Equinox nears Greenstone’s golden finish line
Equinox Gold (TSX: EQX; NYSE: EQX) is in the final stages of completing its $1.2-billion Greenstone mine build in northern Ontario, which is slated to pour first gold under budget and on schedule by the middle of 2024.
Completing the mine in Geraldton will transform the company’s production profile, adding about 240,000 oz. gold to Equinox’s forecasted 590,000 oz. this year.
“Investing in Greenstone was a no-brainer for us. It’s got everything you would ever look for in a mine,” Rhylin Bailie, Equinox Gold’s vice president for investor relations, told The Northern Miner during a recent interview. “[And achieving production next year] will be transformational for Equinox because Greenstone is adding another 240,000 oz. of production per year and will be our biggest mine by far,” Bailie said.
After construction started at Greenstone (formerly known as Hardrock) in October 2021, it’s now more than 90% complete, Bailie said. She pointed out that Equinox places strategic value on Greenstone because all the ingredients for a successful, long-lived mining operation were in place in Ontario.
Greenstone is fully permitted and has strong support from First Nations in Ontario, considered one of the top mining jurisdictions globally, with sufficient infrastructure to service the operation. “It’s like watching your baby graduate,” she said. “It’s very exciting to see the progress at site as we advance toward production.”
Bailie is confident the commissioning of Greenstone will translate into a paradigm shift for the company’s valuation.
“We fully expect to start climbing our way up the valuation ladder over the next few years as we execute on each of our development projects. But the big step-change is going to come in the first half of next year with Greenstone,” she says.
Greenstone, which is 60-40 owned by Equinox and Orion Mine Finance Group, will be Equinox’s first gold mine in Canada and one of the country’s largest, with production at about 400,000 oz. per year (in total) in the first five years and 350,000 oz. average over the 14-year life of the mine. The project features an initial open pit mine and a 27,000-tonne-per-day carbon-in-pulp processing facility.
The deposit contains 3.3 million oz. of gold in 81.2 million tonnes of proven and probable reserves grading 1.27 grams gold per tonne. Measured and indicated resources are 9.5 million tonnes grading 2.9 grams gold, containing 881,000 ounces.
Following Greenstone, Castle Mountain in California stands as the next significant expansion, which might add another 180,000 oz. to the growing production base.
“We have grown our production from 25,601 oz. gold in 2018 and have the assets in place in our pipeline to produce more than 1 million oz. gold in the coming years,” Bailie said.
Haywood Securities mining analyst Kerry Smith said in an Aug. 1 note to clients that Greenstone will be a key value driver for the company. With a full year of production from Greenstone expected in 2025, Equinox’s production will jump about 40% to around 835,000 oz. in the analyst’s model, with consolidated cash costs dropping about 10%. The stock remains a top pick for Haywood, and is said to have “excellent leverage to gold,” up 51% in the year to date versus gold up 7%.
Under the leadership of Ross Beaty, the company has come a long way. Since 2017, the company built its portfolio with strategic acquisitions, buying names like the Mesquite mine in California from New Gold (TSX: NGD; NYSE AM: NGD) and slurping up miners such as Leagold Mining and Premier Gold. It currently has seven operating mines from Brazil through Mexico, the U.S. and soon Canada. Previously, the team had successfully executed mine builds at Castle Mountain, and at Aurizona and Santa Luz in Brazil.
Quoted at $6.34 per share in Toronto Thursday, Equinox shares are up 43% over the past 12 months, having touched $3.23 and $7.89. It has a market capitalization of $2 billion.
