Equinox Gold (TSX: EQX) posted third quarter revenue of US$1.05 billion, up 36% from the second quarter. The quarter included the first two months of the former Orla Mining assets.
Earnings fell. Net income dropped to US$62.5 million, or US$0.06 per share, from US$230.6 million, or US$0.29 per share, in the prior quarter. Most of the decline came from non-cash charges tied to the merger, including a US$76.6 million fair value adjustment on acquired inventory and a US$50.0 million loss on the company’s warrant liability. Income tax expense of US$111.9 million also weighed on the result.
On an adjusted basis, net income rose to US$199.3 million, or US$0.19 per share, from US$0.16 per share in Q2. Adjusted EBITDA climbed 49% to US$533.0 million.
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The balance sheet improved as well. Cash rose to US$527.9 million from US$317.8 million at the end of June, while total debt slipped to US$512.0 million from US$583.0 million. As a result, the company moved from net debt of US$265.2 million three months earlier to net cash of US$15.9 million. Liquidity, including the undrawn revolver, stands at about US$1.2 billion.
Gold production totalled 237,019 ounces, up from 176,836 ounces in Q2, with Musselwhite and Camino Rojo contributing from August onward. Valentine was the strongest asset in the quarter, lifting output 6% on higher grades and running 26% above nameplate throughput in September.
Mesquite was the weak spot. It produced 17,116 ounces at an all-in sustaining cost of US$3,250 per ounce after encountering ground instability in one of its pit phases. A scheduled grinding roll replacement also cut throughput at Greenstone.
Consolidated cash costs fell 9% to US$1,654 per ounce, and all-in sustaining costs eased to US$2,091 per ounce from US$2,175. With a realized gold price of US$4,157 per ounce, the margin is above US$2,000 per ounce.
Guidance will be harder to hit. Equinox produced 611,484 ounces through nine months and expects to finish at the low end of its 870,000 to 920,000 ounce range. That would require a fourth quarter well ahead of Q3. Year to date AISC of US$2,070 per ounce is also above the full year range of US$1,900 to US$2,000, and the company now expects to finish at the top of that range.
The company is counting on the fourth quarter, the first full quarter with Musselwhite and Camino Rojo in the portfolio, to close that gap. Jason Simpson, who took over as CEO on November 1, said the third quarter’s results are “only a partial reflection of the transformation of Equinox Gold.”
Equinox Gold last traded at $17.02 on the TSX.
