Equinox Gold Corp

Equinox Gold Corp (TSX: EQX) is a mining company based out of Canada. The Group is engaged in the business of developing mineral properties. The Company operates in six wholly owned gold mines. EQX produces gold from Mexico based Los Filos Mine, California based Mesquite Gold Mine, and Brazil-based Pilar, RDM, Fazenda and Aurizona mines.

Recent News

On 5th June 2020, Equinox Gold announced that the Director Neil Woodyer has opted to step down from Board of Directors of the Company to pursue other interests.

Financial Highlights – Q1 Financial Year 2020 (31^st March 2020, USD, thousand)

(Source: Quarterly Report, Company Website) 

In the first quarter of the financial year 2020, driven by an increase in the sale of gold for the period, the revenue stood at USD 130,035 thousand (Q1 FY2019: USD 35,385 thousand). Driven by higher revenue and lower exploration expenses, the Group reported an operating profit of USD 33,915 thousand in Q1 FY2020 (Q1 FY2019: USD 959 thousand). The company reported a PBT (profit before tax) of USD 41,332 thousand in the first quarter of the financial year 2020 (Q1 FY2019: loss before tax of USD 6,362 thousand), reflecting higher revenue and operating income. The net income stood at USD 10,895 thousand in the first quarter of the financial year 2020 (Q1 FY2019: net loss of USD 8,317 thousand). The Group’s basic and diluted earnings per share stood at $0.08 in the first quarter of the financial year 2020 versus a basic and diluted loss per share of $0.07 in Q1 FY2019. The cash balance increased to USD 303,057 thousand as on 31st March 2020 versus a cash balance of USD 67,716 thousand as on 31st December 2019.

Share Price Performance

Daily Chart as of 14 July 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Equinox Gold Corp shares closed at CAD 15.42 at the time of writing after the market close on 14 July 2020. Stock's 52 weeks High is CAD 16.00 and Low is CAD 5.90.

Key Risks

Any change in regulations and government policies could affect the overall business of the Company. The operations of the Company could be impacted by risks related to liquidity and interest rate. The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well.

Conclusion

The Company has shown a significant increase in the financial performance in the first quarter of the financial year 2020. Both the top-line and the bottom-line performance have increased, with improved profitability for the period. The liquidity position of the company has improved, and the balance sheet remained well-positioned. The recent increase in the gold prices in the global markets will improve financial performance and bring operational stability. The Group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening the balance sheet and reducing costs to preserve cash. In March, Gold recoveries returned to over 90% as per the expectations and to enhance and stabilize recoveries further; the company planned to slightly alter processing to carbon-in-leach from carbon-in-pulp.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 15.42 (as on 14 July 2020).

Disclaimer

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