So with that, it's my pleasure to introduce Greg Smith, President and CEO of Equinox Gold, and Darren Hall, President and CEO of Calibre Mining. And we'll jump right into the Q&A. So maybe just while questions are trickling in, we'll kick it off with one from me for Greg. Commercial production was declared at the flagship Greenstone operation in November. How are recoveries tracking at the Greenstone plant, and can you give an update on the valve replacements and any other adjustments that you've been making at the plant?
Sure. Well, we put out our year-end and Q4 financial statements, MD&A, last week and our results. And you could see that we've had progressively increasing production from Greenstone over 2024. We also gave guidance for 2025, 300,000-350,000 ounces of gold produced from Greenstone this year, all at sustaining costs of around $1,100 an ounce. So this will be our first full year of commercial production, progressively increasing production quarter over quarter. And I think Q1 is kind of similar to Q4 as we've come out of December. And then as we go through the year, we open up the pit, we get higher grades, we get higher throughput, and we continue to increase that production.
Great. And maybe one for Darren: can you give us an update on the Valentine Gold Mine build?
Yeah, thanks, Kevin. And appreciate everyone coming out today and listening to Greg and I do a Bert and Ernie routine here, right? So Valentine, no, it's going well. We're confident in where we sit with respect to the build. We remain firm on our CAD 744 million build cost to first production anticipated here in Q2. Progress has been excellent over the last quarter or so. We're in the situation by the end of the month where we'll set mill motors. We'll be substantially complete on motors. Cable trays, about 80% complete. We'll be pulling cable and complete through March. The ADR, Gold Room, will be complete by the end of March. Progress is going well, so we're set up pretty well. Primary crushers have actually been handed over to operations, so we're comfortable with where we sit, so no, as planned.
Excellent. Maybe going back to Greg, what should we expect to see in terms of mining rates in the Greenstone pit now that the contaminated soil area has been completed?
Yeah, I think we're going to continue to ramp up as we open up the pit. I think we ended the year around 150,000 tons per day. We're going to keep pressing to 170,000-180,000 tons per day. We've got four new trucks coming online this quarter, some additional loading equipment. So I think as we open up the pit, new equipment comes on. It's just going to keep incrementally increasing.
Can I just layer in there one? I mean, I had the privilege of visiting Greenstone here just a month ago, and the configuration of the pit has substantially changed over the last quarter or two. And the pit's now opened up, so you can double-side load. You'll see efficiencies come up. So no, I think the team is setting things up for a real positive 2025.
So you've got no questions from the audience. I think this is kind of weird that you can only ask questions when we just announced the transaction. So I'm just going to jump into the transaction if that works.
Perfect.
It's just so bizarre. Yeah, I mean, last night we announced the combination of Equinox Gold and Calibre Mining. This really is structured as a merger of equals transaction where we're amalgamating the two companies into one company. We're going to be sharing board representation, senior management representation, bringing in the Calibre team and merging with the Equinox team, with the goal here of creating a new major gold producer with two substantial long-life brand new assets in Canada as a foundation for the company. We announced this last night. Rough terms are 0.31 Equinox shares per Calibre share. This transaction will progress through February, March. We'll have our shareholder votes in April, both companies voting, and then we expect to close the transaction in May. Combined company, we'll have nine producing mines across multiple jurisdictions in the Americas.
We've got a number of expansion projects in the portfolio, massive gold reserve endowment of 24 million ounces, and an additional 22 million ounces on top of that in M&I resources. Combined this year, we've got guidance of 950,000 ounces. That's at the midpoint of both companies' guidance, excluding anything from Los Filos in Valentine. When Greenstone, Valentine are up to capacity as we exit 2025 and into 2026, again, excluding Los Filos, we're on a path to 1.2 million ounces or more of gold production. Big step change for both companies here, with the big headline being, we're going to be the second largest producer of gold in Canada from Canada between the Greenstone mine and Valentine Lake.
No, you covered it. I mean, really, we're here to be able to answer questions and anything that may be on people's minds. I think it's probably more effective to do that than be a couple of talking heads.
For sure. I'll remind the audience that you can put your questions in the app. Otherwise, I do have to stick to my prepared non-transaction related questions.
Was that a plea, was it, Kevin?
Yeah.
We do have mics, so if you just raise your hand and you can get a mic, there's a question right there. Can you speak to the recent drilling at Valentine?
Yeah, no, happily. Again, we love what we see at Valentine, right? With the purchase of this asset, clearly it was a great value driver for us as Calibre. We were always excited by what we see, but we were particularly excited about the underexplored nature of what we saw at Valentine, right? I mean, when Marathon had first got into it, they'd had a modicum of success, then they decided as a junior explorer to develop, and we've seen that story play out before, and normally ends up with tears and someone getting in trouble, right? So underinvesting in that exploration potential has been an opportunity that we've been able to start on over the last 12 months. We're early in the journey, but as we put out in November and recent results as well, is that we've tagged into something that's very close to our existing operations.
It's about a kilometer away from the Leprechaun pit. It actually bleeds out a long trend. Current surface exposure is about two times the length of what we see in Leprechaun. Open at depth to 500 meters has the potential to be significantly larger than Leprechaun. So it's early in the days, but we're particularly excited. I mean, this is definitely the making of a new mining district.
I mean, I'd say I was just at Valentine in January, and our technical team has loved the exploration potential at that project for a long time, going all the way back to Marathon. And I came away, I'm not a geologist, but I was definitely razzle-dazzled by the potential there. And the nice thing about the Valentine Gold Mine is it's got the room to expand that plant over time. So the more material we find, the more we can push through the plant as we expand it over the next number of years. I agree. I think it's going to be a district in a great location, and we're just going to keep finding more and more. Last night when we were talking just after the announcement, we were talking about how many drills were on the project. There's three drills on the project now.
Ross Beaty, who's our chairman, was like, "How fast can we get 10 drills on the project?" We're keen to keep building out that mineral inventory at Valentine.
Yeah, it's kind of an interesting point there. We've guided exploration for this year, $15 million-$20 million, about 100,000 meters of diamond drilling. I think when we're sitting here talking in a year's time, my anticipation is it'll be more than 100,000 meters, and you'll be very pleased with the results. But Greg talked about the expandability as well, and it's probably worthwhile just refreshing the opportunity at Valentine. Phase one was a 2.5 million ton facility expanded to 4 million ton. That was in the feasibility during the course of 2024. We tested the veracity of those estimates. We were able to reproduce with current costs and our learned experiences at Valentine. The capital costs are in the feasibility for that 1.5 million ton expansion.
But importantly, what we've been able to do is identify that there's a significant improvement over what was conceived, and we're going through the detailed engineering now, to get us to probably five to five-plus million tons on an expansion with a very modest level of capital. The plant was always designed for a regrind and a flotation circuit. But what we've been able to identify is that between the primary crusher and the SAG mills, add secondary stage crushing as the mills are the limitation, fine up the feed, it'll push us to five-plus million tons. So the opportunity that sits there is significant.
If you look at the value that'll be created through a new Equinox as we go forth, it's not just Valentine as currently conceived and realizing the value at Greenstone, but we've got the cash flowing assets around the portfolio, but the organic growth potential is huge. We think about Valentine, we think about Los Filos, we think about Castle Mountain, we talk about the million-ton of surplus capacity that still remains in Nicaragua. The opportunities are huge. When Greg's talking about one plus 1.2 million tons in 2026, I mean, I think that there's still room to grow from that.
Ounces.
Ounces.
1.2 million ounces in 2026.
Did I say tons?
Another question here.
Thank you.
Darren, excuse me if you've had this question already, and there's two points of view, but given all that upside for Valentine that's looking more exciting, especially the last six months, and you're starting production next year, why not wait till the ramp up before doing a deal like this?
Daniel, that's the first time someone's asked me that today, right? No, quite seriously, is there ever a perfect time for M&A? No. If we look at the value proposition we see, we fully anticipate as a Calibre standalone, we'd see a re-rate. I look at what Greg and the team have done with Equinox and the opportunity that still exists there, given the level of production, the performance we will see as Greenstone meets its full potential. There's a significant re-rate opportunity there. Us throwing our kit together, we'll see that combined re-rate from both companies, and we'll move us into a different paradigm from an attractability perspective and what we can attract in from an ETF and generalist funds perspective, which Greg can talk about more eloquently than I can, right? We're not leaving any money on the table.
I have a significant percentage of my net worth involved in the Calibre product, and when I look at getting together with Greg doing this transaction versus taking a premium, I'm going to be wealthier as a consequence of this in 18 months' time, there's no doubt.
When you look at the two companies and where they've traded over the last number of months, and we've been talking about this now for eight months, it was the type of thing that was very slow, kind of conceptual, could be interesting for a long time, and it was very slow until it got very quick. But when you look over the last number of months, at the time we announced, both companies on consensus analyst estimates are trading at exactly the same PNAV, like bang on. So both companies, PNAV neutral, not accretive, not diluted, PNAV neutral. And then you look at the exchange ratio that had been trading over the last number of months, and it's in a very, very tight band. So you look at that, you look at what the market's telling both companies, and you see the re-rate potential with both companies.
Again, hard to pick your timing, but when we looked at that, it looked like the perfect timing, actually.
I'll ask one more question. Darren here, you plan on sticking around for a few years?
Yeah, as long as Greg doesn't put a bullet in me. I mean, that's the plan, right? And that was the value proposition, right? Is we put these two sets of assets together. Every time you're looking at doing a transaction, it's not about the physical assets, it's also the human capital component, right? And these two organizations are absolutely stronger together than what they are apart, right? We have complementing sets of skills, as you see here, right? Different animals, right? But it meshes really, really well. And we look at what we can bring from a Calibre perspective, and you look at how we've upgraded our organization over the last couple of years with the introduction of David Schummer as COO just recently.
David comes across. You look at the big pit experience that he has, how we'll be able to leverage off that experience at Greenstone and Valentine, right? And then you look at the technical team led by Doug Reddy and co within the Equinox space. I mean, there's a great level of capacity within that space. Arguably, the Equinox team have more technical capability than what we have, right? They're a larger organization. We have good operating cred. So I think that we look at salt and peppering this blended family together. I think we can end up with something that's truly world-class, absolutely.
Maybe a question from the app here. Do you have plans to rationalize the portfolio and do the Brazilian assets now become non-core?
I think we'd like to close the transaction first, but post-closing, Darren and his team get involved in the company. Of course, as you grow, certain assets become non-core and Equinox, over the last number of years, we have been rationalizing our portfolio. We've sold two mines, we've sold some other projects, we've spun out companies, and there's no reason to believe, I think, that we wouldn't continue to be commercial in what makes sense. That being said, I want Darren down on the ground. I want him and his team to look at these things. I want another set of eyes to look at these things. There's a lot of potential in some of those Brazilian assets, the Bahia Complex in particular, Aurizona Underground.
Certainly when you look at the overall portfolio, we're probably going to do some rationalization, but there's a lot of potential in the portfolio today that we've got to make sure we don't just give away. We've got to make sure we have the opportunity to take a good hard look and then surface that over time. Darren, feel free to.
No, no, absolutely nailed it, right? Again, there's going to be multiple ways in which we can create shareholder value, but I think we need to fully understand what the value can be derived from each of those assets first so we can make the sensiblest decision, right? Again, for those that are familiar with the Calibre story, there was a couple of assets that we got involved with just five years ago in Nicaragua, and we're standing here today talking about this, right? From what was, we raised $100 million in the summer of 2019. We've progressed through a series of assets that were non-core within a company's portfolio, right? So coming in, looking at them from a different perspective, leveraging off the capability of the team, we're able to drive a significant amount of value.
I'm sure there's going to be things that we can see within the Equinox portfolio and the Equinox guys will see within the Calibre portfolio about how we can create shareholder value. This is all about not being hubris. Hopefully you get that from Greg and I today, right? There's no pride of ownership in here. What we're doing is that we've spent a significant amount of time beating each other up on DD, but not for the purpose of trying to negotiate a premium, but to understand the assets. When we come into this, we're absolutely committed, right? They know ours, we know theirs, we know where the warts are, we know where the pressure points are, and how do we ensure that we realize value, right?
And again, coming in at a premium or a merger of equals or whatever nomenclature you want to call it, right? That's the nature of this transaction. It sets us up for a non-competitive space. But this wasn't done overnight, as Greg alluded to, right? We've spent a lot of time in the space understanding the assets, and we're both very comfortable with what we see.
Great. Well, maybe another one from the app, maybe starting with Greg, can you talk about the shareholder reaction?
Yeah. I mean, we had the opportunity to meet with obviously a number of our shareholders here. It's very convenient to be at the conference, and it's been positive. It's been very positive, especially by the shareholders that really understand what we're talking about in terms of these two big Canadian assets together underpinning the production profile of this company for probably the next several decades. They understand it very well. I think they're happy to see it. We did get the questions, why now and does this make sense at this stage? And exactly what we said here is what we said then, and I think most people get it, and I think the share reaction today was pretty indicative of that.
You have the initial reaction on the announcement of a deal, and then over the course of the day, we saw some pretty sustained buying in the stock that took both of them back up to something much more palatable, I think, to both of us. So good reaction overall, and we'll be talking to shareholders tomorrow and tonight and through the rest of the conference, and I expect it'll be similar.
Yeah, another thing I'd love from a Calibre perspective, it was similar, right? It's like it really come back to the why now. And then as you sit down and talk through with people, they go, "I get it," right? The visceral reaction is that you've been talking about this re-rate opportunity, how come? But what we found is that most of the people we were talking to didn't actually understand who we were getting into bed with, right? So more of my discussion today has not been about why it makes sense, but why Equinox makes sense with Calibre.
It's a good point, and there's actually not as much shareholder overlap between our two companies as you might find typically in a transaction like this, and so you have that same thing where our shareholders might not know their assets as well, their shareholders might not know our assets as well, and so it's a bit of an education process, but most people get right away when you say, "Look at the Canadian production profile, look at everything else in the company and what that means." People get it. I think they get the point pretty quickly. This is just one slide out of the deck, but this deck is on both of our websites if anyone wants to go take a look. It explains the whole transaction, a number of metrics on why we think this is a great transaction.
Yep. Yeah. Once you can focus people on a year out from now and what this is going to look like, people catch on really, really quickly. Has been my feedback today. Because most of it's been back, why now, right? And it's been a pretty easy discussion to talk people through it.
Great. Maybe next one for Darren. What's the rationale for the convertible debenture plus warrant financing?
Yeah. No, it's a good question. It's that we're funded at Valentine. I'll put that out there. There's absolutely no tension there, right? We talked about it. We've got CAD 100 million at the end of the year to spend to first gold. As of mid-February, we've got $160 million plus in cash plus the restricted cash which sits in the DSRA, right? So there are no financing issues. But as we enter into a transaction, right, there's going to be restrictions placed upon us. And that period could run three, four months. We anticipate it being quick, but there are some approvals that are required, right? So we don't want to get into the situation where, if anything happens, we're into an awkward situation. So that's the rationale for, right? It's also important to note that the most significant portion of that sits with Equinox.
Upon close, right, it disappears.
Yeah. It's really $75 million in the press release, but it's really a $35 million financing because we're taking $40 million. And on closing, that debt will just eliminate.
Yep, so our focus for the next three months is business as usual, make sure that we continue to deliver into and then understand how we maximize that value upon close, right? And we don't want anything to be able to extract from that. And going out there and having to do something if something was to happen, we don't anticipate it. But it's always good prudent management to have those things in place.
Great. And maybe one for Greg. Why a merger of equals with no premium and how will Equinox deal with a counter bid for Calibre?
I think why a merger of equals? I think it's really just what the principals and management of the two companies saw in the big picture, right? Equinox and Calibre are very similar in that we've built these companies through acquisitions, through development over time. Both coincidentally ended up with larger Canadian assets at around the same time. Both saw the bigger picture and the big vision. We weren't out looking for an acquisition. Equinox was not out there hunting for a company to buy. We've been focusing on Greenstone and our own portfolio. I don't think Calibre was looking either. When you start having conversations between the two companies, you start looking at what this could be. It made a lot of sense. It's a 65-35 deal, but it is structured really much more like a merger of equals.
And they're going to have 40% of board representation. Darren and his team are going to make up a substantial part of the management team. And so this truly is a merger of equals, two companies coming together. And so I actually think, I can't speculate if anyone's going to come over the top or not, but I actually think the market's going to see the value proposition here. And I think that it's going to basically preclude someone from coming over the top. I mean, that's certainly my hope, that's my wish, but I think if people see what we see, I think that's how it's going to play out.
Yeah. No, again, I'd agree and concur with everything that Greg said. I mean, the one thing I would like to do is make a shout out to Ross and Blayne, who have maintained steadfast in the approach through the whole discussions, right? And it's having that vision of what it can be and then bringing Greg and I into that whole discussion and understanding what it is. So you can start to say, "Hey, as investors in the product, what does this look like a year or 18 months from now?" It's not about what's the best return in a quarter from now. It's what's going to set us up. Sorry?
Don't forget Doug.
Oh, and Doug. No, but I mean the entire boards. But there's been a consistent approach to this right through. Because we don't want to get into that situation where you're beating each other up for a small change in premium that gets in the way of that truly earth-shattering re-rate that we will see as we deliver into expectations.
And again, we're both trading at the exact same PNAV. We're treating this as a merger of equals. The board, the management team reflects that. This is the transaction that made sense for all shareholders, I think.
Great. Well, I'll remind the audience, if you do have a question, feel free to put it in the app or just raise your hand and we'll get a microphone over to you. But maybe in the meantime, one from me for Darren. What can we expect to see from the Valentine technical studies that are currently underway and where do you see the most upside at Valentine?
Yeah, where to begin? The technical studies we've got working on right now are really related to the detailed engineering getting control schedule out for phase two. And where we'll be in the middle of the year is to a decision point about when do we want to time that expansion at Valentine. And by the end of the year, we'll be at the situation where we'll be positioned to make commitment to long lead time items. And if it makes sense in the greater portfolio, which I think it will, we'll be in that pleasant situation where we can roll out the construction team from in Q3, give them a quarter off, roll in in Q1 of next year, start the build, roll it into an expansion in 2027, delivering into five million tons a year of production, right?
That's where the technical studies are at from the feasibility study, not from the feasibility, but from the mill expansion. In terms of quintessential technical report associated with, say, resource reserve update, we're early in the stage and we really need to understand what the scale of this property looks like, right? It took 15 years to find the first five million ounces. I'm pretty sure it's not going to take that long to find the next five, and we've seen that from drill results. And our focus now is not about trying to quickly get from a five million ounce resource to a seven million ounce resource. It's really to understand the scale, right, and the scope of what this property is going to look like so we can make intelligent decisions in this combined portfolio about how to allocate capital.
And we're going to be in the situation here in the next year or two where, again, as Greg's alluded to, right, we're going to be generating significant levels of cash and we're going to have a real first world problem of what to do with it, right? So no, it's exciting times for Valentine and as it is across the portfolio of assets.
That kind of dovetails into my next question for you, Greg. With cash flow ramping up, what are your plans for the balance sheet?
We've been kind of focused on deleveraging our balance sheet, actually. Both companies have taken on some debt as we've built out our mines and built out the portfolio. And we're now hitting that like a pretty big inflection point in cash flows for both companies. And I think it's a good opportunity that we can start to deleverage the balance sheet. And this is, again, this is one of the value potentials here because as we bring down that leverage, I think, again, it's going to start to reflect on our multiples, especially with most of the production coming from Canada. But that's the plan in the near term. In our guidance last week, we said we'd do at least $200 million + $140 million of convertible notes one way or the other.
And at these current spot gold prices, our cash flow is going to be significantly higher than we're predicting with that. And so I think there's going to be good potential for us to pay down a lot more than that this year. And certainly, as you go into next year, in the deck, you can see at spot gold and consensus estimates, it's like $2.4 billion of EBITDA. So there's a lot of cash flow coming into the company and we can make smart and intelligent capital allocation decisions, which will, of course, be deleveraging and investing back in the portfolio.
Great. Well, that runs us about out of time. Darren, Greg, thanks so much for joining us.
Appreciate it. Thanks very much.
Thanks so much. Appreciate it.