Mr. Christian Milau reports
EQUINOX GOLD RELEASES FIRST QUARTER FINANCIAL RESULTS
Equinox Gold Corp. has released its unaudited condensed consolidated interim financial statements and related management's discussion and analysis for the three months ended March 31, 2018.
Equinox Gold's principal assets are its wholly owned, past-producing Aurizona gold mine in Maranhao, Brazil,and its wholly owned, past-producing Castle Mountain gold mine in California. The company's primary focus is completing construction and achieving production at Aurizona, which is on track to pour gold before the end of 2018. The company is also completing a prefeasibility study for Castle Mountain, targeted for completion in mid-2018, with the objective of recommencing production in 2020.
First quarter 2018 financial highlights and recent developments:
Full-scale construction of Aurizona approved in early January:Construction fully financed, on budget and on schedule;Mining contract signed and activities under way, currently focused on removing waste from the Piaba pit and developing access roads;Aurizona construction project-to-date financial highlights (includes project construction activities from Q4 2017) as of March 31, 2018:Budget of $146-million;Project-to-date capital expenditures (capex) of $43.5-million;Commitments made of $75.5-million (includes project-to-date capex);Undrawn portion of construction debt facility of $70.0-million;Aurizona construction capex of $21.3-million during Q1 2018;Total Q1 2018 exploration spend of $3.0-million:Spent $1.7-million on Castle Mountain prefeasibility study preparation;Retired $15.0-million of debentures purchased by Ross Beaty via conversion into common shares;Received $14.8-million ($18.4-million (Canadian)) cash, net of financing costs, pursuant to shareholder's exercise of non-dilution rights;Received milestone payment of $4.7-million in April, 2018, related to December, 2017, sale of Coringa project;Q1 2018 net loss of $4.4-million;Working capital of $59.4-million at March 31, 2018, including cash and marketable securities of $52.2-million;Koricancha operation generated $6.1-million in revenue and recorded a $900,000 loss:Collected $1.6-million of value-added tax refund in April, 2018.
Aurizona
Equinox Gold's board of directors approved full-scale construction at Aurizona in early January, 2018. During the quarter the company expended $21.3-million on Aurizona construction activities which, when added to the amount expended on early project works during the fourth quarter of 2017, brings the total construction expenditures at March 31, 2018, to $43.5-million.
With a construction budget of $146-million and $43.5-million in project expenditures to date, the remaining project capital will be financed by cash and marketable securities of $52.2-million and $70.0-million of undrawn construction debt financing.
Construction is proceeding on schedule to achieve first gold pour bythe end of 2018. The overall project was 44-per-cent complete at the end of March and plant construction was 27-per-cent complete. Mining activities commenced in mid-April and are currently focused on removing waste from two locations in the Piaba pit and developing access roads in preparation for ore mining in Q3 2018.
While the Aurizona operations team is focused on achieving production, Equinox Gold's exploration team is focused on mine life extension and district-scale opportunities. During the quarter the company announced the results from exploration at six targets east and northeast of the reserve pit, where drilling discovered broad intervals of economic-grade gold mineralization and several new mineralized structures. These discoveries, approximately four kilometres of western strike extension and other district-scale targets will be tested with upcoming exploration programs, and a study is under way examining opportunities to develop the underground potential of the Aurizona gold deposit. In addition, drill results from more than 11,000 metres of drilling in 2017 at the Piaba and Piaba West targets are being incorporated into a resource update that is targeted for completion in mid-2018.
Castle Mountain
Activities at Castle Mountain during the quarter focused on the exploration and related technical activities required to complete a prefeasibility study for the Castle Mountain project with the objective of restarting production. The prefeasibility study is examining a production restart in a phased ramp-up scenario, starting with phase 1 run-of-mine heap leaching of backfill material from previous operations and ramping up to a full restart in phase 2 which will include milling of a limited stream of higher-grade material and ROM leaching of the balance. While the base case plan for phase 2 operations had originally contemplated three processing streams -- ROM heap leaching for low-grade material, crushing and heap leaching of medium-grade material, and milling for a limited stream of higher-grade material -- metallurgical studies have shown higher-than-expected recoveries using ROM heap-leach processing. As a result, the company is advancing an alternative phase 2 flow sheet employing ROM heap leach of low- and medium-grade material and milling of high-grade material. This simplified flow sheet reduces operating complexity and also brings significant economic benefits to the project, reducing both up-front capital costs and long-term operating costs.
The company expended $1.7-million on exploration and related technical activities during the quarter to support the Castle Mountain prefeasibility study. Completion of the prefeasibility study is targeted for mid-2018 with the potential to commence phase 1 production in 2020.
During the quarter the company announced that exploration has identified a new zone of significant mineralization at the East Ridge target, peripheral to the current resource pit, with grades significantly higher than the current resource grade. Additional drilling to examine East Ridge and other Castle Mountain targets is planned for later in 2018. Exploration at Castle Mountain in 2017 focused on upgrading material previously classified as waste or inferred resources within and adjacent to the pit shells, with the objective of incorporating this material into the prefeasibility study.
Corporate and other
In February, 2018, Equinox Gold received $14.8-million ($18.4-million (Canadian)), net of finance costs, in cash from Pacific Road Resources Funds and issued 21 million Equinox Gold common shares pursuant to Pacific Road's exercise of non-dilution rights.
Mr. Beaty, chairman of Equinox Gold, has invested approximately $30-million since October, 2017, to become the company's largest shareholder and currently holds approximately 12 per cent of Equinox Gold's common shares. Of these share purchases, Mr. Beaty acquired approximately 22.5 million common shares in January, 2018, pursuant to a share and debenture purchase agreement between Equinox Gold, Mr. Beaty and Sandstorm Gold Ltd., whereby Sandstorm sold to Mr. Beaty 4.0 million common shares of Equinox Gold and $15.0-million principal amount of the debenture payable by Equinox Gold to Sandstorm at a combined purchase price of approximately $18.2-million. The debenture sold to Mr. Beaty was retired through the issuance of approximately 18.5 million common shares.
The company's Koricancha processing facility processes ore purchased from small-scale and artisanal miners throughout Peru. During the quarter Koricancha processed 10,992 tonnes of ore and sold 4,777 ounces of gold for revenue of $6.1-million. Cost of sales was $7.0-million, which includes $5.2-million of ore purchasing costs and $1.8-million of other production costs, resulting in a net loss at the operation of $900,000 for the quarter.
Additional information regarding the company's financial results, activities under way at Aurizona and Castle Mountain, and the company's long-term business strategy is available in the first quarter financial statements and accompanying first quarter management's discussion and analysis, which are available for download on the company's website and on SEDAR.
About Equinox Gold Corp.
Equinox Gold is a Canadian mining company with a multimillion-ounce gold resource base, near-term and growing gold production from two past-producing mines in Brazil and California, and a long-term growth platform with a diverse portfolio of gold and copper assets in North and South America. Construction is under way at the company's Aurizona project in Brazil with the objective of pouring gold by late 2018, and a prefeasibility study is under way at the company's Castle Mountain project in California with the objective of restarting production.
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