Site visit: Equinox Gold’s newest mine to launch it into the 1M oz per year club

GERALDTON, ONT. — Through the slight haze of dust kicked up by a passing haul truck loaded with ore at Equinox Gold’s (TSX: EQX; NYSE: EQX) Greenstone mine, visitors can just see the deepening open pit that will soon take the company to its goal of becoming a million oz. per year producer.

The Vancouver-based miner poured first gold at Greenstone – the biggest of its eight operations – in May. Now, in late August, it’s reached 60% capacity and has welcomed dozens of guests to celebrate its official opening.

“Greenstone is now, by far, our largest gold mine,” CEO Greg Smith said beside a towering, 240-ton haul truck on the sidelines of the mine’s opening ceremony. “For a number of years, we’ve had a pretty well defined and well communicated goal to build a million-ounce gold producer. It represents a certain level of scale that we think is a good size for a multi-mine gold company.”

Watch a video of the site visit

As more giant shovels load up the trucks with fresh ore from the pit, now only 50 metres deep, the company will reach 80% capacity in the coming months. By the end of the year, Equinox plans to reach full capacity at the mine.

Over the first five years, Greenstone is expected to produce around 400,000 oz. per year. That’s more than double the capacity of Equinox’s second-highest producer Los Filos in Mexico, at 155,000 to 175,000 oz. annually. Across its mines in North America, Mexico and Brazil, its 2024 guidance totals 945,000 ounces.

Over its entire 14-year life Greenstone, just south of the town of Geraldton, about 275 km northeast of Thunder Bay, should churn out an average of 360,000 oz. per year, with a carbon-in-pulp processing facility putting out 27,000 tonnes per day.

That’s all possible because of the deposit’s size under the Geraldton area, sitting on the eastern part of the Beardmore-Geraldton greenstone belt. The region’s first foray into gold mining dates back almost 100 years. From 1938 to 1970 the former Hard Rock, MacLeod-Cockshutt and Mosher companies mined the yellow metal producing more than 2 million oz. of gold.

Barrick Gold (TSX: ABX; NYSE: GOLD) predecessor Lac Minerals also explored underground reserves at the former mines in the 1980s.

Low-cost, high-grade

Equinox boasts Greenstone will be one of the lowest cost gold mines in the world, with all-in sustaining costs forecast at $840 to $940 per ounce.

That claim is based on Greenstone’s deposit having some of the highest grades in Canada, Smith said.

“We get more gold for every tonne that we mine,” he said. “And also, volume. It’s a big mine.”

Proven and probable reserves total 135.3 million tonnes grading 1.27 grams gold per tonne for 5.5 million ounces.

“We’ve got a lot of exploration potential in the underground, and then some satellite deposits (to the) West (such as) the Brookbank deposit and the Beardmore area… across the land package we have.”

Equinox shares were down 2.3% to $7.19 apiece on Friday, valuing the company at $3 billion. Its shares traded in a 52-week range of $5.36 and $8.79.

M&A, gold price boost

Construction of the $1.2-billion project began in 2021, a year after Equinox acquired a 50% interest in the project through its acquisition of Premier Gold Mines. It gained an additional 10% from Orion Mine Finance in April 2021. It acquired full ownership of Greenstone five months ago, in a US$995-million cash-and-shares deal for partner Orion’s 40% interest.

Greenstone’s path forward is smoothed for now by the high price of gold, which sat at US$2,507.50 per oz. on Thursday, slightly under its historic high of US$2,532 per oz. two weeks earlier.

“(This) takes a lot of pressure off,” Smith said. “It’s a huge win for us when you’re commissioning a mine at this scale into a very strong gold price. As you ramp it up, we’ve already got to the point where the mine is basically funding itself.”

Cheers and tears

The mood was celebratory at the mine opening — complete with traditional dancing and drumming from local First Nations, speeches by politicians including Ontario mines minister George Pirie and Indigenous Services Canada minister Patty Hajdu, and even parfaits with gold bar-shaped pieces of cake for dessert. But some of the speakers touched on the challenges that preceded the happy occasion.

Speaking on a stage beside Greenstone’s truck shop, Eric Lamontagne, outgoing general manager of the mine recalled a difficult meeting several years ago in the Geraldton community centre.

“One challenge appeared immediately, and it was to secure the footprint of the pit,” he said. “Sixty-five families or houses were impacted, and we understood that this was a very sensitive aspect of the project. We asked them to relocate.”

Negotiations were successful and the families were relocated, but there was also a lot of work in hammering out agreements with four local First Nations and the Métis Nation of Ontario (MNO).

“It took four years, but with the concessions made by both parties, we were able to close the gap and sign agreements. I cried, believe me, because some days I was discouraged and did not believe that it will be possible.”

The result of those negotiations from 2015 to 2019 were Impact Benefit Agreements (IBAs) with the MNO, Animbiigoo Zaagi’igan Anishnaabek and the First Nations of Aroland and Long Lake 58. The agreements provide partnerships with First Nations businesses, as well as job training and employing a full-time workforce that is 25% Indigenous. Greenstone is expected to employ about 500 people by next year.

Long Lake First Nation Chief Judy Desmoulin said she’s optimistic about the relationships that Equinox has formed with local First Nations.

“Our First Nations never received or profited or benefited from anything (from previous mines),” she said. “As you go through our First Nations in this area, you see the under-development that we’re in, and it’s because we have not benefited from our own resources and our own lands.”

But Desmoulin said it’s been different with Greenstone, and her community was included “from the get go.”

She added: “And now that we understand and know what can be done with this project, we know it can be done with the rest that are going to come our way.”

On hand for the celebration, industry veteran and Equinox board chair Ross Beaty noted the tremendous effort required to get the mine — the biggest he’s ever been involved with over a multi-decade career — to this stage.

“It’s like an ecosystem,” he said. “It’s employees, it’s contractors, suppliers, Indigenous communities we work with as partners, all the governments. Everybody has come together to make this a success.”