(Kitco News) - Equinox Gold is setting its sights on further growth and strategic acquisitions after a year of record production, according to Chairman Ross Beaty.
Beaty told Kitco Mining about the company's plans to leverage its strong cash flow to aggressively reduce debt while also exploring opportunities to enhance its portfolio.
Record production
Equinox Gold reported a record production of 622,000 ounces. With eight producing mines across Brazil, Mexico, and North America, the company is well on its way to achieving its goal of becoming a million-ounce-per-year gold producer.
"We're really going to hit our stride," Beaty said on the sidelines of the Vancouver Resource Investment Conference, emphasizing the transformative impact of the Greenstone mine in Ontario.
The company spent $750 million to build Greenstone and another billion to buy out its partner. As a result, Equinox Gold has about $1.3 billion in debt. Beaty noted that the focus for the coming year is to deleverage and pay off debt as quickly as possible, which he sees as a return of capital to shareholders.
Strategic acquisitions
While deleveraging remains the priority, Equinox Gold is also open to strategic mergers and acquisitions (M&A) to improve its portfolio. Beaty pointed out the "crazy disconnect between the gold price and gold equity values," particularly among smaller companies, presenting potential opportunities for value.
"It is tempting right now to continue to try to grow," Beaty stated, adding that scale is important for shareholders and creates a more diversified asset holding.
The company is considering divesting higher-cost mines to improve its portfolio's overall quality. Beaty highlighted the company's journey from high-cost mines acquired early on to now focusing on better quality assets like Greenstone.
When asked about Lumina Gold, Beaty said, "It is something we would look at with Equinox Gold at the point in time where we're looking at that kind of asset."
Industry insights and market outlook
Beaty also shared his broader views on the mining industry, noting the disconnect between gold prices and equity values. He suggested that the junior mining sector, in particular, offers tremendous value for new investors.
"Either the gold price is going to go down, or the equity value is going to go up, and I'm going to bet it's companies like Lumina Gold that are going to do really well this year," Beaty commented.
Commenting on consolidation in the copper sector, Beaty expressed skepticism about large companies buying each other, noting that such deals are "disruptive as hell" and "often not" wealth creating. He also touched on the increasing demand for copper due to electrification, but cautioned against overly optimistic price predictions.
Special thanks to our sponsor Snowline Gold Corp for making this coverage possible. Visit https://snowlinegold.com/ today.
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