11/3/2022

speaker
Conference Operator
Operator

Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold third quarter 2022 results and corporate update. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. And if you're participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. I would now like to turn the conference over to Rulon Bailey, Vice President, Industrial Relations for Equinox. Please go ahead.

speaker
Rilind Bailey
VP of Investor Relations

Thank you, operator, and thank you, everybody, for joining us this morning. We will, of course, be making a number of forward-looking statements today, so please visit our website and our other continuous disclosure documents on CEDAR and on EDGAR to read all of those cautionary notes. I will now turn the call over to our CEO and President, Greg Smith.

speaker
Greg Smith
CEO & President

Thanks, Rilind, and thanks, everyone, for joining us today. On the call with me is our COO, Doug Reddy, our CFO, Peter Hardy, and our EVP of Exploration, Scott Heffernan, and, of course, our VP of Investor Relations, Rilind Bailey. I know most of you on the call are familiar with the company, but for those that aren't, Equinox is a diversified, Americas-focused gold producer, and with our Santa Luz mine now in commercial production, we have seven producing mines and four growth projects, including our large-scale Greenstone joint venture projects in Ontario, which is in construction now. Just a reminder, we announced the CEO change in August, and so this is my first quarterly call since taking on the role in early September. I'll start with a broad overview for the quarter and then turn the call over to Pete and Doug for more details. We expected increasing gold production through the year and during the third quarter we did see a meaningful increase with production of over 143,000 ounces of gold, which is a 19% increase from Q2 and a 22% increase from Q1. That said, we also experienced some operating challenges at our Los Silos and Arizona mines and a slow start at Santa Luz that impacted production. This, in addition to inflationary cost pressures and an inventory write-down at Los Felos, resulted in lower production and higher costs than we had planned, with consolidated cash costs in the third quarter of $1,400 per ounce and all-in sustaining costs of $1,749 per ounce. We are addressing the operating challenges at Arizona and Los Felos, and we are making progress. However, production in Q4 will also be affected, and looking forward, we now expect oil production for the year to be approximately 540,000 ounces. We are seeing inflation start to ease, particularly in Brazil, but we also see inflationary cost pressures persisting through Q4 this year. As a result, we expect our oil and sustaining costs to exceed the upper end of our guidance of 1530 per ounce by about 5%. Pete and Doug will provide more information on our Q3 operating results and financial results shortly. On to our projects. During the third quarter, we continued with commissioning of our new Santa Luz mine in Brazil, and we announced commercial production commencing on October 1st. This makes Santa Luz our seventh producing mine. We also advanced an updated feasibility study for the Los Felos mine during the third quarter, and in October, we filed a technical report outlining the potential expansion of Los Filos through the construction of a 10,000 ton per day CIL plant, which would complement the existing heap leach infrastructure. The study confirms that Los Filos could grow to be a large-scale, long-life mine with peak average annual production of over 360,000 ounces of gold per year. However, we have no immediate plans to proceed with the expansion. In part, this is due to the capital needs at our other projects and primarily Greenstone, but also due to the continued risk of community blockades, the most recent of which occurred in September. On to Greenstone. The team has made significant progress during the quarter and construction continues to go very well. I was on site with our analysts and other stakeholders in September and the site is very impressive. I encourage everyone on the call to go to our website and you can check out the photo gallery there. Overall, we're now over 57% complete. And Eric and his team have successfully executed on the critical path with major components being shipped on time, including from China in October, and the building enclosures are progressing well for the year end and for the winter work. I'm very pleased to confirm the project continues to be on schedule and on budget. Finally, as was discussed on the Q2 call, we did amend our credit facility during the third quarter, which termed out our debt, increased our total available credit, and reduced our overall interest rates. With that, I'd like to hand over the call to Pete to run through our financial results.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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