Equinox Gold sees record Q3

Equinox Gold has reported record gold sales and revenue for the September quarter on production of 149,089oz at an all-in-sustaining cost of US$1630/oz.

The company reported a net profit of $2.2 million on revenues of $284.7 million, compared with a net loss of $30.1 million in the prior year.

Equinox said it is on track to achieve its 2023 guidance of 590,000oz, and is on schedule and on budget to bring the Greenstone development in Ontario, Canada into production in 2024. The project, which is 40% owned by Orion Mine Finance, was 93% complete at the end of the September quarter.

The company ended the quarter with $356.7 million in cash and long-term debt of $948.5 million. It also has $110 million of shares in investments.

The company completed a $150 million convertible note financing in September with a five-year term, 4.75% coupon and $6.30 per share conversion price.

"The market did not react well to this, although it has a lower interest rate and higher conversion price than the prior note that we are due to settle in April 2024," said Equinox Gold chief executive Greg Smith during the results conference call.

Smith further explained that the funds from the new note have been used to pay down part of the company's revolving credit facility, which is expected to result in considerable interest savings, in addition to providing flexibility in 2024 at a time when Greenstone will be commissioned and brought into production.

"We do not want to be in a position of having to make a $140 million debt repayment as we are commissioning and ramping up Greenstone. We wanted to get well ahead of that repayment. The market was cooperating, and we got better terms," said Smith.

Equinox said it can fund the remaining share of the Greenstone spend through cash, and funds it has raised through gold prepay agreements. In addition, it has $100 million available under its revolving credit facility.

On October 31, Equinox closed a gold prepay agreement with Sandbox Royalties Regal Partners Royalties and received a $75 million payment in exchange for monthly deliveries of the greater of 500oz or 1.8% of the monthly production from Greenstone starting in November until 90,000oz have been delivered. The purchasers will make cash payments equal to 20% of the spot gold price.

This adds to a similar agreement the company entered into in March with its existing lenders for $139.5 million in exchange for delivering 3,605oz per month from October 2024 through July 2026 for a total of 79,310oz. An additional agreement was made in June for $9.9 million in exchange for delivering 263.5oz gold per month for a total of 5,797oz

Shares in Equinox Gold are trading at C$6.17, valuing the company at C$1.9 billion.