Equinox Gold Reports First Quarter 2022 Financial and Operating Results All dollar figures in US dollars
TSX: EQX
NYSE-A: EQX
Suite 1501 - 700 West Pender St., Vancouver, BC Canada V6C 1G8
[email protected] +1 604.558.0560 www.equinoxgold.com
NEWS RELEASE
Equinox Gold Reports First Quarter 2022 Financial and Operating Results
All dollar figures in US dollars, unless otherwise indicated
May 3, 2022 – Vancouver, BC – Equinox Gold Corp. (TSX: EQX, NYSE American: EQX) (“Equinox Gold” or the
“Company”) is pleased to announce its first quarter 2022 summary financial and operating results. The Company’s
unaudited condensed consolidated interim financial statements and related management’s discussion and
analysis for the three months ended March 31, 2022 will be available for download on SEDAR, on EDGAR and
on the Company’s website. The Company will host a conference call and webcast on May 4, 2022 commencing
at 7:30 am Pacific Time to discuss the Company’s first quarter results and activities underway at the Company’s
projects. Further details are provided at the end of this news release.
Christian Milau, CEO of Equinox Gold, commented: “Over the first few months of 2022 we poured first gold at our
new Santa Luz mine in Brazil, strengthen ed our balance sheet and investment portfolio with the sale of our non-
core Mercedes mine, and made good progress with construction at our Greenstone project. We expect g old
production to increase and costs to come down over the next three quarters with new production from Santa Luz,
increased production from our other Brazil mines as the rainy season ends, and growing production at Mesquite.
We are on track to achieve guidance for 2022, with 60% of production and more than 85% of cash flow forecast
to come in the second half of the year . We look forward to achieving commercial production at Santa Luz and
reporting on construction milestones at Greenstone as we ramp up activity heading into the summer season.”
HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2022
Operational
• Produced 117,452 oz of gold during the quarter; sold 119,324 oz of gold at an average realized gold price of
$1,862 per oz
• Total cash costs of $1,238 per oz and AISC (all-in sustaining costs) of $1,578 per oz(1)
• Recommenced plant operations at RDM on March 14 following a temporary suspension on February 26 to
reduce water levels in the tailings storage facility; mining and stockpiling of ore continued during the suspension
• Total recordable injury frequency rate of 3. 76 for the quarter with five lost-time injuries, and 3.01 on a rolling
12-month basis
Earnings
• Earnings from mine operations of $28.5 million
• Net loss of $19.8 million or $(0.07) per share
• Adjusted net loss of $23.9 million(1) or $(0.08) per share(1), after adjusting for certain non-cash expense items(2)
Financial
• Cash flow from operations before changes in non-cash working capital of $33.5 million ($16.4 million cash
flow used in operations after changes in non-cash working capital)
• Adjusted EBITDA of $43.4 million(1)(2)
• Expenditures of $37.1 million in sustaining capital and $90.7 million in non-sustaining capital(1)
• Cash and cash equivalents (unrestricted) of $151.2 million at March 31, 2022
- In April 2022, received $75 million on closing of the sale of Mercedes and $40 million on exercise of
Solaris warrants issued by the Company
• Net debt(1) of $385.1 million at March 31, 2022 (including $278.9 million of in-the-money convertible notes)
_________________________
1. Cash costs per oz sold, AISC per oz sold, adjusted ne t income, adjusted EBITDA, adjusted EPS, sustaining capital, non -sustaining capital and net debt are
non-IFRS measures. See Non-IFRS Measures.
2. Primary adjustments for the three months ended March 31, 2022 were $18.7 million unrealized loss on change in fair value of share purchase warrants, $10.5
million unrealized foreign exchange loss, $18.1 million unrealized gain on foreign exchange contracts and $5.4 million unreal ized gain on gold contracts.
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Construction, development and exploration
• Poured first gold at Santa Luz on March 30, 2022; commissioning and ramp up continuing towards achieving
commercial production
• Advanced Greenstone construction
- Overall project 20% complete and tracking on schedule and within budget
- Detailed engineering 91% complete
- Tailings management facility construction ahead of schedule
- Highway relocation on schedule
- Site civil works and concrete foundation work well advanced
- Plant earthworks 75% complete
POST QUARTER HIGHLIGHTS
• Sold Mercedes on April 21, 2022 to Bear Creek Mining Corporation for aggregate consideration of:
- $100 million in cash, with $75 million paid on closing and $25 million payable within six months of closing;
- 24,730,000 common shares of Bear Creek Mining (TSXV: BCM); and
- A 2% net smelter return payable on production from Mercedes
• Exploration drilling in 70-km-long greenstone belt that hosts Fazenda and Santa Luz identified multiple near-
mine and regional discoveries that highlight growth potential
• Received $40 million (C$50 million) and transferred five million shares of the Company’s investment in Solaris
Resources Inc. following the exercise of warrants the Company granted on April 28, 2021
• Acquired 1 million shares of Solaris at C$6.75 per share on exercise of share purchase warrants. Following
the exercise of the share purchase warrants, the Company owns 13,826,737 shares, representing
approximately 12.71% of Solaris
CONSOLIDATED OPERATIONAL AND FINANCIAL HIGHLIGHTS
Three months ended
Operating data Unit
March 31,
2022
December 31,
2021
March 31,
2021
Gold produced oz 117,452 210,432 129,233
Gold sold oz 119,324 212,255 128,555
Average realized gold price $/oz 1,862 1,792 1,786
Cash costs per oz sold(1) $/oz 1,238 1,039 1,141
AISC per oz sold(1)(2) $/oz 1,578 1,265 1,482
Financial data
Revenue M$ 223.2 381.2 229.7
Earnings from mine operations M$ 28.5 99.4 44.2
Net (loss) income M$ (19.8) 109.0 50.3
(Loss) earnings per share $/share (0.07) 0.37 0.21
Adjusted EBITDA(1) M$ 43.4 130.0 60.9
Adjusted net (loss) income(1) M$ (23.9) 72.2 (3.2)
Adjusted EPS(1) $/share (0.08) 0.24 (0.01)
Balance sheet and cash flow data
Cash and cash equivalents (unrestricted) M$ 151.2 305.5 317.5
Net debt(1) M$ 385.1 235.2 229.8
Operating cash flow before changes in non-cash working capital M$ 33.5 122.2 62.0
(1) 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.
(2) Consolidated AISC per oz sold excludes corporate general and administration expenses.
During Q1 2022, the Company recognized revenue of $223.2 million on sales of 119,324 ounces of gold,
compared to revenue for the three months ended December 31, 2021 (“Q4 2021”) of $381.2 million on sales of
212,255 ounces of gold. Gold ounces sold and revenues are comparable to Q1 2021. The decrease in ounces
sold from Q4 2021 to Q1 2022 was mainly due to decreased production at Los Filos, Aurizona, Mesquite and
RDM. In accordance with the sites’ mine plans, waste stripping occurs early in the calendar year, resulting in the
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majority of ore tonnes being mined later in the year. In addition to this, Q1 2022 production for RDM and Aurizona
was lower than Q4 2021 due to higher levels of rainfall impeding production.
In Q1 2022, earnings from mine operations were $28.5 million, a decrease compared to $99.4 million in Q4 2021.
Earnings from mine operations was impacted by lower gold production and higher operating costs due to oil prices,
supply chain constraints and inflationary pressures. Net loss in Q1 2022 was $19.8 million compared to net income
of $109.0 million in Q4 2021, driven by the decrease in earnings from mine operations and a $18.7 million loss on
the change in fair value of share purchase warrants in Q1 2022 compared to a gain of $27.5 million in Q4 2021.
Adjusted EBITDA for Q1 2022 of $43.4 million decreased from $130.0 million in Q4 2021 driven by lower earnings
from mine operations in Q1 2022. Adjusted net loss was $23.9 million for Q1 2022 compared to adjusted net
income of $72.2 million in Q4 2021.
SELECTED FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
$ amounts in millions, except per share amounts
Three months ended
March 31,
2022
March 31,
2021
Revenue $ 223.2 $ 229.7
Cost of sales
Operating expense (152.4) (146.8)
Depreciation and depletion (42.3) (38.7)
Earnings from mine operations 28.5 44.2
Care and maintenance expense (0.4) (2.0)
Exploration expense (3.2) (3.0)
General and administration expense (11.8) (7.4)
Income from operations 13.1 31.9
Finance expense (9.4) (8.7)
Finance income 0.8 0.4
Share of net loss in associate (1.6) (2.7)
Other (expense) income (19.0) 49.3
Net (loss) income before taxes (16.1) 70.3
Income tax expense (3.7) (20.0)
Net (loss) income $ (19.8) $ 50.3
Net (loss) income per share attributable to Equinox Gold shareholders
Basic $ (0.07) $ 0.21
Diluted $ (0.07) $ 0.14
Additional information regarding the Company’s financial results and activities underway at the Company’s
projects is available in the Company’s Q1 2022 Financial Statements and accompanying management’s
discussion and analysis for the three months ended March 31, 2022, which will be available for download on the
Company’s website at www.equinoxgold.com, on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.
RECENT DEVELOPMENTS
Due to a reversal of previous decisions by SUPRAM (State Environmental Agency - Minas Gerais), permitting the
next TSF raise at RDM is delayed. Discussions with regulatory authorities are ongoing. If the Company is not able
to achieve satisfactory resolution prior to the need to start the next raise in Q2 2022, operations at the mine may
be temporarily suspended commencing in Q2 or Q3 2022.
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The RDM TSF is raised on an intermittent basis throughout the mine life to store additional tailings produced from
ongoing operations. The TSF has been designed and is operated to industry best practices and is regularly inspected
and audited by independent parties. A design alteration was filed with SUPRAM in 2017 to change from a centreline
to a downstream design, which is considered the safest construction method, and since 2018 each raise has been
completed using a downstream design. Permits to raise the TSF using a downstream design were granted in 2019
and 2020. In 2020, the Company requested a raise method formalization as an addendum to the license to operate,
confirming the change to a downstream design, and in early 2021 SUPRAM granted the permit to raise the TSF to
its current level. In 2021, the Company applied for a permit for the next TSF raise, which has not been granted to
date.
NON-IFRS MEASURES
The Company’s financial and operating results are prepared in accordance with International Financial Reporting
Standards (“IFRS”). This news release includes the following non- IFRS measures which have no standardized
meaning under IFRS and may not be comparable to similar measures presented by other issuers. Such non-IFRS
measures have been derived from the Company’s financial statements and are consistently measured and
presented. Non- IFRS measures are intended to provide additional information about the performance of the
Company 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 include mine site operating costs plus lease principal payments, but are exclusive of
depreciation and depletion, reclamation, capital and exploration costs and net of by-product sales and then divided
by ounces sold to arrive at cash costs per oz sold. The measure is not necessarily indicative of cash flow fr om
operations under IFRS or operating costs presented under IFRS.
AISC per oz sold
The Company is reporting AISC per oz of gold sold. The methodology for calculating AISC was developed
internally and is calculated below. Readers should be aware that this measure does not have a standardized
meaning. 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. In calculating AISC, the Company includes silver by-product credits
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.
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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.
$’s in millions, except ounce and per oz figures
Three months ended
March 31,
2022
December 31,
2021
March 31,
2021
Gold ounces sold 119,324 212,255 128,555
Operating expenses $ 152.4 $ 215.5 $ 146.8
Lease payments 2.4 3.8 2.2
Silver by-product credits (1.0) 0.3 (0.1)
Non-recurring charges recognized in operating expenses (1) — (0.4) —
Fair value adjustment on acquired inventories (5.9) 1.4 (2.3)
Total cash costs $ 147.8 $ 220.6 $ 146.6
Cash costs per gold oz sold $ 1,238 $ 1,039 $ 1,141
Total cash costs $ 147.8 $ 220.6 $ 146.6
Sustaining capital 37.1 42.4 41.3
Reclamation expenses 2.4 5.5 2.6
Sustaining exploration expenses 1.0 — 0.1
Total AISC 188.3 268.5 190.6
AISC per oz sold $ 1,578 $ 1,265 $ 1,482
(1) Non-recurring charges recognized in operating expenses relates to an impairment charge on replacement parts at Mesquite.
Sustaining and non-sustaining capital reconciliation
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
$’s in millions
March 31,
2022
December 31,
2021
March 31,
2021
Capital additions to mineral properties, plant and equipment(1) $ 129.1 $ 135.4 $ 112.1
Less: Non-sustaining capital at operating sites (30.3) (23.4) (27.1)
Less: Non-sustaining capital at development projects (60.4) (62.4) (8.3)
Less: Capital expenditures - corporate (0.1) (0.1) (0.4)
Less: Other non-cash additions(2) (1.2) (7.1) (35.1)
Sustaining capital expenditures $ 37.1 $ 42.4 $ 41.3
(1) Per note 5 of the condensed consolidated interim financial statements. Capital additions are exclusive of 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 and capitalized depreciation for deferred stripping activities.
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. 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.
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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
$’s in millions
March 31,
2022
December 31,
2021
March 31,
2021
Operating cash flow before non-cash changes in working capital $ 33.5 $ 122.2 $ 62.0
Add: Operating cash flow used by non-mine site activity(1) 39.1 32.7 17.1
Cash flow from operating mine sites $ 72.6 $ 154.9 $ 79.1
Mineral property, plant and equipment additions $ 129.1 135.4 112.1
Less: Capital expenditures relating to development projects and corporate and
other non-cash additions (61.7) (69.6) (43.8)
Capital expenditure from operating mine sites 67.3 65.8 68.4
Lease payments related to non-sustaining capital items 3.4 3.5 1.2
Non-sustaining exploration expenses 2.1 3.0 2.2
Total mine site free cash flow $ (0.3) $ 82.7 $ 7.3
(1) Includes taxes paid 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 use AISC contribution margin 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 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
performance, such as impairments and gains and losses on disposals of assets.
Prior to Q4 2021, adjusted EBITDA was calculated excluding transaction costs as an adjusting item. Commencing
in Q4 2021, the Company has adjusted for transaction costs as this item is not considered representative of core
operating performance. The calculation of adjusted EBITDA for March 31, 2021 has been adjusted to conform
with the current methodology and is different from those previously reported.
The following tables provide the calculation of AISC contribution margin, EBITDA and adjusted EBITDA, as
calculated by the Company:
AISC Contribution Margin
Three months ended
$’s in millions
March 31,
2022
December 31,
2021
March 31,
2021
Revenue $ 223.2 $ 381.2 $ 229.7
Less: AISC (188.3) (268.5) (190.6)
AISC contribution margin $ 34.9 $ 112.7 $ 39.1
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EBITDA and Adjusted EBITDA
Three months ended
$’s in millions
March 31,
2022
December 31,
2021
March 31,
2021
Net (loss) income before tax $ (16.1) $ 88.2 $ 70.3
Depreciation and depletion 42.6 66.7 38.8
Finance expense 9.4 10.3 8.7
Finance income (0.8) (1.1) (0.4)
EBITDA $ 35.1 $ 164.1 $ 117.4
Non-cash share-based compensation expense (recovery) 1.3 0.8 (0.1)
Unrealized loss (gain) on change in fair value of warrants 18.7 (27.5) (33.3)
Unrealized gain on gold contracts (5.4) (4.3) (42.1)
Unrealized (gain) loss on foreign exchange contracts (18.1) (1.7) 11.3
Unrealized foreign exchange loss (gain) 10.5 (10.8) (1.0)
Non-recurring charges recognized in operating expense(1) — 0.4 —
Transaction costs 0.1 0.5 0.5
Share of net loss (income) on investment in associate 1.6 (8.3) 2.7
Other (income) expense(2) (0.4) 16.8 5.5
Adjusted EBITDA $ 43.4 $ 130.0 $ 60.9
(1) Non-recurring charges recognized in operating expenses relates to an impairment charge on replacement parts at Mesquite.
(2) Other expense for the three months ended March 31, 2022 includes a $1.9 million loss on the change in fair value of derivative liabilities. Other expense for
the three months ended December 31, 2021 includes an $8.0 million loss on disposal of plant and equipment and a $6.0 million expected credit loss. Other
expense for the three months ended March 31, 2021 includes a $1.7 million loss on disposal of plant and equipment and a $1.0 million loss on change in fair
value of marketable securities.
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 performance, such as impairments and gains and losses on disposals of assets.
Adjusted net income per share amounts are calculated using the weighted average number of shares outstanding
on a basic and diluted basis as determined by IFRS.
Prior to Q4 2021, adjusted net income was calculated excluding transaction costs as an adjusting item.
Commencing in Q4 2021, the Company has adjusted for transaction costs as this item is not considered
representative of core operating performance. The calculation of adjusted net income for March 31, 2021 has
been adjusted to conform with the current methodology and is different from those previously reported.
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The following table provides the calculation of adjusted net income and adjusted EPS, as adjusted and calculated
by the Company:
Three months ended
$’s in millions
March 31,
2022
December 31,
2021
March 31,
2021
Basic weighted average shares outstanding 285,835,623 300,790,672 242,576,291
Diluted weighted average shares outstanding 285,835,623 348,996,674 291,620,441
Net (loss) income attributable to Equinox Gold shareholders $ (19.8) $ 109.0 $ 50.3
Add (deduct):
Non-cash share-based compensation expense (recovery) 1.3 0.8 (0.1)
Unrealized loss (gain) on change in fair value of warrants 18.7 (27.5) (33.3)
Unrealized gain on gold contracts (5.4) (4.3) (42.1)
Unrealized (gain) loss on foreign exchange contracts (18.1) (1.7) 11.3
Unrealized foreign exchange loss (gain) 10.5 (10.8) (1.0)
Non-recurring charges recognized in operating expense(1) — 0.4 —
Transaction costs 0.1 0.5 0.5
Share of net loss (income) on investment in associate 1.6 (8.3) 2.7
Other expense(2) (0.4) 16.8 5.5
Income tax impact related to above adjustments (1.8) — —
Unrealized foreign exchange (gain) loss recognized in deferred tax expense (10.6) (2.7) 3.0
Adjusted net (loss) income $ (23.9) $ 72.2 $ (3.2)
Adjusted (loss) income per share - basic ($/share) $(0.08) $0.24 $(0.01)
Adjusted (loss) income per share - diluted ($/share) $(0.08) $0.21 $(0.01)
(1) Non-recurring charges recognized in operating expense relates to an impairment charge on replacement parts at Mesquite.
(2) Other expense for the three months ended March 31, 2022 includes a $1.9 million loss on the change in fair value of derivative liabilities. Other expense for
the three months ended December 31, 2021 includes an $8.0 million loss on disposal of plant and equipment and a $6.0 million expected credit loss. Other
expense for the three months ended March 31, 2021 includes a $1.7 million loss on disposal of plant and equipment and a $1.0 million loss on change in fair
value of marketable securities.
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.
March 31,
2022
December 31,
2021
March 31,
2021
Current portion of loans and borrowings $ 26.7 $ 26.7 $ 20.0
Non-current portion of loans and borrowings 509.6 514.0 527.3
Total debt 536.2 540.7 547.3
Less: Cash and cash equivalents (unrestricted) (151.2) (305.5) (317.5)
Net debt $ 385.1 $ 235.2 $ 229.8