Equinox Gold earns $22.3-million (U.S.) in 2020

2021-03-03 20:33 ET - News Release

Mr. Christian Milau reports

EQUINOX GOLD REPORTS OPERATING CASH FLOW OF $217 MILLION IN 2020

Equinox Gold Corp. has released its unaudited financial and operating results for the fourth quarter and fiscal year ended Dec. 31, 2020. These results are preliminary and could change based on final audited results. Equinox Gold's 2020 audited consolidated financial statements and accompanying management's discussion and analysis for the three months and year ended Dec. 31, 2020, will be released later this month. All financial figures are in United States dollars, unless otherwise indicated.

"Equinox Gold's 2020 results reflect delivery on the company's growth and diversification strategy. Our seven operating mines generated 477,200 ounces of gold and operating cash flow of $217-million in the year, compared to our 2019 production of 201,000 ounces of gold and $60-million in operating cash flow," said Christian Milau, chief executive officer. "Our acquisition of Premier Gold Mines will bring further scale and diversification with the addition of a producing mine in Mexico and a 60-per-cent interest in the construction-ready, world-class Hardrock project in Ontario, Canada. With strong cash flow from our operating mines and a healthy balance sheet, Equinox Gold is an excellent position to achieve ambitious goals in 2021 and beyond in terms of gold production and cash flow as we continue to develop our extraordinary pipeline of development and expansion projects."

Highlights for the full year 2020

Operational and financial

Completed more than 13 million work hours with nine lost-time injuries across all sites;

Implemented pro-active COVID-19 testing and safety protocols to keep the mines operating effectively while protecting the health, safety and economic well-being of the company's work force and local communities;

Exceeded revised production guidance with total production of 477,186 ounces of gold;

Mine cash costs of $849 per oz with mine all-in sustaining costs (AISC) of $1,027 per oz sold (1)(2);

Sold 471,786 oz of gold at average realized gold price of $1,783 per oz, generating revenue of $842.5-million;

Earnings from mine operations of $287.7-million;

Net income of $22.3-million or 10 cents per share;

Adjusted net income of $82.7-million or 39 cents per share, after adjusting for non-cash expenses (1)(3);

Cash flow from operations before changes in working capital of $231.7-million ($216.6-million after changes in working capital);

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $273.8-million (1)(3);

Expenditures of $76.3-million in sustaining capital and $92.8-million in non-sustaining capital (1);

Refinanced debt with low-cost $500-million corporate credit facility;

Cash and cash equivalents (unrestricted) of $344.9-million at Dec. 31, 2020;

Net debt of $200.3-million at Dec. 31, 2020 (including $278.9-million of in-the-money convertible notes) (1);

Corporate

Completed at-market merger with Leagold Mining, expanding the company's asset portfolio with four new mines in Mexico and Brazil and a development-stage project in Brazil;

Announced acquisition of Premier Gold Mines (TSX: PG), which will further increase diversification and scale with the addition of a producing mine in Mexico and a construction-ready project in Ontario, Canada;

Increased average daily share trading liquidity from $3-million in 2019 to more than $40-million in 2020;

Achieved inclusion in global indices including the GDX, GDXJ, FTSE and S&P/TSX composites;

Invested $10.4-million (Canadian) in Solaris Resources (TSX: SLS) to maintain an approximate 26-per-cent interest on a fully diluted basis; current market value of Equinox Gold's basic interest is approximately $195-million (Canadian);

Commenced on-line environmental, social and governance (ESG) quarterly reporting;

Increased technical expertise, governance oversight, and diversity with board and management appointments.

Construction, development and exploration

Completed construction and commissioning of Castle Mountain phase 1 mine with no lost-time incidents and achieved commercial production on Nov. 21, 2020;

Increased Mesquite mineral reserves by 28 per cent and measured and indicated mineral resources by 94 per cent;

Extended mine life at Mesquite, Aurizona and Fazenda with exploration success;

Completed maiden indicated resource for Tatajuba deposit at Aurizona;

Completed a positive PEA (preliminary economic assessment) (4) for potential Aurizona underground development showing 740,500 oz of gold production over a 10-year mine life, an after-tax NPV (net present value) (5-per-cent discount rate) (herein referred to as NPV5) of $288-million and an IRR (internal rate of return) of 38 per cent at $1,620/oz gold;

Completed 23,916 metres of deep drilling and advanced technical studies to support a prefeasibility study for potential Aurizona underground development;

Completed a positive feasibility study for Santa Luz showing 903,000 oz of gold production over an initial 9.5-year mine life, an after-tax NPV5 of $362-million and an IRR of 67 per cent at $1,600/oz gold;

Commenced construction at Santa Luz in Q4 2020;

Advanced Los Filos optimization study for new carbon-in-leach plant, heap leach expansion, updated mine planning, and a mineral reserve and mineral resource update; targeted for completion in H1 2021 (first half).

Financial and operating highlights for Q4 2020

Completed more than 2.9 million work hours with one lost-time injury across all sites;

Produced 136,352 oz of gold and sold 134,895 oz of gold, generating revenue of $252.6-million;

Mine cash costs of $848 per oz and AISC of $1,093 per oz (1)(2);

Earnings from mine operations of $95.3-million;

Net income of $89.4-million or 37 cents per share;

Adjusted net income of $33.9-million or 14 cents per share, after adjusting for non-cash expenses (1)(5);

Cash flow from operations before changes in working capital of $86.7-million ($83.0-million after changes in working capital);

Adjusted EBITDA of $79.4-million (1)(5);

Expenditures of $31.5-million in sustaining capital and $17.3-million in non-sustaining capital (1).

(1) Mine cash cost per oz sold, AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted EPS, sustaining capital, non-sustaining capital and net debt are non-IFRS (international financial reporting standards) measures.

(2) Consolidated AISC/oz excludes corporate general and administration expenses.

(3) Primary adjustments for full-year 2020 were $29.9-million loss on the change in fair value of warrants, $14.1-million unrealized loss on the change in fair value of foreign exchange contracts and $12.9-million unrealized loss on the change in fair value of gold collars and forward contracts.

(4) The preliminary economic assessment (PEA) is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the results contemplated in the PEA will be realized.

(5) Primary adjustments during Q4 2020 were $17.4-million unrealized gain on the change in fair value of warrants, $11.1-million unrealized gain on the change in fair value of foreign exchange contracts, $11.2-million unrealized gain on the change in fair value of gold collars and forward contracts, and $18.5-million unrealized gain on foreign exchange recognized within deferred tax expense.

Recent developments

Provided 2021 production and cost guidance of 600,000 to 665,000 oz of gold at mine cash costs of $940 to $1,000 per oz and AISC of $1,190 to $1,275 per oz:

Gold production is expected to increase (and AISC decrease) each quarter during the year, with approximately 30 per cent of production occurring in Q4 2021.

Announced positive drill results from Piaba underground and Genipapo targets at Aurizona;

Santa Luz construction more than 25-per-cent complete and on schedule for first gold pour in Q1 2022;

Announced agreement with Orion Mine Finance Group to acquire an additional 10 per cent of the Hardrock project in Ontario, Canada, bringing the company's total interest to 60 per cent following completion of the Premier acquisition (through which the company will acquire Premier's 50-per-cent interest in Hardrock);

Premier acquisition expected to close in March, 2021, and the additional 10 per cent of Hardrock shortly thereafter:

Premier securityholders approved the acquisition on Feb. 23, 2021;

Require Mexican Comision Federal de Comptetencia Economica anti-trust clearance decision and other regulatory approvals.

Further to the company's news release on Dec. 16, 2020, Equinox Gold plans to complete a non-brokered private placement of subscription receipts at a price of $10.00 (Canadian) per subscription receipt for gross proceeds of $75-million (Canadian). The private placement is fully underwritten by the company's chairman, Ross Beaty, and other insiders of Equinox Gold will also be participating in the financing. Each subscription receipt will entitle the holder to receive one common share of Equinox Gold on satisfaction of certain conditions, including completing the Premier Gold acquisition. The financing is subject to completion of definitive documentation, customary closing conditions and regulatory approvals, including the approval of the Toronto Stock Exchange for the pricing and other terms of the financing.

Conference call and webcast

Equinox Gold will host a conference call and webcast on Thursday, March 4, 2021, commencing at 7 a.m. PT (10 a.m. ET) to discuss the company's fourth quarter and full-year 2020 results and upcoming milestones. All participants will have the opportunity to ask questions of Equinox Gold's chief executive officer and executive team. The webcast will be archived on Equinox Gold's website until Sept. 4, 2021.

Conference call

Toll-free in U.S. and Canada: 1-800-319-4610

International callers: +1-604-638-5340

Webcast accessible on company website.

Guidance was updated on Aug. 10 primarily to reflect the effect of government-mandated temporary suspensions related to COVID-19 and revised on Nov. 9 to reflect the effect of the Los Filos blockade, which was removed in December.

Capital expenditures were lower than planned for the year, primarily due to the suspension of mining and development activities at Los Filos as the result of a community blockade and the deferral of certain expenditures as the result of COVID-19 restrictions.

2021 outlook

On Feb. 9, 2021, the company announced 2021 production guidance of 600,000 to 665,000 oz of gold, an approximate 33-per-cent increase over the company's 2020 full-year production. Cost guidance includes cash costs of $940 to $1,000 per oz of gold sold and AISC of $1,190 to $1,275 per oz of gold sold. The company may revise guidance during the year to reflect changes to expected results.

Consolidated gold production is expected to increase quarter over quarter during the year, with the fourth quarter benefiting from higher-grade ore at both Los Filos and Mesquite. Cash costs for 2021 reflect the lower grades mined at Los Filos for the first half of the year until the Guadalupe stripping program and Bermejal underground development are complete, providing access to higher-grade ore. Bermejal underground development will not commence, however, until successful resolution of an amended community support agreement with the Carizalillo community. AISC in 2021 reflect significant development and stripping campaigns at Los Filos, Mesquite and Aurizona to access higher-grade ore, which will boost production and reduce costs in the second half of the year.

The company is investing significantly in its projects in 2021, setting the foundation for lower-cost, longer-life mines and substantial production growth going forward. The company has budgeted $178-million in sustaining capital for 2021 (including some capital carried over from 2020), compared with the total spend in 2020 of $76.3-million. The company is also undertaking meaningful growth projects in 2021, including construction of the Santa Luz mine, advancing expansion projects at the Los Filos mine, completing a pit expansion at the RDM mine and significant exploration programs focused on mine life extension. The company has budgeted $249-million in non-sustaining growth capital for 2021, compared with $92.8-million in 2020.

The company expects to complete the Premier Gold acquisition in March, 2021. Guidance will be updated following completion of the acquisition to include the producing Mercedes mine in Mexico and to reflect expenditures associated with construction of the Hardrock mine in Ontario, Canada, which is expected to commence in Q4 2021 as Santa Luz construction is nearing completion.

About Equinox Gold Corp.

Equinox Gold is a Canadian mining company with seven operating gold mines and construction under way at an eighth site, a multimillion-ounce gold reserve base and a clear path to achieve one million ounces of annual gold production from a pipeline of development and expansion projects. Equinox Gold operates entirely in the Americas, with two properties in the United States, one in Mexico and five in Brazil. Equinox Gold's common shares are listed on the Toronto Stock Exchange and the NYSE American under the trading symbol EQX.

Technical information

Doug Reddy, Msc, PGeo, Equinox Gold's chief operating officer, and Scott Heffernan, MSc, PGeo, Equinox Gold's executive vice-president of exploration, are the qualified persons under National Instrument 43-101 for Equinox Gold, and have reviewed and approved the technical information in this document.

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