Equinox Gold Ord Shs T.EQX

How are they going to pay for Greenstone?

[Concojones]

Let's say it costs $800m if we assume a very slight cost overrun due to inflation. This is the amount they need to cough up in 2 years. 

If they sold their entire equity portfolio today, and paid off all debt, they'd have maybe $100m in the bank, if that (due to Solaris / copper price fall).

If gold stays at $1800 (that's a very big "if" in a rising rate environment) they could make $400m from operations if they stop all nonsustaining capex ($160m this year) in all mines.

If they max out their debt, they could make up the difference ($400m).

If gold doesn't hold at $1800 in a world where all asset classes are falling due to rising rates, they won't have the money.

Am I missing something or does their budget seem over-optimistic to you too?

Please only reply if you've done this analysis.

[Partypanther21]

I don't think you're far off that it's a major risk. Fortunately, Santa Luz spend is basically done now which is huge.(knock on wood). Getting that mine ramped up is very important because it's supposed to have such lower AISC. The market is likely nervous that EQX hasn't announced commercial production or even given a revised timeline of when that might be. Because the

[marketdiva]

i thought throughout history the major gold rallies occurre during stagflation bear market / recessions ....so why would we not want that ? 

[Concojones]

Thanks for clarifying the Santa Luz situation, Partypanther.    As to your question: what will EQX AISC be once Santa Luz is in production: my calculation assumed ~$1300 because that was their Jan guidance for H2 "due to Santa Luz mine transitioning from construction and commissioning to operations starting in Q2 2022." You might argue AISC could be lower depending on Santa

[Partypanther21]

Ya, that makes sense to have a massive increase in AISC on Santa Luz just due to input prices (diesel, etc.). The recovery rate risk of the mine is huge.....to my knowledge the reason the mine shut down previously was that the recovery rates of the technology used were terrible so they had really high AISC. The technology they are using now is different and has been tested and shown a massive

[Concojones]

Thanks for filling us in on Santa Luz, PartyPanther. Very interesting.

[Concojones]

One more thing on Santa Luz. You're undoubtedly right that it's a risk. On the other hand, it's hard to imagine Ross Beaty not doing proper homework on the metallurgy (it's also his money). So I'm going to assume that whatever problems they may have, they'll eventually sort them out.

[Concojones]

Good news regarding Santa Luz (which Partypanther21 was concerned about). This article suggests commercial production is imminent (was a few weeks away as of early July):  https://www.sindimina.com/post/equinox-gold-inaugura-minera%C3%A7%C3%A3o-santa-luz

[Concojones]

Update with new assumptions: $700m capex $100m in the bank (like I said this depends on value of their equity portfolio) Stop spending growth capex on other mines $1350 AISC (= H2 guidance + $50/oz corporate) 700koz in 2023 At $1800 gold, they could complete Greenstone without extra financing and pay off their convertible debt. At $1500 gold, they'd need an extra $400m (seems feasible with