Equinox Gold Divests $1B Brazil Assets to Slash Debt and Refocus on High-Margin North American Operations

• Equinox Gold produced 920,000 ounces in 2025, with Q4 setting a quarterly record at 247,000 ounces, driven by ramping Canadian assets including Greenstone which increased production 29% quarter-over-quarter.
• The company announced the sale of Brazilian assets (200-250k oz/year) for over $1 billion to reduce debt by $800+ million from $1.5 billion, and refocus on tier-one North American jurisdictions.
• Production guidance of 700-800k ounces for 2026 reflects the Brazil sale, with all-in sustaining costs at $1,800-1,900/oz; Canadian operations alone expected to produce 400-500k ounces at industry-leading margins.
• Three major organic growth opportunities include Castle Mountain (California, 200-225k oz/year), Los Filos expansion (Mexico, 250-300k oz/year), and phase 2 expansion at Newfoundland assets, with $75-100 million allocated to exploration.
• Management prioritises operational execution and deleveraging over M&A, with potential to be nearly debt-free by end-2026, enabling shareholder returns through buybacks or dividends while maintaining a $300 million capex budget.

Equinox Gold concluded 2025 with record production and embarked on a strategic transformation designed to position the company as what executive vice president of capital markets Ryan King calls "a top quartile valued gold producer." The multi-asset gold miner, which has grown rapidly through mergers and acquisitions over the past five years, is now executing a deliberate shift from quantity to quality - divesting non-core assets, deleveraging its balance sheet, and concentrating capital on tier-one North American jurisdictions. In a detailed discussion, King outlined how the company plans to navigate this transition while capitalising on a favourable gold price environment and developing a substantial organic growth pipeline.

Record Production and Operational Momentum

Equinox Gold's 2025 performance marked a significant operational milestone. The company produced slightly over 920,000 ounces of gold on a consolidated basis, with the fourth quarter delivering a record 247,000 ounces - up from 236,000 ounces in Q3. This sequential improvement reflects the successful ramp-up of key Canadian assets, particularly the Greenstone mine in Northern Ontario, which increased production by approximately 29% from Q3 to Q4.

"Q4 was a big one because we have a large asset in Northern Ontario called Greenstone which produced about 29% more ounces in Q4 than Q3. So really important factor is that we're starting to see some really good operational performance out of that asset."

The operational momentum at Greenstone and other ramping assets demonstrates management's execution capabilities as the company transitions from a construction-focused organisation to one prioritising operational excellence. This shift is particularly important given the scrutiny gold producers face regarding their ability to meet production and cost guidance.

Strategic Divestiture: Brazil Asset Sale

Perhaps the most significant strategic decision announced alongside the 2025 results was the sale of Equinox's Brazilian operations for slightly over $1 billion. The transaction, expected to close shortly, will see the company divest four smaller mines producing 200,000 to 250,000 ounces annually. King emphasised management's focus on quality over quantity. 

"...These assets have been around for quite a while. There are four smaller mines, four mills and I just think our expertise comes from large open pit gold mines."

The company's leadership, including CEO Darren Hall who spent over 30 years at Newmont, brings deep experience in optimising large-scale operations rather than managing multiple smaller assets.

The financial rationale is equally compelling. Equinox entered 2026 with approximately $1.5 billion in debt following its aggressive acquisition strategy. The Brazil sale will enable the company to reduce debt by over $800 million immediately, with King suggesting the company could be "almost completely de-levered" by year-end 2026 given current gold prices and operational cash flow.

2026 Guidance and Cost Profile

For 2026, Equinox provided production guidance of 700,000 to 800,000 ounces - a step backward from 2025's record that reflects the Brazil divestiture. All-in sustaining costs are projected at $1,800 to $1,900 per ounce on a consolidated basis, with Canadian operations representing the lowest-cost portion of the portfolio.

The Canadian assets - primarily Greenstone and Valentine in Newfoundland - are expected to contribute 400,000 to 500,000 ounces in 2026, representing approximately two-thirds of total production from the company's newest, highest-quality operations. These assets offer multi-decade mine lives and significant exploration upside, with the company already evaluating a phase 2 expansion at one of the new open pits in Newfoundland.

Capital expenditure for 2026 is budgeted at approximately $300 million, with an additional $75 to $100 million allocated to exploration. King characterised this exploration spend as "R&D" for a gold company, emphasising the potential to expand resources at existing operations as a high-return investment opportunity.

Interview with Ryan King, EVP Capital Markets of Equinox Gold

Organic Growth Pipeline

Beyond optimising current operations, Equinox maintains a substantial organic growth pipeline that could add 450,000 to 700,000 ounces of annual production over the medium term without requiring acquisitions.

The Castle Mountain project in California represents the most advanced opportunity. Currently operating as a heap leach mine on suspended operations, the asset holds over four million ounces in reserves and is progressing through the federal FAST-41 permitting process. "We're on track to get a record of decision by probably Q4 of this year," King stated. Once permitted, Castle Mountain could be expanded to produce 200,000 to 225,000 ounces annually, providing a significant bolt-on to North American production.

The Los Filos asset in Mexico presents perhaps the most substantial long-term opportunity. The deposit contains over 15 million ounces across all categories, making it approximately the fourth-largest gold deposit in the Americas. Currently on suspended operations since Q1 2025 due to community land access issues, the company has secured multi-decade agreements with two of three communities and is working toward resolution with the third.

A 2022 feasibility study envisioned installing a modern CIL plant to process sulfide materials while continuing heap leach operations, potentially producing 250,000 to 300,000 ounces annually. However, King acknowledged that construction would require capital expenditure ranging from $500 million to $1 billion and would take considerable time to build. The company is also evaluating a two-community development plan as an alternative.

Management Philosophy: Operations First

A recurring theme throughout the discussion was the operational-first philosophy implemented by CEO Darren Hall and his leadership team. King emphasised that Hall "is not a capital markets focused individual" but rather drives value by focusing on the business fundamentals beneath the equity.

"His driver is the business underneath the equity. What are we going to do today that we can add value to the business that will drive share price performance? Is there a way to eliminate some costs or some capital or some spend from the business?"

This approach represents a shift for Equinox, which historically struggled to consistently meet production and cost guidance. Beginning in Q2 2025, the company started delivering results that met or exceeded expectations - a pattern that continued through Q3 and Q4, gradually rebuilding investor confidence.

The focus on operational discipline extends to capital allocation decisions. Rather than pursuing acquisitions in what King anticipates "may be a big year for mergers," Equinox is concentrating on extracting maximum value from its existing asset base through methodical optimisation and disciplined growth capital deployment.

Balance Sheet Transformation and Capital Returns

The combination of strong operating cash flow, the Brazil divestiture proceeds, and disciplined capital spending positions Equinox for a significant balance sheet transformation. Beyond deleveraging, the company is beginning to contemplate shareholder returns - a milestone for a company that has been in growth and construction mode for years.

"Is there an opportunity to put some sort of buyback in place? I think there will be. Is there an opportunity to look at a dividend potentially? Yes," King noted, while emphasising that asset investment remains the first priority. The company must also navigate the philosophical question facing all gold producers: whether to retain gold inventory as a store of value or convert it to cash for distribution to shareholders.

Valuation Opportunity

Despite strong second-half 2025 performance that made Equinox one of the top-performing gold equities during that period, King pointed out a significant valuation disconnect. 

"If one steps back for a second and looks at 2021, 2022 through to the end of the year 2025, we actually underperform gold. We actually underperform the GDX and the GDXJ."

This historical underperformance, combined with the operational improvements, portfolio optimisation, and balance sheet strengthening underway, forms the basis for King's assertion that the company is "on the path of creating a top quartile valued gold producer" with "opportunity in rerating" the stock.

Conclusion

Equinox Gold is executing a strategic pivot that prioritises operational excellence, financial strength, and jurisdictional quality over production volume growth. By divesting non-core Brazilian assets, concentrating on ramping Canadian operations, and maintaining disciplined optionality on substantial organic growth projects, the company is positioning itself for sustainable value creation in any gold price environment. 

The success of this strategy will ultimately depend on continued operational delivery, successful permitting of Castle Mountain, and resolution of community issues at Los Filos - but the foundation for a transformed company is clearly being laid.

TL;DR

Equinox Gold delivered record 2025 production (920k oz) and is executing a strategic transformation from growth-focused to quality-focused, divesting Brazilian assets for $1B+ to de-lever by $800M+ while concentrating on ramping Canadian operations (400-500k oz in 2026). With Castle Mountain permit decision expected in Q4 2026 and Los Filos expansion optionality (combined 450-700k oz/year growth potential), the company offers substantial organic growth without M&A risk, while historical underperformance versus gold indices despite operational improvements suggests significant rerating opportunity.