(Unaudited, expressed in thousands of United States dollars, unless otherwise stated)

Contingencies (note 9(b)(iii))

Subsequent event (note 8(a))

1.    NATURE OF OPERATIONS

Equinox Gold Corp. (the “Company” or “Equinox Gold”) was incorporated under the Business Corporations Act of British Columbia on March 23, 2007. Equinox Gold’s primary listing is on the Toronto Stock Exchange in Canada where its common shares trade under the symbol “EQX”. The Company’s shares also trade on the NYSE American Stock Exchange in the United States under the symbol “EQX”. The Company’s corporate office is at Suite 1501, 700 West Pender Street, Vancouver, British Columbia, Canada, V6C 1G8.

Equinox Gold is a mining company engaged in the operation, acquisition, exploration and development of mineral properties, with a focus on gold.

All of the Company’s principal properties are located in the Americas. The Company’s principal properties and material subsidiaries are wholly owned except for Greenstone Gold Mines LP, which is a joint operation that owns the Greenstone development project (“Greenstone”) in which the Company has a 60% interest.

(a)Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). These unaudited condensed consolidated interim financial statements do not include all of the information required for annual financial statements prepared using International Financial Reporting Standards (“IFRS”) and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022. Except as described in notes 2(b) and 10, the accounting policies applied in the preparation of these unaudited condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2022.

These unaudited condensed consolidated interim financial statements were approved and authorized for issuance by the Board of Directors on August 2, 2023.

(b)Amended IFRS standard effective January 1, 2023

In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities Arising from a Single Transaction which amended IAS 12, Income Taxes (“IAS 12”). Prior to the amendments, IAS 12 contained a recognition exemption whereby deferred income tax assets and liabilities were not recognized for temporary differences arising on initial recognition of assets and liabilities, other than in business combinations, that affect neither accounting nor taxable income. The amendments narrowed the scope of the recognition exemption in IAS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

In accordance with the effective date and transition rules of the amendments, the Company initially applied the amendments to IAS 12 to its consolidated financial statements for the annual reporting period beginning on January 1, 2023. On initial application, the Company recognized an adjustment of $1.3 million to decrease opening retained earnings as at January 1, 2022 and recognized an additional $1.3 million of deferred income tax liabilities for taxable temporary differences associated with reclamation and closure cost provisions and the corresponding reclamation and closure cost assets for which no deferred income tax liabilities were previously recognized. There was no material impact to the Company’s net loss for the three and six months ended June 30, 2023 and 2022.

(c)Amended IFRS standard not yet effective

In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1) which amended IAS 1, Presentation of Financial Statements (“IAS 1”), to clarify the requirements for presenting liabilities in the statement of financial position. The amendments specify that the Company must have the right to defer settlement of a liability for at least 12 months after the reporting period for the liability to be classified as non-current. In addition, the amendments clarify that: (a) the Company’s right to defer settlement must exist at the end of the reporting period; (b) classification is unaffected by management’s intentions or expectations about whether the Company will exercise its right to defer settlement; (c) if the Company’s right to defer settlement is subject to the Company complying with specified conditions, the right exists at the end of the reporting period only if the Company complies with those conditions at the end of the reporting period, even if the lender does not test compliance until a later date; and (d) the term settlement includes the transfer of the Company’s own equity instruments to the counterparty that results in the extinguishment of the liability, except when the settlement of the liability with the Company transferring its own equity instruments is at the option of the counterparty and such option has been classified as an equity instrument, separate from the host liability.

(c)Amended IFRS standard not yet effective (continued)

In October 2022, the IASB issued Non-current Liabilities with Covenants, which amended IAS 1 to clarify that if the Company’s right to defer settlement of a liability for at least 12 months is subject to the Company complying with covenants after the reporting period, those covenants would not affect whether the Company’s right to defer settlement exists at the end of the reporting period for the purposes of classifying a liability as current or non-current. The amendments also increased the disclosure requirement relating to such covenants to include: (i) the nature of the covenants and the date by which the Company must comply with the covenants; (ii) whether the Company would comply with the covenants based on its circumstances at the reporting date; and (iii) whether and how the Company expects to comply with the covenants by the date on which they are contractually required to be tested.

The above amendments are effective for the Company’s annual reporting periods beginning on or after January 1, 2024. The impacts of initial application of the amendments on the Company’s consolidated financial statements will depend on the Company’s right to defer settlement of its liabilities at the end of the reporting period and include increased disclosure in respect of its compliance with related covenants.

(a)Dispositions of Solaris Resources Inc. marketable securities

In January and March 2023, the Company sold its remaining 12.0 million common shares of Solaris Resources Inc. (“Solaris”) held for total proceeds of $53.4 million (C$71.8 million). In connection with the sale of the common shares, the Company transferred the cumulative loss net of tax of $6.6 million on the marketable securities from accumulated other comprehensive loss to retained earnings.

(b)Reclassification of investment in i-80 Gold

On disposition of the Company’s partial interest in i-80 Gold on March 31, 2023 (note 6(a)), the Company’s retained interest in i-80 Gold was reduced to 19.95% and was reclassified from investment in associate to marketable securities measured at fair value through other comprehensive income (“FVOCI”) with changes in fair value recognized in other comprehensive income or loss (“OCI”).

(c)i-80 Gold common shares held in escrow

On May 15, 2023, pursuant to an escrow agreement in respect of the i-80 Gold share purchase warrants issued by the Company in connection with the sale of the i-80 Gold units on March 31, 2023 (note 6(a)), 5.8 million of the i-80 Gold common shares owned by the Company were deposited into an escrow account. The shares will be held in escrow until the earlier of the date on which the escrowed shares are released upon exercise of the i-80 Gold share purchase warrants and the expiry date of the warrants, being March 31, 2024. At June 30, 2023, the fair value of the 5.8 million i-80 Gold common shares held in escrow was $13.1 million.

(d)Change in fair value

During the three and six months ended June 30, 2023, the Company recognized a net loss of $11.3 million and $12.4 million, respectively, on remeasurement of the fair value of its investments in marketable securities, of which a total loss of $11.4 million and $12.5 million, respectively, was recognized in OCI and a gain of $0.1 million and $0.1 million associated with marketable securities measured at fair value through profit or loss (“FVTPL”) was recognized in net income within other income.

(1)    Non-current inventories at June 30, 2023 and December 31, 2022 relate to heap leach ore at the Mesquite and Castle Mountain Mines in the United States.

At June 30, 2023, the Company’s total provision for obsolete and slow-moving supplies inventories was $14.4 million (December 31, 2022 – $14.5 million).

During the three and six months ended June 30, 2023, the Company recognized within cost of sales $6.6 million and $7.1 million, respectively (2022 – $11.6 million and $19.2 million, respectively) in write-downs of inventories to net realizable value, mainly relating to heap leach ore at the Los Filos Mine in Mexico (“Los Filos”).

(1)Additions for the six months ended June 30, 2023 include the following non-cash additions: $29.9 million in additions to right-of-use assets included in plant and equipment, and $2.4 million and $3.4 million of depreciation and depletion capitalized to mineral properties and construction-in-progress, respectively. In addition, $17.3 million of borrowing costs incurred were capitalized to construction-in-progress.

(a)Non-depletable mineral properties

Mineral properties at June 30, 2023 that are currently not subject to depletion amount to $380.8 million and $63.4 million relating to Greenstone and Los Filos, respectively (December 31, 2022 – $371.4 million and $63.4 million, respectively).

(b)Construction-in-progress

During the six months ended June 30, 2023, the Company capitalized $185.3 million of costs, including capitalized borrowing costs of $17.3 million, to construction-in-progress at Greenstone.

At June 30, 2023, the Company’s investment in associate comprised a 34.4% interest in Sandbox Royalties Corp. (“Sandbox”) (December 31, 2022 – 25.3% interest in i-80 Gold and 34.4% interest in Sandbox).

The following table summarizes the changes in the carrying amounts of the Company’s investments in associates during the six months ended June 30, 2023:

(a)Sale of partial interest in i-80 Gold and reclassification of retained interest

On March 31, 2023 (the “Closing Date”), the Company completed the sale of a portion of its interest in i-80 Gold through a private placement sale of 11.6 million units at a price of C$2.76 per unit, with each unit consisting of one common share of i-80 Gold held by the Company and one-half of an i-80 Gold common share purchase warrant, for gross proceeds of $23.6 million (C$32.0 million). Each whole warrant entitles the holder to acquire one common share of i-80 Gold held by the Company at a price of C$3.45 per share for a period of 12 months from the Closing Date. Of the gross proceeds of $23.6 million, $20.5 million was allocated to the common shares sold and $3.1 million was allocated to the warrants issued.

On disposition of the 11.6 million common shares of i-80 Gold, the Company’s interest in i-80 Gold was reduced to 19.95%. As a result, the Company determined it no longer had significant influence over i-80 Gold and accordingly discontinued the use of the equity method to account for its investment. The carrying amount of the Company’s retained interest in i-80 Gold was reclassified from investment in associate to marketable securities measured at FVOCI (note 3(b)). The Company recognized a gain of $34.5 million in other income for the six months ended June 30, 2023 on the sale of its partial interest and the reclassification of its investment in i-80 Gold, calculated as the difference between the fair value of the retained interest of $119.9 million plus proceeds from disposition allocated to the common shares sold of $20.5 million, less transaction costs of $0.8 million, and the carrying amount of the Company’s investment in i-80 Gold of $105.1 million on the date of disposition. The fair value of the retained interest was determined based on the quoted market price of the i-80 Gold common shares on date of disposition of the partial interest.

The amount of proceeds allocated to the warrants issued represents the fair value of the warrants, determined using the Black-Scholes option pricing model, on the Closing Date. The warrants are accounted for as derivative liabilities measured at FVTPL with changes in fair value at the end of each reporting period recognized in net income or loss (note 9(b)(i)).

(a)Bear Creek note receivable

In March 2023, the Company and Bear Creek Mining Corporation (“Bear Creek”) entered into an amending agreement (the “Amending Agreement”) to amend the terms of the note receivable from Bear Creek received as partial consideration for the sale of the Company’s Mercedes Mine in Mexico (“Mercedes”) to Bear Creek in April 2022 (the “Bear Creek Note”). Under the amended terms, the Company is to receive monthly repayments of $0.7 million commencing on March 3, 2023 until February 28, 2024. Commencing on March 31, 2024, the Company is to receive monthly repayments equal to the greater of 50% of Bear Creek’s monthly free cash flows, calculated as consolidated revenue, less operating expenditures, capital expenditures, taxes paid, reclamation expenditures, metal stream obligations, scheduled debt service payments, and changes in consolidated working capital, and $0.7 million. Any remaining outstanding principal and accrued interest are due on October 21, 2024. The amendment did not have a material impact to the carrying amount of the Bear Creek Note.

In addition to the amended terms of the Bear Creek Note, the Amending Agreement provided for the Company to receive 2.8 million common shares of Bear Creek upon regulatory approval. The Bear Creek shares receivable were accounted for as current derivative assets measured at FVTPL with a fair value of $1.4 million on initial recognition. At June 30, 2023, the fair value of the Bear Creek shares receivable was $1.1 million (note 9(a)).

During the three and six months ended June 30, 2023, the Company recognized an impairment loss of $3.4 million in respect of the Bear Creek Note within other income (2022 – nil). At June 30, 2023, the carrying amount of the Bear Creek Note was $21.7 million, of which $20.0 million is included in other non-current assets and $1.7 million, representing the amount the Company expects to realize within twelve months after the reporting period, is included in trade and other receivables (December 31, 2022 – $25.3 million, of which $19.9 million is included in other non-current assets and $5.4 million is included in trade and other receivables).

(b)Investment in PGI

During the three and six months ended June 30, 2023, the Company recognized a loss of $2.3 million in OCI on remeasurement of the fair value of its investment in PGI. At June 30, 2023, the Company’s investment in PGI was nil (December 31, 2022 – $2.3 million).

The following is a reconciliation of the changes in the Company’s loans and borrowings balance during the six months ended June 30, 2023 and 2022 to cash flows arising from financing activities:

(a)Revolving Facility

On February 17, 2023, the Company entered into an amending agreement with its syndicate of lenders to amend certain of the financial covenants under its revolving credit facility (the “Revolving Facility”). In connection with the amendment, the interest rate margins applicable to amounts drawn on the Revolving Facility of 2.25% to 3.50%, based on the Company’s total net leverage ratio, were increased to 2.50% to 4.50%. Effective February 17, 2023, amounts drawn under the Revolving Facility are subject to variable interest rates at the applicable term rate based on the Secured Overnight Financing Rate plus an applicable margin of 2.50% to 4.50%, based on the Company’s total net leverage ratio, and a credit spread adjustment of 0.10% to 0.25%, based on the interest period.

On amendment, the Company recognized a modification loss of $4.3 million in other income to reflect the adjusted amortized cost of the Revolving Facility, calculated as the present value of the modified contractual cash flows discounted using the original weighted average effective interest rate (“EIR”). Transaction costs incurred relating to the amendment of $1.5 million are being amortized over the remaining term of the Revolving Facility.

At June 30, 2023, there was $127.5 million undrawn on the Revolving Facility.

The Revolving Facility is secured by a first-ranking security interest over all present and future property and assets of the Company and its material subsidiaries, and the Company’s present and future equity interests in Greenstone. The Revolving Facility is subject to standard conditions and covenants, including maintenance of a debt service coverage ratio, leverage ratio, minimum tangible net worth of $550 million and minimum liquidity of $50 million. At June 30, 2023, the Company was in compliance with these covenants.

On August 1, 2023, the Company drew down $127.0 million on its Revolving Facility.

(b)Convertible Notes

The 2019 and 2020 Convertible Notes, which mature in April 2024 and March 2025, respectively, are secured by a second ranking security interest over all present and future assets of the Company and its material subsidiaries, and the Company’s present and future equity interests in Greenstone, and are subordinate to the Revolving Facility. The 2019 and 2020 Convertible Notes are subject to standard conditions and covenants, including maintenance of certain debt to earnings ratios. At June 30, 2023, the Company was in compliance with these covenants.

(a)Derivative assets

The following is a summary of the Company’s derivative assets measured at FVTPL as at June 30, 2023 and December 31, 2022:

(1)    Included in other non-current assets.

(i)Foreign exchange contracts

At June 30, 2023, in connection with the Company’s foreign currency exchange risk management program to reduce its exposure to fluctuations in the value of the Brazilian Réal (“BRL” or “R$”), the Mexican Peso (“MXN”) and the Canadian Dollar (“CAD”) against the US dollar (“USD”), the Company had in place USD:BRL, USD:MXN and USD:CAD put and call options with the following notional amounts, weighted average rates and maturity dates:

(1)    USD notional amount calculated as the CAD notional amount translated using the USD:CAD spot exchange rate at June 30, 2023.

At June 30, 2023, the Company also had in place forward contracts to purchase CAD at a USD:CAD fixed foreign exchange rate of 1.36 for a USD notional amount of $1.5 million per month to August 2023.

The foreign exchange contracts have not been designated as hedges and are measured at fair value, determined based on forward foreign exchange rates, at the end of each reporting period with changes in fair value recognized in other income or expense.

The following table summarizes the changes in the carrying amounts of the outstanding foreign exchange contracts during the three and six months ended June 30, 2023 and 2022:

(a)Derivative assets (continued)

(i)Foreign exchange contracts (continued)

The fair value of the outstanding foreign exchange contracts at June 30, 2023 was a net asset of $31.5 million (December 31, 2022 – net asset of $4.7 million) which was presented as follows:

(ii)Gold contracts

On January 31, 2023, the Company entered into gold collar contracts with a put strike price of $1,900 per ounce and an average call strike price of $2,065 per ounce, for 10,644 ounces per month from February 2023 to March 2024. On April 4, 2023, the Company entered into a gold collar contract with a put strike price of $1,950 per ounce and a call strike price of $2,250 per ounce, for 3,050 ounces per month from April 2023 to March 2024.

On March 24, 2023 and June 23, 2023, concurrent with the gold sale prepayment transactions entered into with a syndicate of its existing lenders (note 10), the Company entered into financial swap agreements for gold bullion whereby the Company will receive $2,170 and $2,109 per ounce in exchange for paying the spot price for 1,290.25 and 263.5 ounces per month, respectively, from October 2024 to July 2026.

The following table summarizes the changes in the carrying amounts of the outstanding gold contracts during the three and six months ended June 30, 2023 and 2022:

The fair value of the outstanding gold contracts at June 30, 2023 was a net asset of $2.5 million (December 31, 2022 – nil) which was presented as follows:

(a)Derivative assets (continued)

(iii)Solaris warrants

On March 27, 2023, the Company exercised the remaining 7,500,000 warrants to purchase 7,500,000 common shares of Solaris at an exercise price of C$1.20 per share for total consideration of $6.7 million. The total investment of $31.7 million, which includes the carrying amount of the warrants of $25.0 million derecognized on exercise, was recognized as marketable securities measured at FVOCI.

The following table summarizes the changes in the carrying amounts of the outstanding Solaris warrants during the three and six months ended June 30, 2023 and 2022:

(b)Derivative liabilities

The following is a summary of the Company’s derivative liabilities at June 30, 2023 and December 31, 2022:

(i)i-80 Gold warrant liability

On March 31, 2023, in connection with the sale of the Company’s partial interest in i-80 Gold, the Company issued 5.8 million i-80 Gold share purchase warrants to the buyer (note 6(a)). Each warrant is exercisable into one common share of i-80 Gold held by the Company at a price of C$3.45 per share until March 31, 2024. The warrants are accounted for as current derivative liabilities measured at FVTPL. During the three and six months ended June 30, 2023, the Company recognized a gain of $1.5 million on revaluation of the derivative liability in other income. The fair value of the i-80 Gold warrants at June 30, 2023 of $1.7 million was determined using the Black Scholes option pricing model with the following weighted average inputs:

(b)Derivative liabilities (continued)

(ii)Power purchase agreement

In August 2022, the Company entered into a power purchase agreement for the delivery of 14.6 megawatts (“MW”) of power per hour to its Santa Luz Mine in Brazil (“Santa Luz”) at fixed prices, ranging from R$166.0 to R$252.0 per MW, calculated based on a pre-determined formula which includes adjustments for inflation over a period of 10 years commencing in January 2023. At contract inception, Management accounted for the agreement as an executory contract on the basis that the contract was held for the purpose of the receipt of a non-financial item in accordance with the Company’s expected power usage requirements at Santa Luz over the contract term. Effective April 1, 2023, Management determined that, based on actual consumption being lower than expected and revised estimates of expected power usage requirements at Santa Luz over the contract term, the power purchase agreement no longer met the criteria to be considered held for the purpose of the receipt of a non-financial item in accordance with the Company’s usage requirements. Accordingly, the Company recognized the contract as a derivative liability measured at fair value, calculated as the net present value of the expected future cash flows based on contractual and projected future energy prices using a discount rate that reflects the time value of money and risks associated with the liability, with a corresponding loss within other income (expense). At June 30, 2023, the fair value of the power purchase derivative liability and the total loss recognized within other income in respect of the derivative liability during the three and six months ended June 30, 2023 was $7.2 million.

(iii)Contingent consideration – Greenstone

As part of the consideration for the Company’s acquisition of an additional 10% interest in Greenstone in April 2021, the Company assumed a contingent payment obligation to deliver approximately 2,200 ounces of refined gold, the cash equivalent value of such refined gold, or a combination thereof, after each production milestone of 250,000 ounces, 500,000 ounces and 700,000 ounces from Greenstone. The fair values of the contingent consideration derivative liability at June 30, 2023 and December 31, 2022 were determined based on the net present value of the projected cash outflows associated with the contingent payments at the milestone dates using a market-based discount rate that reflects the risk associated with the delivery of the contingent consideration. During the three and six months ended June 30, 2023, the Company recognized a loss of $0.1 million and $1.2 million, respectively (2022 – gain of $0.1 million and loss of $0.8 million, respectively) on revaluation of the derivative liability in other income (expense). 

On March 24, 2023, the Company entered into gold sale prepay transactions with a syndicate of its existing lenders, whereby the Company received net proceeds of $139.5 million, representing upfront cash prepayments of $140.1 million less transaction costs incurred of $0.6 million, in exchange for delivering to the lenders 3,605 ounces of gold per month from October 2024 through July 2026 (the “Delivery Period”) for a total of 79,310 ounces. On June 23, 2023, the Company entered into an additional gold sale prepay transaction with an existing lender whereby the Company received an upfront cash prepayment of $9.9 million in exchange for delivering to the lender 263.5 ounces of gold per month during the Delivery Period for a total of 5,797 ounces. These transactions are referred to collectively as the “Gold Prepay Transactions”. Gold deliveries can be settled by production from any of the Company’s operating mines.

The Gold Prepay Transactions have been accounted for as contracts within the scope of IFRS 15, Revenue from Contracts with Customers, whereby the cash prepayments have been recognized as deferred revenue in the consolidated statement of financial position and will be recognized as revenue based on the cash selling price in accordance with the contracts in the consolidated statement of income (loss) when gold deliveries are made. Of the total cash prepayments of $150.0 million, $90.1 million was made on a fixed price basis of $2,170 per ounce of gold. The remaining $59.9 million of cash prepayments was made on a spot price basis, whereby if the spot price on delivery of the gold ounces exceeds or is less than $2,170 per ounce with respect to $50.0 million of the prepayments and $2,109 per ounce with respect to $9.9 million of the prepayments (the “Fixed Amount”), the Company will receive or pay in cash the difference between the spot price and the Fixed Amount, respectively, with a corresponding adjustment to revenue when the gold is delivered.

Concurrently with execution of the Gold Prepay Transactions, the Company entered into financial swap agreements which fix the gold price relating to the $50.0 million and $9.9 million prepayments at $2,170 and $2,109 per ounce, respectively. The financial swaps are accounted for as derivatives measured at fair value, determined based on forward gold prices, at the end of each reporting period with changes in fair value recognized in other income or expense (note 9(a)(ii)).

During the three and six months ended June 30, 2023, the Company recognized finance expense of $2.9 million relating to the financing component contained in the Gold Prepay Transactions, based on the weighted average discount rate implied in the contracts of 8.0%. At June 30, 2023, the carrying amount of the deferred revenue was $152.9 million.

(a) Lease liabilities

In January 2023, the Company entered into lease agreements for the use of mining and operational equipment at the RDM Mine in Brazil. In connection with the leases, the Company recognized additions of $18.0 million to right-of-use assets with a corresponding increase of $8.2 million to current lease liabilities, included in other current liabilities, and $9.8 million to non-current lease liabilities. In accordance with the terms of the leases, the Company will make fixed monthly payments of $0.8 million over the 24-month terms ending in January 2025.

(a)Share issuances

On November 21, 2022, the Company filed a prospectus supplement to its short form base shelf prospectus pursuant to which the Company may, at its discretion and from time-to-time, sell common shares of the Company for aggregate gross proceeds of up to $100 million (the “Offered Shares”). Concurrently, the Company entered into an equity distribution agreement providing for an at-the-market equity offering program (the “ATM Program”) pursuant to which the Company may sell the Offered Shares through or to the agents at prices to be determined based on market conditions at the time of sale (the “Equity Distribution Agreement”). The ATM Program is effective until December 21, 2024 unless terminated earlier by the Company in accordance with the Equity Distribution Agreement.

During the three months ended March 31, 2023, the Company issued 4,369,615 common shares under the ATM Program at a weighted average share price of $3.88 per common share for total gross proceeds of $16.9 million. Transaction costs incurred of $0.6 million are presented as a reduction to share capital. No shares were issued under the ATM Program during the three months ended June 30, 2023.

In addition to the common shares issued under the ATM Program, the Company issued 1.2 million common shares during the six months ended June 30, 2023 on exercise of warrants and stock options and settlement of restricted share units (“RSUs”) and restricted share units with performance-based vesting conditions (“pRSUs”) (2022 – 2.6 million). The average exercise price of warrants and stock options exercised during the six months ended June 30, 2023 were C$5.30 and C$5.07, respectively (2022 – C$10.42 and C$4.14, respectively).

(b)Share-based compensation plans

Equity-settled restricted share units

During the six months ended June 30, 2023, the Company granted 1.6 million equity-settled RSUs to directors, officers and employees and 2.3 million equity-settled pRSUs to officers and employees with a weighted average grant date fair value of $4.47. The RSUs granted vest over a period of three years. Of the total number of equity-settled pRSUs granted during the six months ended June 30, 2023, 0.5 million are subject to a multiplier of 0% to 200% of the number of units granted based on the Company’s total shareholder return as compared to the S&P Global Gold Index over a three-year vesting period. The remaining 1.8 million pRSUs are subject to a multiplier of 0% to 125% of the number of units granted based on the achievement of certain non-market conditions, including the completion of construction of the Greenstone Mine, and have a vesting date of December 31, 2025.

Share-based compensation expense related to the RSUs, based on the grant date fair value, is recognized over the vesting period with the cumulative amount recognized adjusted to reflect the number of RSUs expected to vest at each reporting date. Share-based compensation expense related to the pRSUs that vest based on a market condition is recognized over the vesting period based on the grant date fair value of the award. Share-based compensation expense related to the pRSUs that vest based on non-market conditions is recognized over the vesting period with the cumulative amount recognized adjusted at the end of each reporting period to reflect the change, if any, in the number of pRSUs expected to vest based on expected performance.

Cash-settled RSUs and pRSUs

During the six months ended June 30, 2023, the Company granted 0.9 million cash-settled RSUs and 0.6 million cash-settled pRSUs to certain employees with a weighted average grant date fair value of $4.42. The RSUs granted vest over a period of three years. Of the total number of cash-settled pRSUs granted during the six months ended June 30, 2023, 0.1 million are subject to a multiplier of 0% to 200% of the number of units granted based on the Company’s total shareholder return as compared to the S&P Global Gold Index over the three-year vesting period. The remaining 0.6 million pRSUs are subject to a multiplier of 0% to 125% of the number of units granted based on the achievement of certain non-market conditions, including the completion of construction of the Greenstone Mine, and have a vesting date of December 31, 2025.

The fair values of the cash-settled RSUs and pRSUs are recognized as share-based compensation expense over the vesting period with a corresponding increase to liabilities. The liabilities are remeasured at the end of each reporting period and at the date of settlement, based on the current quoted market price of the Company’s common shares and the number of RSUs and pRSUs expected to vest, with any changes in fair value recognized in share-based compensation in net income or loss.

Operating expense during the three and six months ended June 30, 2023 and 2022 consists of the following expenses by nature:

(1)    Total salaries and employee benefits, excluding share-based compensation, for the three and six months ended June 30, 2023 including amounts recognized within care and maintenance expense, exploration expense and general and administrative expense, were $44.3 million and $84.5 million, respectively (2022 – $39.4 million and $74.8 million, respectively).

General and administration expense during the three and six months ended June 30, 2023 and 2022 consists of the following expenses by nature:

Other income (expense) during the three and six months ended June 30, 2023 and 2022 consists of the following:

(a)Write-off of receivables from PGI

At June 30, 2023, due to operational challenges at the Pilar Mine (“Pilar”) which the Company sold to PGI in April 2021, the Company recognized an impairment loss of $9.9 million to write off the outstanding gross carrying amount of the note receivable it recognized as partial consideration for the sale of Pilar and the associated loss allowance for expected credit losses previously recognized.

The calculations of basic and diluted net income (loss) per share (“EPS”) for the three and six months ended June 30, 2023 and 2022 were as follows:

Operating results of operating segments are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess performance. The Company considers each of its mine sites as a reportable operating segment. The following tables present significant information about the Company’s reportable operating segments as reported to the Company’s chief operating decision maker:

(1)Segment information for the three months ended June 30, 2022 includes the results of Mercedes, which was sold on April 21, 2022.

(2)     The first gold pour occurred at Santa Luz during the three months ended March 31, 2022. Based on the level of production achieved, the Company assessed and determined that Santa Luz was operating as intended by management on September 30, 2022. Depreciation and depletion of capitalized costs at Santa Luz commenced on October 1, 2022.

(1)Segment information for the six months ended June 30, 2022 includes the results of Mercedes, which was sold on April 21, 2022.

(2)     The first gold pour occurred at Santa Luz during the three months ended March 31, 2022. Based on the level of production achieved, the Company assessed and determined that Santa Luz was operating as intended by management on September 30, 2022. Depreciation and depletion of capitalized costs at Santa Luz commenced on October 1, 2022.

(1)Corporate assets at June 30, 2023 includes the Company’s investment in Sandbox (December 31, 2022 – investments in i-80 Gold and Sandbox) (note 6).

(1)Includes accrued expenditures and non-cash additions.

(2)Capital expenditures for the six months ended June 30, 2022 include capital expenditures at Mercedes, which was sold on April 21, 2022.

The changes in non-cash working capital during the three and six months ended June 30, 2023 and 2022 were as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy categorizes inputs to valuation techniques used in measuring fair value into the following three levels:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly, such as prices, or indirectly (derived from prices).

Level 3 – unobservable inputs for which market data are not available.

(a)Financial assets and financial liabilities measured at fair value

The fair values of the Company’s financial assets and financial liabilities that are measured at fair value in the consolidated statement of financial position and the levels in the fair value hierarchy into which the inputs to the valuation techniques used to measure the fair values are categorized are as follows:

(1)Marketable securities and other financial assets are principally measured at FVOCI.

(2)Includes current and non-current derivatives (note 9).

(3)The fair values of marketable securities and certain derivative assets are based on the quoted market price of the underlying securities.

(4)The fair values of certain derivative assets and certain derivative liabilities are measured using Level 2 inputs. The fair values of the Company’s foreign currency contracts are based on forward foreign exchange rates, and the fair values of the Company’s gold contracts are based on forward metal prices. The fair values of the i-80 Gold warrant liability (December 31, 2022 – investments in Solaris warrants and Equinox Gold warrant liability) are determined using the Black-Scholes option pricing model that uses a combination of quoted market prices and market-derived inputs such as expected volatility.

(5)The fair value of the Company’s power purchase agreement at Santa Luz is calculated as the net present value of the expected future cash flows based on contractual and projected future energy prices discounted using a market interest rate that reflects the risks associated with the liability. The fair value of the contingent consideration derivative liability relating to Greenstone is calculated as the present value of projected future cash flows using a market interest rate that reflects the risk associated with the delivery of the contingent consideration. The projected cash flows are affected by assumptions related to the achievement of production milestones.

There were no amounts transferred between levels of the fair value hierarchy during the three and six months ended June 30, 2023.

(b)Financial assets and financial liabilities not already measured at fair value

At June 30, 2023, the carrying amounts of the Company’s cash and cash equivalents, trade and other receivables, restricted cash, accounts payable and accrued liabilities, current portion of loans and borrowings and other current financial liabilities (December 31, 2022 – cash and cash equivalents, trade and other receivables, restricted cash, accounts payable and accrued liabilities, and other current financial liabilities) approximate their fair values due to the short-term nature of the instruments.

The fair values of the Company’s other financial assets and financial liabilities, excluding lease liabilities, that are not measured at fair value in the consolidated statement of financial position as compared to the carrying amounts were as follows:

(1)The fair values of non-current receivables from sales of the Company’s non-core assets (note 7) are calculated as the present value of expected future cash flows based on expected amounts and timing of the future cash flows discounted using a market rate of interest for similar instruments.

(2)The fair value of the Revolving Facility (note 8(a)) is calculated as the present value of future cash flows based on the contractual cash flows discounted using a market rate of interest for similar instruments.

(3)The fair value of the non-current Convertible Notes (note 8(b)) at June 30, 2023 and December 31, 2022 represents the fair value of the 2020 Convertible Notes and the fair values of the 2019 and 2020 Convertible Notes, respectively. The fair value of the 2020 Convertible Notes at June 30, 2023 of $137.8 million (December 31, 2022 – $135.0 million) represents the fair value of the debt component of $124.5 million (December 31, 2022 – $130.0 million) and the fair value of the equity component of $13.3 million (December 31, 2022 – $5.0 million). The fair value of the 2019 Convertible Notes at December 31, 2022 of $146.4 million represents the fair value of the debt component of $134.9 million and the fair value of the equity component of $11.5 million. The fair value of the debt component is calculated as the present value of future cash flows based on the contractual cash flows discounted using a market rate of interest for similar instruments.

(Expressed in United States Dollars, unless otherwise stated)

This Management’s Discussion and Analysis (“MD&A”) of the financial position and results of operations for Equinox Gold Corp. (the “Company” or “Equinox Gold”) should be read in conjunction with the audited consolidated financial statements of the Company as at and for the year ended December 31, 2022 and the unaudited condensed consolidated interim financial statements of the Company for the three and six months ended June 30, 2023 and the related notes thereto, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. For further information on the Company, reference should be made to its public filings on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

This MD&A is prepared by management and approved by the Board of Directors as of August 2, 2023. This discussion covers the three and six months ended June 30, 2023 (“Q2 2023” or the “Quarter” and “H1 2023”) and the subsequent period up to the date of issuance of this MD&A. All dollar amounts are in United States (“US”) dollars, except where otherwise noted.

This MD&A contains forward-looking statements. Readers are cautioned as to the risks and uncertainties related to the forward-looking statements, the risks and uncertainties associated with investing in the Company’s securities, and the risks and uncertainties associated with technical and scientific information under National Instrument 43-101 (“NI 43-101”) concerning the Company’s material properties, including information about mineral reserves and resources.

Throughout this MD&A, cash costs, cash costs per ounce (“oz”) sold, all-in sustaining costs (“AISC”), AISC per oz sold, AISC contribution margin, adjusted net income, adjusted earnings per share (“EPS”), mine-site free cash flow, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), net debt, and sustaining capital expenditures are non-IFRS financial measures with no standard meaning under IFRS. Non-IFRS measures are further discussed in the Non-IFRS Measures section of this MD&A.

Throughout this MD&A, the operational and financial results of the Mercedes Mine (“Mercedes”) are included for the period through to April 21, 2022, when Mercedes was sold.