Equinox Gold Reports Strong Operating Cash Flow of $321 Million in 2021, Achieves 26% Production Growth with 602,668 Ounces of Gold Sold
TSX: EQX NYSE-A: EQX
NEWS RELEASE
Equinox Gold Reports Strong Operating Cash Flow of $321 Million in 2021, Achieves 26% Production Growth with 602,668 Ounces of Gold Sold
all financial figures are in US dollars, unless otherwise indicated
February 24, 2022 – Vancouver, BC – Equinox Gold Corp. (TSX: EQX, NYSE American: EQX) (“Equinox Gold” or the “Company”) is pleased to announce its unaudited financial and operating results for the fourth quarter and fiscal year ended December 31, 2021. These results are preliminary and could change based on final audited results. Equinox Gold’s 2021 audited consolidated financial statements and accompanying management’s discussion and analysis for the three months and year ended December 31, 2021 will be released in mid-March.
Christian Milau, CEO of Equinox Gold, commented: “Equinox Gold’s 2021 results demonstrate consistent year-on-year production and cash flow growth as the Company advances toward its target of achieving more than one million ounces of annual gold production. During 2021, our seven operating mines produced 602,110 ounces of gold and generated operating cash flow of $321 million, compared to 2020 production of 477,200 ounces of gold and $256 million in operating cash flow. We realized more than $1 billion in revenue for the year, and produced our millionth ounce of gold, both important milestones for our growing company.
“We achieved significant reserve and resource growth, adding more than three million ounces of gold reserves to our portfolio through the acquisition of Premier Gold and its Greenstone project. We also increased mineral reserves and demonstrated mine life extension at Aurizona and Castle Mountain, and drilled more than 219,000 metres across the portfolio. The next few years will be focused on delivering organic growth from our pipeline of development and expansion projects, which will collectively add more than 600,000 ounces of annual production to the Company at reduced costs.”
2021 HIGHLIGHTS Operational
- Realized 26% production growth compared to 2020
- Achieved 2021 guidance with total production of 602,110 ounces (“oz”) of gold
- Sold 602,668 ounces of gold at an average realized gold price of $1,791 per oz
- Total cash costs of $1,087 per oz and all-in sustaining costs (“AISC”) of $1,350 per oz(1)
- Produced the Company’s millionth ounce of gold and realized over $1 billion in revenue
- Achieved a total recordable injury frequency rate(2) of 3.05, 17% better than 2020, with 13 lost-time injuries
- Achieved a significant environmental incident frequency rate(2) of 0.68, 60% better than 2020
- Continued proactive COVID-19 health and safety protocols with no production days lost due to COVID-19; supported community health with donations of supplies and support for education, medical staffing and vaccination programs
Earnings
- Earnings from mine operations of $230.6 million
- Net income of $556.8 million or $1.95 per share
- Includes $85.8 million unrealized gain on change in fair value of warrants, $58.1 million unrealized gain on change in fair value of gold contracts, $186.1 million gain on reclassification of investment in Solaris Resources Inc. (“Solaris”) from fair value to cost accounting, $50.3 million gain on sale of partial interest in Solaris, $45.4 million gain on sale of Pilar Mine and $81.4 million gain on acquisition of Premier Gold
- Adjusted net income(1) of $73.8 million or $0.26 per share(1), after adjusting for the non-cash expense items noted above(3)
Financial
- Cash flow from operations before changes in non-cash working capital of $264.1 million ($320.8 million after changes in non-cash working capital)
- Adjusted EBITDA of $303.1 million(1)(3)
- Expenditures of $144.7 million in sustaining capital and $238.7 million in non-sustaining capital(1)
- Cash and cash equivalents (unrestricted) of $305.5 million at December 31, 2021
- Net debt(1) of $235.2 million at December 31, 2021, including $139.7 million of in-the-money convertible notes
Suite 1501 - 700 West Pender St., Vancouver, BC Canada V6C 1G8 [email protected] +1 604.558.0560 www.equinoxgold.com
Corporate
- Completed acquisition of Premier, increasing diversification and scale with a 50% interest in the low-cost, long-life Greenstone gold project in Canada and a 100% interest in the operating gold-silver Mercedes mine in Mexico
- Increased Greenstone ownership interest to 60%
- Sold ten million shares of Solaris for total cash proceeds of $66.7 million
- Sold the Pilar Mine for $38.0 million, a 1% net smelter return royalty and 11.6 million shares of Pilar Gold Inc.
- Invested C$51 million in i-80 Gold Corp. to maintain an approximate 25% interest on a fully diluted basis
- Announced agreement to sell the Mercedes Mine for $100 million, a 2% net smelter return and 24.73 million shares of Bear Creek Mining Corporation (“Bear Creek”)(4)
Construction, development and exploration
- Commenced Greenstone construction in Q4 2021 with first gold pour targeted for the first half of 2024 (“H1 2024”)
- Advanced Santa Luz construction with first gold pour targeted for late Q1 2022
- Increased Aurizona Mineral Reserves by 73% and completed a positive pre-feasibility study for an expansion that would extend the mine life to 11 years and increase annual production by concurrently mining new underground and satellite open-pit deposits with the existing open-pit mine
- Increased Castle Mountain Mineral Reserves by 17% and completed a positive feasibility study for a Phase 2 expansion that would extend the Castle Mountain mine life to 21 years and increase gold production to more than 200,000 ounces per year
- Commenced mining the new Guadalupe open-pit deposit and Bermejal underground deposit at Los Filos
- Drilled 219,000 metres across the portfolio with a focus on Mineral Reserve growth and mine life extension
- Added 3.3 million ounces of Proven and Probable Mineral Reserves through the Premier Acquisition
Responsible mining
- Published inaugural Environmental, Social and Governance (ESG) Report
- Published first Tailings Management Report
- Started implementing Towards Sustainable Mining Protocols and Responsible Gold Mining Principles at all mine sites
- Established a Social Responsibility & Human Rights Policy, conducted human rights assessments at two mine sites
- Set and achieved short-term energy and greenhouse gas emission targets for 2021, submitted data to the Carbon Disclosure Project, commenced reporting using the Task Force on Climate-related Financial Disclosures framework
HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 Operational
- Total recordable injury frequency rate of 2.92 with 3 lost-time injuries
- Produced 210,432 ounces of gold during the quarter; sold 212,255 ounces of gold at an average realized gold price of $1,792 per oz
- Total cash costs of $1,040 per oz and AISC of $1,266 per oz
Earnings
- Earnings from mine operations of $99.4 million
- Net income of $110.9 million or $0.37 per share
- Includes $27.5 million unrealized gain on change in fair value of share purchase warrants, $9.4 million dilution gain on investment in associate and $8.0 million loss on disposal of plant and equipment
- Adjusted net income of $75.6 million or $0.25 per share, after adjusting for the non-cash expense items noted above(5)
Financial
- Cash flow from operations before changes in non-cash working capital of $122.2 million ($155.4 million after changes in non-cash working capital)
- Adjusted EBITDA of $130.0 million(5)
- Expenditures of $42.4 million in sustaining capital and $84.6 million in non-sustaining capital
Construction, development and exploration
- Commenced full-scale construction at Greenstone with a construction budget on a 100% basis (of which Equinox Gold will fund 60%) of C$1.53 billion ($1.23 billion at a rate of USD:CAD 1.25), including a $177 million contingency
- Initial capital estimate updated in October 2021 to reflect firm supplier quotes following detailed engineering, a review and update of capital costs, and an increased contingency including a provision for future inflation and potential COVID-19 impacts
- Initial cash spend could be reduced by approximately $100 million through lease financing for mobile equipment and offset economically by up to $70 million of pre-commercial production revenues (at $1,750 per oz gold price)
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POST QUARTER END HIGHLIGHTS
- Provided 2022 production and cost guidance of 625,000 to 710,000 ounces of gold at cash costs of $1,080 to $1,140 per oz and AISC of $1,330 to $1,415 per oz
- Provided 2022 capital expenditure guidance of $682 million
- $195 million of sustaining capital
- $487 million of non-sustaining capital, including $27 million to complete Santa Luz construction and $326 million to advance Greenstone construction
- $36 million of exploration expenditures, including sustaining ($6 million) and non-sustaining ($30 million) capital expenditure guidance
- Commenced commissioning of the Santa Luz gold plant, including leach circuit, SAG mill, ball mill and secondary grinding; construction more than 95% complete and on track for first gold pour by late Q1 2022
- Greenstone construction progressing well
- Engineering approximately 85% complete
- Tailings management facility ahead of schedule
- Highway relocation underway
- Site civil works and concrete foundation work underway
- New Brazil Federal legislation announced February 16, 2022 changed minimum freeboard(6) guidelines for all tailings storage facilities (“TSFs”), effective immediately
- As the result of heavy rains that began in November, the RDM TSF freeboard is currently outside of the new guidelines, requiring a temporary suspension of plant operations for an estimated two to three weeks until the water level is reduced, at which point plant operations will resume
- Mining and stockpiling of ore will continue during the suspension of plant operations; the Company does not anticipate a material impact on production for the year
____________________________________
(1) Cash costs per oz sold, AISC per oz sold, adjusted net income, adjusted EBITDA, adjusted EPS, sustaining capital, non-sustaining capital and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
(2) Total recordable injury frequency rate and significant environmental incident frequency rate are both reported per million hours worked. Total recordable injury frequency rate is the total number of injuries excluding those requiring simple first aid treatment.
(3) Primary adjustments for the year ended December 31, 2021 were $85.8 million unrealized gain on change in fair value of warrants, $58.1 million unrealized gain on change in fair value of gold contracts, $186.1 million gain on reclassification of investment in Solaris from fair value to cost accounting, $50.3 million gain on sale of partial interest in Solaris, $45.4 million gain on sale of Pilar and $81.4 million gain on acquisition of Premier Gold.
(4) The sale is expected to close around the end of Q1 2022, subject to completion of customary closing conditions and regulatory approvals.
(5) Primary adjustments for the three months ended December 31, 2021 were $27.5 million unrealized gain on change in fair value of share purchase warrants, $9.4 million dilution gain on investment in associate and $8.0 million loss on disposal of plant and equipment.
(6) Freeboard is the height from the crest of the TSF embankment to the surface of tailings and water in the TSF.
CONFERENCE CALL AND WEBCAST
Equinox Gold will host a conference call and webcast on Friday, February 25, 2022 commencing at 7:30 am Vancouver time to discuss the Company’s financial and operating results for the fourth quarter and fiscal year ended December 31, 2021 and activities underway at the Company’s projects. All participants will have the opportunity to ask questions of Equinox Gold’s CEO and executive team. The webcast will be archived on Equinox Gold’s website until August 25, 2022.
Conference call Toll-free in U.S. and Canada: 1-800-319-4610 International callers: +1 604-638-5340
Webcast www.equinoxgold.com
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CONSOLIDATED RESULTS
Basic weighted average shares during period 284,932,357 212,487,729 Shares outstanding end of period 301,324,604 242,354,406
Three months ended Year ended
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 | December 31, | December 31, 2020(2) |
|---|---|---|---|---|
| 2021 | 2021(1) | |||
| Gold produced oz Gold sold oz Average realized gold price $/oz Cash costs per oz sold(4) $/oz AISC per oz sold(3)(4) $/oz Financial data | 210,432 | 139,758 136,352 137,144 136,418 1,780 1,871 1,109 844 1,327 1,086 | 602,110 | 477,186 473,309 1,783 847 1,025 |
| 212,255 | 602,668 | |||
| 1,792 | 1,791 | |||
| 1,040 | 1,087 | |||
| 1,266 | 1,350 | |||
| Revenue M$ Earnings from mine operations M$ Net income (loss) M$ Earnings (loss) per share $/share Adjusted EBITDA(4) M$ Adjusted net income(4) M$ Adjusted EPS(4) $/share Balance sheet and cash flow data | 381.2 | 245.1 255.5 45.7 97.7 (8.1) 91.2 (0.03) 0.38 67.3 85.3 9.2 38.9 0.03 0.16 | 1,082.3 | 845.4 290.2 22.3 0.10 282.3 88.4 0.42 |
| 99.4 | 230.6 | |||
| 110.9 | 556.8 | |||
| 0.37 | 1.95 | |||
| 130.0 | 303.1 | |||
| 75.6 | 73.8 | |||
| 0.25 | 0.26 | |||
| Cash and cash equivalents M$ (unrestricted) Net debt(4) M$ Operating cash flow before changes M$ in non-cash working capital | 300.3 344.9 244.8 200.3 48.3 94.0 | 344.9 200.3 271.0 | ||
| 305.5 | 305.5 | |||
| 235.2 | 235.2 | |||
| 122.2 | 264.1 |
(1) Operational and financial results of the assets acquired as part of the Premier Acquisition are included from April 7, 2021, onward.
(2) Operational and financial results of the assets acquired as part of the Leagold Acquisition are included from March 10, 2020, onward.
(3) Consolidated AISC per oz sold excludes corporate general and administration expenses.
(4) Cash costs per oz sold, AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted EPS and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
CONSOLIDATED 2021 RESULTS COMPARED TO 2021 FORECAST 2021 Actuals Guidance Range
| Gold Production (oz) | 602,110 | 560,000 - 625,000 | |
| Cash costs ($/oz)(1) | $1,087 | $1,025 - $1,075 | |
| AISC ($/oz)(1) | $1,350 | $1,300 - $1,375 | |
| Sustaining capital (M$)(1) | $146 | $186 | |
| Non-sustaining capital ($M)(1) | $239 | $251 |
(1) Cash costs per oz, AISC per oz, sustaining capital and non-sustaining capital are non-IFRS measures.
See Non-IFRS Measures and Cautionary Notes.
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2022 OUTLOOK
For 2022, the Company expects to achieve its fourth consecutive year of production growth with guidance of 625,000 to 710,000 ounces of gold, which is an increase of 11% compared to 2021 production (using the mid-point of 2022 guidance). Cash costs for 2022 are estimated at $1,080 to $1,140 per oz, with AISC of $1,330 to $1,415 per oz. Production and cost guidance excludes Mercedes as the previously announced sale to Bear Creek is expected to close around the end of Q1 2022, although ounces produced and capital spent prior to closing will be attributable to Equinox Gold. The Company may revise guidance during the year to reflect changes to expected results.
Production is expected to increase quarter over quarter, with 60% of gold production and more than 85% of operating cash flow anticipated in the second half of the year. As production increases, AISC is expected to decrease. Cash costs and AISC are expected to be approximately $1,210 and $1,540 per oz in H1 2022 and $1,025 and $1,295 per oz in H2 2022, respectively. The weighting of production and cash flow into the second half of the year is primarily due to Santa Luz transitioning from construction and commissioning to operations starting in Q2 2022.
Cash costs for 2022 reflect inflationary pressures across all operations, with approximately 15% cost escalation for fuel and other major consumables. AISC for 2022 includes $195 million of sustaining capital investment focused primarily on stripping campaigns at Mesquite, Aurizona and Santa Luz to open up new ore sources, and both open-pit stripping and underground development work at Los Filos that was in part delayed during 2021. The Company is also completing TSF expansions or lifts at Aurizona, RDM and Santa Luz and completing a leach pad expansion at Castle Mountain. Sustaining capital guidance includes $6 million for exploration, which is almost all capitalized.
The Company is undertaking several growth projects during 2022 including completing construction and commissioning of Santa Luz, advancing construction at Greenstone, and conducting exploration focused on mine life extension at Mesquite, Aurizona, Fazenda, Santa Luz and RDM. The Company’s primary development focus for 2022 is construction at Greenstone, with Equinox Gold’s 60% share of construction capital forecast at $326 million. Non-sustaining capital expenditures also include underground development at Los Filos in part carried over from 2021, a pit expansion at RDM and permitting for the Castle Mountain expansion, with total non-sustaining capital for 2022 forecast at $487 million. Non-sustaining capital guidance includes $30 million for exploration, of which approximately $19 million is expensed with the rest capitalized.
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OPERATING & FINANCIAL RESULTS BY MINE Mesquite Gold Mine, California, USA
Three months ended Year ended
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 3,835 3,498 10,807 8,487 2.82 2.43 0.45 0.72 23,264 33,717 22,333 33,032 40.1 61.5 22.1 29.5 8.7 10.5 0.6 0.4 31.4 40.4 8.7 21.0 5.1 0.6 3.6 20.4 1,793 1,861 988 894 1,402 1,225 1.53 1.57 2.86 3.36 0.96 1.19 | December 31, | December 31, 2020 |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined and stacked on leach pad kt Waste mined kt Open pit strip ratio w:o Average gold grade stacked to leach g/t Gold produced oz Gold sold oz | 3,175 | 9,740 | 17,351 30,782 1.77 0.48 141,270 139,872 | |
| 11,679 | 49,863 | |||
| 3.68 | 5.12 | |||
| 0.44 | 0.42 | |||
| 66,870 | 137,467 | |||
| 68,377 | 138,289 | |||
| Financial data | ||||
| Revenue M$ Cash costs(1) M$ Sustaining capital(1) M$ Reclamation expenses M$ | 122.8 | 249.0 | 245.9 125.8 24.1 2.8 | |
| 65.7 | 134.7 | |||
| 3.2 | 46.3 | |||
| 1.2 | 2.6 | |||
| Total AISC(1) M$ AISC contribution margin(1) M$ Non-sustaining expenditures(1) M$ | 70.1 | 183.6 | 152.7 93.3 9.2 | |
| 52.8 | 65.5 | |||
| 6.2 | 19.4 | |||
| Mine free cash flow(1) M$ | 46.6 | 46.1 | 84.1 | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(1) $/oz AISC per oz sold(1) $/oz Mining cost per tonne mined $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,795 | 1,801 | 1,758 899 1,091 1.42 2.81 0.85 | |
| 960 | 974 | |||
| 1,023 | 1,327 | |||
| 1.53 | 1.47 | |||
| 3.75 | 4.32 | |||
| 1.43 | 1.61 |
(1) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Outlook
Mesquite production for 2022 is estimated at 120,000 to 130,000 ounces of gold, with approximately 60% of production expected in the second half of the year. Cash costs are estimated at $1,050 to $1,100 per oz and AISC at $1,450 to $1,500 per oz. The increase in AISC compared to 2021 reflects lower gold production as well as costs associated with stripping programs.
Ore from the Brownie pit is expected to be the primary source of production during 2022. Completion of the Brownie strip campaign provided full access to oxide ore at the bottom of the Phase 1 Brownie pit, and stripping of the Brownie Phase 2 pit commenced in Q4 2021. Forecast AISC at Mesquite in 2022 includes estimated sustaining capital of $52 million related primarily to a $44 million stripping program commencing in Q1 2022 to open up a new phase of the VE pit, which is expected to be the primary source of ore in Q4 2022 and into 2023. Non-sustaining growth capital of $20 million includes $5 million for exploration with the objective of converting resources to reserves in the Brownie, VE and Rainbow pits. The Company is also permitting and planning the construction of extensions to the leach pad and expects to make $12 million in lease payments for the truck fleet.
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Castle Mountain Gold Mine, California, USA
Three months ended Year ended
| Operating data Unit | December 31, | September 30, December 31, 2021 2020(1) 1,331 1,197 143 130 0.11 0.11 0.30 0.33 7,873 5,338 7,378 4,862 13.1 9.1 6.1 4.5 1.8 — 0.0 0.0 7.9 4.5 5.2 4.6 0.8 7.4 4.4 (2.8) 1,778 1,875 822 921 1,067 921 3.24 3.30 1.99 1.79 1.35 1.87 | December 31, | December 31, 2020(1) |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined and stacked to leach pad kt Waste mined kt Open pit strip ratio w:o Average gold grade stacked to leach pad g/t Gold produced oz Gold sold oz | 987 | 4,710 | 1,197 130 0.11 0.33 5,338 4,862 | |
| 408 | 1,149 | |||
| 0.41 | 0.24 | |||
| 0.28 | 0.36 | |||
| 8,357 | 25,270 | |||
| 8,947 | 25,671 | |||
| Financial data | ||||
| Revenue M$ Cash costs(2) M$ Sustaining capital(2) M$ Reclamation expenses M$ | 16.1 | 46.0 | 9.1 4.5 — 0.0 | |
| 8.2 | 22.7 | |||
| 8.6 | 13.9 | |||
| 0.0 | 0.1 | |||
| Total AISC(2) M$ AISC contribution margin(2) M$ Non-sustaining expenditures(2) M$ | 16.8 | 36.7 | 4.5 4.6 51.9 | |
| (0.8) | 9.3 | |||
| 2.0 | 7.8 | |||
| Mine free cash flow(2) M$ | (2.8) | 1.5 | (47.3) | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(2) $/oz AISC per oz sold(2) $/oz Mining cost per tonne mined $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,795 | 1,793 | 1,875 921 921 4.12 2.14 2.28 | |
| 918 | 883 | |||
| 1,881 | 1,429 | |||
| 3.31 | 3.15 | |||
| 2.89 | 1.95 | |||
| 2.28 | 1.39 |
(1) Castle Mountain commenced commercial production on November 21, 2020.
(2) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Castle Mountain production for 2022 is estimated at 25,000 to 35,000 ounces of gold with cash costs of $1,150 to $1,200 per oz and AISC of $1,475 to $1,525 per oz.
Costs at Castle Mountain are expected to increase primarily as the result of the decision to crush and agglomerate ore to increase ore permeability and gold production. AISC for 2022 includes $11 million of sustaining capital, with $3 million allocated for plant modifications and $7 million for the current leach pad expansion that is expected to accommodate the entirety of Phase 1 operations.
Non-sustaining growth capital of $9 million at Castle Mountain in 2022 includes $7 million for Phase 2 permitting, optimization studies and metallurgical test work, and nearly $2 million for exploration. The Company expects to submit Phase 2 permit applications in Q1 2022.
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Los Filos Gold Mine, Guerrero, Mexico
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 1,754 — 7,871 399 4.49 — 0.85 — 107 0.3 3.11 1.83 — 403 32,837 13,615 32,112 13,740 57.1 26.4 48.8 14.2 3.1 3.2 1.0 0.1 52.9 17.5 4.2 8.9 4.8 16.7 18.9 3.0 (19.5) (10.8) 1,769 1,932 1,520 1,035 1,647 1,276 1.52 1.85 84.79 168.60 8.86 n/a 2.20 n/a | December 31, | December 31, 2020 (1) |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined - open pit kt Waste mined - open pit kt Open pit strip ratio w:o Average open pit gold grade g/t Ore mined - underground kt Average underground gold grade g/t Ore re-handled for secondary leaching kt Gold produced oz Gold sold oz | 3,423 | 7,090 | 496 7,065 14.25 0.34 191 4.00 4,547 58,453 59,135 | |
| 11,036 | 38,027 | |||
| 3.22 | 5.36 | |||
| 0.77 | 0.71 | |||
| 162 | 519 | |||
| 3.11 | 3.23 | |||
| — | 2,312 | |||
| 54,733 | 144,096 | |||
| 55,144 | 143,809 | |||
| Financial data | ||||
| Revenue M$ Cash costs(2) M$ Sustaining capital(2) M$ Reclamation expenses M$ | 98.8 | 257.2 | 105.9 57.8 11.2 0.4 | |
| 72.3 | 226.6 | |||
| 5.3 | 21.5 | |||
| 1.4 | 4.0 | |||
| Total AISC(2) M$ AISC contribution margin(2) M$ Care and maintenance M$ Non-sustaining expenditures(2) M$ | 79.0 | 252.1 | 69.4 36.4 42.1 16.7 | |
| 19.7 | 5.1 | |||
| — | 12.6 | |||
| 10.2 | 59.6 | |||
| Mine free cash flow(2) M$ | 9.5 | (67.1) | (22.4) | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(2) $/oz AISC per oz sold(2) $/oz Mining cost per tonne mined - open pit $/t Mining cost per tonne mined - underground $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,787 | 1,783 | 1,786 978 1,174 1.65 68.36 5.90 1.00 | |
| 1,311 | 1,575 | |||
| 1,433 | 1,753 | |||
| 1.50 | 1.45 | |||
| 82.07 | 86.73 | |||
| 6.05 | 7.02 | |||
| 1.70 | 1.97 |
(1) Los Filos was acquired as part of the Leagold Acquisition. Operational and financial results are included from March 10, 2020, onward.
(2) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Outlook
Los Filos production for 2022 is estimated at 160,000 to 180,000 ounces of gold. While Los Filos’ costs are expected to be lower in the second half of the year, waste stripping campaigns in the Los Filos and Guadalupe open pits and underground development for Bermejal are expected to impact AISC and free cash flow for the year. Los Filos’ cost guidance for 2022 is estimated at cash costs of $1,400 to $1,475 per oz with AISC of $1,625 to $1,700 per oz.
The Company continues to review the potential to construct a new carbon-in-leach plant to operate concurrently with the existing heap leach operation, which could increase production and lower costs, but does not expect to make a construction decision until the majority of Greenstone expenditures are complete and the current stability with local communities allows operations to continue without interruption.
Capital investments at Los Filos during 2022 are expected to focus primarily on open-pit stripping and underground development, with almost $30 million of expenditures carried over from 2021. AISC at Los Filos in 2022 includes $38 million of sustaining capital, with $13 million allocated for capitalized stripping of the Guadalupe open pit, $7 million for development of the Los Filos underground mine, $10 million for fleet refurbishment and processing equipment and $4 million for exploration.
Non-sustaining growth capital of $62 million includes $23 million for stripping of the Los Filos open pit, $24 million for Bermejal underground development and $14 million for fleet rebuilds and new equipment.
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Aurizona Gold Mine, Maranhão, Brazil
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 1,047 1,231 5,077 7,301 4.85 5.93 832 846 1.42 1.59 91.2 90.6 34,583 37,438 33,200 38,213 59.4 71.6 26.8 23.3 4.7 10.6 0.3 0.5 31.8 34.4 27.6 37.2 3.0 1.1 24.6 36.1 1,790 1,874 806 610 957 901 1.91 1.78 12.04 8.18 4.90 4.14 | December 31, | December 31, 2020 |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined kt Waste mined kt Open pit strip ratio w:o Tonnes processed kt Average gold grade processed g/t Recovery % Gold produced oz Gold sold oz | 1,029 | 3,180 | 3,267 19,901 6.09 3,227 1.41 89.8 130,237 129,004 | |
| 7,727 | 20,442 | |||
| 7.51 | 6.43 | |||
| 922 | 3,383 | |||
| 1.51 | 1.35 | |||
| 91.9 | 91.2 | |||
| 41,258 | 134,961 | |||
| 41,819 | 135,061 | |||
| Financial data | ||||
| Revenue M$ Cash costs(1) M$ Sustaining capital(1) M$ Reclamation expenses M$ | 75.1 | 242.6 | 229.6 92.4 24.4 2.7 | |
| 31.0 | 105.9 | |||
| 12.3 | 26.7 | |||
| 0.3 | 1.3 | |||
| Total AISC(1) M$ AISC contribution margin(1) M$ Non-sustaining expenditures(1) M$ | 43.6 | 133.9 | 119.5 110.1 4.7 | |
| 31.5 | 108.8 | |||
| 5.3 | 9.3 | |||
| Mine free cash flow(1) M$ | 26.2 | 99.5 | 105.4 | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(1) $/oz AISC per oz sold(1) $/oz Mining cost per tonne mined $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,797 | 1,796 | 1,780 716 926 1.87 8.44 4.10 | |
| 742 | 784 | |||
| 1,044 | 991 | |||
| 2.04 | 2.09 | |||
| 9.19 | 9.65 | |||
| 4.06 | 4.12 |
(1) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Aurizona production for 2022 is estimated at 120,000 to 130,000 ounces of gold with cash costs of $800 to $850 per oz and AISC of $1,175 to $1,225 per oz sold. Production during 2022 is expected to come from multiple ore sources, including Piaba East and the new Boa Esperança pit, which was opened up with a small stripping campaign during 2021.
Forecast AISC at Aurizona in 2022 includes $50 million of sustaining capital allocated primarily to $19 million in capitalized waste stripping, $18 million to construct a new TSF and increase capacity of the existing TSF and $8 million for infrastructure including installation of a new pebble crusher. With fresh rock feed expected to increase to 30% in 2022, the pebble crusher is expected to help to maintain processing capacity. Non-sustaining growth capital at Aurizona of $8 million is allocated almost entirely to exploration.
The Company expects to continue to advance the Aurizona expansion during 2022, with plans to initiate permitting for an exploration portal, undertake some underground-focused exploration and continue internal studies. Development work to access the underground deposit could begin in late 2022.
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Fazenda Gold Mine, Bahia, Brazil
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 286 302 348 332 1.54 1.91 89.7 89.9 15,598 18,196 15,727 18,237 28.0 34.0 13.9 13.3 3.1 2.7 0.3 0.1 17.3 16.1 10.7 17.9 1.3 2.1 9.4 15.8 1,777 1,862 884 728 1,098 881 21.86 20.84 11.44 12.66 5.19 5.59 | December 31, | December 31, 2020 (1) |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined - underground kt Tonnes processed kt Average gold grade processed g/t Recovery % Gold produced oz Gold sold oz | 283 | 1,177 | 1,014 1,087 1.63 90.6 51,611 51,056 | |
| 351 | 1,367 | |||
| 1.43 | 1.52 | |||
| 90.9 | 90.5 | |||
| 14,499 | 60,401 | |||
| 14,279 | 60,269 | |||
| Financial data | ||||
| Revenue M$ Cash costs(2) M$ Sustaining capital(2) M$ Reclamation expenses M$ | 25.6 | 107.9 | 92.4 37.6 4.8 0.7 | |
| 13.8 | 52.7 | |||
| 4.7 | 14.5 | |||
| 1.8 | 2.6 | |||
| Total AISC(2) M$ AISC contribution margin(2) M$ Non-sustaining expenditures(2) M$ | 20.3 | 69.8 | 43.1 49.3 4.6 | |
| 5.3 | 38.1 | |||
| 0.8 | 5.5 | |||
| Mine free cash flow(2) M$ | 4.5 | 32.6 | 44.7 | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(2) $/oz AISC per oz sold(2) $/oz Mining cost per tonne mined $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,792 | 1,791 | 1,810 737 844 17.60 10.86 4.57 | |
| 963 | 875 | |||
| 1,419 | 1,159 | |||
| 20.35 | 19.95 | |||
| 11.34 | 11.25 | |||
| 5.17 | 4.97 |
(1) Fazenda was acquired as part of the Leagold Acquisition. Operational and financial results are included from March 10, 2020, onward.
(2) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz
Fazenda’s production for 2022 is estimated at 60,000 to 65,000 ounces of gold, with cash costs estimated at $975 to $1,025 per oz and AISC estimated at $1,200 to $1,250 per oz.
Of the $14 million sustaining capital investment planned for 2022, $6 million is allocated for underground development, $3 million for open-pit waste stripping, $2 million for exploration to upgrade inferred Mineral Resources and $2 million for engineering, plant maintenance and equipment. Non-sustaining growth capital of $11 million includes $4 million for underground development and $3 million for exploration.
In addition, the Company has planned a significant regional exploration program in the Fazenda-Santa Luz district, a 70-kmlong greenstone belt that hosts both the Fazenda and Santa Luz mines. The 2022 regional exploration program includes a $1.5 million airborne geophysical survey that will cover the entire belt and is expected to greatly aid in the development of new targets and more than 50,000 metres of drilling targeting high priority near-mine and regional targets. Of the total $9 million non-sustaining capital spend, $4 million has been budgeted to Fazenda with the remainder budgeted to Santa Luz.
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RDM Gold Mine, Minas Gerais, Brazil
| Operating data Unit | December 31, | September 30, December 31, 2021 2020 682 680 6,082 6,310 8.92 9.28 755 714 0.69 0.92 86.2 86.4 15,880 18,068 16,140 18,263 28.7 34.1 24.5 19.2 3.3 3.7 0.2 0.1 28.0 23.0 0.7 11.1 — — 2.5 — (1.8) 11.1 1,779 1,857 1,518 1,050 1,733 1,261 2.18 1.58 10.05 9.03 2.46 2.37 | December 31, | December 31, 2020 (1) |
|---|---|---|---|---|
| 2021 | 2021 | |||
| Ore mined kt Waste mined kt Open pit strip ratio w:o Tonnes processed kt Average gold grade processed g/t Recovery % Gold produced oz Gold sold oz | 346 | 1,768 | 1,981 18,218 9.19 2,218 0.97 85.6 59,354 58,723 | |
| 3,829 | 22,837 | |||
| 11.06 | 12.92 | |||
| 713 | 2,835 | |||
| 0.68 | 0.74 | |||
| 87.6 | 86.7 | |||
| 13,362 | 58,829 | |||
| 13,424 | 59,074 | |||
| Financial data | ||||
| Revenue M$ Cash costs(2) M$ Sustaining capital(2) M$ Reclamation expenses M$ | 24.0 | 105.8 | 106.6 51.8 8.8 0.5 | |
| 18.6 | 72.2 | |||
| 3.6 | 10.1 | |||
| 0.5 | 1.1 | |||
| Total AISC(2) M$ AISC contribution margin(2) M$ Care and maintenance M$ Non-sustaining expenditures(2) M$ | 22.7 | 83.4 | 61.1 45.5 0.5 0.6 | |
| 1.3 | 22.5 | |||
| — | — | |||
| 4.7 | 21.9 | |||
| Mine free cash flow(2) M$ | (3.4) | 0.6 | 44.4 | |
| Unit analysis | ||||
| Realized gold price per oz sold $/oz Cash costs per oz sold(2) $/oz AISC per oz sold(2) $/oz Mining cost per tonne mined $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,789 | 1,791 | 1,805 882 1,041 1.64 8.52 1.98 | |
| 1,386 | 1,222 | |||
| 1,689 | 1,410 | |||
| 2.73 | 2.04 | |||
| 10.65 | 10.04 | |||
| 3.12 | 2.68 |
(1) RDM was acquired as part of the Leagold Acquisition. Operational and financial results are included from March 10, 2020, onward.
(2) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Outlook
RDM production is expected to increase almost 30% compared to 2021 as the result of modifications to the pit design based on a new geotechnical model. Production for 2022 is estimated at 70,000 to 80,000 ounces of gold. Cash costs are estimated at $1,200 to $1,250 per oz and AISC is estimated at $1,350 to $1,400 per oz.
AISC at RDM in 2022 includes $11 million of sustaining capital, of which $9 million relates to increasing capacity of the TSF and installing a tailings thickener to reduce water consumption. Non-sustaining growth capital of $18 million relates primarily to capitalized stripping for a pushback of the open pit to provide better access to the ore body. In addition, the Company has allocated $3 million for exploration to undertake the first exploration campaign at RDM in several years, with a focus on potential extensions along strike and down dip.
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Mercedes Gold Mine, Sonora, Mexico
| Operating data Unit | December 31, | September 30, June 30, 2021 2021(1) | December 31, |
|---|---|---|---|
| 2021 | 2021(1) | ||
| Ore mined - underground kt Tonnes processed kt Average gold grade processed g/t Recovery % Gold produced oz Gold sold oz | 125 | 105 118 109 128 2.89 2.71 95.7 96.2 9,722 10,708 10,253 10,416 | 348 |
| 161 | 398 | ||
| 2.30 | 2.59 | ||
| 95.4 | 95.8 | ||
| 11,353 | 31,782 | ||
| 10,266 | 30,935 | ||
| Financial data | |||
| Revenue M$ Cash costs(2) M$ Sustaining capital(2) M$ Reclamation expenses M$ | 18.9 | 18.8 19.3 9.9 8.7 2.3 3.6 0.6 0.5 | 56.9 |
| 11.2 | 29.9 | ||
| 4.7 | 10.6 | ||
| 0.4 | 1.5 | ||
| Total AISC(2) M$ AISC contribution margin(2) M$ Non-sustaining expenditures(2) M$ | 16.3 | 12.8 12.8 5.8 6.5 0.3 0.2 | 42.0 |
| 2.6 | 15.0 | ||
| 0.5 | 0.9 | ||
| Mine free cash flow(2) M$ | 2.1 | 5.5 6.3 | 14.1 |
| Unit analysis | |||
| Realized gold price per oz sold $/oz Cash costs per oz sold(2) $/oz AISC per oz sold(2) $/oz Mining cost per tonne mined - underground $/t Processing cost per tonne processed $/t G&A cost per tonne processed $/t | 1,775 | 1,761 1,779 970 839 1,261 1,226 38.67 34.91 21.23 20.58 17.39 14.54 | 1,772 |
| 1,091 | 966 | ||
| 1,584 | 1,357 | ||
| 33.38 | 35.38 | ||
| 18.56 | 19.94 | ||
| 14.19 | 15.18 |
(1) Mercedes was acquired as part of the Premier Acquisition. Operational and financial results are included from April 7, 2021, onward.
(2) Cash costs, sustaining capital, non-sustaining expenditures, AISC, AISC contribution margin, mine free cash flow, cash costs per oz
On December 16, 2021, the Company entered into an agreement to sell Mercedes to Bear Creek (the “Transaction”). The Transaction is expected to close around the end of Q1 2022. As such, 2022 guidance does not include Mercedes, although ounces produced and capital spent prior to closing will be attributable to Equinox Gold.
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