Equinox Gold (TSX: EQX) says its majority-owned Greenstone project in northern Ontario is more than two-thirds complete, on schedule to pour gold in next year’s first half, and — most impressively — on budget.
The US$1.2-billion project is being developed as a 60:40 partnership by Equinox and New York-based Orion Mine Finance Group. Greenstone, located about 100 km north of Lake Superior, is slated to be one of Canada’s largest gold mines. It aims to produce more than 400,000 oz. of gold annually for the first five years and more than 5 million oz. over its proposed 14-year life.
Vancouver-based Equinox eased inflationary pressures on construction through savings opportunities or absorbed them through a US$177-million contingency budget, it said in a news release on Wednesday. To date, 71% of all construction has been contracted and US$680 million has been spent. Of the remaining US$550 million left in the budget, 30% is on a fixed-price basis.
“The construction effort is shifting to interior mechanical, electrical and piping installation during the winter months,” Greg Smith, president and CEO of Equinox Gold, said in the release. “Detailed commissioning and operation readiness planning is well underway to prepare for first gold pour in the first half of 2024.”
Work still to be done includes installing the ball mills this quarter, a crusher in the third quarter and realigning Highway 11 by the end of the year, Equinox says. Commissioning is planned for next year.
A company rundown shows completion levels: earthworks 73% complete, concrete 77%, structural steel 62%, tailings storage facility 47%, mill 41%.
Work that’s been finished includes the Ministry of Transportation patrol yard, the diversion of Goldfield Creek, and the permanent effluent water treatment plant. The new truck shop’s first four bays are in use and the 14-km natural gas pipeline is ready for commissioning by June.
Pre-production mining began in September ahead of schedule, Equinox says. The first four haul trucks and shovel excavated more than 2.5 million tonnes of material – ore, waste and overburden – by the end of last year.
Haywood Capital Markets continues to recommend the stock, noting the company has grown from a non-producer in mid-2018 to running seven gold mines such as its Los Filos mine complex in Mexico and Castle Mountain in California as well as a pipeline of growth projects. While Greenstone is on schedule, Haywood mining analyst Kerry Smith expressed some concerns.
“The operations have struggled, and Equinox needs to start hitting their targets to win back investors,” Smith wrote in a note. “With higher-cost production, Equinox is highly leveraged to the gold price.”
Mining magnate Ross Beaty is chairman and owns 8% of the company’s shares.
Equinox shares rose nearly 4% to close at $6.48 in Toronto on Wednesday, within a 52-week trading range of $2.35 and $9.07, valuing the company at about $2 billion.
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