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Equinox Gold: A Shift to a U.S. Listing

08/14/2019 5:00 am EST


Brien Lundin

Executive Editor, Gold Newsletter

The new gold bull market has been confirmed, with gold breaking through technical resistance; what makes this an exciting time is that the junior miners are only now beginning to significantly respond, and there are still bargains galore in the sector, notes Brien Lundin, small cap mining expert and editor of Gold Newsletter.

Equinox Gold (Vancouver: EQX) has been following the gold market steadily up overt he past couple of weeks. It makes sense, given the company’s growth profile and its status as a gold producer.

That status got a boost in July with the achievement of commercial production at the company’s newly restarted Aurizona mine in Brazil. The mine produced 7,000 ounces of gold in June and is on its way to achieving average life-of-mine production of 136,000 ounces per year.

Between Aurizona and Equinox’s Mesquite mine, the company expects to produce between 200,000 and 235,000 ounces of gold in 2019 with AISC ranging between$ 940 and $990 an ounce.

Those numbers are revised down slightly due to a longer leach cycle for non-oxide ore at Mesquite and the modification of the mine plan for Aurizona. Management wills pend $69 million on development at Mesquite and has spent $48 million on Aurizona through June30, 2019.

For the recently ended second quarter, Equinox sold 26,856 ounces of gold, generating $35.4 million in revenue. That produced $9.6 million in earnings from mine operations and resulted in a $10.7million net loss.

In preparation for a U.S. listing, management has elected to consolidate shares on a five-to one basis. That will take the company’s shares outstanding from 566 million to 113 million. The consolidation will happen on or around Aug. 20, 2019.

While not ideal in the short run, the consolidation and resultingU. S.listing should help draw a broader audience for the stock. The company’s high-growth production strategy and mid-tier producer bona fides continue to make Equinox a compelling, leveraged bet on a gold bull market. It’s a buy, post-consolidation.

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