Equinox Poised for Top-Tier Status with Greenstone Mine’s First Gold Pour

By Peter Kennedy

Equinox Gold Corp. [EQX-TSX, EQX-NYSE American] is capitalizing on a rare opportunity to bring one of Canada’s largest gold mines into production as the market witnesses near record high bullion prices.

The recent gold pour at the Greenstone mine in northern Ontario marks a potentially pivotal moment for Equinox, an Americas-focused company that aims to join the ranks of top tier gold miners with annual production of over one million ounces of gold.

The high-grade open pit Greenstone mine forms a key component of that strategy because it is expected to produce over 400,000 ounces of gold annually during the first five years of commercial production.

It makes Greenstone a cornerstone asset in a portfolio of seven other mines, which produced 564,000 ounces of gold in 2023, including 155,000 ounces in the fourth quarter. This year the company has set a production target of between 730,000 ounces and 830,000 ounces at an all-in-sustaining cost (AISC) of US$1,565 to US$1,675 an ounce. That includes up to 195,000 ounces from Greenstone.

“We have always had a long-term ambition of reaching one million ounces of gold production per year. There is nothing special about that number. But it is an indicator of scale, a company of a certain size, a certain market cap,’’ said Equinox President and CEO Greg Smith.

Equinox was launched six years ago by company Chair Ross Beaty, a Vancouver-based mining company builder. His previous track record of success includes Pan American Silver Corp. [PAAS-TSX, NASDAQ]. He currently holds a 6.3% interest in Equinox, which traded on June 12, 2024, at $7.18 in a 52-week range of $8.79 and $5.36.

“The markets reward scale,’’ Beaty said recently. “When we started Equinox, we wanted to go big, and we wanted to go gold and try to catch what I thought was a very bullish sentiment in the metal price.”  He said Equinox aims to occupy a space in the gold mining sector that was vacated when another Canadian company, Goldcorp was acquired by Newmont Corp. [NGT-TSX, NEM-NYSE] in 2019.

From a standing start in early 2018 Equinox has assembled a portfolio that includes eight operating mines. Aside from Greenstone, they include the Mesquite and Castle Mountain mines in California, the Los Filos mine in Mexico, plus the Aurizona, Fazenda, Santa Luz and RDM mines in Brazil.

In December 2020, Equinox secured an initial 50% interest in the Greenstone mine via its acquisition of Premier Gold Mines Ltd., a deal that put the company in a joint venture with Orion Mine Finance, which owned the other 50%.

Equinox subsequently purchased an additional 10% stake from Orion for US$51 million (plus certain contingent payment obligations) in April 2021. Three years later, in April 2024, Equinox bought Orion’s remaining 40% stake for $995 million to consolidate 100% ownership of the mine into Equinox.

Construction began in October 2021 with the initial capital expenditure pegged at US$1.3 billion, including a US$108 million contingency. Production commenced on schedule in the first half of 2024, with first gold pour on May 22.

Under the current mining plan, Greenstone on its own, is unlikely to get Equinox to its one million ounces per year target. That will require expanded production at three of the company’s other mines.

“It’s a portfolio approach and within that portfolio we have some other expansion opportunities,’’ said Smith.

Building a carbon-in-leach plant to process higher grade ore at Los Filos, for example, could increase production from 175,000 to over 300,000 ounces at that mine.

At Castle Mountain, where the project is being developed in a phased ramp-up scenario, Equinox is permitting an expansion that would increase production from 25,000 to over 200,000 ounces per year. The company has said the phase 2 expansion will include milling and carbon-in-leach (CIL) processing of higher-grade ore.

“At Aurizona, later this year we are going to start initial activities to go underground,’’ Smith said. “That deposit underneath the open pit looks like it just goes on forever. So, I think long term, we are going to have a fairly large underground operation at Aurizona, but we are at the initial stages of that right now.”

Equinox moved to acquire full ownership of Greenstone because it saw a rare opportunity to own 100% of a tier one mining operation.

When Equinox acquired the asset, proven and probable reserves stood at 5.54 million ounces of grade 1.27 g/t gold. An estimated 3.1 million ounces of inferred underground resources are not included in the reserves estimates or in the current mine life economics.

Greenstone is expected to deliver 414,000 ounces of average annual gold production with an average head grade of 1.45 g/t gold for the first five years, and 358,000 ounces average annual gold production over the initial 14-year mine-life.

Greenstone, which was formerly known as the Hardrock property, is located approximately 275 kilometres northeast of Thunder Bay, Ontario.

The project resides in a district with active mines and processing facilities located at Hemlo and Timmins, and therefore has access to good transportation and regional mining related infrastructure. The mine is right on the Trans-Canada Highway and the nearby town of Geraldton hosts a municipal airport.

Equinox Gold Corp.

There are several past producing gold mines on the property, including the Hard Rock, MacLeod-Cockshutt, Mosher (all later combined as the Consolidated Mosher), Little Long Lac, Banfield, Jellicoe and Magnet mines. There are also a number of less significant historical occurrences of gold mineralization within the property boundary.

Acquiring the additional 40% stake in Greenstone is expected to add 160,000 ounces of gold per year to Equinox’s production forecasts. Accounting for roughly 40% of the company’s annual production, the mine will also improve the company’s cost structure with all-in-sustaining costs expected to be less than US$975 an ounce.

Equinox is establishing itself as a premier Americas-focused gold miner at a time when gold is trading at US$2,313.46 an ounce (June 11, 2024). Beaty is betting that the price will go higher.

It is a view that rests in part on record-breaking gold purchases by central banks last year coupled with unprecedented retail purchases in Asia. Factors that could take the gold price higher, he said, include lower interest rates, a weaker U.S. dollar and continuing gold purchases by central banks. Beaty recently said he doesn’t see why any of those fundamentally bullish factors are likely to change in the near future. “So certainly, I would expect gold to trade at new highs this year. When and how high, who knows, but generally speaking I’m still bullish on gold.”