Latest / Kitco MINING / Equinox Gold Shifts From M&A to Execution | Jason Simpson

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Equinox Gold Shifts From M&A to Execution | Jason Simpson · Kitco MINING

• 0:00
  SPEAKER_00: Kitco Mining on-site coverage of Mining Forum Americas is presented by Metalla Royalty and Streaming.
• 0:11
  SPEAKER_02: Building the next gold giant.
• 0:13
  SPEAKER_02: Hello and welcome to Kitco Mining with me, Paul Harris, here at the 2026 Mining Forum Americas in Colorado Springs.
• 0:19
  SPEAKER_02: Joining me now is Jason Simpson, president of Equinox Gold.
• 0:23
  SPEAKER_02: Jason, welcome back to Kitco.
• 0:24
  SPEAKER_01: Thank you.
• 0:25
  SPEAKER_01: Very nice to speak with you again, Paul.
• 0:26
  SPEAKER_02: It's very nice to speak with you, Jason.
• 0:28
  SPEAKER_02: It's the first time we're speaking as with you as the president of Equinox Gold.
• 0:31
  SPEAKER_02: Previously, we're spoken with you as the president and CEO of uh Orla Mining.
• 0:36
  SPEAKER_02: Um, and this of course points to the fact that uh you've just recently closed, you know, quite a significant transaction.
• 0:42
  SPEAKER_02: Equinox Gold and Orla Mining got together.
• 0:45
  SPEAKER_02: Um, Jason, I want to sort of talk about uh start off talking about the genesis of this deal.
• 0:50
  SPEAKER_02: Um, because the the deal was announced in the same year that Equinox Gold closed its merger with Calibri Mining or Caliber Mining, depending on how you pronounce that.
• 1:00
  SPEAKER_02: So I think a lot of people were surprised to see Equinox engage in another major transaction so soon when while presumably it's still digesting um the transaction with caliber.
• 1:10
  SPEAKER_02: Um you're coming at this from another the other side, from the Orla mining side, so rather than the Equinox side.
• 1:16
  SPEAKER_02: So um let's look at it from that point of view.
• 1:19
  SPEAKER_02: What's the trigger for Orla?
• 1:20
  SPEAKER_01: Yeah, so so before we get to the combination of Equinox with Orla, I'll just back up a little bit and make sure we understand how how we came to the today in the company that we have and the platform that we're working from.
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  SPEAKER_01: Ross Beattie almost 10 years ago envisioned uh uh creating a mining company, Equinox Gold, producing over a million ounces.
• 1:40
  SPEAKER_01: And in order to deliver that uh uh ambition, he combined uh some companies, including Calibur and Orla.
• 1:47
  SPEAKER_01: Uh he acquired some assets, they divested uh of some assets for uh including things like Brazil, all the while uh moving towards that ambition that Ross had to create a plus million ounce a year producer uh based out of Canada uh that uh could compete uh with the senior ranks.
• 2:05
  SPEAKER_01: And so, really, the combination with Orla was the final piece of that puzzle and positions Equinox Gold as exactly what he envisioned and is what we'll be working from, and the platform we'll be working from to create value for shareholders.
• 2:20
  SPEAKER_02: Okay.
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  SPEAKER_02: That begs the question then, why is it that um the the GoForward company has the Orla management team rather than the Equinox management team?
• 2:29
  SPEAKER_01: Yeah, and so uh so I'm happy to say that uh on my executive leadership team we have a mix of uh caliber, equinox, or la management team.
• 2:37
  SPEAKER_01: Uh perhaps what you're referring to uh is the leadership transition from Darren, former Calibre, uh to uh Jason, uh former Orla, uh with Chuck Janesse uh as the chairman.
• 2:49
  SPEAKER_01: And so to quickly walk you through that, uh Ross had achieved the ambition that he achieved, wants to stay connected with the company, and so still a special advisor to the board and attends our board meetings.
• 2:59
  SPEAKER_01: Uh but his 40-year-long friend uh Chuck Janess was happy to take the mantle of chair uh and help uh help this company deliver value for shareholders, which is the board's responsibility.
• 3:10
  SPEAKER_01: Um, in in relation to the uh transition between uh Darren Hall and myself, uh uh we had set up a transition, a succession plan, so to speak, where I would uh move into the president and then CEO uh position of the of the Equinox Gold Company going forward, uh, and uh and that's where we are today.
• 3:30
  SPEAKER_01: It is my responsibility over the years to come to lead this company uh forward uh with with everything that those great leaders, Darren, Ross, uh, and the like have have uh put together for me to deliver from.
• 3:44
  SPEAKER_02: Well, you're certainly a great lead as well, Jason.
• 3:47
  SPEAKER_02: Uh how we're at an investor event.
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  SPEAKER_02: How well has the transaction been received by investors?
• 3:53
  SPEAKER_01: Yeah, and and this is really the first uh uh coming out party for us, so to speak, uh as uh as the new Equinox going forward, and I've been absolutely delighted with the reception that we've gotten.
• 4:04
  SPEAKER_01: Um we are completely booked over over the three days.
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  SPEAKER_01: Uh we have two streams running, uh, and I'm I'm proud to be able to uh represent Equinox goal and describe what investors can expect from us going forward.
• 4:17
  SPEAKER_01: And and we have a pretty compelling platform to talk about.
• 4:20
  SPEAKER_02: I know we're gonna we've got a lot to talk about there.
• 4:23
  SPEAKER_02: Why do you think this transaction has been so attractive for investors?
• 4:27
  SPEAKER_02: Uh what what is it in the transaction that investors are looking for?
• 4:32
  SPEAKER_01: Yeah, I think uh intentionally the company is put together in a certain way that we think will be attractive to investors to give investors another choice within the senior ranks, uh, which has some attributes that'll be uh very important to them.
• 4:45
  SPEAKER_01: You know, our greater than 50% nav valuation uh in Canada alone uh is helpful from a jurisdictional risk perspective.
• 4:54
  SPEAKER_01: Our growth uh next stage of growth will come in the United States, at which point we'll have 70% of our nav value in the United States and Canada.
• 5:02
  SPEAKER_01: And the fact that we are a plus million ounce producer with an organic pipeline to take us towards two million ounces, self-funded, all the while reducing the share count.
• 5:13
  SPEAKER_01: All of those components uh lead to us being an attractive uh opportunity for investors to consider, in addition to our peers in the senior uh gold group.
• 5:22
  SPEAKER_02: Now you've got quite a substantial portfolio of assets, and pretty much all of your operational assets also have expansion cases.
• 5:30
  SPEAKER_02: You mentioned uh going from let's say a million ounces with a pipeline to get up to two million ounces.
• 5:35
  SPEAKER_02: One of your key challenges, therefore, I imagine, is the sort of capital allocation, the investment decisions.
• 5:41
  SPEAKER_02: So talk me through that, Jason.
• 5:43
  SPEAKER_02: What are you sort of looking at?
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  SPEAKER_02: What do you think will be the sort of priorities, you know, the things you'll invest in first?
• 5:48
  SPEAKER_01: Yeah, and and so that's very clear for us.
• 5:50
  SPEAKER_01: So I'll start by saying that the the last combination between Orla and Equinox uh really uh is quite important that the geographic symmetry uh that we saw in that transaction.
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  SPEAKER_01: Orla had a mine in Canada, uh Equinox had two brand new mines in Canada, so now we have three mines in Canada.
• 6:08
  SPEAKER_01: Uh Orla had a uh construction project in the United States, Equinox has an operating line and a construction uh project in the United States, so now three uh assets in the United States.
• 6:19
  SPEAKER_01: Each of us had an asset in Mexico, so there's a lot of geographic symmetry there.
• 6:23
  SPEAKER_01: And as you correctly pointed out, the growth pipeline also uh meshed together nicely.
• 6:29
  SPEAKER_01: Uh at no point uh in this transaction do we have competition for capital, it's all sequenced in time.
• 6:36
  SPEAKER_01: Uh the first piece of growth, as I mentioned, is going to be in the United States in the former legacy Orla asset in Nevada, uh, followed by the Legacy Equinox asset in California.
• 6:49
  SPEAKER_01: Two big open pit heat bleaches that'll be the next uh stage of growth.
• 6:53
  SPEAKER_01: In both the cases, and really exemplifying what you described, uh coming off operating platforms and growing from there, in Mexico, each of us has an open pit heat bleach.
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  SPEAKER_01: Uh so Equinox has two open pit heat bleaches, one just restarted and one that's not operating for some time.
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  SPEAKER_01: But the real opportunity in those assets is the sulfide endowments that they both have, each 8 million ounces, each uh requiring uh uh a CIL or or flotation processing circuit that can liberate and bring to market uh those ounces.
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  SPEAKER_01: Uh so that would represent the medium term uh uh from uh uh from Equinox.
• 7:31
  SPEAKER_01: And then finally, you know, to sort of take us all the way to the 2 million, we have uh expiration packages across all four nations of uh of our company uh that will deliver many more ounces that we can look at improvements and in uh in the processing facilities that we already have.
• 7:48
  SPEAKER_01: Muscle White is a great example of that in Canada, right?
• 7:51
  SPEAKER_01: So we have uh already defined uh uh triple uh the the strike length uh that we acquired from Newmont uh a few years ago, and now we're considering how we can expand that facility to produce even more annual ounces.
• 8:05
  SPEAKER_01: Uh and so that at the end of our sort of uh uh uh growth cycle is is something that uh that will push us over that two million ounce mark.
• 8:13
  SPEAKER_02: Excellent.
• 8:14
  SPEAKER_02: Now you've got quite a tight geographic focus on North America, Canada, US, and Mexico.
• 8:19
  SPEAKER_02: Um are there any specific synergies or other value creation opportunities that you can um take advantage of or pursue because of that?
• 8:28
  SPEAKER_01: Yeah, absolutely.
• 8:29
  SPEAKER_01: And and to be clear, you know, our North American focus was quite intentional.
• 8:33
  SPEAKER_01: Okay, we we wanted to have a company that for the investors' consideration was North American focused, uh uh uh based out of Canada and the center of gravity being in Canada.
• 8:44
  SPEAKER_01: Um and certainly with three mines in Canada, uh uh uh moving to three mines in the United States, uh two big mines in Mexico, in each of those jurisdictions, and and we are by the way, the biggest gold producer in Nicaragua, 3.5% of the GDP, uh the highest taxpayer in the country, also a big uh uh operator in that nation.
• 9:05
  SPEAKER_01: So in all four nations, uh it is reasonable to presume that that we will be able to find opportunities not only for supplies and services in each of the nations that we need to to run our business, uh, but also uh access to uh to the governments and and and agencies within all three nations and and and of course are in all four nations contributing to the nation's uh prosperity, which is what uh which is part of the model of what Equinox is.
• 9:34
  SPEAKER_02: Okay.
• 9:34
  SPEAKER_02: Are there assets in the combined portfolio that no longer meet the quality, scale, or or geographic criteria of a senior North American gold producer?
• 9:44
  SPEAKER_02: You you just mentioned Nicaragua.
• 9:47
  SPEAKER_02: That's perhaps the smallest producing asset.
• 9:50
  SPEAKER_02: It's also the one that probably brings the highest country risk or political risk along with it.
• 9:55
  SPEAKER_02: Um it does seem to be an outlier in this or combined portfolio.
• 9:59
  SPEAKER_01: Yeah, we we get asked that question a lot, and I understand the genesis of the question is based on geopolitical risk, but let me be clear.
• 10:06
  SPEAKER_01: Uh Nicaragua specifically is is 250,000 ounces a year contribution to the platform that is Equinox Gold now.
• 10:13
  SPEAKER_01: So a very important part of the company.
• 10:15
  SPEAKER_01: Uh and and Mexico, as I described, is a very important part of our growth pipeline.
• 10:20
  SPEAKER_01: So both of those two two countries are an important part of Equinox Gold.
• 10:25
  SPEAKER_01: And we but we have to acknowledge the geopolitical risks uh that that exists in those locations.
• 10:31
  SPEAKER_01: And as long as we can uh have uh significant uh uh delivery of gold ounces from those nations and manage the the risk in those two nations, then they'll continue to uh be part of the portfolio of Equinox Gold.
• 10:45
  SPEAKER_01: The risk reward always has to be uh heavily weighted to the reward side, and we need to monitor the risk.
• 10:50
  SPEAKER_01: And currently, those two nations are an important contributor, i.e., reward for the company, and uh and we're able to manage the risk.
• 10:58
  SPEAKER_01: Should the reward or risk profile change in any of the four nations, uh then we'll make uh choices uh uh where to funnel our future investment.
• 11:07
  SPEAKER_02: Okay, you mentioned uh how full your your plate is with investor meetings here at the Mining Forum Americas.
• 11:14
  SPEAKER_02: Um investors tend to be very forthright in their sharing their beliefs and their views.
• 11:19
  SPEAKER_02: You mentioned that uh the investors have really loved the combination and the creation of this uh North American gold powerhouse.
• 11:25
  SPEAKER_02: Um to what extent or not would they say, you know, we love what you're doing, would love it even more if you didn't have Nicaragua.
• 11:32
  SPEAKER_02: Uh and to what extent do you think you perhaps get a PNAV multiple handicap for having Nicaragua within the overall package?
• 11:39
  SPEAKER_01: Yeah, I I think those those multiple effects are real, Hall, and we would have to you know consider that.
• 11:44
  SPEAKER_01: Uh but but as I mentioned earlier, I think their the reward far outweighs that, right?
• 11:49
  SPEAKER_01: 250,000 ounces.
• 11:50
  SPEAKER_01: I just uh finished a tour of all of our sites uh in the four nations uh uh with many of the of the entire L executive staff uh alongside, uh getting an understanding of the opportunity and the people that are uh delivering on those opportunities.
• 12:05
  SPEAKER_01: And I can tell you that uh Nicaragua was was absolutely delivering for us, uh continuing to exceed targets, uh cornerstone of this comp uh company.
• 12:15
  SPEAKER_01: Uh and uh how long that remains the case, of course, uh we need to be cognizant of the geopolitical risk.
• 12:21
  SPEAKER_01: And I think that the contribution of gold uh uh is is something that you know offsets any uh uh nav uh uh reduction that we may get.
• 12:31
  SPEAKER_01: Um and uh and should things change in in any of the four nations, we'll we'll reassess that.
• 12:36
  SPEAKER_01: But in the current circumstances of what I just saw three weeks ago in Nicaragua, we got a great team delivering significant number of ounces, um, and and we're fully committed to uh to supporting them and continuing that for the company.
• 12:48
  SPEAKER_02: I've been out to do side visits to the Nicaragua assets a couple of times, first when Caleb first took them over, and uh later on just before the Valentine uh acquisition or development.
• 12:58
  SPEAKER_02: So I I can attest to the great assets, great team, and the Hub and Spoke uh model that's been developed there has been very, very effective.
• 13:06
  SPEAKER_02: Um let's turn to balance sheet, uh Jason, because you've you've got you've outlined quite a um or portfolio of investments, capital investments over the coming years.
• 13:16
  SPEAKER_02: Um you said a great thing is that that they're nicely sequenced, so you don't necessarily have any sort of capital bottlenecks.
• 13:24
  SPEAKER_02: Um so talk me through how the balance sheet is going to evolve.
• 13:27
  SPEAKER_02: You've got uh a million ounces in production, uh, relatively high gold price, relatively attractive only sustaining cost margin.
• 13:35
  SPEAKER_02: So um are you able to you know fund all these investments yourself internally and continue growing cash while you're doing that?
• 13:42
  SPEAKER_01: Yeah, absolutely.
• 13:43
  SPEAKER_01: And and let me just explain how the capital allocation will work going forward at Equinox.
• 13:47
  SPEAKER_01: So at predictably, particularly at uh current gold prices, a lot of uh cash flow income to the company at over a million ounces.
• 13:56
  SPEAKER_01: Uh so that cash flow income, we subtract uh the deployment back into the business to grow the business and grow the value of the business.
• 14:04
  SPEAKER_01: Uh and uh and and we uh use the cash and balance sheet to do that.
• 14:08
  SPEAKER_01: We we then look to make sure we're constantly reducing our debt and reducing the cost of capital.
• 14:14
  SPEAKER_01: Uh, and we've got plenty of examples even this year of doing exactly that.
• 14:18
  SPEAKER_01: And then and then finally, there needs to be money left over to uh to distribute back to investors.
• 14:24
  SPEAKER_01: Uh we just increased our dividend by 50 percent, uh, and we are buying back shares, and we'll continue to do both of those things uh going forward so that we can constantly demonstrate to our investors that we're allocating capital in a way that considers growth of the value of the company, attends to our balance sheet, but still has money left over uh to distribute back to investors.
• 14:45
  SPEAKER_01: And as the commodity price changes, you know, we'll need to uh to change the pace of things and adjust our plans to make sure that we're still delivering all three.
• 14:54
  SPEAKER_01: That's our commitment going forward.
• 14:56
  SPEAKER_01: Uh, we are completely self-funded, use the cash uh that we generate from the million ounces to grow us to two million ounces, completely self-funded, all the while reducing the share count and keeping the investors in focus.
• 15:09
  SPEAKER_02: I think uh that's uh quite a unique thing.
• 15:11
  SPEAKER_02: You're you know, let me be quite you're doing it all.
• 15:14
  SPEAKER_02: You you invest in capital investment.
• 15:16
  SPEAKER_02: Um Equinox paid down more than a billion dollars of debt over the past couple of years, so very, very strong there.
• 15:23
  SPEAKER_02: And as you mentioned, the the um the recently doubled dividend uh um that that's quite a quite a substantial proposition.
• 15:31
  SPEAKER_02: Um, looking ahead, I mean you're you're becoming much more attractive company for investors, and I imagine you're starting to appeal to a broader swathe, a broader range of investors.
• 15:42
  SPEAKER_02: What are some of the sort of measurable targets that investors can look to over the next 12 to 18 months to um determine whether the combination, the Orla Equinox combination has succeeded?
• 15:54
  SPEAKER_01: Yeah, so so a few things I'd offer in in my response there.
• 15:58
  SPEAKER_01: Uh so the intention of getting to the scale that we are uh was was purposeful in that scale matters, i.e., we get access to a different uh you know a range of investors that we think is is helpful and we can uh we can access them uh uh to invest in the company.
• 16:14
  SPEAKER_01: So that's where the scale does uh matter.
• 16:17
  SPEAKER_01: Uh so what they can look for and what matters uh going forward is for 2026, our focus is to pivot from the combination of companies and assets to produce that scale and now shift to the execution and delivery uh from the platform that we have.
• 16:33
  SPEAKER_01: We don't need anything else, we just need to focus on delivering.
• 16:37
  SPEAKER_01: Uh so shareholders uh can expect us to deliver our consolidated guidance.
• 16:41
  SPEAKER_01: Uh, we updated in Q2 uh by the end of this year, as well as in the early part of next year, uh, prevent uh provide 2027 guidance uh uh so that they can uh be assured that we are the senior gold producer that they can rely upon.
• 16:56
  SPEAKER_01: And then when they couple that with the geographic exposure we have uh and the uh uh discipline we have for for capital allocation and delivery back to the shareholders, we feel we're gonna be a compelling investment choice amongst uh the senior peers.
• 17:11
  SPEAKER_01: That's what we have to focus on for the next uh uh few months and and all of 2027.
• 17:16
  SPEAKER_02: Okay.
• 17:17
  SPEAKER_02: We we've covered a lot of the ground, Jason.
• 17:19
  SPEAKER_02: What are some of the sort of key catalysts our viewers should watch out for from the company over the next 12 months?
• 17:24
  SPEAKER_01: Yeah, so the catalysts in Canada will be the uh uh wrapping up of the ramp up at Greenstone, the continuous ramp up at Valentine.
• 17:32
  SPEAKER_01: We're expanding that plant to doubling the size of that plant, so updates on that construction pro progress.
• 17:38
  SPEAKER_01: Uh so across our Canadian portfolio, delivering that 700,000 ounces that we can deliver from those three mines.
• 17:45
  SPEAKER_01: Moving down into the United States, the uh the focus should be on the construction project uh that we have begun in Nevada and uh the construction progress uh uh along the way for the remainder of this year and all of next, so that it can be producing in 2028.
• 18:00
  SPEAKER_01: Uh at the end of that construction project, as I said, they were sequenced.
• 18:05
  SPEAKER_01: Uh you know, we should be looking for updated studies uh and uh construction decisions about the next open pit heap leach, a bigger one, uh over 200,000 ounces uh at Castle Mountain as the next step.
• 18:18
  SPEAKER_01: All the while uh we'll be working on the expansion and the new mines on the existing mines in Mexico, and so study work uh leading to that outcome for our Mexican opportunities.
• 18:30
  SPEAKER_01: And we'll just expect Nicaragua to continue contributing the ounces that that it has uh through the Hubman Spoke model, uh, which I was very impressed with what I saw.
• 18:39
  SPEAKER_02: You've got a lot going on, but very, very exciting times.
• 18:42
  SPEAKER_02: Congratulations once again, Jason Simpson.
• 18:45
  SPEAKER_02: Thank you very much for joining me today.
• 18:46
  SPEAKER_02: Thank you, Paul.
• 18:47
  SPEAKER_02: Thank you.
• 18:48
  SPEAKER_02: And we have a lot more to come from the 2026 Mining Forum Americas here in Colorado Springs, so stay tuned and hit that subscribe button.
• 18:56
  SPEAKER_02: I'm Paul Harris, and this is Kitco Mining.
• 18:58
  SPEAKER_00: Kitco Mining on site coverage of Mining Forum Americas is presented by Metalla Royalty and streaming.