Equinox Gold halts RDM mine in Brazil due to permit delay 

Equinox Gold (TSX: EQX, NYSE: EQX) has  suspended operations at its RDM mine in Brazil for at least two months as scheduled permits needed to raise its tailing dam were delayed, the company said on May 16.  

The company has been applying for permits to raise its TSF every year since 2018 after it altered the design of its facility and changed it from a centreline to a downstream design. It last received a permit in 2021, which allowed it to raise the facility to its current level, but the miner is yet to receive permission for the next TSF raise   

When asked about the reason behind the delay, Equinox’s VP of Investor Relations, Rhylin Bailie, replied “bureaucracy,” in an emailed response to The Northern Miner. “Everyone was aware of and in support of the change to downstream design, but for whatever reason for the current raise the permit has been delayed because we’re using a design configuration different than the original (centerline) license to operate.”

Bailie, however, said that the project had been designated as a top priority for the state and that Equinox is confident of getting an approval soon.

Located in Minas Gerais state of southeastern Brazil, RDM, which began production in early 2014 as an open pit operation, is one of the company’s smaller mines. Its TSF is raised on an intermittent basis throughout the life of the mine to store additional tailings produced from ongoing operations, the Equinox said.  

The mine was estimated it could produce 70,000 to 80,000 oz. gold in 2022 or about 11% of the company’s consolidated production. Due to the suspension, the company has withdrawn its 2022 production guidance for the mine.

“While the suspension will obviously have an impact on RDM’s production and cash flow for the year, we do expect to resume operations within two months from receipt of the permit. We’ll update guidance for RDM once it’s back in full operations,” said Bailie. 

During the first quarter of 2022, RDM produced 7,160 oz. gold, which was lower than the 13,362 oz. gold produced in the previous quarter. Equinox said production was lower in that quarter because  the company had suspended operations for just over two weeks to reduce water levels in the TSF to comply with the regulatory requirements.  

Equinox had also pumped water from the TSF into the open pit, to comply with the requirements, which meant higher-grade ore sources in the bottom of the pit were not available for mining.   

“Consequently, RDM was reliant on processing lower-grade stockpile material for 80% of the ore processed during the quarter,” said Equinox in a security filing on May 3, in which the company had first disclosed the possibility of temporarily suspending the mine.  

A day after the disclosure on May 3, Equinox Gold’s share value fell from $9.19 per to $7.87 on the TSX exchange.  

Scotiabank analyst Ovais Habib described the suspension as a mild negative, in a research note, since the company had “previously flagged” the possibility of such an occurrence.

At press time in Toronto on May 16, shares of the company were trading at $6.90, down 24¢ or 3.3%, within a 52-week trading range of $6.87 and $11.49. The company has 303.5 million common shares outstanding.