Equinox Gold Corp has announced 2021 production guidance of 600,000 to 665,000 oz of gold, a 33% increase over 2020 production of 477,200 oz of gold. Cost guidance includes cash costs of $940 to $1,000 per ounce of gold sold and all-in-sustaining costs (AISC) of $1,190 to $1,275 per ounce of gold sold.
“2021 represents a year of investment for Equinox Gold as we direct our strong operating cash flow to our existing portfolio of mines and growth projects,” said Christian Milau, CEO of Equinox Gold. “These investments in 2021 will set the foundation for lower-cost production, longer-life mines and substantial near-term production growth with an increase to approximately 900,000 oz of gold at significantly lower costs in 2022 and approximately one million ounces of gold from 2023.”
He adds: “All-in-sustaining costs in 2021 include stripping campaigns at Los Filos, Mesquite and Aurizona to access higher-grade ore, which will increase production and reduce costs in the second half of the year. Growth capital includes the Los Filos expansion projects, a significant pit expansion at RDM and completion of construction at Santa Luz. The company is also undertaking an aggressive exploration program focused on mine life extension and reserve replacement. We also look forward to completing the acquisition of Premier Gold Mines this quarter and integrating the producing Mercedes Mine and construction-ready, multi-million-ounce Hardrock project into our portfolio and plans. Our share of production from Hardrock would further reduce our costs per ounce produced and boost production by more than 200,000 oz annually starting in 2024.”
Consolidated gold production is expected to increase each quarter during the year, with approximately 30% of 2021 production occurring in Q4 as the mines access higher-grade ore at both Los Filos and Mesquite.
Overall cash costs for 2021 reflect an assumption of strengthened local currencies and slightly increased fuel and other consumable costs, as well as lower grades mined at Los Filos as the Guadalupe stripping program and Bermejal underground development are advanced through the year. AISC for 2021 includes important sustaining investment at the Los Filos, Mesquite and Aurizona mines. The company is also undertaking a number of growth projects this year including constructing the Santa Luz mine, advancing expansion projects at the Los Filos mine, completing a pit expansion at the RDM mine and undertaking exploration focused on mine life extensions at Mesquite, Los Filos, Aurizona and Fazenda.
Guidance will be updated to include the Mercedes mine and Hardrock project following completion of the proposed acquisition of Premier Gold Mines, which is expected to close in March subject to all necessary securityholder and regulatory approvals.
The following is a summary of major planned investments and projects at existing mines:
Los Filos Gold Mine, Mexico
The Los Filos gold mine in Guerrero State, Mexico currently comprises two open pits (Los Filos and Bermejal), one underground mine (Los Filos) and secondary recovery from previously leached ores. Expansion projects are underway to increase annual production and extend the mine life including the addition of the Guadalupe open pit, the Bermejal underground mine and plans for construction of a new carbon-in-leach (CIL) plant to operate concurrently with the existing heap leach operation. An updated feasibility study and technical report is expected to be complete in the first half of 2021.
Los Filos production for 2021 is estimated at 170,000 to 190,000 oz of gold, with production weighted 60% toward the second half of the year. Production will gradually increase during Q1 2021 as mining activities and leaching ramp up following the recent December restart of operations, and increase quarter over quarter as development activities provide access to higher-grade ore from the Guadalupe open pit by mid-year and the Bermejal underground deposit in the H2 2021, both of which were deferred to 2021 due to the government-mandated suspensions during Q2 2020 due to COVID-19 and a community blockade from September through December. Costs are expected to decrease over the year as production increases and are anticipated to decrease further in future years as mine expansion is completed and grades increase. Los Filos cost guidance for 2021 is estimated at cash costs of $1,125 to $1,200 per ounce sold, with AISC of $1,330 to $1,390 per ounce sold. AISC is expected to trend below $1,000 per ounce as the expansion is completed.
Capital investments at Los Filos during 2021 will support significant production growth from 2022 and mine life extension. The company has planned a total sustaining and non-sustaining capital spend of $133 million at Los Filos for the year. AISC at Los Filos in 2021 includes $38 million of sustaining capital, with $13 million allocated for fleet refurbishment and processing equipment, $9 million for development at the Los Filos underground mine and $13 million for capitalised stripping of the Los Filos and Guadalupe open pits.
Non-sustaining growth capital of $95 million relates to the expansion projects and was in part deferred from 2020, including $48 million for Bermejal underground development, $10 million for pre-stripping of the Guadalupe open pit and $25 million for fleet rebuilds and new equipment. In addition, $5 million relates to exploration for extension of the Los Filos underground mine life and $6 million is for expansion of heap leach processing capabilities. Guidance does not include capital for construction of the CIL plant, which could commence in H2 2021.
Mesquite Gold Mine, USA
Mesquite production for 2021 is estimated at 130,000 to 140,000 oz of gold, heavily backend weighted with approximately 40% of production coming in Q4 2021, with cash costs of $925 to $975 per ounce and AISC of $1,275 to $1,325 per ounce.
AISC at Mesquite in 2021 includes sustaining capital of $48 million related primarily to a $30 million stripping program to access the higher-grade, oxide Brownie deposit, which will contribute significantly to production beginning in H2 2021 and continuing throughout 2022. As a result, AISC is substantially lower in H2 2021. In addition, the company has planned $10 million for leach pad expansion and $6 million for mining and processing equipment. The truck fleet is being renewed with the addition of 10 new Caterpillar 793 haul trucks via a $43 million lease. This investment in a new fleet will support operations for a substantially longer mine life than contemplated when the company acquired Mesquite in 2018 and will reduce costs over the life of mine.
Exploration success since acquiring Mesquite has extended the expected mine life by more than three years and further mine life extension remains a focus in 2021. Non-sustaining growth capital of $9 million is allocated entirely to exploration focused on resource growth in the Brownie, Vista East and Rainbow deposits as well as reserve replacement.
Castle Mountain Gold Mine, USA
Castle Mountain production for 2021 is estimated at 30,000 to 40,000 oz of gold with cash costs of $725 to $775 per ounce and AISC of $1,100 to $1,150 per ounce. AISC at Castle Mountain is temporarily elevated in 2021 as it includes sustaining capital of $14 million primarily comprising $9 million for a leach pad expansion that will accommodate the entirety of Phase 1 operations and $3 million for plant optimisation.
Equinox Gold is finalising a feasibility study for a proposed expansion of Castle Mountain, which is expected to increase average production to more than 200,000 ounces of gold annually. The feasibility study and technical report is expected to be complete in H1 2021. Non-sustaining growth capital at Castle Mountain in 2021 of $10 million includes $7 million to complete the feasibility study and commence permitting for the expansion, $2 million to construct an assay lab on site and $1 million for exploration.
Aurizona Gold Mine, Brazil
Aurizona production for 2021 is estimated at 120,000 to 130,000 oz of gold with cash costs of $720 to $770 per ounce and AISC of $1,075 to $1,125 per ounce. Mining costs increase slightly in 2021 due to an increase in the proportion of fresh rock from 14% to 23% of ore mined, as well as an increase in the cost for consumables and the assumption that the Brazil Real will strengthen in 2021.
AISC at Aurizona in 2021 includes sustaining capital of $46 million allocated primarily to $27 million in capitalised waste stripping, including 8 Mt deferred from 2020, and $15 million to increase capacity of the tailings storage facility. Non-sustaining growth capital at Aurizona of $4 million is directed to exploration, land purchases and completion of the Piaba underground prefeasibility study.
Fazenda Gold Mine, Brazil
Fazenda production for 2021 is estimated at 60,000 to 65,000 oz of gold with cash costs of $820 to $870 per ounce and AISC of $1,075 to $1,125 per ounce. AISC at Fazenda in 2021 includes sustaining capital of $15 million allocated primarily to $8 million for underground development and equipment and $4 million in open-pit waste stripping. Non-sustaining growth capital of $2 million relates to exploration.
RDM Gold Mine, Brazil
RDM production for 2021 is estimated at 55,000 to 60,000 oz of gold with cash costs of $1,000 to $1,050 per ounce and AISC of $1,175 to $1,225 per ounce.
AISC at RDM in 2021 includes $10 million of sustaining capital of which $6 million relates to increasing capacity of the tailings storage facility, with $2 million for equipment and $2 million for buildings and infrastructure. Non-sustaining growth capital of $35 million relates entirely to capitalized stripping for a pushback of the open-pit, providing lower strip access to the ore body in future years.
Pilar Gold Mine, Brazil
Pilar production for 2021 is estimated at 35,000 to 40,000 oz of gold with cash costs of $1,200 to $1,300 per ounce and AISC of $1,400 to $1,500 per ounce.
AISC at Pilar in 2021 includes sustaining capital of $7 million for underground development. The company has not allocated any non-sustaining capital to Pilar during 2021.
Santa Luz Gold Project, Brazil
Equinox Gold commenced full-scale construction of Santa Luz on November 9, 2020. Of the total $103 million construction budget, the company has budgeted $94 million in construction and mine development capital in 2021. Open-pit stripping is expected to begin in Q1 2021 with processing infrastructure expected to be finished by the end of 2021 and first gold pour targeted for Q1 2022.
The company completed a feasibility study for Santa Luz in November 2020 outlining the design of an open-pit mine producing 903,000 oz of gold over an initial 9.5-year mine life with average annual production of 110,500 oz of gold for the first five years. At $1,600 per ounce gold, the mine has an after-tax net present value (discounted at 5%) of $362 million and an after-tax internal rate of return of 67%.