Equinox Gold rises on record output

Shares in Equinox Gold (TSX, NYSE-A: EQX) jumped on Thursday after the company reported record third-quarter production alongside low costs.

The Canadian gold miner’s output during the three months to Sept. 30 totalled 236,382 oz., its most ever, partly due to significant quarter-on-quarter increases in mining rate (10%) and mill grade (13%) at the Greenstone mine in Ontario. It produced 56,029 ounces.

Elsewhere, Equinox’s Nicaragua and Brazil operations contributed 71,119 oz. and 67,629 oz., respectively. Mesquite in California added 27,642 oz. and the now sold Pan mine in Nevada produced 10,797 ounces. During the quarter, the Valentine mine in Newfoundland also started production, with a relatively minor output of 609 ounces.

“Equinox delivered a solid financial quarter,” BMO Capital Markets mining analyst Kevin O’Halloran said in a note late on Wednesday. “Adjusted earnings per share of 19¢ beat the BMO and consensus [of other analysts] estimates of 15¢ and 13¢. Operating cashflow roughly matched our forecast after working capital changes, while free cash flow was modestly below due to higher capital spending.”

The company’s Toronto-listed stock gained 8.7% to C$16.24 apiece by Thursday afternoon for a market capitalization of C$12.9 billion.

Financials

High gold prices helped Equinox report third-quarter net income of $85 million (vs $23.8 million in the second quarter) on revenue of $819 million with earnings before interest, tax, depreciation and amortization at $335 million.

Mine-site free cash flow before changes in non-cash working capital was $304.3 million. BMO’s O’Halloran said the miner’s all-in sustaining costs of of $1,833 per oz. was roughly in line with the bank’s estimate. 

Together, the company’s operating mines produced 634,427 oz. for the year to date, on track to deliver the mid-point of its 2025 consolidated production forecast, which it set in June at 785,000 to 915,000 ounces.

Nevada sale

These results allowed Equinox to strengthened its balance sheet, with debt reduction of $139 million and a cash position of $348.5 million at quarter-end. Since then, it has added another $88 million in cash from the sale of Nevada assets.

Equinox CEO Darren Hall said the company is expecting a strong finish to the year, with Greenstone continuing to improve, Valentine ramping up well, and Nicaragua and Brazil reliably contributing to production and cash flow.

“The company remains on track to deliver the mid-point of our 2025 consolidated production guidance, after the divestment of our Nevada assets, and before considering any production from Valentine,” Hall said.