Equinox Gold Corp. (EQX) Q2 2026 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Ingrid Rico, SVP, Capital Markets for Equinox Gold. Please go ahead.

Thank you, and good morning, everyone. Thank you for taking the time to join the call this morning. Before we begin, I would like to direct everyone to the forward-looking statements on Slide #2. Our remarks today, including responses during the question-and-answer session, may include forward-looking information regarding the company's future performance. Although management believes the statements are based on reasonable assumptions, actual results may differ materially. Please refer to today's cautionary statements and our most recent regulatory filings available on SEDAR+, EDGAR and our website. Today's presentation also includes certain non-IFRS financial measures. Please refer to our MD&A for reconciliations and additional information. Unless otherwise stated, all figures discussed today are in U.S. dollars. Joining me on the call today are Darren Hall, our Chief Executive Officer; Jason Simpson, President; Peter Hardie, Chief Financial Officer; and our operating team, David Schummer and Andrew Cormier. Today, Darren will discuss the quarter and our operational progress. Jason will review our updated outlook and priorities for the second half of the year, and then we'll open the call for questions. The presentation is available on our website, and a replay of today's webcast will be available in the presentation archive. With that, I'll pass the call over to Darren.

Turning to Slide 3, and thanks, Ingrid. Good morning, everyone, and thank you for joining the call today. With the completion of the business combination with Orla Mining, we entered the second half of 2026 as North America's new senior gold producer with meaningfully greater production, stronger cash flow and one of the industry's strongest organic growth pipelines. The financial benefits of the combination will begin to be reflected in our third quarter results. In this call we'll also highlight the continued operational progress we've made across the portfolio, particularly at Greenstone and Valentine. Our focus is now straight forward: disciplined integration, operational execution, and delivering the long-term value this transformational combination has created. Before I discuss the quarter, I'd like to thank our employees across both Equinox and Orla, completing a transaction of this scale while continuing to operate safely is a tremendous accomplishment and appreciate everyone's commitment throughout the process. The combined company is built around a portfolio of high-quality, long-life assets anchored by 3 cornerstone Canadian mines: Greenstone, Musselwhite, and Valentine, supported by one of the strongest organic growth pipelines in the industry. Importantly, this isn't simply about becoming larger. It's about creating a stronger company with greater financial capacity, operating resilience and maintaining a disciplined capital outlook to unlock long-term value creation. That confidence is also reflected in the actions we've taken today. The Board approved a 50% increase to our annual dividend to $0.09 per share. As a larger, more cash-generative business, we believe it is important that our shareholders participate directly in the value we're creating while maintaining the financial flexibility to invest in our growth pipeline and preserve a strong balance sheet. Turning to Slide 4. The second quarter reflected continued improvement across our Canadian operations and increased confidence in our outlook for the balance of the year. Greenstone continued to perform well with the mill effectively achieving nameplate through the second quarter. The team's focus is now on building on that performance while continuing to improve mining rates and grade delivery. At Valentine, we also saw another meaningful step forward. The process plant continued to perform exceptionally well, consistently delivering above nameplate capacity during the quarter. At the same time, improvements in mining performance, ore control and grade reconciliation resulted in significantly better performance compared to the first quarter, and that positive trend has continued into July. July mill feed grades averaged more than 1.8 grams per tonne, providing further evidence that the operational improvement initiatives are delivering the expected results. These improvements reinforce our confidence that the operating initiatives are working, and we expect to see that reflected in stronger production and lower unit costs through the balance of the year. Together with Greenstone's continued ramp-up and the addition of Musselwhite, we expect our Canadian portfolio to deliver higher production, lower unit costs and stronger cash flow through the second half of the year. The transaction also leaves us in a strong financial position. We finished July with approximately $650 million of cash, a net cash position of approximately $214 million and approximately $1.2 billion of available liquidity. That balance sheet gives us the flexibility to execute our growth strategy while maintaining a disciplined approach to capital allocation. Today's 50% dividend increase reflects our confidence in the cash-generating capability of the combined company and our commitment to return value to shareholders. With that, I'll pass the call over to Jason.

Thank you, Darren, and good morning, everyone. Turning to Slide 5. It's a pleasure to be joining you all on today's call. Since the transaction was announced, I've spent considerable time with our operating teams reviewing each asset, the operating plans and the assumptions supporting our outlook for the balance of the year. Based on that work, I'm confident in the assumptions underpinning our updated guidance and comfortable with our ability to deliver it. Our updated guidance reflects 12 months of production from the legacy Equinox Gold operations and 5 months of contribution from Musselwhite and Camino Rojo following the completion of the transaction on July 31. For 2026, we now expect consolidated production of between 870,000 ounces and 920,000 ounces. On a pro forma basis, the combined company would produce approximately 1.1 million ounces of gold. The guidance reflects stronger second half performance from Greenstone and Valentine, together with the 5 months of production from Musselwhite and Camino Rojo. As production increases through the second half, we expect improved fixed cost absorption and lower unit costs. Combined with the addition of Musselwhite and Camino Rojo, that supports our expectation for consolidated total cash costs of $1,600 to $1,700 per ounce and all-in sustaining costs of $1,900 to $2,000 per ounce, with stronger cash generation through the balance of the year. From my perspective, the opportunity over the second half is really about execution. The operating plans are in place. The teams understand the priorities at each site, and our focus is on safely delivering against those plans while maintaining discipline around costs and capital allocation. As Darren mentioned, at Valentine, the process plant continues to perform exceptionally well and has consistently demonstrated throughput above nameplate capacity. The opportunity now is continuing to improve mining performance and grade delivery. The initiatives the team has implemented around selective mining, ore control, grade definition, dilution management and blending are beginning to deliver the expected results. We saw meaningful high-grade reconciliation during the second quarter compared to the first, and that positive trend, as Darren mentioned, continued into July. In July, as indicated earlier, mill feed averaged approximately 1.8 grams per tonne gold, providing further evidence that the operational improvements are transitioning and translating into a stronger mill feed and positioning us well for the second half. There is still work ahead of us, but we are encouraged by the progress we have been seeing. As we continue executing those initiatives, we have been increasing our confidence in our ability to deliver full year guidance and continue realizing the full potential at Valentine. Overall, I'm confident with the operating plans across the combined portfolio and confident in our ability to deliver a stronger second half. Turning to Slide 6. The completion of the Orla transaction fundamentally changes the scale and quality of Equinox Gold. We now have a stronger operating platform, greater financial capability and one of the industry's strongest organic growth pipelines. Our immediate focus needs to be execution. That means delivering on our second half operating plans, achieving our full year production and cost guidance and successfully integrating the combined organization while maintaining the operational momentum we have built. Looking beyond 2026, we have a portfolio of high-quality assets and a pipeline of organic growth opportunities that provides a clear path for long-term value creation. We'll continue advancing those opportunities in a disciplined and measured way, prioritizing the projects that generate the strongest returns while maintaining financial flexibility. We have the assets, the balance sheet and most importantly, the people to deliver on that strategy. Now it's about consistent execution and delivering on our commitments. With that, we'll pass it over to the operator, and we'd be pleased to take your questions.

[Operator Instructions] Our first question is from Wayne Lam with TD Securities.

Yes. Maybe just starting with downtime. The grades were normally nominally higher this quarter, but the mine plan that was released in March calls for average process grades of 2.5 gram through 2028. So just was wondering if you could outline a bit more detail on steps being taken here on the selectivity and the dilution front? And just wondering if that's still a reasonable target or does there need to be a bit of a reset in the reserve grade or expectation at some point as we think ahead to the coming quarters in 2027?

Yes. Wayne, and thanks for the questions, and thanks for TD's support. I'll start with the last part of that question first. From a reserve grade perspective, we're comfortable in the contained metal within the deposit. And that's what we've said quarter-on-quarter for the last couple of quarters. Our challenges have been about reflecting the selectivity that was intimated in the feasibility study or the technical report that we released. And we've made significant improvements quarter-on-quarter to deliver a higher grade above our cutoffs. So the ability to deliver an average rate above an all waste cutoff is solid. We're comfortable with that. And what we saw Q2 over Q1 was a market improvement in our high-grade reconciliation above an elevated cutoff. We improved reconciliation by close to 20% in the quarter, and that was reflected in a stronger grade in the quarter, but more importantly, in July, we saw a 1.8 gram grade. That has continued into August, and it's only early, but we're approaching around a 2-gram grade disc in August month today. If we talk about some of the operating initiatives that we're focused on, I'll throw it over to Dave and just, Dave, do you want to give a little bit of an outline of some of the things we've been focusing on over the last quarter or 2?

Yes. For sure. Thanks, Darren. So we've been applying the software called OREPro 3D, which helps us understand as we've lost the material, how much is displaced and helps us better outline the polygon. And we're also focused intently on improving the Polygon Mining compliance. And that compliance was up in the high 90s this last month, which is a significant improvement over previous. We're focused on dilution across the board, operator training, training our technical people, et cetera. And I believe the results we're seeing are consistent with what I'd expect and expect that to continue through the rest of the year, as Darren mentioned.

And when you start thinking about the longer term, right? I see no need to reset expectations in that space. I mean, we've revised guidance for this year and the revised guidance reflects the performance that we have seen, carried forward for the balance of the year. And I don't think it fully represents the improvements that we have seen and we'll see. We've kind of arguably set the -- arguably a little conservatively as we want to kind of increase the level of confidence in our ability to deliver into expectations for that asset. And the production profile in the back end of the year is 80,000 to 90,000 ounces. So when you annualize that, you're still towards the midpoint of guidance of what would have been a full year guidance. So as we roll into 2027, we're going to continue to see those benefits improve. The realized grade increase will maintain throughput and importantly, the Board just yesterday approved full funds for Valentine, which we -- for the Phase 2, which we disclosed in the release as well. And as we implement or build that expansion, that will take a lot of the issues out of the selectivity issues that we see in the short term until we have that 5 million tonne plant in play. So I think that what we're seeing is typical and normal sort of ramp-up related issues. We were overly aggressive in terms of our selectivity for the start of the year. We're working through those issues. We're improving. We'll continue to, and we're very comfortable and confident with the estimates we've put out there. Jason, anything you'd layer on that, mate?

Yes. I think -- and David, Andrew and I will be down in Newfoundland very shortly to oversee and confirm our confidence in the work that's already been initiated in terms of grade control and selectivity to preferentially feed that high grade. But in my experience with these ramp-ups, this kind of stabilization of the operation, everything from grade control to operating efficiencies of the equipment and so on is normal course in ramping up any project, and that's represented here in Valentine.

And both in the production and the cost. We've basically taken a run rate that we have seen for the year projected it for. So the gains that we've seen, the efficiencies we've seen in the reduction in spend and we have not been factored into and we'll be transparent here is -- the point estimate of our internal estimates going forward is lower than our low end of guidance for costs, right? So we're really trying to set the asset up for delivering to expectations and not disappoint. Wayne, did we cover your question? Is there anything else outstanding in your head?

Yes, thanks. No, that's great. That's a lot of detail. Maybe moving to Greenstone, Nice to see the improvement in the process grades quarter-over-quarter alongside the tonnage getting towards design. Just wondering if you had any commentary on the lag in the recoveries? And then would you be able to give us some color on the timing of the installation of the trommel and expected impact that might have operationally on throughput or recoveries?

Yes, for sure. And I'll start with -- I'll start at the end of the question because I can remember that part, right, and then go backwards. The trommel is still in play here for the end of the year, and we will see the benefit of that before the end of the year. And what that will do, it will take out a lot of the tramp that we're feeding into the plant, which creates unnecessary downtime and also remove and reduces efficiencies within the plant. And that was always envisaged to get us to nameplate. But pleasingly, where we see today, I mean, for the average throughput for Q2, we were just a smidgen under nameplate capacity, were 26,000 tonnes for the quarter. Now for the third quarter, so through -- actually yesterday morning, through the fourth of August, or fifth of August, we were just over nameplate at 28 -- just over 28,000 tonnes a day. So we are -- what we are seeing is all of the activities that Brian and the team have been leading over the last year at Greenstone are truly paying dividends. So we're comfortable that we can deliver into nameplate or exceeding the nameplate without the trommel. So the trommel then positions us well as we head into 2027 to start challenging that installed capacity to maybe 30 or 300,000 tonnes a day. So we're very comfortable with where that sits. We're seeing grades consistent with our expectations in terms of reconciliation with the model. We are still seeing some kind of a -- bit of an overhang here from a recovery perspective. Recoveries in the quarter, around 80% thereabouts. And we are seeing higher levels of arsenopyrite. Dave, do you want to -- or Matt, do you want to give a little bit of color on?

Sure. Yes. On the arsenopyrite, we are seeing -- we're learning more as we mine through the ore body, and we're trying to model better. We're undertaking some efforts to do a sampling campaign to understand the distribution of that arsenopyrite within the ore body, and we'll know more as we go through that in the remainder of '26 and into '27.

So yes, comfortable with where we sit and looking forward. I think that the technical report kind of holistically reasonably represents what we expect to get out of the assets. So there will be some unders and overs as always. But I think with the improved throughput above the nameplate with grade reconciling well, we'll work through the recovery issues. I think we're setting ourselves up to be able to comfortably deliver into those long-term expectations for Greenstone.

Okay. Great. And then maybe just last 1 for Jason. Just curious when the merger was announced, I had posed a question about whether you were coming in to run a larger entity. And you had said, "Let me be clear about the leadership. Darren and I are partnered in this combined company." So just wondering now with Darren stepping aside pretty shortly and some kinks still to be worked out with some of the Equinox assets, I mean you have a pretty successful track record getting back to Torex and with Orla, but just wondering if something had prompted a change in the management structure since our last discussion? And just curious where you're prioritizing your focus as you get into the seat? It just seems like a pretty big portfolio to take over in a very short period of time.

Yes, Wayne, thanks for remembering our last conversation, and I stand by it. Darren and I are absolutely and remain partners in this business. What prompted the change is 2 things. One, internally, as we combine the companies and Ed Chan is working on integration, Dave and Andrew working on operations. At the corporate level, the clarity of who's making the decisions needed to be enhanced. And so Darren and I spoke about this, and we felt that internally for us, it was best to clarify that. Externally, making sure that we understood who is representing the company outside Ed Chan again in Capital Markets and his team as well as myself, will do that. But Darren isn't going anywhere. He's sitting right next to me right now. He will continue to be an adviser to the company. He and I speak every day about the combined company. And frankly, I will be relying upon his support to run this bigger entity, the likes of which is going to be daunting as we operate all these mines and build all these projects. So I will seek his counsel and continue to receive it. We've got a great team at Equinox. The folks out in Newfoundland, our combined operations in Ontario, and that's just speaking about our Canadian operations. So I look forward to the work ahead to run what is a strong company. And I'll need the counsel of people like Darren, like our new Board of Directors that met for the first time yesterday. And so now it's about getting to work and delivering on expectations, and that starts with hitting our numbers.

And Jason, just let me layer on that. It's -- we thought long and hard about this over the last couple of weeks. I mean, this is something that's emerged pretty quickly, but it was through the report and the relationship we developed over the last 6 months as we've been working through this process. And when I looked at what was in front of this organization and the amount of change we've seen within the business, we needed someone who could turn up and say that I'm committed to be here for the next 5 years. And Jason is in that position, and I remain a significant shareholder in that -- in this business. And even though I may not be an executive employee, I'll be with Jason for whatever we need for, whatever period of time, unless I find myself in a position where I'm conflicted to do so. And I don't have any plans to be conflicted. So no, I think that we're -- externally, it probably creates a little bit of discomfort, but we've done it for what we believe is best for the business to ensure there's clarity internal to the business so that all people who deliver the results to you all can be absolutely certain about their future and what the business looks like. And so I think we're having our cake and eat too. So no, I'm very comfortable with the change. And Jason is well positioned, too. He's got a great team around him, and he's got lots of support from folks like myself. So I think we're in a good position, Wayne.

Okay. Great. Best of luck in the months ahead. And Darren, thank you for the partnership over the years and best of luck in retirement.

Yes. Thanks, buddy.

The next question is from Anita Soni with CIBC.

I just had a few more questions on Valentine. I wanted to understand what the assumptions are for -- just from a throughput and grade -- mill feed grade perspective for the guidance at Valentine for this year. So you delivered like 7.7% on the mill throughput. Is that the kind of back half assumption above nameplate and lower grades or whatever the implied grades would be? Or are you still assuming 6,500 tonne per day in the back half?

No. It's reflecting the buoyancy we see in throughput, and it's reflecting a lower grade than anticipated. Now I'll ask Matt to comment on the specifics of, but from memory, I think for the balance of the year, we're probably anticipating a rate about 1.8, 1.85 grams per tonne?

Correct.

And recoveries in that 93%, 94%, which we've seen. And encouragingly, Anita, what we have seen is that we've seen recoveries maintained with significantly higher throughputs, which is fantastic. And so you back into the tonnes to get those ounces. That's kind of the math. Matt, have I missed anything?

No, that's correct. .

Yes. So it truly reflects throughput performance without any further improvements, which we still anticipate there will be as we work through and the team continue to optimize that plant. But it reflects arguably, a somewhat conservative view on metal in terms of being able to deliver into that high-grade cutoff. Again, it's only a -- we're only 6 weeks into the quarter, but we are seeing grades consistent or better than what was fundamentally assumed within the forecast. So I think we're well positioned in that space, Anita.

Okay. So then -- so the 1.8 gram, 1.85 gram, that's not that much above the actual head grade you should be seeing out of the pit, which I believe was about 1.7 gram for the year. So my question, I guess, relates now to the mining rates. The average over the year should have been about 1 point -- sorry, 154,000 tonnes per day, and you're doing about 110,000 right now. So with the -- I guess, with the more I guess, what am I trying to say, less segregation involved and getting to just -- from getting the 1.7 gram to be upgraded to 1.8 gram, 1.85 gram, is that a fair assumption that you'll be basically doing like less segregation than the original mine plan, because I think it called for about 50 million tonnes -- sorry, like almost 5.5 million tonnes of ore versus a mill feed of about 2.5 million tonnes of ore?

Yes, Anita, we'll -- yes, happy to have kind of a real fulsome discussion offline as well. But I guess as I will kind of for the general audience to separate out 2 things, is that what we have seen, we have seen a slower ramp-up in absolute mining, but that's unrelated to the selectivity issues. Regardless of how many tonnes you mine, you want to be as selective as you possibly can. So we're not compromising selectivity for volume, right? Volume will always want to deliver the best possible grade. So no, the grade assumption reflects basically backward-looking performance with some moderate increases in quality around the segregation, but I don't think it really reflects where we will get to. In terms of the absolute volumes, Dave, I mean we're not winding 110,000 tonnes a day now?

No. No, the number is accurate earlier in the year, but now we're in the 140,000, 145,000 tonnes per day range.

Yes. We've had some significant improvements.

All right. Okay. And yes, I guess I was using the word selectivity and meaning, or segregation where your -- you have a certain number of high grade, right, that you can put into the mill. And if your mining rates are behind, then you don't have as much of the higher grade ore to put into the mill, right?

Yes. The biggest bucket you mine, the more you can select from. Absolutely. Yes.

Okay. And then just a similar question on Greenstone for the back half of the year. Can you -- are you assuming throughput rates that are around 27,000 tonne per day and grade similar to what you saw in the first -- sorry, in Q2 and then also in terms of recovery rate? Because I think the recovery rate is probably the big question in correlation to the grade with obviously the higher grade material having a bit more arsenopyrite content to them.

Yes. The short answer is yes. And it's throughputs consistent with the 27,000. It's grades consistent with basically the 1 gram and its recoveries that are consistent with as well. So it's basically taken the last quarter and said, okay, let's just project that forward and any benefits that come from improvements are not reflected in those estimates. And that's what we did, what we did is we kept the floor the same and just lowered the top end range at Greenstone and the worst thing we can do is do a little better than what we said.

Okay. And then last question, I'll get back in the queue. So Los Filos, you made some progress with the communities and got a 3-way agreement there. Could I ask perhaps, Jason, how are we thinking about Los Filos going forward? And what the next -- I mean, obviously, you guys are doing a study, but where does that fit in your capital allocation priorities at this stage?

Yes. Thanks, Anita. And as most of the audience probably knows, I spend a lot of time there building Torex, and I would offer that there's 3 components of your question that we need to focus on. The first component is the agreement that the Equinox team just achieved with the 3 communities there. And obviously, I've been aware and involved in the discussions throughout and feel that, that is absolutely the right approach for working there going forward. So now that the agreements are in place and you have social stability, we can then focus on resuming operations through the heap leach process. But in parallel with that, we need to be planning for the big opportunity at Filos, which is the ounces that we have in resources there. And so we will be updating the study and planning our construction in Guerrero based upon what is available in terms of gold resources. While we're doing that, our technical teams are preparing for that decision point at the Board, we need to resume operations at Los Filos and have it again producing gold. We got approval from the Board yesterday to do exactly that. So we'll begin leaching and in parallel preparing for the future conversation with the Board. And as we recall, in our capital allocation going forward, that Los Filos increase in production out of the heap leach and into a CIL process will occur after the construction of self railroad, the construction of Castle Mountain and our expansions in Mexico will follow in the years to come.

Yes. And the 1 thing I'd layer on that, Jason, it was a good summary, is that with the funds to commence the restart are included in the guidance now because that was not budgeted, and that's in the project pipeline space. There likely will be some metal that falls out before now and the end of the year that's not reflected in any of the production numbers. It's a de minimis level given the 1.1 million ounces of annualized rate that we're producing.

Okay. Actually, I had 1 last question on Valentine and the CapEx. So now includes $50 million to $60 million for the Phase 2 in the back half of the year. But the CapEx guide went up, I think a little bit more than that, I'd say, about $25 million to $35 million by my rough math here. Can you let me know what that extra growth capital at Valentine is going to be attributed to?

Peter will pick that 1 up. Pete, dive.

Yes. I mean essentially, that's the -- we made a change from a jaw crusher to gyratory crusher. And that's the balance that we're in.

Phase 2. I think that was a quick question, Anita?

No. The question was the -- your capital went from -- I believe it was $95 million to $115 million, up to $180 million to $200 million and $50 million to $60 million of that is for the Phase 2. So that still leaves a differential of about $30 million. And I was wondering what that growth capital in 2026 was associated with?

Yes. We'll get back to you on that 1 offline, Anita.

The next question is from Josh Wolfson with RBC.

Continuing along the question that Anita had on CapEx. I noticed that there was some additional spend included for some of the development projects, less core opportunities right now. But $35 million to $40 million at Los Filos for half of the year effectively, and then $30 million to $35 million at Camino Rojo, presumably that's on the sulfides. Should we assume a similar run rate maybe on an annualized basis into 2027, despite some of these development opportunities being longer dated?

Yes. So I'll take the Los Filos part first. It's Peter. The additional capital for Los Filos for the year, keeping in mind that we were on care and maintenance, the -- what we told you about for the year was concerning in the mine on care maintenance. The additional capital that we have there is for the gradual restart of operations. And then we'll inform for next year as we firm up our plan to go forward and then do our 2027 budget. And then sorry, what was the second part of your question?

The Camino Rojo, Peter. I'll take that one. So the Camino Rojo an update we did not include in the original guidance, the portal to hit underground on the sulfides as you recall, Josh. So it includes the last finalization of the heap leach pad expansion. But frankly, there's not a lot of spend left there, but it does include that. And then the $25 million for the portal collar and development underground. So that's what represents the Camino Rojo share. We did not include that in the original Orla guidance, we're now including it in our company at Equinox.

And for clarification on that as well. It's the prudent step forward to get in and start getting a higher level of knowledge with respect to the metallurgy, you get some bulk samples, do that sort of work as part of it. It doesn't preempt a full funds commitment for the project, as Jason alluded to in terms of we've got a clearly defined growth capital project schedule in the next couple of years. This is the continuing and learning of, just like we'll have it at Los Filos, right? There's work that will be spent to be able to progress the understanding, so we can understand what the right size of the facility is. This is exactly the same level of work that's been done at Camino Rojo. And again, as a larger, bolder, stronger organization allows us to be able to take a very methodical and thoughtful approach to those development projects and spend a little bit more money upfront to understand exactly what we're dealing with, so that when we make commitments, we're very, very clear on what we're committing to and can do it with the significantly higher degree of confidence. And that's what those funding's for. So it's a very good move.

And back to Valentine, I understand things are a little bit in flux with the ramp-up. On the grade outlook, I guess, more so as it skews into 2027. Is it fair to assume the disclosures the company has made on mining selectivity challenges and looking to increase throughput to offset that? Is it fair to say that the grades are likely to remain in line with the second half of the year? Or should we still expect an improvement? And then similarly on the unit costs, is there any sort of perspective that could be provided on what our steady-state unit cost and especially given that throughput rates are already very high, why would they decline going forward?

Yes. I guess there's 2 parts. Let's just tackle the grade issue. If we think about grade, in the back half of the year, we will have a higher grade than we did in the front half of the year. That's going to be reflective of improved performance, which will continue into 2027 and to '28. By the end of '28, you've got a doubling of the size of the plant. So the exposure on selectivity becomes less. In terms of the unit costs, ubiquitously across the portfolio, we're seeing tension from a -- just like everyone else has, on fuel prices. It's about $100 an ounce of increase in spend cost across our business with respect to WTI and related costs. At Valentine, it's a little higher. It's probably in the order of closer to probably $200 between volume and price this year. We have seen additional resources that we've added to work through the effectiveness so we can become more efficient. We will see those -- that spend start to trail off through the back end of the year and into 2027. So I think we'll see that those unit costs will come down as a function of efficiency. It will obviously be positively impacted by a denominator increase in terms of more metal, but you'll also see less spend for any volume as a consequence of the team getting better and working at the [ team spend ]. Part of the normal kind of ramp-up process. And arguably, we were probably overly aggressive about the rate at which we would get to that kind of steady state, if you will, when we foresee the 2026 guidance. I mean, Jason, you've been through this before, buddy?

Yes. Very typical ramp-up process where we are trying to resolve various issues and spending a bit more to get through them just to deliver the results. So absolutely consistent as part of the ramp-up process. And as you've articulated clearly and Josh, you know this well, you need to do both, start to reduce the numerator spending, which you will do as your teams get organized, as they get a flow of what they need to be doing, everything from geologists to truck operators. And then once they get better at that, the cost drop and the ounces then follow. In the case of Valentine, of course, achieving a greater grade introduced to the mill before it gets expanded and simultaneously with doing that, we're expanding the mill so that we'll be at that 5 million tonne per year.

The next question is from Mohamed Sidibe with National Bank.

Maybe continuing on Valentine, specifically on the unit costs. And as it relates to the G&A there, I think that's also slightly higher than what we expected in the technical report there. Is that just as a result of more labor hours or more manpower required versus your tech report? And how do you expect that to call it advance over the next, call it, 6 to 12 months outside there?

Yes. Okay, Mohamed, Assalamu Alaikum. Just a -- I think it tails onto the last part of the conversation that Jason and I were having here is that it's a reflection of the on costs associated with supporting the activity that we've seen increasing in terms of mining and those sort of things, it's a direct relationship to. So as those efficiencies come on, you will see the G&A costs go down. Because it's not really G&A, it's site services and support, its camping, it's messing, it's those sort of things that go into it, which is the majority of that tension on that "G&A space." And full disclosure, it's in the order of $10 million for the full year is what it is above what we saw, and that will probably come down to single digits over the course of -- yes, at an annualized rate between now and the end of the year. .

Great. And then maybe at the consolidated level, when I'm looking at your revised all-in sustaining cost guidance there. So could you share what the assumptions on gold price, fuel price you're now using versus what the Equinox stand-alone was, in order to just better understand what that delta is. So that when fuel prices started to pay off, we could see maybe how that can improve?

Yes, on fuel price. Fuel price -- it's Peter, and thanks for the question, Mohamed. Fuel prices, we have assumed about 50% higher across the board, consolidated fuel prices from our original plan and guidance overall. And so as we see -- hopefully, as we think -- we hopefully see things modulate here in the near future. We expect that to return down back to what the original plan was.

And so in short, it's basically reflecting average price year-to-date going forward. And that's probably our best crystal ball, and we will be wrong, right? And hopefully that like everyone that we're wrong to the conservative.

And is that the same for gold? So is that assuming about $4,500 per ounce gold or...

Well, and I guess there's 2 parts to that, right? Gold price, the effect on gold price is only in royalties and those related costs, right? So just to be clear that there's very little of our business that's impacted by gold price, and there's very few decisions we make on a day-to-day basis that are impacted by the gold price, because we're spending capital like it's our own, and we're making the right decisions for the long term. But in terms of the gold price assumption used...

It's very close actually at the current gold price. So you shouldn't see too much tension there.

Yes. So if we see gold go to $6,000 an ounce between now and the end of the year, you will see some additional tension from the royalties and related cost of the [ employment ]. But that will be an easy discussion to have. .

The next question is from Adrian Day with Adrian Day Asset Management.

Yes. I'm sorry, I didn't put myself in queue, so I don't know how that happened. I apologize.

Okay. Adrian. Well, thank you very much for your support anyway, and have a nice day.

And our last question is from Jeremy Hoy with Canaccord Genuity.

With the leadership transition, can we expect to see any other management changes in the near future?

In the release, Jason -- sorry, Jeremy. I was looking at Jason, when I did it. We -- actually, in the highlights of the subsequent events, we talked about the team going forward. And no, I mean, we've set the team, we know who it is, and that was part of again, day 1, and I guess that's a little bit unique in this compared to a lot of transactions. We've come out and we've spent the last 3 months working out who's who in the zoo, if you will. And now we're building out those teams from that down. So no, we're clear on those senior leaders for positions. There's some decisions that need to be made below that. But as we've foreshadowed, we have more than enough work to do to accommodate everyone on both sides of the business. So retention of human capital is really our challenge rather than necessarily working out who shouldn't be here. We see it across the industry. We're blessed by having great teams on both sides and utilizing and those people to the betterment of the product is what our focus is. So no, I'm very comfortable with where we're at, where we're headed. And I think the team is gelling very, very nicely at this point.

Yes, since the beginning, Darren and I've been talking about the combination of these companies and frankly, the combination of that human capital that is so sought after in our industry, what we're -- have been announcing in the recent days and what we'll need to sort through in the future is how we can keep everybody within Equinox Gold and make sure everybody understands what they need to do to contribute to our combined success. And that's the work ahead of us. It's about understanding who's doing what and hopefully, we can retain the majority of that human capital.

Great. The other question I have is a bit of a follow-up on Anita's regarding Los Filos. Post announcement of the merger, you guys secured those community agreements and are moving ahead with restart of operations and studies. When the deal was announced, I asked what the time line was to get to 1.9 million ounces. I believe Jason, the answer was about 5 years. I'm just wondering, with more time examining the portfolio and the opportunities ahead of you, is that still the time line you envision? And I guess what's the level of confidence in that? Can we expect to see some of these projects shifted in terms of where they fit in the pipeline?

Maybe I'll kick it off and then Jason and I can do a Bert and Ernie on this. But the short-term organic growth, as Jason has already talked to, is well defined. We've got Valentine South Railroad and then we'll be in a position middle of next year to make a decision in and around Castle Mountain. In the background, we'll be progressing and doing the work that we need to do in Mexico to be able to surface value from that. And that comes from Camino Rojo underground, right? Or a potential open pit expansion. And that's why we're continuing with the underground portal to get bulk samples to understand metallurgy, which is obviously key to that asset. Los Filos, we're doing the work in the background on scoping level studies to understand the benefit that can come from a larger process plant and what that means. So over the next year or 2, those things will flesh out. But we're very, very comfortable with what we see in terms of that organic growth profile. And if you look at the leverage that we have from the asset base without even considering the Mexico opportunity. It's significant going forward. So no, I think that what we've been talking about for the last couple of months remains. There will be, as always, timing changes as we work through understand. And could there be Sophie's Choices in the future? Yes, absolutely. But it's not going to come from a liquidity or ability to pay. It's going to be from what makes sense from the organization to be able to bolt these things on and realize the full potential of our existing assets. We haven't talked at all about Musselwhite. We haven't talked about the fact that we have 1.5 million tonne a year facility that we're only using 1 million tonne of. And if you look at the opportunity that can be surfaced there, we're not talking about $150 million to $200 million annually of exploration burn and what that will generate in terms of optionality at our existing assets. So there's going to be -- we're going to be spoiled for choices and I think that what we have foreshadowed in the business and position going forward, I think, is a fair representation. But it will change, and I think it will only change for the positive.

Yes. Darren, I'll layer on. Frankly, the business needs to focus on the next 6 months of execution and delivery, but a business this size has to look across the entire portfolio and make sure that we have work progressing everything from exploration, finding more ounces for the future, the projects that you asked the question about -- projects in Mexico that you asked a question about making sure that we're doing the data collection and study work to those assets up in the years to come, which is what we're doing this year and next, so that we're doing the study work. And then, of course, more near term, the 6 months that I talked about, but also advancing the construction starts in Nevada followed by Castle Mountain, the expansion that we just got approved yesterday in Newfoundland. So we, as a larger business, need to focus on all ends of our pipeline to make sure that we are, as Darren likes to say, laying track in front of the train and then making sure that the trains arrive on time. So that this bigger business is now stronger because we have all of those choices that Darren talked about. And in the future, we have to acknowledge that our choices of capital allocation will not be governed by our ability to fund them and will be governed by making sure that we're methodical in our selection of what we build, when to deliver the best value return for investors, as approved by the Board in the years to come.

Yes. It's keeping in mind that the reason we exist is, we're a financial instrument to create shareholder value through share price appreciation. All of our capital allocation decisions were made in that mindset. It won't be growth in growth's sake. It will be about value creation for the people that own the business, which is you all. So no, I appreciate the questions, and I appreciate the support that we have seen in both companies and look forward to that continued support going forward.

I'd like to pass the floor back over to Ingrid Rico.

Thank you, operator. We're almost at the hour. So Etienne and myself will be available and will be answering the questions that came on the webcast. And I'll pass over the call to Darren for his closing remarks.

Yes. Thanks, Ingrid, and thanks again, everyone, on the call. I'd like to thank all of our shareholders for their continued support. Over the coming months, I'll be working closely with Jason who will assume the role of Chief Executive Officer of upon my retirement from Equinox. Leading Equinox has been 1 of the greatest privileges of my career. I'm incredibly proud of the team we have around the table and throughout the business and what we've accomplished in all precursor companies to get us to that point. Every decision that's been made throughout all of those businesses has positioned us with the privilege to be able to build on that basis going forward. So I'm very, very proud of what we've all been able to do and where we're at. And Jason is exceptionally well positioned to lead Equinox through its next phase of growth and value creation. I have complete confidence in Jason and his ability to guide the company forward. And as we foreshadowed, I'll be around and available too, and supporting the initiative as a very interested shareholder, right? So as always, the leadership team are available if you have any further questions. And again, thank you very much for your participation today, and take care and be well. Back to the operator.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.