We will be conducting a live interview with EQX CEO Darren Hall on Thursday, November 13, at 11:00 a.m. If you are interested in joining the call, you can sign up below:
Please note that Massif Capital is invested in EQX via the company's US listing. We use USD throughout this discussion, including the share price.
Our original 2021 investment thesis centered on Equinox Gold's (EQX) transformation from a mid-tier producer to a significant, Americas-focused gold miner, anchored by its flagship Canadian asset, the Greenstone Mine. It has taken longer than even we expected, and we tend to be more patient than most; however, four years later, this thesis is materializing.
Following the June 2025 completion of the Calibre Mining acquisition and the successful ramp-up of both Greenstone and Valentine mines, EQX now stands as Canada's second-largest gold producer with a clear path to 1.1+ million ounces annually in 2026. In part due to the time it has taken to accomplish this long-sought-after goal (Ross Beaty, Chairman of the Board, has been talking about the 1 Million Oz goal since 2019/2020), the market is still not recognizing the achievement or pricing in the return potential of the production growth.
In addition to operational changes that have strongly positioned EQX for future cash flow growth, a reset in gold prices has occurred that appears to be sticky. Our previous valuation of EQX was based on a probability-weighted average gold price of approximately $2,000 per ounce, resulting in a probability-weighted value of the business of roughly $14 per share. With the change in the gold price and the introduction of new assets, our valuation has increased by~42.5%. With a probability-weighted gold price across a range of operational scenarios of $3,675, we estimate EQX has a value of $20-$22 per share. Furthermore, given the expected inflection in free cash flow next year, and in the presence of stable or rising gold prices, we anticipate the market will rerate the stock within the next 12 to 18 months.
Strategic Evolution: From Promise to Delivery
Our 2021 vision contemplated production growth to approximately one million ounces by 2023. While the timeline extended beyond initial projections, the scaling objectives have been achieved. The company delivered record Q3 2025 production of 236,470 ounces and year-to-date output of 634,428 ounces. Management guidance of 785,000-915,000 ounces for 2025 positions the company for 20% to 40% production growth to 1.1 million ounces in 2026 as Greenstone and Valentine advance from ramp-up to nameplate capacity.
The Calibre acquisition (announced in February 2025 and closed in June 2025) proved transformative. The ~$1.8 billion all-stock transaction added the Valentine mine (nearing completion at the time of acquisition) and Nicaragua operations to the EQX portfolio, immediately diversifying cash flow and adding a second cornerstone Canadian asset. With Greenstone and Valentine collectively expected to produce in excess of ~500,000 ounces annually for a decade, Equinox now has meaningful Canadian exposure, precisely the Tier-1 jurisdiction strategy outlined in our 2021 report.
Operational Progress: Greenstone and Valentine Beginning to Deliver
Greenstone encountered well-documented ramp-up challenges through 2024-2025, prompting a 25% reduction in 2025 guidance and a management reset. Issues included dilution control in selective mining and mill optimization downtime, partially attributed to deferred upfront capital stripping to maintain original construction budgets. We are now modeling 320 koz/year over 13 years at a mine-site AISC of approximately $1,300 per ounce, which is below management's guidance for life-of-mine production.
Despite the challenges, Q3 2025 appears to have marked an inflection point regarding operational ramp-up at Greenstone. Mining rates now exceeded 185,000 tonnes per day (10% above Q2, 21% above Q1). Mill grades improved 13% quarter-over-quarter to 1.05 g/t, with September averaging above 1.3 g/t. Quarter-to-date Q4 ex-pit mining volumes ran 10% higher than Q3, while process plant throughput averaged 24.5 kptd over the prior 30 days, with over one-third of days exceeding 27 ktpd nameplate capacity. Full-year Greenstone production is expected to be at the lower end of the 220,000-260,000 ounce guidance, but operational momentum supports confidence in a strong Q4 and continued improvement into 2026.
Valentine achieved its first gold pour on September 14, 2025, ahead of schedule, and is ramping up toward a 2.5 Mtpa nameplate by Q2 2026. During the first 66 days of operations, the plant averaged 73% of nameplate capacity. Management expects 15,000-30,000 ounces in Q4 2025, positioning Valentine to contribute ~190,000-205,000 ounces in 2026. In Valentine, EQX has one of the highest-grade, lowest-cost new mines in Canada, a strategic asset that should command premium valuation multiples once derisked, especially given current gold prices.
Financial Position and Balance Sheet Trajectory
The company exited Q3 2025 with $403 million in cash and cash equivalents and a Net Debt/EBITDA ratio of 1.3x. Aggressive deleveraging remains the strategic priority. In Q3 2025, EQX reduced total debt by $153 million to $1.6 billion and completed the sale of its Nevada assets (Pan and Mesquite) for $115 million. During the 3rd Quarter call held on 11/6, management noted that they foresee a significant portion, if not the majority, of the debt being paid off by the end of 2026. Given we forecast free cash flow of as much as $1.5 billion at $3,500 gold, that seems readily possible.
We believe any concerns about the balance sheet are misplaced. The balance sheet provides sufficient flexibility to support near-term capital expenditures (CapEx) projects at Castle Mountain and Los Filos, as well as to support operations even in the absence of accelerated debt repayment. We forecast FCF generation of $0.35 to $0.40 in 2025 and a significant increase to between $1.25 and $1.75 per share in 2026 as Greenstone and Valentine ramp up their operations. Our FCF range implies that the stock is currently trading at a multiple of between 10x FCF and 7x FCF.
Investment Thesis Reaffirmation
The 2021 thesis envisioned Equinox evolving into a major Americas-focused producer anchored by long-life, low-cost Canadian assets. This transformation has occurred. Despite a challenging 2024-2025 operational period and significant stock underperformance early in the year, the company now possesses:
Scale: 1.1+ million ounce production capacity with two flagship Canadian mines collectively producing ~450,000 ounces annually.
Quality: 60%+ of production from Canada/US.
Growth visibility: As much as a 40% production increase from 2025 to 2026 as Greenstone and Valentine reach capacity.
Cash generation: Inflection to robust FCF beginning 2026, enabling rapid deleveraging and a ramp-up of shareholder returns in the form of dividends and share buybacks.
Operational momentum at Greenstone (Q3 2025: 185k tpd mining, 1.05 g/t mill grades improving to 1.3+ g/t) and Valentine's, ahead of schedule, first gold production validates management's revised guidance and supports confidence in 2026 targets.
Castle Mountain Phase 2 acceptance into the FAST-41 permitting program (August 2025) provides additional long-term growth optionality, with the project expected to produce 200,000 ounces annually over 14 years, beginning after the 2026 construction decision. Combined with potential Los Filos CIL plant construction (if economics improve) and ongoing exploration across the portfolio, Equinox possesses a multi-year growth pipeline extending beyond the current Greenstone/Valentine focus.
