Greenstone Ramp-Up Will Accelerate Secular Global Gold Demand

Key Takeaways

• Accelerated operational efficiency, exploration success, and streamlined portfolio management could boost earnings, organic growth, and drive significant early capital returns.
  
• Enhanced scale and diversification position Equinox to benefit disproportionately from sustained gold price appreciation, supporting strong free cash flow and balance sheet strength.
  
• Structural headwinds from shifting demand, regulatory uncertainty, operational challenges, financial constraints, and industry pressures threaten long-term profitability and margin stability.

Catalysts

Engages in the acquisition, exploration, development, and operation of mineral properties in the Americas.

• Analyst consensus sees the Greenstone ramp-up driving material production growth, but early evidence of mining and processing rates above nameplate capacity-plus the rapid operational efficiency gains from the integrated team-point to a meaningful upside surprise in both output and cost reductions starting in 2025, which could cause revenues and net margins to exceed even the most optimistic current forecasts.
  
• While consensus expects margin expansion from Valentine's ramp-up, the exceptional state of operational readiness, deep experience of the commissioning team, and significant investment in redundancy and critical spares suggest a faster trajectory to steady-state production and sustainably lower unit costs, positioning Equinox for outsized earnings growth as early as late 2025.
  
• The company's intensified exploration programs-now funded by a much stronger balance sheet after two major mine builds-could yield major resource expansions at Nicaragua, Valentine, and Mesquite, unlocking substantial new ounces without costly acquisitions and providing organic revenue growth levers well beyond current modeled life-of-mine assumptions.
  
• As gold demand is increasingly underpinned by persistent global inflation and a shift towards de-dollarization, Equinox's enhanced scale and operational diversification across the Americas position it as one of the sector's most leveraged producers to price upside, amplifying both cash flow and earnings sensitivity to structurally higher gold prices.
  
• The disciplined portfolio rationalization already underway (including asset sales in Nevada and a readiness to exit or redeploy capital from under-earning operations) offers a clear path to aggressive balance sheet deleveraging by 2027, opening the door to sizable capital returns via buybacks and dividends-potentially well ahead of sector peers-thus creating a powerful catalyst for share price re-rating as free cash flow inflects.

Equinox Gold Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Equinox Gold compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Equinox Gold's revenue will grow by 37.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -1.2% today to 37.4% in 3 years time.
• The bullish analysts expect earnings to reach $1.9 billion (and earnings per share of $2.39) by about September 2028, up from $-23.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 7.5x on those 2028 earnings, up from -327.9x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 18.6x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.02%, as per the Simply Wall St company report.

Equinox Gold Future Earnings Per Share Growth

Risks

• The global transition to renewable energy and reduced reliance on gold as a financial reserve could structurally weaken long-term gold demand, putting sustained downward pressure on realized prices and directly lowering Equinox Gold's long-term revenues and future earnings power.
  
• Persistent ESG and regulatory scrutiny on mining, along with increasingly complex stakeholder relationships-such as the ongoing negotiations with multiple communities at Los Filos-risk higher compliance costs, regulatory delays, and possible operational disruptions, which could erode net margins and adversely impact revenue reliability over the long term.
  
• Equinox Gold's geographically dispersed portfolio exposes it to heightened geopolitical and legal risks, as underscored by unresolved tax and legal disputes in Nicaragua and Brazil, and potential unrest in regions like Mexico, all of which could result in project delays, asset impairments, or unexpected costs that dampen revenue stability and compress margins.
  
• The company's history of capital constraints, undercapitalization of assets like Los Filos, and reliance on aggressive organic growth and exploration spending (noting ongoing high exploration costs) could require future equity issuances, raising dilution risk and limiting per-share earnings growth even if gross revenues increase.
  
• Industry-wide challenges such as declining grades and diminishing availability of high-quality, accessible gold deposits-evidenced by Greenstone's lower-than-expected grades and increased focus on minimizing dilution-are likely to drive sustained operating and capital cost escalation, further compressing operational margins and undermining long-term profitability.

Valuation

• The assumed bullish price target for Equinox Gold is CA$17.03, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Equinox Gold's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$17.03, and the most bearish reporting a price target of just CA$9.53.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $5.0 billion, earnings will come to $1.9 billion, and it would be trading on a PE ratio of 7.5x, assuming you use a discount rate of 7.0%.
• Given the current share price of CA$13.78, the bullish analyst price target of CA$17.03 is 19.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.