SGL wrote about Equinox Gold in September 2023 at $4.43 and again in March 2024 at $4.61. Since then, the company has made huge progress, but the share price has been a major disappointment trading today at around $6.00. SGL believes that a major catch up phase could begin now.
July 8, 2025
SGL wrote about Equinox Gold (EQX) in September 2023 at $4.43 and again in March 2024 at $4.61. The thesis was always that EQX would join the names of highest quality gold stocks, by producing 1 million ounces per year.
Since then, the company has made huge progress, but the share price has been a major disappointment trading today at around 6.00. SGL believes that the major catch up phase may begin now.
There are two main reasons to anticipate a turnaround. First, the heavy lifting of financing and building two large new mines in Canada appears done. Second, Darren Hall, the renowned miner and brain behind the success of Calibre Mining has been working for two months at Greenstone, EQX's flagship mine in Canada, which is already experiencing major progress.
Equinox Gold, another Ross Beaty success story
When this legendary mining entrepreneur launched from scratch a new gold focused company, his goal was to create a 1,000,000 ounce per year producer.
In 2018, Equinox Gold produced only 25,601 ounces of gold. Only six years later, in 2024, this young start up delivered 623,597 ounces. Amazing!
Unfortunately, this growth came with a cost: quite a lot of dilution. This is one of the key reasons why EQX presents a compelling value at current prices.
Big Companies Receive Premium Valuations
Short term disappointments have created a compelling opportunity
Equinox Gold is trading far below its 2020 highs.
Institutional investors, as well as most retail speculators, are more and more short term oriented. This is why there has never been so many opportunities for investors with a long-term focus.
So why has everyone been dumping this stock? Why is the sentiment on Equinox Gold so dire?
Equinox Gold is Up But Still Underperforming
Perversely, the great acquisition of Calibre Mining by EQX created selling.
By purchasing Calibre Mining, Ross Beaty’s company was able to grow and acquire a profitable goldmining operation in Nicaragua, but also the excellent Valentine mine, which is beingbuilt in Canada. This is quite positive! Unfortunately, some investors owned Calibre Mining as well as Equinox shares. With this merger, the size of their Equinox holdings became too large and had to be reduced. Funds nowadays have to comply with so many rules!
Greenstone: Disappointments in the production ramp up.
Putting a huge mine into production, even in Canada, is a very difficult exercise.
Nobody believed that Greenstone, which will be able to produce 400,000 ounces a year, could be built on time and on budget. They did it!
Unfortunately, production guidance was a bit aggressive and Q2 production numbers are disappointing, coming in only around 47 000 ounces.
Valentine: A delayed first gold pour and slight cost overrun.
First gold is anticipated only by the end of the third quarter of 2025.
Here again, a 3 month's miss is not necessarily unusual in this business and nothing life-threatening! But the fickle nature of investors today scared many.
Mexico: On care and maintenance
This also has not helped the brand image of Equinox Gold. The Mexican government has done everything to give a bad reputation to mining.
On top of that, Equinox Gold has had many problems over the years with the locals on their Filo property.
Management took the right decision to close down the mine until a fair long-term contract can be achieved with the local community.
It might take some time, but this excellent mine is expected to reopen and should see capital investment to increase production. Today, no valuation at all is given to this substantial asset.
$1.4 billion in debt will scare most people off
Debt for an individual - as well as for a company - can be a very bad thing, sometimes leading to bankruptcy.
But here, the debt level does not appear excessive for a senior company and for the size of the two assets being developed in Canada - a pretty safe jurisdiction!
On top of that, EQX is operating in a long-term bull market in Gold.
Most analysts model that Equinox Gold could have an operational cash flow for 2026 of $1.3 billion - assuming $3000 gold. This means that by the end of 2026 a lot of the debt can be paid down. At current prices, discussions then could shift to dividends and share buybacks.
Nobody wants to see AISC $2065
But, this AISC is what hit the market with the release on May 8 of the first quarter 2025 financial results. Of course this is what you get when you have to do massive capital investments to build a big mine. As capital spending goes down drastically and production increases, total cost should go down quite a lot. All in sustainable cost guidance for 2025 are between $1800 and $1900 per ounce. This should fall substantially in 2026 and beyond with the continued production ramp up.
Expectations have been lowered.
In EQX's latest news release, overall 2025 production guidance has been lowered by some 80,000 ounces to between 785,000 ounces and 950 000 ounces of gold. Greenstone alone should produce between 220,000 ounces and 260,000 ounces of gold. This seems reasonable for a plant designed to produce some 400,000 ounces.
Equinox Gold: Buy the Dip?
Greenstone Turnaround in Progress Following Calibre Additions
Adding the expertise of top Calibre managers to the already quite impressive teams at Equinox should have a huge impact.
Doug Forster, founder of Newmarket Gold and lead director of Calibre Mining has joined the Equinox board as a Director.
Darren Hall, former chief operating officer of Kirkland Lake Gold and former president and CEO of Calibre Mining was appointed COO of Equinox Gold. After only two months, he has implemented major improvements to Greenstone. As an example in May mining rates averaged 175,000 tons per day representing a 25% increase over Q1 2025 performance.
A Marketing "King"
If Ryan King, who did extremely well as IR at Calibre Mining, decided to join the Equinox Gold team as VP Corporate Development and IR, there must be a reason. Is he confident that Equinox Gold has the assets to join the top quality names in the mining space like Agnico Eagle and Alamos?
With a massive marketing budget starting now, King appears to be the right person to help Equinox turn sentiment around with expected positive new flow until the end of this year: a Greenstone ramp up, Valentine first gold pour, decreasing costs and exploration successes.
Buy low sell high
The classic trading principle must start with the ability to buy when things are cheap. Today, this high-quality company is trading at a massive discount to its peers. On a price to NAV Equinox is at 0.70x vs 1.93 for Lundin Gold or 1.66 for Goldfields. On EV/25E-26E, one is paying only $5,833 per ounce of production when good quality names trade above $15,000. And let’s not forget that Equinox Gold still has good long term growth potential.
Don’t tell me what to buy, but when!
Aggressive traders who are bullish gold might load up now that there are first signs of an increase in production at Greenstone and a large marketing campaign is starting. A more conservative approach could be to initiate a first position now and keep increasing as positive news flow develops. The last piece of significant negative news should be the Q2 financial results to be released August 13th. But this should be already widely anticipated.
Equinox Gold will soon join the very exclusive club of high-quality gold companies with a production of well above 1,000,000 ounces!
Disclaimer: SGL does not provide investment advice and is not a registered investment advisor. Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL has attempted to present the information fairly, but it or its contributors may own shares of any companies mentioned so bias cannot be excluded. SGL and its contributors have no relationship with any company mentioned. SGL or its contributors may buy or sell shares at any time.
SGL makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.
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