Equinox surges to 3-year high on Q2 results

Equinox Gold (TSX, NYSE-A: EQX) shares surged to their highest in more than three years after reporting second-quarter earnings results that beat analyst estimates while offering a positive outlook for the rest of the financial year.

For the three months ended June 30, the Canadian gold miner produced a total of 150,849 oz. across its operations, a 23% increase over last year and 4% higher than the previous quarter. This output excludes contributions from the Nicaragua operations and the Pan mine in Nevada that it acquired from Calibre during the quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) came to $200.5 million (C$277 million), and earnings per share (EPS) were 11¢, beating previous estimates, Canaccord Genuity analyst Jeremy Hoy said in a note on Thursday. 

“EQX posted strong EBITDA and EPS beats versus our estimates and consensus, driven by lower costs,” he said. 

Greenstone leads pack

The strong Q2 results are led by the Greenstone mine in Ontario, where mining rates rose 23% and processing rates improved 20% over the first quarter, Equinox CEO Darren Hall said in a release on Wednesday. 

The higher production, coupled with a higher realized gold price of $3,207 per oz., lifted Equinox’s quarterly revenue by nearly 78% and reversed its adjusted net income from a $46.4 million loss last year to a $56.7 million profit. 

Following the Q2 results, shares of Equinox jumped as much as 15% to C$10.80 apiece, the highest since April 2022, with a market capitalization of C$8.2 billion.

“We see substantial value in EQX’s portfolio, with a potential re-rate hinging on execution at Greenstone, delivery of Valentine [in Newfoundland], and consistent operational performance,” Hoy said. “Q2 results represent a meaningful step toward restoring investor confidence, in our view.”

BMO Capital, on the back of the new quarterly results, has raised its price target for Equinox to C$13 a share from C$11.50 previously.

Strong second half

Equinox is now entering a pivotal phase of growth and is expecting a strong second half of the year as it continues to ramp-up operations at Greenstone, Hall said. The mine, which entered commercial production last November, is expected to become one of Canada’s largest open-pit gold mines once in full production, averaging 330,000 oz. of annual output.

The company will also have full-quarter contributions from the newly acquired Calibre assets, which had 71,743 oz. of production prior to the transaction close.

“If the Calibre transaction had been effective from Jan. 1, 2025, our pro-forma consolidated revenue for the first half would have been approximately $1.33 billion,” Hall said.

Following the acquisition, Equinox issued in June a new full-year guidance forecast of 785,000-915,000 oz., which it expects to meet. However, the Castle Mountain and Los Filos mines, with a combined 3,470 oz. of output last quarter, were excluded.

Also not included in the guidance is the Valentine mine in Newfoundland, which is expected to enter production in the third quarter.

According to Hall, this quarter will be an “inflection point” for the company, driven by “full-quarter contribution from the Calibre assets, first ore processed at Valentine and continued improvement at Greenstone.”