Equinox Gold Reports Q4 and Fiscal 2023 Financial and Operating Results, Provides 2024 Production Guidance of 660,000 to 750,000 Ounces of Gold
All financial figures are in US dollars, unless otherwise indicated.
Vancouver, British Columbia--(Newsfile Corp. - February 21, 2024) - Equinox Gold Corp. (TSX: EQX) (NYSE American: EQX) ("Equinox Gold" or the "Company") has released its audited consolidated financial and operating results and related management's discussion and analysis for the fourth quarter and fiscal year ended December 31, 2023. The Company will host a conference call and live webcast to discuss the results at 7:30am PT (10:30am ET) on Thursday, February 22, 2024. Dial-in and login details are provided later in this news release.
Greg Smith, President and CEO of Equinox Gold, commented: “Equinox Gold finished 2023 with its strongest quarter of production at the lowest cash costs for the year, bringing full-year production to 564,458 ounces of gold at all-in sustaining costs of $1,622 per ounce. Greenstone was a significant focus during 2023. After 2.5 years, construction was substantially complete at year end, which is a huge accomplishment for the team. The focus at Greenstone has shifted now to hot commissioning and operations ramp up with first gold on schedule for the first half of 2024.
"Looking forward, we expect to produce between 660,000 to 750,000 ounces of gold in 2024 with cash costs of $1,340 to $1,445 per ounce and all-in sustaining costs of $1,630 to $1,740 per ounce. We started 2024 with $360 million in total liquidity which, along with cash flow from our operating mines and marketable investments currently worth about $100 million, leaves us well funded to achieve our 2024 objectives and advance Greenstone to commercial production."
HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2023
Operational
Produced 154,960 ounces of gold Sold 149,861 ounces of gold at an average realized gold price of $1,983 per oz Total cash costs of $1,330 per oz and all-in sustaining costs ("AISC") of $1,657 per oz(1) Three lost-time injuries and a total recordable injury frequency rate (TRIFR)(2) of 1.35 for the Quarter Significant environmental incident frequency rate (SEIFR)(2) of 0.00 for the Quarter
Earnings
Income from mine operations of $38.6 million Net income of $3.9 million or $0.01 per share (basic)
Adjusted net income of $2.4 million or $0.01 per share(1)
Financial
Cash flow from operations before changes in non-cash working capital of $168.2 million, which includes $75.6 million in proceeds from gold prepay arrangements ($125.9 million after changes in non-cash working capital)
Adjusted EBITDA of $95.3 million(1)
Sustaining expenditures of $44.5 million and non-sustaining expenditures of $99.2 million Received $75.0 million on closing of the gold purchase and sale arrangement ("Sandbox Arrangement")
Issued 5.0 million common shares under the at-the-market equity program ("ATM Program") at an average share price of $5.01 per common share for total gross proceeds of $24.9 million In November and December, entered into gold collar contracts with an average put strike price of $1,980 per ounce and an average call strike price of $2,198 per ounce, for 11,332 ounces per month beginning January 2024 through to June 2024 In October, repaid $166.0 million of the Revolving Facility with proceeds from the 2023 Convertible Notes
Construction, Development and Exploration
Advanced Greenstone construction with the following achieved:
Completed more than 5.9 million hours project-to-date with one lost-time injury; 12-month rolling average TRIFR of 2.39 Tailings facility permitted and ready for use Hot commissioning of crushing circuit and ore storage dome complete Wet commissioning underway in the ball mills, high-pressure grinding rolls, thickener and leach tanks Approximately 1 million tonnes of ore stockpiled for startup Spent $74 million (Equinox Gold's 60% share) during the Quarter On track to pour gold in H1 2024
RECENT DEVELOPMENTS
Provided 2024 production and cost guidance of 660,000 to 750,000 ounces of gold at cash costs of $1,340 to $1,445 per oz and AISC of $1,630 to $1,740 per oz(1)
Provided 2024 sustaining and non-sustaining expenditure guidance of $424 million $212 million of sustaining expenditures, of which $196 million is sustaining capital expenditures(1)
$213 million of non-sustaining expenditures, of which $205 million is non-sustaining capital expenditures Non-sustaining capital expenditures includes $95 million to advance Greenstone through to commercial production Since January 1, 2024, the Company has issued 5.0 million common shares under the ATM Program at an average share price of $4.56 per common share for total gross proceeds of $22.9 million
FULL-YEAR 2023 HIGHLIGHTS
Operational
Achieved 2023 production guidance, with 564,458 ounces of gold produced Sold 559,481 ounces of gold at an average realized gold price of $1,941 per oz Beat 2023 cash costs guidance, with cash costs of $1,350 per oz(1)
Achieved 2023 AISC guidance, with AISC of $1,612 per oz(1)
Seven lost-time injuries, one fatality; four sites had no lost-time injuries Achieved a total recordable injury frequency rate(2) of 1.47, a 31% improvement compared to 2022
Earnings
Income from mine operations of $109.0 million Net income of $28.9 million or $0.09 per share Adjusted net income of $21.7 million(1) or $0.07 per share(1)
Financial
Cash flow from operations before changes in non-cash working capital of $527.5 million, which includes $225.0 million in proceeds from gold prepay arrangements ($358.5 million after changes in non-cash working capital)
Adjusted EBITDA of $304.4 million(1)
Sustaining expenditures of $129.1 million and non-sustaining expenditures of $404.1 million Cash and cash equivalents (unrestricted) of $192.0 million at December 31, 2023 Net debt(1) of $733.0 million at December 31, 2023
Corporate
Strengthened balance sheet Issued $172.5 million of unsecured senior convertible senior notes with a conversion price of $6.30 (the "2023 Convertible Notes") and used the net proceeds to repay $166.0 million of the revolving credit facility (the "Revolving Facility")
Completed $225.0 million in gold prepay and gold purchase and sale arrangements Sold a portion of the Company's shares in i-80 Gold Corp. (TSX: IAU) for initial proceeds of C$32.0 million Issued 9.3 million common shares under the ATM Program at an average share price of $4.48 per common share for total gross proceeds of $41.8 million Gold collar contracts in place at December 31, 2023 had a weighted average put strike price of $1,954 per ounce and an average call strike price of $2,166 per ounce, for delivery of an average of 18,687 ounces per month from January to June 2024, representing approximately 30% of estimated production during that time period
Construction, Development and Exploration
Advanced Greenstone on schedule with installation activities effectively completed at December 31, 2023 and commissioning underway to pour first gold in H1 2024 Advanced permitting and front-end engineering for the Castle Mountain Phase 2 expansion Advanced technical studies for the Aurizona underground expansion and received a permit to commence underground portal development in the Piaba deposit. Received a permit to develop the Tatajuba open pit deposit Successfully replaced reserves through 57,969 metres of reserve replacement drilling and strategic mine planning updates Completed 44,260 metres of step-out drilling across the portfolio with a focus on mine life extension, and completed 16,321 metres of regional drilling to delineate new deposits
Responsible Mining
Achieved a SEIFR(1) of 0.29, a 54% improvement compared to 2022 Published the Company's annual ESG (Environment, Social and Governance) Report, updated the Tailings Management Report, and submitted greenhouse gas (GHG) emissions data to CDP (formerly the Carbon Disclosure Project)
Published the Company's first Water Stewardship Report and its first Climate Action Report, outlining a strategy to achieve a 25% reduction in GHG emissions by 2030 compared to "business as usual" emissions
______________________ (1)Cash costs per oz sold, AISC per oz sold, adjusted net income (loss), adjusted EBITDA, adjusted EPS, 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.
CONSOLIDATED OPERATIONAL AND FINANCIAL HIGHLIGHTS
Three months ended Year ended December 31,
| December 31, | September 30, | December 31, | December 31, | |||
|---|---|---|---|---|---|---|
| Operating data | Unit | 2023 | 2023 | 2022 | 2023 | 2022(3) |
| Gold produced | oz | 154,960 | 149,089 | 150,439 | 564,458 | 532,319 |
| Gold sold | oz | 149,861 | 148,231 | 149,386 | 559,481 | 532,137 |
| Average realized gold price | $/oz | 1,983 | 1,917 | 1,733 | 1,941 | 1,784 |
| Cash costs per oz sold(1)(2) | $/oz | 1,330 | 1,363 | 1,206 | 1,350 | 1,315 |
| AISC per oz sold(1)(2)(3) | $/oz | 1,657 | 1,630 | 1,523 | 1,612 | 1,622 |
Financial data
| Revenue | M$ | 297.8 | 284.7 | 259.3 | 1,088.2 | 952.2 |
| Income from mine operations | M$ | 38.6 | 25.2 | 32.0 | 109.0 | 85.0 |
| Net income (loss) | M$ | 3.9 | 2.2 | 22.6 | 28.9 | (106.0) |
| Earnings (loss) per share (basic) | $/share | 0.01 | 0.01 | 0.07 | 0.09 | (0.35) |
| Adjusted EBITDA(1) | M$ | 95.3 | 81.2 | 74.3 | 304.4 | 168.0 |
| Adjusted net income (loss)(1) | M$ | 2.4 | 28.7 | 7.0 | 21.7 | (91.5) |
| Adjusted EPS(1) | $/share | 0.01 | 0.09 | 0.02 | 0.07 | (0.30) |
Balance sheet and cash flow data
Cash and cash equivalents (unrestricted) M$ 192.0 356.7 200.8 192.0 200.8 Net debt(1) M$ 733.0 729.5 627.3 733.0 627.3 Operating cash flow before changes in non-cash working capital(5) M$ 168.2 82.6 80.0 527.5 144.3
(1) Cash costs per oz sold, AISC per oz sold, adjusted EBITDA, adjusted net loss, adjusted EPS and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
(2) Consolidated cash cost per oz sold and AISC per oz sold for the year ended December 31, 2022 excludes Santa Luz results while the mine was in pre-commercial production up until the achievement of commercial production at the end of Q3 2022.
(3) Operational and financial results of Mercedes are included for the period through to April 21, 2022, when Mercedes was sold.
(4) Consolidated AISC per oz sold excludes corporate general and administration expenses.
(5) Includes proceeds from gold prepay arrangements of $75.6 million and $225.0 million for the three months and year ended December 31, 2023, respectively.
(6) Numbers in tables throughout this news release may not sum due to rounding.
Gold ounces sold in Q4 2023 were marginally higher compared to Q4 2022 primarily due to higher production at RDM, offset partially by lower production at Fazenda and Santa Luz. At RDM, the higher production was primarily due to higher grades from the mining of in-situ ore, and reduced reliance on rehandling low-grade ore stockpiles. At Fazenda, the lower production was primarily due to lower ore tonnes and grades from open pit mining due to mine sequencing. At Santa Luz, the lower production was primarily due to challenges with the elution and electrowinning circuits.
For the year ended December 31, 2023, the Company sold 5% more gold ounces compared to 2022.The increase in gold sales for the year was primarily due to higher production at Los Filos, RDM, Santa Luz and Aurizona, offset partially by lower production at Mesquite and not having production from Mercedes after it was sold in April 2022. The higher gold production at Los Filos was driven by increased ore mining and stacking activity in 2023 compared to 2022. The higher gold production for the year at RDM was for the reasons mentioned above. In addition, RDM had a temporary suspension of operations in 2022 that affected gold production for that year. The higher production at Santa Luz was due to a full year of commercial operations in 2023. Santa Luz achieved commercial production at the beginning of Q4 2022. The higher production at Aurizona was due to better access to higher-grade ore benches of the main pit and increased ore processed. The lower production at Mesquite was primarily due to a smaller pit approach to reduce waste stripping and a longer leach cycle for some of the ore being placed.
Revenue was higher in Q4 2023 compared to Q4 2022 primarily due to higher gold prices. The Company realized $1,983 per ounce sold in Q4 2023 generating $297.8 million in revenue, compared to $1,733 per ounce sold in Q4 2022 generating $259.3 million in revenue.
Cash cost per oz sold and AISC per oz sold were 10% and 9% higher in Q4 2023 compared to Q4 2022, respectively, primarily driven by higher cash costs at Los Filos and Fazenda. Cash cost per oz sold and AISC per oz sold for 2023 were in line with 2022 results. While input costs were generally lower in 2023, the strengthening of the Mexican Peso ("MXN") and Brazilian Réal ("BRL") compared to the USD more than offset these lower costs in Mexico and Brazil.
In Q4 2023, income from mine operations was $38.6 million (Q4 2022 - $32.0 million) and for the year ended December 31, 2023 was $109.0 million (year ended December 31, 2022 - $85.0 million). The higher income from mine operations in Q4 2023 compared to Q4 2022 was mainly the result of higher income from operations at RDM, Los Filos and Mesquite, driven by higher average realized gold price per ounce sold at each site, as well as higher production at RDM, and lower operating costs at Mesquite, offset partially by lower income from mine operations at Santa Luz, which was primarily due to lower production.
The higher income from mine operations for the year ended December 31, 2023 compared to the same period in 2022 was mainly the result of higher production at Los Filos, Aurizona and RDM, and higher average realized gold price per ounce sold, offset partially by lower income from mine operations at Mesquite and Santa Luz, which was primarily due to lower production. Income from mine operations for the year ended December 31, 2023 was also impacted by the sale of Mercedes in April 2022.
Net income for Q4 2023 was $3.9 million (Q4 2022 - net income of $22.6 million) and net income for the year ended December 31, 2023 was $28.9 million (year ended December 31, 2022 - net loss of $106.0 million). The lower net income in Q4 2023 compared to Q4 2022 was mainly due to a lower tax recovery and higher finance expense, offset partially by higher income from mine operations.
The higher net income for the year ended December 31, 2023 compared to the same period in 2022 was mainly due to higher income from mine operations, in addition to a tax recovery of $14.1 million (year ended December 31, 2022 - tax expense of $7.6 million) and other income of $31.1 million (year ended December 31, 2022 - other expense of $67.9 million). Other income for the year ended December 31, 2023 includes a $46.2 million gain on change in fair value of foreign exchange contracts and a $34.5 million gain on sale of the Company's partial interest and reclassification of investment in i- 80 Gold, offset partially by $13.8 million in expected credit losses and write-offs. Other expense for the year ended December 31, 2022 includes a $69.9 million loss on change in fair value of share purchase warrants.
In Q4 2023, adjusted EBITDA was $95.3 million (Q4 2022 - $74.3 million) and for the year ended December 31, 2023 was $304.4 million (year ended December 31, 2022 - $168.0 million). In Q4 2023, adjusted net income was $2.4 million (Q4 2022 - $7.0 million) and for the year ended December 31, 2023 was $21.7 million (year ended December 31, 2022 - adjusted net loss of $91.5 million). The increase in adjusted EBITDA and adjusted net income in Q4 2023 was primarily due to higher income from mine operations, in addition to a $6.9 million realized gain on foreign exchange contracts in Q4 2023 (Q4 2022 - realized gain of $1.2 million). The increase in adjusted EBITDA and adjusted net income for the year ended December 31, 2023 was primarily due to higher income from mine operations, in addition to a $32.8 million realized gain on foreign exchange contracts (year ended December 31, 2022 - realized gain of $1.2 million) and a $0.8 million realized gain on gold contracts (year ended December 31, 2022 - realized loss of $33.0 million).
2024 GUIDANCE AND OUTLOOK
For 2024, the Company expects to produce 660,000 to 750,000 ounces of gold. The midpoint of 2024 guidance of 705,000 ounces represents an increase of more than 140,000 ounces compared to 2023 gold production. Cash costs for 2024 are estimated at $1,340 to $1,445 per oz, with AISC of $1,630 to $1,740 per oz.
Production Cash Costs AISC Sustaining Non-sustaining (oz) ($/oz)(1)(2) ($/oz)(1)(2) expenditures (M$)(3) expenditures (M$)(4)
Canada
105,000 - 125,000 $690 - $790 $840 - $940 $25 $95 Greenstone(5)
USA
Mesquite 75,000 - 85,000 $1,345 - $1,445 $1,410 - $1,510 $5 $82 Castle Mountain 30,000 - 35,000 $2,045 - $2,145 $2,125 - $2,200 $3 $4
Mexico
Los Filos 155,000 - 175,000 $1,785 - $1,885 $2,090 - $2,190 $50 $-
Brazil
| Aurizona | 110,000 - 120,000 | $1,070 - $1,170 | $1,575 - $1,675 | $58 | $11 |
| Fazenda | 65,000 - 70,000 | $1,195 - $1,295 | $1,560 - $1,660 | $25 | $3 |
| Santa Luz | 70,000 - 80,000 | $1,495 - $1,595 | $1,720 - $1,820 | $17 | $4 |
| RDM | 50,000 - 60,000 | $1,260 - $1,360 | $1,800 - $1,900 | $29 | $14 |
| Total(6) | 660,000 - 750,000 | $1,340 - $1,445 | $1,630 - $1,740 | $212 | $213 |
(1)Cash costs per oz sold and AISC per oz sold, are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
(2)Exchange rates used to forecast 2024 cash cost and AISC per oz include a rate of BRL 5:00 to USD 1 and MXN 17.50 to USD 1.
(3)Sustaining expenditures include asset retirement obligation accretion and amortization, exploration expense and capital expenditures. Of the $212 million sustaining expenditures, $196 million will be capital expenditures. Sustaining capital expenditure is a non-IFRS measure. See Non-IFRS Measures and Cautionary Notes.
(4)Non-sustaining expenditures include exploration expense and capital expenditures. Of the $213 million non-sustaining expenditures, $205 million will be capital expenditures.
(5)2024 Guidance at Greenstone reflects the Company’s 60% ownership of the project. Greenstone gold production guidance for 2024 includes all ounces expected to be produced during the pre-commercial production and commercial production periods. 2024 cash cost per ounce and AISC per ounce guidance figures are the expected costs of gold production after commercial production is achieved.
(6)Total is the sum or average of the individual mine-level amounts. Numbers may not sum due to rounding.
The Company may revise guidance during the year to reflect changes to expected results.
Cash costs for 2024 reflect the life cycle stages of the assets in the Company's portfolio and also that, while consumables inflation has abated, labour and equipment costs are expected to face continued upward pressure throughout 2024. In addition, compared to many other countries the BRL and MXN were top performing currencies compared to the USD in 2022 and 2023 and management expects relative stability in the BRL and MXN compared to the USD throughout 2024.
Sustaining expenditures in 2024 of $212 million includes investing: (i) $60 million in capitalized stripping programs, with the largest investments at Aurizona and Los Filos, (ii) $58 million in equipment costs, of which $17 million relates to the Los Filos open pit and underground fleets and processing equipment and $22 million relates to the RDM mobile fleet costs, and (iii) $40 million for tailings storage facility ("TSF") lifts and maintenance at all four Brazilian operations and Greenstone.
Sustaining expenditures for 2024 include $13 million for exploration with a focus on reserve replacement across the portfolio. Non-sustaining expenditures include $13 million for step-out and regional exploration, primarily at Aurizona and in the Bahia district.
Production and cash flow are expected to grow each quarter through 2024 due to normal seasonality and Greenstone ramp up throughout the year.
The Company's primary development focus for 2024 continues to be advancing Greenstone to commercial production, with Equinox Gold's 60% share of capital in 2024 forecast to be $95 million. In addition, the Company is advancing engineering and permitting for the Castle Mountain Phase 2 expansion, expects to start underground portal development for the Aurizona underground expansion in the second half of the year and is advancing dialogue with local communities at Los Filos to agree on a long-term development plan for the mine.
Cost and production guidance for Los Filos is subject to the successful execution of new social and land access agreements with local community stakeholders and landowners and collective agreements with unions. These new agreements are necessary to help ensure the long-term economic and investment viability of the mine, including the addition of a new 10,000 tpd carbon-in-leach ("CIL") processing plant to increase recoveries from higher-grade ore. If the Company is unable to satisfactorily complete these agreements, the Company will re-evaluate the current operation and may elect to suspend operations indefinitely or until such time as new agreements are in place. Accordingly, Los Filos production and cost guidance for 2024 is subject to change.
SELECTED FINANCIAL RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2023 AND 2022
Three months ended Year ended
| December 31, | December 31, | December 31, | December 31, | |
|---|---|---|---|---|
| $ amounts in millions, except per share amounts | 2023 | 2022 | 2023 | 2022 |
| Revenue | $ 297.8 $ | 259.3 $ | 1,088.2 $ | 952.2 |
Cost of sales
| Operating expense | (198.2) | (168.2) | (764.2) | (680.1) |
| Depreciation and depletion | (61.0) | (59.0) | (215.0) | (187.2) |
| Income from mine operations | 38.6 | 32.0 | 109.0 | 85.0 |
| Care and maintenance expense | - | (1.4) | (1.4) | (9.5) |
| Exploration and evaluation expense | (3.3) | (4.5) | (11.7) | (18.4) |
| General and administration expense | (10.0) | (12.8) | (46.2) | (46.7) |
| Income (loss) from operations | 25.3 | 13.3 | 49.6 | 10.4 |
| Finance expense | (17.9) | (12.4) | (60.2) | (40.4) |
| Finance income | 2.4 | 2.6 | 11.7 | 5.6 |
| Share of net income (loss) in associate | (0.4) | (3.6) | (17.5) | (6.2) |
| Other income (expense) | (1.0) | (4.9) | 31.1 | (67.9) |
| Net income (loss) before taxes | 8.3 | (5.0) | 14.8 | (98.4) |
| Income tax recovery (expense) | (4.5) | 27.6 | 14.1 | (7.6) |
| Net income (loss) | $ 3.9 $ | 22.6 $ | 28.9 $ | (106.0) |
Net income (loss) per share attributable to Equinox Gold shareholders Basic $ 0.01 $ 0.07 $ 0.09 $ (0.35) Diluted $ 0.01 $ 0.07 $ 0.09 $ (0.35)
Additional information regarding the Company's financial results and the Company's business strategy are available in the Company's 2023 audited consolidated Financial Statements and accompanying news release for the three months and year ended December 31, 2023, which will be available for download on the Company's website at www.equinoxgold.com, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
CONFERENCE CALL AND WEBCAST
Equinox Gold will host a conference call and webcast on Thursday, February 22, 2024 commencing at 7:30 am Vancouver time to discuss the Company's fourth quarter results and activities underway at the Company. 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 22, 2024.
Conference call Toll-free in U.S. and Canada: 1-800-319-4610 International callers: +1 604-638-5340
Webcast www.equinoxgold.com
ABOUT EQUINOX GOLD
Equinox Gold is a growth-focused Canadian mining company with seven operating gold mines, commissioning underway at a new project, and a clear plan to achieve more than one million ounces of annual gold production from a pipeline of expansion projects. Equinox Gold's common shares are listed on the TSX and the NYSE American under the trading symbol EQX. Further information about Equinox Gold's portfolio of assets and long-term growth strategy is available at www.equinoxgold.com or by email at [email protected].
EQUINOX GOLD CONTACTS
Greg Smith, President & Chief Executive Officer Rhylin Bailie, Vice President, Investor Relations Tel: +1 604-558-0560 Email: [email protected]
CAUTIONARY NOTES
Non-IFRS Measures
This news release refers to cash costs, cash costs per oz sold, AISC, AISC per oz sold, AISC contribution margin, adjusted net income, adjusted EPS, mine-site free cash flow, adjusted EBITDA, net debt and sustaining capital expenditures that are measures with no standardized meaning under IFRS, i.e. they are non-IFRS measures, and may not be comparable to similar measures presented by other companies. Their measurement and presentation is consistently prepared and is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Numbers presented in the tables below may not sum due to rounding.
Cash Costs and Cash Costs per oz Sold
Cash costs is a common financial performance measure in the gold mining industry; however, it has no standard meaning under IFRS. The Company reports total cash costs on a per oz sold basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate operating income and cash flow from mining operations. Cash costs are calculated as mine site operating costs and are net of silver revenue. Cash costs are divided by ounces sold to arrive at cash costs per oz sold. In calculating cash costs, the Company deducts silver revenue as it considers the cost to produce the gold is reduced as a result of the by-product sales incidental to the gold production process, thereby allowing management and other stakeholders to assess the net costs of gold production. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
AISC per oz Sold
The Company uses AISC per oz of gold sold to measure performance. The methodology for calculating AISC was developed internally and is calculated below. Current IFRS measures used in the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain gold production. The Company believes the AISC measure provides further transparency into costs associated with producing gold and will assist analysts, investors and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. AISC includes cash costs (described above) and also includes sustaining capital expenditures, sustaining lease payments, reclamation cost accretion and amortization and exploration and evaluation costs.
This measure seeks to reflect the full cost of gold production from current operations, therefore, expansionary capital and non-sustaining expenditures are excluded.
Prior to Q2 2023, the Company's calculation of cash costs included the principal portion of sustaining lease payments. Commencing in Q2 2023, to improve the comparability of the Company's financial performance measures with its peers and align to the standards outlined by the World Gold Council, the Company has excluded sustaining lease payments from its calculation of cash costs and has included them as a component of AISC. The calculations of cash costs and AISC for comparative periods have been adjusted to conform with the current methodology and are different from the measures previously reported.
The following table provides a reconciliation of cash costs per oz of gold sold and AISC per oz of gold sold to the most directly comparable IFRS measure on an aggregate basis.
Three months ended Year ended
| $'s in millions, except ounce and | December 31, | September 30, | December 31, | December 31, | December 31, |
|---|---|---|---|---|---|
| per oz figures | 2023 | 2023 | 2022 | 2023 | 2022 |
| Operating expenses | 198.2 | 201.1 | 168.2 | 764.2 | 680.1 |
| Silver revenue | (0.6) | (0.6) | (0.2) | (2.1) | (3.0) |
Fair value adjustment on
| acquired inventories | 1.6 | 1.6 | 12.2 | (6.9) | 21.9 |
| Santa Luz operating expense(1) | - | - | - | - | (29.3) |
| Total cash costs | $ 199.3 $ | 202.1 $ | 180.2 $ | 755.2 $ | 669.7 |
| Sustaining capital | 42.7 | 32.0 | 43.1 | 119.9 | 139.2 |
| Sustaining lease payments | 4.6 | 4.7 | 2.5 | 17.6 | 6.8 |
| Reclamation expense | 1.7 | 2.9 | 1.8 | 9.1 | 9.2 |
| Sustaining exploration expense | - | - | - | - | 1.1 |
Santa Luz reclamation
| expense(1) | - | - | - | - | (0.2) | |||||||||
| Total AISC | $ | 248.3 | $ | 241.7 | $ | 227.6 | $ | 901.9 | $ | 825.7 | ||||
| Gold oz sold | 149,861 | 148,231 | 149,386 | 559,481 | 532,137 | |||||||||
| Santa Luz gold ounces sold(1) | - | - | - | - | (22,945) | |||||||||
| Adjusted gold oz sold | 149,861 | 148,231 | 149,386 | 559,481 | 509,192 | |||||||||
| Cash costs per gold oz sold | 1,330 | $ | 1,363 | $ | 1,206 | 1,350 | $ | 1,315 | ||||||
| AISC per oz sold | $ | 1,657 | $ | 1,630 | $ | 1,523 | $ | 1,612 | $ | 1,622 |
(1) Consolidated cash cost per oz sold and AISC per oz sold for the year ended December 31, 2022 excludes Santa Luz results while the mine was in pre-commercial production up until the achievement of commercial production at the end of Q3 2022.
Sustaining Capital Expenditures
Sustaining capital expenditures are defined as those expenditures which do not increase annual gold ounce production at a mine site and excludes all expenditures at the Company's projects and certain expenditures at the Company's operating sites which are deemed expansionary. Sustaining capital expenditures can include, but are not limited to, capitalized stripping costs at open pit mines, underground mine development, mining and milling equipment and TSF raises.
The following table provides a reconciliation of sustaining capital expenditures to the Company's total capital expenditures for continuing operations:
Three months ended Year ended December 31, September 30, December 31, December 31, December 31, $'s in millions 2023 2023 2022 2023 2022 Capital additions to mineral properties, plant and equipment(1) $ 157.0 $ 153.5 $ 163.2 $ 596.4 $ 642.2 Less: Non-sustaining capital at operating sites (8.1) (8.4) (10.8) (25.3) (81.2) Less: Non-sustaining capital at development projects (94.6) (101.4) (103.4) (390.4) (389.4) Less: Capital expenditures -
| corporate | 0.1 | (0.2) | - | (0.3) | (10.2) |
| Less: Other non-cash additions(2) | (11.7) | (11.5) | (5.9) | (60.4) | (22.2) |
| Sustaining capital expenditures $ | 42.7 $ | 32.0 $ | 43.1 $ | 119.9 $ | 139.2 |
(1) Per note 9 of the consolidated financial statements. Capital additions exclude non-cash changes to reclamation assets arising from changes in discount rate and inflation rate assumptions in the reclamation provision.
(2) Non-cash additions include right-of-use assets associated with leases recognized in the period, capitalized depreciation for deferred stripping activities, and capitalized non-cash share-based compensation.
Total Mine-site Free Cash Flow
Mine-site free cash flow is a non-IFRS financial performance measure. The Company believes this measure is a useful indicator of its ability to operate without reliance on additional borrowing or usage of existing cash. In calculating total mine-site free cash flow, the Company excludes the impact of fair value adjustments on acquired inventories as these adjustments do not impact cash flow from operating mine sites. Mine-site free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Mine-site free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Prior to Q1 2023, mine-site free cash flow was calculated inclusive of fair value adjustments on acquired inventories. The calculation of mine-site free cash flow for comparative periods has been adjusted to conform with the current methodology and is different from the measure previously reported.
In Q4 2023, the Company revised the calculation to include changes in non-cash working capital and present mine-site free cash flow after changes in non-cash working capital. The Company believes it is useful to provide mine-site free cash flow before and after changes in non-cash working capital as working capital can fluctuate significantly between periods due to numerous factors.
The following table provides a reconciliation of mine-site free cash flow to the most directly comparable IFRS measure on an aggregate basis:
Three months ended Year ended December 31, September 30, December 31, December 31, December 31, $'s in millions 2023 2023 2022 2023 2022 Operating cash flow before noncash changes in working capital $ 168.2 $ 82.6 $ 80.0 $ 527.5 $ 144.3 Less: Fair value adjustments on acquired inventories (1.6) (1.6) (12.2) 6.9 (16.1) Less: Operating cash flow (generated) used by non-mine site activity(1) (71.1) (5.2) 7.1 (223.2) 97.2 Cash flow from operating mine sites $ 95.6 $ 75.9 $ 74.9 $ 311.2 $ 225.4
Mineral property, plant and equipment additions $ 157.0 153.5 163.2 $ 596.4 642.2 Less: Capital expenditures relating to development projects and corporate and other noncash additions (106.2) (113.1) (109.3) (451.2) (421.8) Capital expenditure from operating mine sites 50.8 40.4 53.9 145.2 220.4 Lease payments related to nonsustaining capital items 7.0 4.4 3.9 20.5 16.8 Non-sustaining exploration expense 3.1 2.6 5.4 11.5 17.8 Total mine-site free cash flow before changes in non-cash working capital $ 34.7 $ 28.4 $ 11.8 $ 134.0 $ (29.6) (Increase) decrease in non-cash working capital $ (42.3) $ (13.4) $ (34.4) $ (169.0) $ (87.8) Total mine site free cash flow after changes in non-cash working capital $ (7.6) $ 15.1 $ (22.6) $ (35.0) $ (117.4)
(1) Includes taxes paid and proceeds from gold prepayments that are not factored into mine-site free cash flow and are included in operating cash flow before non-cash changes in working capital in the statement of cash flows.
AISC Contribution Margin, EBITDA and Adjusted EBITDA
The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors, and other stakeholders use AISC contribution margin, AISC contribution margin per gold ounce sold and adjusted EBITDA to evaluate the Company's performance and ability to generate cash flows and service debt. AISC contribution margin is defined as revenue less AISC. EBITDA is defined as earnings before interest, tax, depreciation and amortization.
Adjusted EBITDA is defined as earnings before interest, tax, depreciation, and amortization, adjusted to exclude specific items that are significant but not reflective of the underlying operating performance of the Company, such as the impact of fair value changes of warrants, foreign exchange contracts and gold contracts; unrealized foreign exchange gains and losses, transaction costs, and non-cash share-based compensation expense. It is also adjusted to exclude items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating
The following tables provide the calculation of AISC contribution margin, EBITDA and adjusted EBITDA, as calculated by the Company:
AISC Contribution Margin
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| $'s in millions | 2023 | 2023 | 2022 | 2023 | 2022 | |||||
| Revenue | $ | 297.8 | $ | 284.7 | $ | 259.3 | $ | 1,088.2 | $ | 952.2 |
| Less: silver revenue | (0.6) | (0.6) | (0.2) | (2.1) | (3.0) | |||||
| Less: AISC | (248.3) | (241.7) | (227.6) | (901.9) | (825.7) | |||||
| Less: Santa Luz revenue(1) | $ | - | $ | - | $ | - | $ | - | $ | (40.0) |
| AISC contribution margin | $ | 48.9 | $ | 42.5 | $ | 31.5 | $ | 184.2 | $ | 83.5 |
| Gold ounces sold | 149,861 | 148,231 | 149,386 | 559,481 | 532,137 |
Less: Santa Luz gold ounces sold(1) - - - - (22,945) Adjusted gold ounces sold 149,861 148,231 149,386 559,481 509,192 AISC contribution margin per oz sold $ 326 $ 286 $ 211 $ 329 $ 164
(1) AISC contribution margin for the year ended December 31, 2022 excludes Santa Luz results while the mine was in pre-commercial production up until the achievement of commercial production at the end of Q3 2022.
EBITDA and Adjusted EBITDA
Three months ended Year ended
| December 31, | September 30, | December 31, | December 31, | December 31, | |||
|---|---|---|---|---|---|---|---|
| $'s in millions | 2023 | 2023 | 2022 | 2023 | 2022 | ||
| Net income (loss) | $ | 3.9 | 2.2 | 22.6 | $ | 28.9 | (106.0) |
| Income tax (recovery) expense | 4.5 | (8.1) | (27.6) | (14.1) | 7.6 | ||
| Depreciation and depletion | 61.3 | 58.9 | 59.8 | 216.1 | 188.8 | ||
| Finance expense | 17.9 | 15.3 | 12.4 | 60.2 | 40.4 | ||
| Finance income | (2.4) | (3.0) | (2.6) | (11.7) | (5.6) | ||
| EBITDA | $ | 85.2 $ | 65.2 $ | 64.6 | $ | 279.4 $ | 125.2 |
Non-cash share-based compensation expense 2.6 2.5 1.1 8.5 3.7 Unrealized (gain) loss on warrants - (1.6) (2.9) 1.8 69.9 Unrealized (gain) loss on gold contracts 12.7 (6.2) - 4.0 - Gain on gold contracts acquired in a business combination - - - - (33.3) Unrealized (gain) loss on foreign exchange contracts (4.3) 17.8 (7.7) (13.4) (16.8) Unrealized (gain) loss on power purchase agreement (3.3) 0.6 - 4.4 - Unrealized foreign exchange (gain) loss 1.5 (2.2) 3.1 5.3 4.7 Share of net (income) loss of
| investment in associate | 0.4 | - | 3.6 | 17.5 | 6.2 |
| Other (income) expense | 0.5 | 5.1 | 12.5 | (3.1) | 8.4 |
| Adjusted EBITDA | $ 95.3 $ | 81.2 $ | 74.3 $ | 304.4 $ | 168.0 |
Adjusted Net Income and Adjusted EPS
Adjusted net income and adjusted EPS are used by management and investors to measure the underlying operating performance of the Company. Adjusted net income is defined as net income adjusted to exclude specific items that are significant but not reflective of the underlying operating performance of the Company, such as the impact of fair value changes in the value of warrants, foreign exchange contracts and gold contracts, unrealized foreign exchange gains and losses, and non-cash share-based compensation expense. It is also adjusted to exclude items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating
per share amounts are calculated using the weighted average number of shares outstanding on a basic and diluted basis as determined by IFRS.
The following table provides the calculation of adjusted net income and adjusted EPS, as adjusted and calculated by the Company:
December 31, September 30, December 31, December 31, December 31, $'s and shares in millions 2023 2023 2022 2023 2022 Net income (loss) attributable to Equinox Gold shareholders $ 3.9 $ 2.2 $ 22.6 $ 28.9 $ (106.0) Add (deduct):
Non-cash share-based compensation expense 2.6 2.5 1.1 8.5 3.7 Unrealized (gain) loss on warrants - (1.6) (2.9) 1.8 69.9 Unrealized (gain) loss on gold contracts 12.7 (6.2) - 4.0 - Gain on gold contracts acquired in a business combination - - - - (33.3) Unrealized (gain) loss on foreign exchange contracts (4.3) 17.8 (7.7) (13.4) (16.8) Unrealized (gain) loss on power purchase agreement (3.3) 0.6 - 4.4 - Unrealized foreign exchange (gain) loss 1.5 (2.2) 3.1 5.3 4.7 Share of net (income) loss of investment in associate 0.4 - 3.6 17.5 6.2 Other (income) expense 0.5 5.1 12.5 (3.1) 8.4 Income tax impact related to above adjustments 0.6 (0.3) (3.0) (0.8) (2.5) Unrealized foreign exchange (gain) loss recognized in deferred tax expense (12.2) 10.7 (22.2) (31.3) (25.8) Adjusted net income (loss) $ 2.4 $ 28.7 $ 7.0 $ 21.7 $ (91.5)
Basic weighted average shares outstanding 313.7 313.0 305.2 312.8 304.0 Diluted weighted average shares outstanding 317.3 316.5 351.4 316.3 304.0 Adjusted income (loss) per share
- basic ($/share) $ 0.01 $ 0.09 $ 0.02 $ 0.07 $ (0.30)
Adjusted income (loss) per share
- diluted ($/share) $ 0.01 $ 0.09 $ 0.02 $ 0.07 $ (0.30)
Net Debt
The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use net debt to evaluate the Company's performance. Net debt does not have any standardized meaning prescribed under IFRS, and therefore it may not be comparable to similar measures employed by other companies. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performances prepared in accordance with IFRS. Net debt is calculated as the sum of the current and non-current portions of long-term debt, net of the cash and cash equivalent balance as at the balance sheet date. A reconciliation of net debt is provided below.
| December 31, | September 30, December 31, | |
|---|---|---|
| $'s in millions | 2023 | 2023 2022 |
| Current portion of loans and borrowings | $ 138.6 $ | 137.7 $ - |