EQX's AISC Spike Signals Pressure, But H2 Offers Path to Cost Relief

Equinox Gold's Q1 results revealed a 6% increase in all-in sustaining costs (AISC) to $2,065 per ounce, despite a 76% revenue surge driven by higher gold prices and increased sales volume; excluding the suspended Los Filos mine, AISC still rose 9%, reflecting cost inflation in Brazil and maintenance at Greenstone. The company anticipates $35 million in charges related to the Los Filos suspension in Q2, but expects costs to decrease in the second half of 2025 with increased production and merger synergies, while peers like B2Gold also face cost inflation.

Analysis

Equinox Gold Corp. (EQX) reported a mixed first quarter, with revenues surging 76% due to a 38% rise in realized gold prices and a 27% increase in ounces sold, yet all-in-sustaining costs (AISC) climbed 6% year-over-year to $2,065 per ounce. This cost escalation, primarily driven by higher unit costs in Brazil and unplanned winter maintenance at the Greenstone mine, overshadowed some of the revenue gains and underscores operational cost inflation; even excluding the indefinitely suspended Los Filos mine, AISC rose 9% to $1,979 per ounce. The Los Filos suspension is expected to incur approximately $35 million in care and maintenance charges in the second quarter, presenting a near-term headwind. However, Equinox Gold projects a path to cost relief in the second half of 2025, contingent upon the continued production ramp-up at Greenstone, reduced costs associated with Los Filos, and anticipated merger synergies with Calibre Mining Corp. This cost pressure is not unique to EQX, as peers like B2Gold Corp. also experienced a 14% AISC increase, and Agnico Eagle Mines anticipates higher costs for the remainder of 2025 despite a slight Q1 dip from deferred expenditures. Year-to-date, EQX's stock has gained 37.6%, underperforming the Zacks Mining – Gold industry's 50.5% rise. From a valuation perspective, EQX trades at an attractive forward 12-month earnings multiple of 6.51, a 52.2% discount to the industry average, and holds a Value Score of A. While Zacks Consensus Estimates project substantial year-over-year earnings growth for 2025 (230%) and 2026 (106%), these EPS estimates have trended lower over the past 30 days, contributing to the stock's current Zacks Rank #3 (Hold).

Key Decisions for Investors

• Given Equinox Gold's Q1 AISC of $2,065/oz, the impending $35 million Q2 charge for Los Filos, and the Zacks Rank #3 (Hold), investors should closely monitor the company's operational execution and progress on cost-reduction initiatives in subsequent quarters.
• Despite current cost headwinds and recent downward revisions to 2025-2026 EPS estimates, the stock's significant valuation discount (forward P/E 6.51x) and high projected earnings growth may warrant consideration for value-oriented investors, contingent on demonstrated progress towards achieving targeted cost efficiencies in H2 2025.
• Investors should critically assess the ramp-up progress at the Greenstone mine and the realization of synergies from the Calibre Mining Corp. merger, as these are pivotal for future margin improvement and de-risking the investment thesis.