.2
Adjusted net income(4) M$ 39.3 19.1 13.4 71.9
Adjusted earnings per share(4) $/share 0.16 0.08 0.09 0.35
           
Balance sheet and cash flow data          
Cash and cash equivalents (unrestricted) M$ 310.7 494.1 303.1 310.7
Net debt(4) M$ 232.4 244.3 446.8 232.4
Operating cash flow before changes in          
working capital M$ 89.6 59.9 20.3 169.8
   
(1) Results for the three and the nine months ended September 30, 2019 are not presented as they are not readily comparable. During the three and nine months ended September 30, 2019, the Company had only the Mesquite and Aurizona mines in operation, with the Aurizona mine commencing commercial production on July 1, 2019. On March 10, 2020, the Company added four additional operating mines acquired through the Leagold Merger.
(2) As at September 30, 2020, the Company adjusted the fair values of heap leach inventory, mineral properties, plant and equipment and deferred tax liabilities in the Leagold purchase price allocation to reflect an updated estimate of conversion costs for heap leach inventory and useful lives of certain plant and equipment at Los Filos as of the acquisition date. The Company has updated financial results for the periods impacted. Net loss for Q2 2020 increased by $8.2 million and net income for Q1 2020 decreased by $0.4 million from previously reported figures. AISC per oz sold in Q2 2020 and Q1 2020 increased by $50 and $26, respectively, from previously reported figures.
(3) Consolidated AISC per oz sold excludes corporate general and administration expenses.
(4) AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted earnings per share and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

 

SELECTED FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

 

 

$ amounts in millions, except per share amounts Three months ended Nine months ended
Sep 30,
2020
Sep 30,
2019
Sep 30,
2020
Sep 30,
2019(1)
Revenue $        244.5 $         91.9 $        589.9 $       162.7
Operating expenses (110.4) (49.9) (284.4) (98.1)
Depreciation and depletion (36.4) (11.2) (88.1) (19.2)
Earnings from mine operations 97.7 30.8 217.4 45.4
Care and maintenance (12.1) (31.2)
Exploration (2.9) (0.9) (9.5) (7.0)
General and administration (8.1) (3.3) (24.7) (10.1)
Income from operations 74.6 26.5 152.0 28.2
Other expense (51.7) (14.9) (147.8) (35.7)
Net income (loss) before taxes 22.9 11.6 4.2 (7.5)
Tax expense (11.1) (3.5) (48.7) (4.3)
Net income (loss) and comprehensive income (loss) 11.8 8.1 (44.5) (11.8)
Net income (loss) per share attributable to Equinox        
Gold shareholders, basic and diluted 0.05 0.07 (0.22) (0.09)
   
(1) During the three and nine months ended September 30, 2019, the Company had only the Mesquite and Aurizona mines in operation, with the Aurizona mine commencing commercial production on July 1, 2019. During the nine months ended September 30, 2020, it had the Mesquite and Aurizona mines in operation and, on March 10, 2020, added four additional operating mines acquired through the Leagold Merger.

 

Increased revenue and earnings are due primarily to an increase in realized gold price and also increased gold ounces sold as the result of acquiring the Leagold mines in March 2020. Sales from the acquired sites contributed 139,260 oz for the period from acquisition on March 10, 2020 to September 30, 2020, generating revenue of $247.4 million. The Company’s realized gold price also increased to $1,899 per oz in Q3 2020 from $1,475 per oz in Q3 2019. For the nine months ended September 30, 2020, the increase in revenue is also partly attributed to a full nine months of production from Aurizona, which commenced operations on July 1, 2019. Care and maintenance is comprised primarily of expenditures associated with the temporary suspension and subsequent ramp-up costs at Los Filos, RDM and Pilar during Q2 2020 due to the COVID-19 pandemic, and with the temporary suspension of operations at Los Filos during Q3 2020 as the result of a community blockade. Also included in care and maintenance is $5.4 million of costs associated with mine development activities that would otherwise have been capitalized had development activities not been suspended due to COVID-19 and to the community blockade.

 

Other expense for Q3 2020 was largely driven by non-cash losses of $10.2 million on the change in fair value of gold hedge contracts that were acquired as part of the Leagold Merger as the result of an increase in the gold price, and by non-cash losses of $8.6 million on the change in fair value of share purchase warrants as the result of an increase in the Company’s share price. The Company’s share purchase warrants are considered derivatives for accounting purposes as they are to be settled in Canadian dollars, which differs from the Company’s US dollar functional currency. Accordingly, the Company’s share purchase warrants are recorded at fair value with changes in fair value recognized through profit or loss.

 

Additional information regarding the Company’s financial results and activities underway at the Company’s projects are available in the Company’s Q3 2020 Financial Statements and accompanying management’s discussion and analysis for the three and nine months ended September 30, 2020, which are 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/edgar.

 

ABOUT EQUINOX GOLD

 

Equinox Gold is a Canadian mining company with seven operating gold mines, construction underway at an eighth site, a multi-million-ounce gold reserve base and a clear path to achieve one million ounces of annual gold production from its pipeline of growth projects. Equinox Gold operates entirely in the Americas, with two properties in the United States, one in Mexico and five in Brazil. Equinox Gold’s common shares are listed on the TSX and the NYSE American.

 

Posted November 9, 2020

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