0001279569-21-000336.txt : 20210322 0001279569-21-000336.hdr.sgml : 20210322 20210319210402 ACCESSION NUMBER: 0001279569-21-000336 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20201231 FILED AS OF DATE: 20210322 DATE AS OF CHANGE: 20210319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Equinox Gold Corp. CENTRAL INDEX KEY: 0001756607 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-39038 FILM NUMBER: 21759649 BUSINESS ADDRESS: STREET 1: 700 WEST PENDER ST., SUITE 1501 CITY: VANCOUVER STATE: A1 ZIP: V6C 1G8 BUSINESS PHONE: 604-558-0560 MAIL ADDRESS: STREET 1: 700 WEST PENDER ST., SUITE 1501 CITY: VANCOUVER STATE: A1 ZIP: V6C 1G8 6-K 1 equinox6k.htm FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
or 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2021.

Commission File Number 001-39038

EQUINOX GOLD CORP.

(Translation of registrant’s name into English)

700 West Pender Street, Suite 1501

Vancouver, British Columbia

V6C 1G8

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F

Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EQUINOX GOLD CORP.


Date: March 19, 2021	/s/ Susan Toews
	Name:	Susan Toews
	Title:	General Counsel

INDEX TO EXHIBITS

99.1	Consolidated Financial Statements for the years ended December 31, 2020 and 2019
99.2	Management’s Discussion and Analysis for the three months and year ended December 31, 2020

EX-99.1 2 ex991.htm 2020 ANNUAL FINANCIAL STATEMENTS

EXHIBIT 99.1

Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

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

Management’s Responsibility for Financial Reporting

The accompanying consolidated financial statements of Equinox Gold Corp. and subsidiaries (“Equinox Gold Corp.” or the “Company”) and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that in the consolidated financial statements.

Equinox Gold Corp. maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis, assurance that the financial information is relevant, reliable and accurate and that the Company’s assets are appropriately accounted for and adequately safeguarded. The Company’s internal control over financial reporting as of December 31, 2020, is based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements. The Board carries out this responsibility principally through its Audit Committee (“Committee”).

The Audit Committee is appointed by the Board, and all of its members are independent directors. The Committee meets at least four times a year with management, as well as the external auditors, to discuss internal controls over financial reporting, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to review the quarterly and the annual consolidated financial statements, management’s discussion and analysis and the external auditors’ reports. The Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance to the shareholders. The Committee also considers, for review by the Board and approval by the shareholders, the engagement or reappointment of the external auditors.

The consolidated financial statements have been audited by KPMG LLP, an independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. KPMG LLP has full and free access to the Audit Committee.

/s/ Christian Milau	/s/ Peter Hardie

Christian Milau	Peter Hardie
Chief Executive Officer	Chief Financial Officer

March 19, 2021

KPMG LLP

Chartered Professional Accountants

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Internet www.kpmg.ca

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Equinox Gold Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Equinox Gold Corp. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 19, 2021 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

© 2021 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Equinox Gold Corp.
Page 2

Critical Audit Matter

The critical audit matter communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of the mineral properties acquired as part of the Leagold Mining Corporation acquisition

As discussed in Notes 5 and 9 to the consolidated financial statements, on March 10, 2020 the Company acquired 100% of the issued and outstanding shares of Leagold Mining Corporation (Leagold) with an acquisition date fair value of $764,083 thousand. The transaction was accounted for as a business combination. In allocating the purchase consideration to the acquired assets and liabilities, $909,715 thousand was allocated to mineral properties. To determine the fair value of mineral properties, the Company used a discounted cash flow approach.

We identified the evaluation of the fair value of mineral properties acquired in the Leagold acquisition as a critical audit matter. Significant auditor judgment was required because there was a high degree of measurement uncertainty associated with the key inputs to the discounted cash flow model, which included future gold prices, expected future production costs and capital expenditures, discount rates and the estimated quantities of mineral reserves and resources and the expected life of the mines.

The following are the primary procedures we performed to address this critical audit matter. We compared the expected future production costs and capital expenditures in the discounted cash flow models to third party technical reports and to actual historical costs incurred. We evaluated the Company’s estimate of mineral reserves and resources by comparing the estimates to third party technical reports and actual historical production. We evaluated the competence, capabilities, and objectivity of the qualified persons responsible for the estimates of the mineral reserves and resources, and the expected life of the mines. We involved valuation professionals with specialized skills and knowledge, who assisted in:

- Evaluating the future gold prices used in the discounted cash flow models by comparing them to third-party data; and

- Evaluating the discount rates used in the discounted cash flow models by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities.

/s/ KPMG LLP

Chartered Professional Accountants

We have served as the Company’s auditor since 2016.

Vancouver, Canada
March 19, 2021

KPMG LLP

Chartered Professional Accountants

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Internet www.kpmg.ca

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Equinox Gold Corp.:

Opinion on Internal Control Over Financial Reporting

We have audited Equinox Gold Corp.’s (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2020 and 2019, the related consolidated statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated March 19, 2021 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness related to ineffective controls over the purchase price accounting related to the Leagold Mining Corporation acquisition. Specifically, the Company did not (i) identify and deploy control activities through policies that establish expectations and procedures that put policies into action, and (ii) internally communicate information, including objectives and responsibilities for internal control, necessary to support the function of internal control. As a result, there was inadequate control over the determination of the fair value of acquired assets and over the resulting deferred income tax liabilities recognized, as well as inadequate documentation over such controls. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

The Company acquired Leagold Mining Corporation during 2020, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, Leagold Mining Corporation’s internal control over financial reporting associated with total revenues of $360.7 million, net income of $21.8 million, total current assets of $326.5 million, total non-current assets of $1,314.6 million, total current liabilities of $80.8 million and total non-current liabilities of $317.0 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Leagold Mining Corporation.

Equinox Gold Corp.
Page 2

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Discussion Analysis under the heading “Management’s Report on Internal Controls Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada
March 19, 2021

Consolidated Statements of Financial Position

As at December 31, 2020 and 2019

(Expressed in thousands of United States dollars)

	Note		2020			2019

Assets

Current assets
Cash and cash equivalents			$	344,926		$	67,716
Restricted cash - current				1,206			607
Trade and other receivables		6		55,872			27,390
Inventory		7		208,290			46,262
Other current assets				35,730			6,681
				646,024			148,656
Non-current assets
Restricted cash				2,004			14,678
Inventory		7		130,888			141,578
Investment in associate		8		22,287			7,162
Mineral properties, plant and equipment		9		1,843,404			497,944
Exploration and evaluation assets				13,750			13,750
Other assets				13,474			15,582
Total assets			$	2,671,831		$	839,350

Liabilities and Equity

Current liabilities
Accounts payable and accrued liabilities		10	$	130,543		$	67,204
Current portion of loans and borrowings		11		13,333			61,574
Derivative liabilities - current		12		63,993			—
Other current liabilities				14,794			3,145
				222,663			131,923
Non-current liabilities
Loans and borrowings		11		531,908			202,475
Derivative liabilities		12		90,573			56,146
Reclamation obligations		13		117,103			29,885
Other long-term liabilities		14		32,769			5,150
Deferred tax liabilities		22		229,860			10,712

Total liabilities				1,224,876			436,291

Shareholders’ equity
Share capital		16		1,518,042			505,686
Reserves				38,779			27,959
Deficit				(109,866	)		(130,586	)

Total equity				1,446,955			403,059
Total liabilities and equity			$	2,671,831		$	839,350

Commitments and contingencies (notes 9 and 30)
Subsequent events (note 16(b) and 31)

The accompanying notes form an integral part of these consolidated financial statements.

Approved on behalf of the Board of Directors

“Ross Beaty”		“Lenard Boggio”
Director		Director

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

For the years ended December 31, 2020 and 2019

(Expressed in thousands of United States dollars, except share and per share amounts)

	Note		2020			2019

Revenue		17	$	842,507		$	281,697
Operating expenses		18		(422,261	)		(159,198	)
Depreciation and depletion				(131,632	)		(38,645	)
Earnings from mine operations				288,614			83,854

Care and maintenance		19		(64,995	)		—
Exploration				(11,840	)		(8,754	)
General and administration		20		(40,392	)		(19,976	)
Income from operations				171,387			55,124

Finance expense				(39,751	)		(17,537	)
Finance income				1,819			1,950
Other expense		21		(91,924	)		(52,723	)
Net income (loss) before taxes				41,531			(13,186	)
Current tax expense		22		(35,050	)		(7,250	)
Deferred tax recovery		22		14,239			112
Net income (loss) and comprehensive income (loss)			$	20,720		$	(20,324	)


Net income (loss) and comprehensive income (loss) attributable to:
Equinox Gold shareholders			$	20,720		$	(18,360	)
Non-controlling interest				—			(1,964	)
			$	20,720		$	(20,324	)


Net income (loss) per share
Basic		24	$	0.10		$	(0.16	)
Diluted		24	$	0.09		$	(0.16	)

Weighted average shares outstanding
Basic		24		212,487,729			112,001,484
Diluted		24		218,411,971			112,001,484


The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of United States dollars)

	Note		2020			2019

Cash provided by (used in):

Operations
Net income (loss) for the period			$	20,720		$	(20,324	)
Adjustments for:
Depreciation and depletion				151,903			39,129
Change in fair value of warrants		12(c)		29,862			38,185
Unrealized loss on gold contracts		12(a)		12,868			—
Tax expense		22		20,811			7,138
Finance expense				39,751			17,537
Unrealized (gain) loss on foreign exchange contracts		12(b)		14,147			(1,640	)
Share-based compensation		16(c)		8,140			5,632
Expected credit losses				6,074			668
Finance fees paid				(37,415	)		(17,500	)
Unrealized foreign exchange (gain) loss				(4,818	)		955
Income taxes paid				(32,788	)		(4,868	)
Other				2,451			11,229

Operating cash flow before non-cash changes in working capital				231,706			76,141

Changes in non-cash working capital:
Accounts receivable and other current assets				(15,194	)		(4,200	)
Inventory				20,545			(36,492	)
Accounts payable and accrued liabilities				(20,544	)		24,273

				216,513			59,722
Investing
Proceeds from sale of assets		6(b)		6,500			784
Acquisition of Leagold Mining		5		55,252			—
Investment in Solaris Resources		8		(12,480	)		—
Capital expenditures				(172,902	)		(97,577	)
Other				(5,691	)		(14,500	)

				(129,321	)		(111,293	)
Financing
Proceeds from option and warrant exercises		16		171,530			678
Draw down of loans and borrowings		11		518,958			189,661
Net proceeds from equity financings		16(b)		39,938			—
Decrease in restricted cash				11,635			537
Repayment of loans and borrowings		11		(546,274	)		(136,888	)
Lease payments				(6,667	)		(438	)
Other				960			3,446

				190,080			56,996

Effect of foreign exchange on cash and cash equivalents				(62	)		1,469

Increase in cash and cash equivalents				277,210			6,894

Cash and cash equivalents, beginning of year				67,716			60,822
Cash and cash equivalents, end of year			$	344,926		$	67,716

Supplemental cash flow information (note 25)

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in thousands of United States dollars, except share amounts)

	Share Capital
	Shares		Amount			Reserves			Deficit			Non-controlling interest			Total
December 31, 2018		110,425,401	$	491,100		$	15,402		$	(111,723	)	$	14,519		$	409,298
Shares issued to settle debenture (note 11(e))		2,227,835		10,110			—			—			—			10,110
Shares issued on exercise of warrants, stock options and RSUs (note 16(c))		799,127		4,476			(2,896	)		—			—			1,580
Equity component of Convertible Notes (note 11(c))		—		—			10,217			—			—			10,217
Share-based compensation		—		—			5,236			—			—			5,236
Changes in non-controlling interest from equity offerings and other		—		—			—			(503	)		3,949			3,446
Deconsolidation of Solaris Resources		—		—			—			—			(16,504	)		(16,504	)
Net loss and comprehensive loss		—		—			—			(18,360	)		(1,964	)		(20,324	)
December 31, 2019		113,452,363	$	505,686		$	27,959		$	(130,586	)	$	—		$	403,059
Shares and options issued for acquisition of Leagold Mining (note 5)		94,635,765		732,042			19,777			—			—			751,819
Shares issued in financing (note 16(b))		6,472,491		40,000			—			—			—			40,000
Shares issued on exercise of shareholder anti-dilution right (note 16(b))		461,947		2,855			—			—			—			2,855
Equity component of Convertible Notes (note 11(b))		—		—			8,322			—			—			8,322
Shares issued on exercise of warrants, stock options and RSUs (note 16(c))		27,331,840		237,521			(22,104	)		—			—			215,417
Share-based compensation		—		—			4,825			—			—			4,825
Share issue costs		—		(62	)		—			—			—			(62	)
Net income and comprehensive income		—		—			—			20,720			—			20,720
Balance December 31, 2020		242,354,406	$	1,518,042		$	38,779		$	(109,866	)	$	—		$	1,446,955

The accompanying notes form an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

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 (“TSX”) in Canada where its common shares trade under the symbol “EQX” and its warrants trade under the symbol “EQX.WT”. The Company’s shares also trade on the NYSE American Stock Exchange (“NYSE-A”) in the United States under the symbol “EQX”.

Equinox Gold is a mining company engaged in the operation, acquisition, exploration and development of mineral properties, with a focus on gold. On March 10, 2020, the Company completed its acquisition of Leagold Mining Corporation (“Leagold”). The results of operations of Leagold are included in these financial statements from March 10, 2020 (note 5).

All of the Company’s properties are located in the Americas, with one property in Mexico, two in the United States and five in Brazil. Each property is wholly-owned by the Company. The Company’s producing assets are the Los Filos Mine Complex (“Los Filos”) in Mexico, the Mesquite Mine (“Mesquite”) and Castle Mountain Mine (“Castle Mountain”) in the United States, and the Aurizona Mine (“Aurizona”), Fazenda Mine (“Fazenda”), RDM Mine (“RDM”) and Pilar Mine (“Pilar”) in Brazil. The Company’s Santa Luz project (“Santa Luz”) in Brazil is in the early stage of construction.

2. Basis of preparation
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”) issued and outstanding as of December 31, 2020. These consolidated financial statements were approved and authorized for issuance by the Board of Directors on March 19, 2021.
(b) Basis of presentation
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments, which are measured at fair value.
(c) Basis of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company. Control is defined as Equinox Gold having power over the entity, rights to variable returns from its involvement with the entity, and the ability to use its power to affect the amount of returns. All intercompany transactions and balances are eliminated on consolidation.
At December 31, 2020, the Company’s material subsidiaries include the following:
	Company	Location	Ownership Interest
	Castle Mountain Venture	USA	100%
	Desarrollos Mineros San Luis S.A. de C.V.	Mexico	100%
	Fazenda Brasileiro Desenvolvimento Mineral Ltda	Brazil	100%
	Mineração Aurizona S.A.	Brazil	100%
	Mineração Riacho Dos Machados Ltda	Brazil	100%
	Pilar de Goias Desenvolvimento Mineral Ltda	Brazil	100%
	Santa Luz Desenvolvimento Mineral Ltda	Brazil	100%
	Western Mesquite Mines, Inc.	USA	100%

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

2. Basis of preparation (continued)

(d) Functional currency and presentation currency

Except as otherwise noted, these financial statements are presented in United States dollars (“US dollars”), the functional currency of the Company and its subsidiaries.

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the date of the statement of financial position. Non-monetary assets and liabilities are translated at historical exchange rates, unless the item is carried at fair value, in which case it will be translated at the exchange rate in effect at the date when the fair value was determined. Resulting foreign exchange gains and losses are recognized in income or loss. Foreign currency gains and losses are reported on a net basis.

(e) Accounting standards and amendments issued but not yet adopted

The following standards and interpretations have been issued but are not yet effective as of December 31, 2020:

IAS 16, Property, Plant and Equipment - Proceeds before Intended Use

On May 14, 2020, the IASB published a narrow scope amendment to IAS 16, Property, Plant and Equipment - Proceeds before Intended Use. The amendment prohibits deducting from the cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use. Instead, amounts received will be recognized as sales proceeds and related cost in profit or loss.

The effective date is for annual periods beginning on or after January 1, 2022. Earlier application is permitted. The amendment applies retrospectively, but only to items of property, plant and equipment made available for use in the earliest period presented in the financial statements in the year of adoption.

The Company intends to adopt the amendment in its financial statements for the annual period beginning on January 1, 2021. On adoption, the Company will reclassify $1.6 million of pre-commercial production net income from property, plant and equipment as at December 31, 2020 to the statement of income (loss) for the year ended December 31, 2020, comprising of $2.9 million in revenue, $1.0 million in production costs and $0.3 million in depreciation.

Interest rate benchmark reform

On August 27, 2020, the IASB issued “Interest Rate Benchmark Reform - Phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) with amendments that address issues that might affect financial reporting related to financial instruments and hedge accounting resulting from the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. The amendments are effective for annual periods beginning on or after January 1, 2021 and are to be applied retrospectively. The Company is currently assessing the impact of the amendments on the Company’s consolidated financial statements.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies

(a) Business combinations

A business combination is an acquisition of assets and liabilities that constitute a business. A business is an integrated set of activities and assets that consist of inputs and processes, including operational processes that, when applied to those inputs, have the ability to create outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs but can be integrated with the inputs and processes of the Company to create outputs.

When acquiring a set of activities or assets in the exploration and development stage, which may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.

Business combinations are accounted for using the acquisition method whereby identifiable assets acquired and liabilities assumed, including contingent liabilities, are recorded at their fair values at the acquisition date. The acquisition date is the date at which the Company obtains control over the acquiree, which is generally the date that consideration is transferred and the Company acquires the assets and assumes the liabilities of the acquiree. The Company considers all relevant facts and circumstances in determining the acquisition date.

The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the fair values of the assets at the acquisition date transferred by the Company, the liabilities, including contingent consideration, incurred and payable by the Company to former owners of the acquiree and the equity interests issued by the Company. The measurement date for equity interests issued by the Company is the acquisition date. Acquisition-related costs are expensed as incurred.

Non-controlling interests (“NCI”) are the equity in a subsidiary not attributable, directly or indirectly, to a parent. NCI are recorded at their proportionate share of the fair value of identifiable net assets acquired on initial recognition. Goodwill is recognized as the sum of the total consideration (acquisition date fair value) transferred by the Company, including contingent consideration and the NCI in the acquiree, less the fair value of net assets acquired.

(b) Revenue recognition

Revenue is generated from the sale of gold doré with each shipment considered a separate performance obligation. The Company recognizes revenue at the point when the customer obtains control of the product. Control is transferred when title has passed to the purchaser, the customer controls the risks and rewards of ownership and the Company has the present right to payment for the delivery of gold doré. Sales proceeds from saleable gold produced during the testing phase before a mine is determined to be operating in the manner intended by management is deducted from capitalized mine development costs.

Cash and cash equivalents consist of cash on hand with banks and highly liquid investments with a maturity date at purchase of less than 90 days.

(d) Restricted cash

Restricted cash consists of deposits held as security for income tax assessments and letters of credit.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(e) Inventory

Finished goods, work-in-process, heap leach ore and stockpiled ore are valued at the lower of weighted average production cost and net realizable value. Production costs include the cost of raw materials, direct labour and materials, mine-site overhead expenses and depreciation and depletion of mining interests. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and long-term metal prices less estimated future production and selling costs to convert the inventories into saleable form.

The recovery of gold from certain ores is achieved through the heap leaching process. Under this method, ore is placed on leach pads where it is treated with a chemical solution which dissolves the gold contained in ore. The resulting solution is further processed in a plant where the gold is recovered. For accounting purposes, costs are added to ore on leach pads for current mining and leaching costs, including applicable depreciation, depletion and amortization relating to mining interests and purchase price allocations. Costs are removed from ore on leach pads as ounces of gold are recovered based on the average cost per recoverable ounce on the leach pad.

Estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tonnes added to the leach pads), the grade of ore placed on the leach pads (based on assay data), and a recovery percentage (based on ore type). Although the quantities of recoverable gold placed on each leach pad are reconciled by comparing the grades of ore placed on the leach pad to the quantities actually recovered, the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. The recovery of gold from the leach pad is not known until the leaching process has concluded. In the event the Company determines, based on engineering estimates, that a quantity of gold or other metal contained in ore on leach pads is to be recovered over a period exceeding 12 months, that portion is classified as non-current.

Work-in-process inventory represents materials that are currently in the process of being converted into finished goods. The average production cost of finished goods represents the average cost of work-in-process inventories incurred prior to the refining process, plus applicable refining costs and associated royalties.

Consumable stores inventory includes the costs of consumables used in operations and is valued at the lower of average cost and net realizable value, with replacement costs being the typical measure of net realizable value.

Write-downs of inventory are reported in current period operating costs. The Company may reverse a write-down in the event there is a subsequent increase in the net realizable value of the inventory.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(f) Exploration and evaluation expenditures

Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes exploratory drilling and sampling, surveying transportation and infrastructure requirements, and gathering exploration data through geophysical studies.

The Company capitalizes significant direct costs of acquiring resource property interests. Option payments are considered acquisition costs if the Company has the intention of exercising the underlying option.

Exploration, evaluation and property maintenance costs incurred on sites without an existing mine and on areas outside the boundary of a known mineral deposit that contains proven and probable reserves are expensed as incurred up to the date of establishing that property costs are economically recoverable, that the project is technically feasible and upon receipt of project development approval from the Board of Directors. Approval from the Board of Directors will be dependent upon the Company obtaining necessary permits and licenses to develop the mineral property. When approval for project development is received, the related capitalized exploration and evaluation costs are assessed for impairment and the related carrying value is then reclassified to mineral property. If no economically viable ore body is discovered, previously capitalized acquisition costs are expensed in the period that the property is determined to be uneconomical or abandoned. Value-added taxes are included in exploration and evaluation costs when the recoverability of these amounts is uncertain.

Although the Company has taken steps to verify title to exploration and evaluation properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers, and non-compliance with regulatory requirements or title may be affected by undetected defects.

(g) Mineral properties, plant and equipment

(i) Mineral properties and mine development costs

Development expenditures are those incurred subsequent to the establishment of economic recoverability and after receipt of project approval from the Board of Directors. Development costs are capitalized and included in the carrying amount of the related property.

Mineral property and mine development costs capitalized are amortized using the units-of-production method over the estimated recoverable ounces, which is the estimated total ounces to be extracted in current and future periods based on proven and probable reserves and, in the case of certain underground mines, certain measured, indicated and inferred resources.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(ii) Deferred stripping costs
Stripping activity that improves access to ore is accounted for as an addition to or enhancement of an existing asset. Stripping activity assets are recognized when the following three criteria are met: • It is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity; • The Company can identify the component of the ore body for which access has been improved; and • The costs relating to the stripping activity associated with that component can be measured reliably. During the development of a mine, stripping costs are capitalized and included in the carrying amount of the assets that they relate to within mineral properties, plant and equipment. These assets are amortized on a units-of-production basis over the remaining proven and probable reserves of the respective components. During the production phase of a mine, stripping costs incurred to provide access to sources of reserves that will be produced in future periods that would not have otherwise been accessible are capitalized and included in the carrying amount of the related mining property. Stripping costs incurred and capitalized during the production phase are depleted using the units-of-production method over the reserves that directly benefit from the specific stripping activity. Costs incurred for regular waste removal that do not give rise to future economic benefits are considered as costs of sales and included in operating expenses.
(iii) Plant and equipment
Plant and equipment is carried at cost, less accumulated amortization and accumulated impairment losses. The cost of an item of plant and equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, initial estimates of the costs of dismantling and removing an item and restoring the site on which it is located and, where applicable, borrowing costs. The carrying amounts of plant and equipment are depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the life of mine. The significant classes of depreciable plant and equipment and their estimated useful lives are as follows:
	Asset class	Estimated useful life (years)
	Fixed plant and related components and infrastructure	Units-of-production over life of mine
	Mobile equipment	3-10 years
The Company conducts an annual assessment of the residual balances, useful lives and depreciation methods being used for plant and equipment and any changes arising from the assessment are applied by the Company prospectively.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(h) Investments in Associates

An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those decisions. The Company is presumed to have significant influence if it holds, directly or indirectly, 20% or more of the voting power of the investee, unless it can be clearly demonstrated that the Company does not have significant influence.

The Company accounts for its investment in associate using the equity method. Under the equity method, the Company’s investment in associate is initially recognized at cost and subsequently increased or decreased to recognize the Company’s share of net income (loss) and other comprehensive income (loss) of the associate, after any other adjustments for movement in the associate’s reserves, and for impairment losses after the initial recognition date. The Company’s share of income or losses of its associate are recognized in net income (loss) during the period. Dividends and repayments of capital received from the associate are accounted for as a reduction in the carrying amount of the Company’s investment.

At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an associate is impaired. Objective evidence includes the observable data indicating there is a measurable decrease in the estimated future cash flows of the investee’s operations. When there is objective evidence that an investment is impaired, the carrying amount of such investment is compared to its recoverable amount, being the higher of its fair value less costs of disposal and value in use. If the recoverable amount of an investment is less than its carrying amount, the carrying amount is reduced in the period in which the relevant circumstances are identified.

(i) Goodwill

Goodwill may arise on or from the Company’s acquisitions and is not amortized. The Company performs an impairment test for goodwill annually and when events or changes in circumstances indicate that the related carrying amount may not be recoverable. If the carrying amount of an operation, which is the cash-generating unit to which goodwill has been allocated, exceeds the recoverable amount, an impairment loss is recognized for the amount of the excess.

The impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the operation to nil and then to the other assets based on the relative carrying amounts of those assets. Impairment losses recognized for goodwill are not reversed in subsequent periods.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(j) Financial instruments

Financial instruments are recognized initially at fair value. Subsequent to initial recognition, financial instruments are classified and measured as described below.

Transaction costs associated with financial instruments, carried at fair value through profit or loss, are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount of the asset or the liability.

(i) Amortized cost

Financial assets are recorded at amortized cost if both of the following criteria are met: 1) the objective of the Company’s business model for these financial assets is to collect their contractual cash flows; and 2) the asset’s contractual cash flows represent ‘solely payments of principal and interest’.

The Company’s cash and cash equivalents, accounts receivable and deposits, receivables from asset sales, and reclamation bonds are recorded at amortized cost as they meet the required criteria.

(ii) Financial assets recorded at fair value through income (loss)

Financial assets are classified at fair value if they are acquired for the purpose of selling in the near term. Gains or losses on these items are recognized in net income (loss). The Company’s marketable securities are classified as financial assets measured at fair value through income (loss).

(iii) Financial liabilities

Accounts payable and accrued liabilities, loans and borrowings and certain other long-term liabilities are accounted for at amortized cost using the effective interest rate method. The amortization of debt issue costs is calculated using the effective interest rate method.

(k) Derivative liabilities

Derivatives are initially recognized at their fair value on the date the derivative contract is entered into and transaction costs are expensed. The Company’s derivatives are subsequently re-measured at their fair value at each statement of financial position date with changes in fair value recognized in net income or loss.

As the exercise price of certain of the Company’s share purchase warrants is fixed in Canadian dollars, and the functional currency of the Company is the US dollar, these warrants are considered a derivative as a variable amount of cash in the Company’s functional currency will be received on exercise. Accordingly, these share purchase warrants are classified and accounted for as a derivative liability. The fair value of the warrants is determined using the Black Scholes option pricing model at the period-end date or the market price on the TSX for warrants that are trading.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to their host contracts.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(l) Leases

A contract is or contains a lease when the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability. The cost of the right-of-use asset includes the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received and any initial direct costs and, if applicable, an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Generally, the Company uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee or, as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Company does not recognize right-of-use assets and lease liabilities for leases of low-value assets and leases with lease terms that are less than 12 months. Lease payments associated with these leases are instead recognized as an expense over the lease term on either a straight-line basis, or another systematic basis if more representative of the pattern of benefit.

The Company has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Company is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized.

The Company presents right-of-use assets in the same line item as it presents underlying assets of the same nature that it owns. The Company presents lease liabilities in other liabilities in the statement of financial position.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(m) Provisions

(i) Reclamation and restoration provisions

The Company is subject to environmental laws and regulations. Provisions for closure and reclamation costs are recognized at the time the legal or constructive obligation first arises which is generally the time that the environmental disturbance occurs. Upon initial recognition of the provision, the corresponding cost is added to the carrying amount of mineral properties, plant and equipment and is amortized using the same method as applied to the specific asset. Following the initial recognition of the provision, the carrying amount is increased for unwinding of the discount and for changes to the discount rate and the amount or timing of cash flows needed to settle the obligation. The unwinding of the discount is recognized as finance expense in net income or loss while the effect of the changes to the discount rate and the amount or timing of cash flows are recognized in mineral properties, plant and equipment.

Due to uncertainties inherent in environmental remediation, the ultimate cost of future site closure and reclamation could differ from the amounts provided. The estimate of future site closure and reclamation costs is subject to change based on amendments to laws and regulations, changes in technologies, price increases and changes in interest rates, and as new information concerning the Company’s closure and reclamation obligations becomes available. Such changes are reflected prospectively in the determination of the provision.

(ii) Other provisions

A provision is recognized if, because of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflect the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance expense.

(n) Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issuance of common shares are recognized as a deduction from equity, net of any tax effects. Proceeds related to the issuance of units are allocated between the common shares and warrants on a relative fair value basis where warrants are classified as equity instruments. For warrants classified as derivative liabilities, the fair value of the warrants is determined with the residual amount allocated to the common shares.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(o) Impairment

(i) Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested for impairment at least annually regardless of whether an indicator of impairment exists.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is the amount obtainable from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less costs of disposal. When a binding sale agreement is not available, fair value less costs to sell is estimated using a discounted cash flow approach with inputs and assumptions consistent with those at market. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of cash inflows of other assets or groups of assets (the “cash generating unit” or “CGU”). This generally results in the Company evaluating its non-financial assets on a property-by-property basis.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in net income or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount. An impairment charge is reversed through net income or loss only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of any applicable depreciation, if no impairment loss had been recognized. An impairment loss for goodwill is not reversed.

(ii) Financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial assets is measured at an amount equal to lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset and amount equal to the twelve-month expected credit losses. For trade receivables, the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(p) Share-based payments

(i) Stock options

The Company grants stock options to acquire common shares to directors, officers and employees. The Board of Directors determines the specific grant terms within the limits set by the Company’s stock option plan.

The fair value of the estimated number of stock options that will eventually vest, determined as of the date of the grant, is recognized as share-based compensation expense over the vesting period of the stock options, with a corresponding increase in shareholders’ equity (in other reserves). The total amount recognized as an expense is adjusted to reflect the number of options expected to vest at each reporting date.

The cost of the stock options is measured using the estimated fair value at the date of the grant determined using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected term of the option and stock price volatility. The expected term of the options granted is determined based on historical data on the average hold period before exercise, cancellation or expiry. Expected volatility is estimated with reference to the historical volatility of the share price of the Company. These estimates involve inherent uncertainties and the application of management judgement.

(ii) Restricted share units (“RSUs”)

The Company grants to employees, officers, directors and consultants, RSUs in such numbers and for such terms as may be determined by the Board of Directors. RSUs granted under the RSU Plan are exercisable into common shares for no additional consideration after the vesting conditions, as specified by the Board of Directors, are met. RSUs are measured at fair value on the date of grant and the corresponding share-based compensation is recognized over the vesting period in cost of sales, exploration or general and administration expenses, as applicable.

In addition to service conditions, RSUs may have performance-based vesting conditions (“pRSU”). Share-based compensation for these pRSUs is measured on the grant date but is recognized only when it is more likely than not that the performance vesting conditions will be met.

(q) Employee benefits

Short-term employee benefit obligations are recognized as personnel expenses as the corresponding service is provided. Liabilities are recognized at the amount that is expected to be paid if the Company has a present legal or constructive obligation to pay that amount based on past services rendered by the employee, and the obligation can be estimated reliably. There are no long-term employee benefits.

(r) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction/development or exploration of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed as finance expense in the period in which they are incurred.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

(s) Income tax

Income tax on income or loss comprises current and deferred tax. Income tax is recognized in net income or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable or receivable related to previous years.

Deferred tax is recognized for differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are not recorded for temporary differences related to the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, temporary differences arising on the initial recognition of goodwill and temporary differences relating to the investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse based on laws that have been enacted or substantively enacted at period end.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

Tax assets and liabilities are offset when there is a legally enforceable right to offset tax assets against tax liabilities and when they are related to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(t) Income (loss) per share

Basic income (loss) per share (“EPS”) is calculated by dividing the income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential common shares, which comprise warrants, convertible debentures, options and RSUs. The dilutive effect of warrants, options and RSUs assumes that the proceeds to be received on exercise are applied to repurchase common shares. Dilutive warrants, options and RSUs are only included in the dilutive calculations to the extent exercise prices are below the average market price of the common shares.

(u) Comparative information

Certain comparative amounts have been reclassified to conform with the current year’s financial statement presentation. Such reclassifications were not considered material.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

4. Use of judgements and estimates

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ. All estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical judgements and estimates in applying accounting policies that have the most significant effect on amounts recognized in the consolidated financial statements are as follows:

(a) Judgements

(i) Acquisitions

On the acquisition of a set of assets and liabilities, a company must determine whether what was acquired includes the inputs, processes and outputs necessary to constitute a business as defined in IFRS 3 - Business Combinations. If an acquired set of assets and liabilities includes goodwill, the set is presumed to be a business. Based on an assessment of the relevant facts and circumstances, the Company concluded that the acquisition of Leagold on March 10, 2020 met the criteria of a business combination and that Equinox Gold was the acquirer.

(ii) Indicators of impairment

Judgement is required in assessing whether certain factors would be considered an indicator of impairment. The Company considers both external and internal sources of information in assessing whether there are any indications that CGUs are impaired, or reversal of impairment is needed. Factors considered include current and forecast economic conditions, internal projections and the Company’s market capitalization relative to its net asset carrying amount.

(iii) Commencement of commercial production

Management considers several factors in determining when a mining property is capable of operating at levels intended by management. Until a mine is capable of operating at levels intended by management, costs incurred are capitalized as part of the costs of the related mining properties and proceeds from mineral sales are offset against costs capitalized. Depletion of capitalized costs for mining properties begins when the mine is capable of operating at levels intended by management. Amongst other quantitative and qualitative factors, throughput, mill grades, recoveries, and for a heap leach operation, stacking rates and irrigation rates, are assessed over a reasonable period to make this determination. The Company determined that Aurizona was capable of operating at levels intended by management effective July 1, 2019. The Company determined that Phase 1 of Castle Mountain was capable of operating at levels intended by management effective November 21, 2020.

(iv) Investments

Management applies judgement in assessing whether the facts and circumstances pertaining to each investment result in the Company having control, joint control or significant influence over an investee. During the year ended December 31, 2019, the Company determined that Solaris Resources Inc. (“Solaris”) was no longer a controlled subsidiary as the Company’s ownership interest reduced to approximately 30% as a result of the completion of external financings, and Solaris was self-sustaining for an extended period with no capital injections made by Equinox Gold. The Company determined that it retained significant influence over Solaris, and accounts for its interest using the equity method effective June 30, 2019.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

4. Use of judgements and estimates (continued)

(v) Functional currency

The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. The Company has determined the functional currency of each entity is the US dollar. Assessment of functional currency involves certain judgements to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions that determined the primary economic environment.

(vi) Contingencies

Contingencies can be either possible assets or liabilities arising from past events which, by their nature, will be resolved only when one or more uncertain future events occur or fail to occur. Such contingencies include, but are not limited to, environmental obligations, litigation, regulatory proceedings, tax matters and losses resulting from other events and developments. The assessment of the existence and potential impact of contingencies inherently involves the exercise of significant judgement regarding the outcome of future events.

(b) Key sources of estimation uncertainty

(i) Fair value of assets and liabilities acquired

Accounting for acquisitions requires estimates with respect to the fair value of the assets and liabilities acquired. Such estimates require valuation methods including discounted cash flows, depreciated replacement costs and other methods. These models use forecasted cash flows, discount rates, current replacement costs and other assumptions. Changes in these assumptions changes the value assigned to the acquired assets and liabilities and goodwill, if any. Significant assumptions related to the Company’s acquisition of Leagold are disclosed in note 5.

(ii) Estimated recoverable ounces

The Company estimates recoverable ounces for determining the number of ounces in heap leach inventory. Changes to the estimates of recoverable ounces in the heap leach inventory can impact the Company’s ability to recover the carrying value of the inventory in the normal course of operations. Estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the leach pads, the grade of ore placed on the leach pads and an estimated percentage of recovery. Timing and ultimate recovery of gold contained on leach pads can vary significantly from the estimates.

(iii) Inventory valuation

Management values production inventory at the lower of weighted average production costs and net realizable value (“NRV”). Weighted average production costs include expenditures incurred and depreciation and depletion of assets used in mining and processing activities that are deferred and accumulated as the cost of ore in stockpiles, ore on leach pads, work-in-process and finished metals inventories. The allocation of costs to ore in stockpiles, ore on leach pads and in-process inventories and the determination of NRV involve the use of estimates. Costs are removed from the leach pad based on the average cost per recoverable ounce of gold and silver on the leach pad as gold is recovered.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

4. Use of judgements and estimates (continued)

(iv) Impairment of mineral properties, plant and equipment

The determination of fair value less costs to sell and value in use of an asset or CGU requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, mineral reserves, operating costs, closure and rehabilitation costs, future capital expenditures and discount rates. The estimates and assumptions are subject to risk and uncertainty, hence, there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the asset or CGU. In such circumstances some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded in net income (loss).

(v) Mineral reserve and mineral resource estimates

The Company estimates its mineral reserves and mineral resources based on information compiled by qualified persons as defined by National Instrument (“NI”) 43-101. Mineral reserves and for certain of the underground mines acquired on March 10, 2020, measured, indicated and inferred mineral resources, determined in this way are used in the calculation of depreciation, depletion and impairment charges, and for forecasting the timing of the payment of closure and restoration costs. In assessing the life of a mine for accounting purposes, mineral resources are taken into account only where there is a high degree of confidence of economic extraction.

There are numerous uncertainties inherent in estimating mineral reserves and resources, and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of mineral reserves and resources and may, ultimately, result in mineral reserve and resources estimates being revised. Such changes in mineral reserves and resources could impact depreciation and depletion rates, asset carrying values and the provision for closure and restoration costs.

(vi) Mine closure and reclamation costs

The Company’s provision for mine closure and reclamation cost obligations represents management’s best estimate of the present value of the future cash outflows required to settle the liability which reflects estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting the future cash outflows. Changes in the above factors can result in a change to the provision recognized by the Company.

Changes to mine closure and reclamation cost obligations are recorded with a corresponding change to the carrying amounts of related mineral properties, plant and equipment for the year. Adjustments to the carrying amounts of related mineral properties, plant and equipment can result in a change to future depletion expense.

Assumptions with respect to the Company’s mine closure and reclamation costs are disclosed in note 13.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

4. Use of judgements and estimates (continued)

(vii) Valuation of derivatives and other financial instruments

The valuation of the Company’s derivative financial instruments requires the use of option pricing models or other valuation techniques. Measurement of warrants with exercise prices denominated in Canadian dollars that are not listed for trading is based on an option pricing model that uses assumptions with respect to share price, expected life, share price volatility and discount rates. Measurement of foreign exchange contracts is based on forward foreign exchange rates. Measurement of gold hedge contracts is based on forward gold prices. Changes in these assumptions and estimates could result in changes in the fair value of these instruments and a corresponding change in the amount recognized in net income (loss). Significant assumptions related to derivatives are disclosed in note 12.

(viii) Share-based payments

The Company utilizes the Black-Scholes Option Pricing Model (“Black-Scholes”) to estimate the fair value of stock options granted to directors, officers and employees. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the expected volatility of the stock price, the risk-free interest rate, dividend yield, the expected life of the stock options and the number of options expected to vest. Any changes in these assumptions could change the amount of share-based compensation recognized. Significant assumptions related to share-based payments are disclosed in note 16(c).

(ix) Income taxes and value-added taxes receivable

The determination of the Company’s tax expense for the period and deferred tax assets and liabilities involves significant estimation and judgement by management. In determining these amounts, management interprets tax legislation in a variety of jurisdictions and makes estimates of the expected timing of the reversal of deferred tax assets and liabilities. Management also makes estimates of future earnings, which affect the extent to which potential future tax benefits may be used. The Company is subject to assessments by various taxation authorities, which may interpret legislation differently. These differences may affect the final amount or the timing of the payment of taxes. The Company provides for such differences where known based on management’s best estimate of the probable outcome of these matters.

The Company has receivables from various governments for federal and state value-added taxes (“VAT”), and for federal income taxes. Significant estimates and judgements are involved in the assessment of recoverability of these receivables. Changes in management’s impairment assumptions may result in an additional impairment provision or a reduction to any previously recorded impairment provision, with the impact recorded in net income (loss).

(x) Contingencies

Due to the nature of the Company’s operations, various legal, tax, environmental and regulatory matters are outstanding from time to time. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of these changes in its consolidated financial statements in the period in which such changes occur.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

5. ACQUISITIONS
On March 10, 2020, the Company completed the acquisition of Leagold (the “Leagold Acquisition” or “Transaction”). Leagold was a gold mining company with four operating mines, one development project and one expansion project, all located in the Americas, including Los Filos in Mexico, and Fazenda, RDM, Pilar and Santa Luz in Brazil. The acquisition supported the Company’s growth strategy and enhanced the Company’s production profile. Under the terms of the Transa ction, the Company acquired 100% of the issued and outstanding shares of Leagold at an exchange ratio of 0.331 of an Equinox Gold share for each Leagold share. Holders of Leagold options, warrants performance share units (“PSUs”) and deferred share units (“DSUs”) received equivalent Equinox Gold options, warrants, PSUs and DSUs with the number of such securities issuable adjusted by the 0.331 exchange ratio. By virtue of the Company issuing equity instruments and relative voting rights of Equinox Gold shareholders, including significant minority shareholders post-merger, among other factors, the Company has been identified as the acquirer in the transaction and has accounted for the transaction as a business combination. Transaction costs incurred in respect of the acquisition totaling $5.9 million, of which $4.6 million were incurred in 2020, were expensed and presented within professional fees in general and administration expense in profit or loss.
The acquisition date fair value of the consideration transferred consisted of the following:
	Purchase price:
	Share consideration⁽¹⁾	$	732,042
	Option consideration⁽²⁾		19,777
	Warrant consideration⁽³⁾		8,543
	PSU and DSU consideration⁽⁴⁾		3,721
		$	764,083
⁽¹⁾The fair value of 94,635,765 common shares issued to Leagold shareholders was determined using the Company’s share price of C$10.51 per share on the acquisition date. ⁽²⁾The fair value of 5,728,647 replacement options issued was determined using the Black-Scholes option pricing method with the following weighted average assumptions: exercise price of C$7.77, expected life of 2.07 years, annualized volatility of 60.2%, dividend yield of 0.0%, and discount rate of 0.54%. ⁽³⁾The fair value of 16,626,569 replacement warrants issued was determined using the Black-Scholes option pricing method with the following weighted average assumptions: exercise price of C$11.14, expected life of 0.32 years, annualized volatility of 44.1%, dividend yield of 0.0%, and discount rate of 0.69%. ⁽⁴⁾The fair value of 369,919 replacement PSUs and 319,288 replacement DSUs issued was determined using the Leagold share price of C$3.49 on the acquisition date, adjusted for the 0.331 exchange ratio.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

5. ACQUISITIONS (CONTINUED)

The Company retained an independent appraiser to assist with determination of the fair value of certain assets acquired and liabilities assumed. In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed, based upon their estimated fair values at the date of acquisition. The fair values of mineral properties were estimated using discounted cash flow models and the fair values of plant and equipment were estimated using a combination of the replacement cost approach and the sales comparison approach. Expected future cash flows are based on estimates of future gold prices and projected future revenues, estimated quantities of mineral reserves and mineral resources, expected future production costs and capital expenditures based on life of mine plans at the acquisition date. During the year ended December 31, 2020, the Company completed the analysis to assign fair values to all assets acquired and liabilities assumed. Comparative figures have been recast to reflect the measurement period adjustments detailed below. The following table summarizes the final purchase price allocation:
		Reported as of March 31, 2020		Adjustments		Final allocation
	Net assets (liabilities) acquired:
	Cash and cash equivalents	$	55,252	$	—	$	55,252
	Trade and other receivables		33,524		—		33,524
	Inventory⁽¹⁾		90,082		59,996		150,078
	Mineral properties, plant and equipment⁽²⁾		1,350,794		(32,009	)	1,318,785
	Other assets		21,432		—		21,432
	Accounts payable and accrued liabilities		(88,490	)	(406	)	(88,896)
	Loans and borrowings and accrued interest		(323,870	)	—		(323,870)
	Derivative liabilities		(78,526	)	—		(78,526)
	Reclamation obligations⁽³⁾		(69,487	)	7,249		(62,238)
	Deferred tax liabilities⁽⁴⁾		(195,628	)	(34,830	)	(230,458)
	Other liabilities		(31,000	)	—		(31,000)
	Fair value of net assets acquired	$	764,083	$	—	$	764,083

⁽¹⁾The fair value of inventory was adjusted for refinements to estimated conversion costs for heap leach inventories and estimated forward gold prices in determining net realizable value. ⁽²⁾Measurement period adjustments to mineral properties, plant and equipment result from additional analysis of capital costs recovery rates, and timing of cash flows used in the discounted cash flow models to estimate the fair value of mineral properties. During the period, the Company also physically reviewed fixed assets at certain sites and identified specified assets deemed to be obsolete. ⁽³⁾The fair value of reclamation and remediation liabilities is based on the expected amounts and timing of cash flows for closure activities and discounted to present value using a credit-adjusted risk-free rate as of the acquisition date. Measurement period adjustments relate to refinements of cost escalation and cost estimates. ⁽⁴⁾Deferred income tax liabilities represent the future tax expense associated with the differences between the fair value allocated to assets and liabilities and the historical carryover tax basis of these assets and liabilities. Measurement period adjustments include a $13.9 million deferred tax liability in relation to certain pre-export finance loans in Brazil and the tax impact of other measurement period adjustments described above and recorded during the period.
Consolidated revenue for the year ended December 31, 2020 includes revenue from the assets acquired in the Leagold Acquisition of $360.7 million. Consolidated net income for the year ended December 31, 2020 includes net loss before tax from Leagold of $24.3 million. Had the transaction occurred on January 1, 2020, pro-forma unaudited consolidated revenue and net income before tax for the year ended December 31, 2020 would have been approximately $932 million and $1 million, respectively.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

6. Trade and other receivables
		Note		December 31, 2020		December 31, 2019
	Value-added and income tax receivables	6(a)	$	29,076	$	12,181
	Trade receivables			17,172		—
	Due from Serabi Gold plc	6(b)		6,429		12,033
	Receivable from Inca One			—		2,716
	Other receivables			3,195		460
			$	55,872	$	27,390
(a) As at December 31, 2020, the Company had $14.6 million (2019 - $12.8 million) and $8.2 million (2019 - $nil) of value-added tax (“VAT”) receivable in Brazil and Mexico, respectively of which $6.5 million (2019 - $3.4 million) of the Brazilian VAT is included in other assets as it is expected to be recovered over a period which exceeds twelve months.
(b) In March 2020, the Company and Serabi Gold plc (“Serabi”) amended its share and debt purchase agreement in respect of the purchase of Coringa whereby Serabi would pay to the Company monthly installment payments, commencing May 1, 2020, until the outstanding receivable balance of $12.0 million and accrued interest is repaid in full. Installments were $0.5 million for the first three months and increased to $1.0 million thereafter. The receivable attracts interest at a rate of 10% per annum. The receivable is secured by a pledge in the Company’s favour on the shares of Chapleau Resources Ltd. During the year ended December 31, 2020, the Company received $6.5 million from Serabi (2019 - $nil).

7. Inventory
			December 31, 2020		December 31, 2019
	Heap leach ore (current and non-current)	$	268,703	$	158,598
	Less: Non-current portion of heap leach ore		(130,888	)	(141,578)

	Current portion of heap leach ore		137,815		17,020
	Stockpiles		13,514		9,776
	Work-in-process		14,988		6,366
	Supplies		37,473		12,329
	Finished goods		4,500		771
	Current inventory	$	208,290	$	46,262
Non-current inventory relates to heap leach ore at Mesquite and Castle Mountain not expected to be recovered in the next year.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

8. Investment in associate
	Details of the Company’s investment in associate as at December 31, 2020 and 2019 are as follows:
	Name of equity accounted for investee	Principal Activity	Principal place of business	% Ownership interest		Quoted fair value⁽²⁾						Carrying amount
				2020	2019	2020				2019		2020				2019
	Solaris⁽¹⁾	Exploration	Ecuador	26.5	30.3	$	132,026			$	—	$		22,287		$	7,162
⁽¹⁾On June 30, 2019, the Company determined that Solaris was no longer a controlled subsidiary due to dilution of its interest to approximately 32% and the fact Solaris was self-sustaining for an extended period. On deconsolidation, the Company recorded its interest retained in Solaris at fair value. ⁽²⁾The fair value of the Company’s interest in Solaris, which listed on the TSX Venture Exchange during 2020, was based on the quoted market price at December 31, 2020, which is a Level 1 input in terms of IFRS 13. A quoted market price was not available as at December 31, 2019, as Solaris was not a listed company.
For the purposes of applying the equity method of accounting, the consolidated financial statements of Solaris as at September 30, 2020 have been used and appropriate adjustments have been made for the effects of significant transactions between that date and December 31, 2020. The following table summarizes the change in the carrying amount of the Company’s investment in Solaris:
								2020					2019
	Balance as at January 1							$	7,162				$		—
	Acquisition of interest in Solaris								12,480						7,800
	Dilution gain (loss)								8,033						243
	Company’s share of net (loss) of Solaris								(5,388				)		(881)
	Balance as at December 31							$	22,287				$		7,162

Summarized financial information in respect of the Company’s associate as at and for the years ended December 31, 2020 and 2019, is set out below. The summarized financial information below represents amounts in the associate’s consolidated financial statements prepared in accordance with IFRS.
								2020					2019
	Current assets							$	72,295				$		6,191
	Non-current assets								20,652						24,391
	Total assets								92,947						30,582
	Current liabilities								3,141						456
	Non-current liabilities								544						1,575
	Total liabilities								3,685						2,031
	Non-controlling interest								7,766						7,822
	Net assets of associate attributable to shareholders								81,496						20,729
	Equinox Gold’s share of net assets								21,585						6,287
	Other equity adjustments								702						876
	Carrying amount							$	22,287				$		7,162

									2020						2019
	Revenue							$	—				$		—
	Net loss								20,369						1,003
	Net comprehensive loss							$	19,826				$		1,003

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

9. Mineral properties, plant and equipment
		Mineral properties⁽¹⁾			Plant and Equipment⁽¹⁾			Construction in-progress⁽¹⁾			Other			Total
Cost

Balance - December 31, 2018	$	86,740		$	80,234		$	153,171		$	555		$	320,700
Additions		26,132			(900	)		63,108			1,633			89,973
Transfers		89,758			95,633			(195,328	)		—			(9,937	)
Transfer from exploration and evaluation assets		133,060			—			—			—			133,060
Disposals		—			(1,758	)		—			(74	)		(1,832	)
Change in reclamation cost asset		6,080			—			—			—			6,080
Balance - December 31, 2019	$	341,770		$	173,209		$	20,951		$	2,114		$	538,044
Leagold Acquisition		909,715			380,227			28,525			318			1,318,785
Additions		84,675			40,192			52,342			326			177,535
Transfers		(1,570	)		56,125			(66,176	)		—			(11,621	)
Disposals		—			(3,819	)		—			—			(3,819	)
Change in reclamation cost asset		31,537			—			—			—			31,537
Balance - December 31, 2020	$	1,366,127		$	645,934		$	35,642		$	2,758		$	2,050,461
Accumulated depreciation

Balance - December 31, 2018	$	326		$	3,363		$	—		$	100		$	3,789
Additions		12,682			24,136			—			294			37,112
Disposals		—			(766	)		—			(35	)		(801	)
Balance - December 31, 2019	$	13,008		$	26,733		$	—		$	359		$	40,100
Additions		116,424			51,978			—			694			169,096
Disposals		—			(2,139	)		—			—			(2,139	)
Balance - December 31, 2020	$	129,432		$	76,572		$	—		$	1,053		$	207,057

Net book value:
At December 31, 2019	$	328,762		$	146,476		$	20,951		$	1,755		$	497,944
At December 31, 2020	$	1,236,695		$	569,362		$	35,642		$	1,705		$	1,843,404

(1) Cost balances as at December 31, 2018, 2019 cost additions, and 2019 cost transfers have been reclassified to conform with the current period presentation.
During the year ended December 31, 2020, the Company capitalized to construction-in-progress $45.2 million (2019 - $21.0 million) of costs at Castle Mountain. Pre-production income of $1.6 million earned during the ramp-up of Castle Mountain was deducted from construction-in-progress. On commencement of commercial production at Castle Mountain on November 21, 2020, the Company transferred $66.2 million from construction-in-progress to mineral properties ($1.6 million pre-production income) and plant and equipment ($56.1 million). In addition, $11.6 million was transferred from construction-in-progress to inventory. During the year ended December 31, 2020, the Company capitalized to construction-in-progress $3.5 million of costs at Santa Luz. Mineral properties at December 31, 2020 includes $63.4 million allocated to the mineral interest at Los Filos as part of the Leagold purchase price allocation, which is not currently subject to depletion.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

9. Mineral properties, plant and equipment (Continued)

Certain of the Company’s mining properties are subject to royalty arrangements based on their net smelter returns (“NSR”s) or gross revenues. At December 31, 2020, the Company’s significant royalty arrangements were as follows:
	Mineral property	Royalty arrangements
	Mesquite	0.5-7% NSR; 6-9% sliding scale NSR based on gold price
	Castle Mountain	2.65% NSR
	Los Filos	3% of gross sales at Xochipala concession; 1.5% EBITDA; 0.5% gross revenues
	Aurizona	1.5% of gross sales; 3-5% sliding scale NSR based on gold price
	Fazenda	0.75-1.5% of gross sales
	RDM	1-1.5% of gross sales
	Pilar	0.75-1.5% of gross sales

10. Accounts Payable and Accrued Liabilities
			December 31, 2020		December 31, 2019
	Trade payables	$	99,197	$	45,057
	Capital related		7,056		18,833
	Accrued interest		390		1,553
	Value added and income taxes payable		23,900		1,761
		$	130,543	$	67,204

11. Loans and borrowings
		Note		December 31, 2020		December 31, 2019
	Credit Facility	11(a)	$	289,910	$	116,625
	2020 Convertible Notes	11(b)		126,645		—
	2019 Convertible Notes	11(c)		128,686		125,850
	Standby Loan	11(d)		—		12,000
	Debenture	11(e)		—		9,574

				545,241		264,049
	Less: Current portion of loans and borrowings			(13,333	)	(61,574)
	Non-current portion of loans and borrowings		$	531,908	$	202,475

(a) Credit Facility
On March 10, 2020, in conjunction with the Leagold Acquisition, the Company amended its $130 million corporate revolving credit facility with a syndicate of lenders led by The Bank of Nova Scotia, Société Générale, Bank of Montreal and ING Capital LLC. The amended credit facility comprises of a $400 million revolving loan (the “Revolving Facility”) and $100 million amortizing term loan (the “Term Loan”) (together, the “Credit Facility”). On close of the Leagold Acquisition and concurrent financing, the Company drew the full amount of the Term Loan and an additional $100 million from the Revolving Facility. Proceeds from the draws were used to repay Leagold debt outstanding on the acquisition date. On March 24, 2020, the Company drew the remaining $180 million available under the Revolving Facility as a cautionary measure given the uncertainty regarding the potential impact of the COVID-19 pandemic on the Company’s operations. The Credit Facility bears interest at an annual rate of LIBOR plus 2.5% to 3.75%, subject to certain leverage ratios. The Revolving Facility matures on March 8, 2024, at which date it must be repaid in full and the Term Loan matures on March 10, 2025 with quarterly repayments equal to 6.67% of principal beginning September 30, 2021 through to maturity.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

11. Loans and borrowings (continued)

The Company determined that amending the corporate revolving credit facility to become the Credit Facility was a non-substantial modification of the existing outstanding debt. The Company recognized a gain on modification of debt of $2.6 million to reflect the adjusted amortized cost of the drawn portion of the Revolving Facility, recorded within other expense. Additional transaction costs of $9.2 million were incurred in relation to the Credit Facility and were recorded as a reduction to the carrying value of debt.

In August 2020, the Company repaid $200 million principal under the Revolving Facility and recorded $2.7 million in finance expense due to accelerated recognition of deferred financing costs as a result of the change in timing of cash flows. The revised carrying value of debt outstanding is accreted to the principal amount over the respective terms of the Revolving Facility and Term Loan using a weighted average effective interest rate of 4.4%.

The Credit Facility is secured by first-ranking security over all present and future property and assets of the Company. The Credit Facility is subject to standard conditions and covenants, including maintenance of debt service coverage ratio, leverage ratio and minimum liquidity of $50 million. As at December 31, 2020, the Company is in compliance with these covenants.

(b) 2020 Convertible Notes

On March 10, 2020, the Company issued $130 million in Convertible Notes to Mubadala Investment Company (“Mubadala”) and on April 9, 2020, pursuant to a pre-existing investor rights agreement, the Company issued $9.3 million in additional convertibles notes (referred to together with the Mubadala notes as the “2020 Notes”) to Pacific Road Resources Funds (“Pacific Road”). Proceeds from the 2020 Notes and Credit Facility (note 11(a)) were used, together with other sources, to repay $323.9 million principal and accrued interest outstanding under Leagold’s debt facilities (note 5) at the acquisition date.

The 2020 Notes mature on March 10, 2025 and bear interest at a fixed rate of 4.75% per year payable quarterly in arrears. The 2020 Notes are convertible at the holder’s option into common shares of the Company at a fixed conversion price of $7.80 per share. Holders may exercise their conversion option at any time, provided that the holder owns less than 20% of the outstanding common shares of the Company. On or after March 10, 2023, the Company has a call right that may be exercised if the 90-day volume weighted average price (“VWAP”) of the Company’s shares exceeds $10.14 for a period of 30 consecutive days. If the call right is exercised, the holders would be required to either (i) exercise the conversion option on the remaining principal outstanding or (ii) demand cash payment from the Company subject to a predetermined formula based on the conversion price of $7.80 per share and the Company’s share price at the time of redemption.

Gross proceeds from the 2020 Notes of $139.3 million was allocated to the debt and equity components. The fair value of the debt portion of $128.1 million was estimated using a discounted cash flow model based on an expected term of five years and a discount rate of 6.9%. The residual of $8.6 million ($11.7 million net of deferred tax expense of $3.1 million) was recognized in other equity reserves. The debt component is recorded at amortized cost, net of transaction costs, and is accreted to the principal amount over the term of the 2020 Notes using an effective interest rate of 7.3%. Transaction costs of $3.3 million were incurred and allocated on a pro-rata basis with $3.0 million allocated to the debt component and $0.3 million allocated to the equity component.

Security for the 2020 Notes includes a charge over all present and future property and assets of the Company and is subordinate to the Credit Facility.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

11. Loans and borrowings (continued)

On April 11, 2019, the Company issued $130 million in Convertible Notes to Mubadala and on May 7, 2019, pursuant to a pre-existing investor rights agreement, the Company issued $9.7 million in additional convertibles notes (referred to together with the Mubadala notes as the “2019 Notes”) to Pacific Road.

The 2019 Notes mature on April 12, 2024 and bear interest at a fixed rate of 5% per year payable quarterly in arrears. The 2019 Notes are convertible at the holder’s option into common shares of the Company at a fixed conversion price of $5.25 per share. Holders may exercise their conversion option at any time, provided that the holder owns less than 20% of the outstanding common shares of the Company. On or after October 11, 2022, the Company has a call right that may be exercised if the 90-day VWAP of the Company’s shares exceeds $6.83 for a period of 30 consecutive days. If the call right is exercised, the holders would be required to either (i) exercise the conversion option on the remaining principal outstanding or (ii) demand cash payment from the Company subject to a predetermined formula based on the conversion price of $5.25 per share and the Company’s share price at the time of redemption.

Gross proceeds from the 2019 Notes of $139.7 million was allocated to the debt and equity components. The fair value of the debt portion of $126.8 million was estimated using a discounted cash flow model based on an expected term of five years and a discount rate of 7.5%. The residual of $10.5 million ($12.8 million net of deferred tax expense of $2.3 million) was recognized in other equity reserves. The debt component is recorded at amortized cost, net of transaction costs, and is accreted to the principal amount over the term of the 2019 Notes using an effective interest rate of 7.7%. Transaction costs of $3.2 million were incurred and allocated on a pro-rata basis with $2.9 million allocated to the debt component and $0.3 million allocated to the equity component.

Security for the 2019 Notes includes a charge over all present and future property and assets of the Company and is subordinate to the Credit Facility.

(d) Standby Loan

On June 30, 2020, the Company repaid in full $13.7 million principal and accrued interest due under the Standby Loan, entered into in 2018 with the Company’s Chairman, Ross Beaty.

(e) Debenture

On June 30, 2019, the Company issued 2,227,835 common shares in consideration of an instalment payment and accrued interest due of $10.5 million. The Company recorded a gain on extinguishment of debt of $0.3 million.

On June 30, 2020, the Company repaid in full the remaining $10.4 million in principal and accrued interest due under the Debenture.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

11. Loans and borrowings (continued)

(f) Loans and borrowings continuity
The following is a summary of the changes in loans and borrowings arising from investing and financing activities for the years ended December 31, 2020 and 2019:

	Balance - December 31, 2018	$	214,559
	$10 million draw from Aurizona Construction Facility, net of deferred financing costs		8,814
	$20 million draw from Short-term Loan, net of deferred financing costs		19,600
	$20 million draw from Revolving Credit Facility, net of deferred financing costs		19,592
	Modification gain and transaction costs on conversion of Mesquite Acquisition Credit Facility to Revolving Credit Facility		(1,804)
	Debt component of Convertible Notes, net of deferred financing costs		123,942
	Repayment of debt and accrued interest		(131,211)
	Loss on extinguishment of debt		13,540
	Debenture principal repayment settled by issuance of shares		(10,450)
	Accretion and accrued interest		7,467
	Balance - December 31, 2019		264,049
	Debt assumed in Leagold Acquisition, including accrued interest		323,870
	$380 million draw from Credit Facility, net of deferred financing costs		372,682
	Debt component of Convertible Notes, net of deferred financing costs		124,622
	Repayment of debt and accrued interest		(547,463)
	Modification gain and transaction costs incurred on Credit Facility		(4,839)
	Accretion and accrued interest		12,320
	Balance - December 31, 2020	$	545,241

12. Derivative financial instruments
(a) Gold collars and forward contracts
The Company assumed gold collar and forward contracts as part of the Leagold Acquisition (note 5). The gold collars have put and call strike prices of $1,325 and $1,430 per ounce, respectively, for 3,750 ounces per month from acquisition to September 2022 for a total of 116,250 ounces. The forward contracts cover 4,583 ounces per month from acquisition to September 2022 for a total of 142,083 ounces, at an average fixed gold price of $1,350 per ounce. As of December 31, 2020, the Company had 78,764 ounces and 96,234 ounces remaining to be delivered under its gold collars and forward contracts, respectively. The gold collars and forward contracts have not been designated as hedges and are recorded at fair value at the end of each reporting period with changes in fair value recognized in other expense. The fair value of gold collars and forward contracts at December 31, 2020 was a liability of $91.4 million (2019 - $nil), of which $51.8 million was recorded as current derivative liabilities. For the years ended December 31, 2020 and 2019, the Company recognized the following within other expense (note 21):
			2020		2019
	Realized loss on settlement of gold contracts	$	35,223	$	—
	Unrealized loss on revaluation of gold contracts outstanding		12,868		—
					—
		$	48,091	$	—

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

12. Derivative financial instruments (continued)

(b) Foreign exchange contracts
Certain of the Company’s expenditures at its Brazilian and Mexican operations are denominated in the Brazilian Réal (“BRL”) and the Mexican Peso (“MXP”), respectively. The Company has implemented a foreign currency exchange risk management program to reduce its exposure to fluctuations in the value of the BRL and MXP relative to the US dollar.
As at December 31, 2020, the Company had in place USD:BRL and USD:MXP put and call options with the following notional amounts, weighted average rates and maturity dates:
			USD notional amount				Call options’ weighted average strike price			Put options’ weighted average strike price
		Currency		Within 1 year		1-2 years
		BRL	$	164,780	$	14,501	4.51			5.17
		MXP		24,000		2,000	21.75			25.99
The foreign exchange contracts have not been designated as hedges and are recorded at fair value at the end of each reporting period with changes in fair value recognized in other expense. The Company entered into these contracts at no premium and therefore incurred no investment costs at inception. The fair value of foreign exchange contracts at December 31, 2020 was a liability of $12.5 million (2019 - $1.6 million asset), of which $12.2 million was recorded as current derivative liabilities. For the year ended December 31, 2020, the Company recognized the following within other expense (note 21):
									2020					2019
	Realized loss on settlement of foreign exchange contracts							$	584				$	1,197
	Unrealized loss (gain) on revaluation of foreign exchange contracts								14,147					(1,640)

									14,731					(443)
(c) Warrant liability
The functional currency of the Company is the US dollar. The share purchase warrants were not issued for goods or services rendered. As the exercise price of the Company’s share purchase warrants is fixed in Canadian dollars, these warrants are considered a derivative as a variable amount of cash in the Company’s functional currency will be received on exercise. Accordingly, these warrants are classified and accounted for as a derivative liability at fair value through net income or loss. The fair value of the warrants is determined using the Black Scholes option pricing model at the period-end date or the market price on the TSX for warrants that are trading.

		Balance - December 31, 2018									$	18,861
		Warrants exercised										(868)
		Change in fair value										38,153
		Balance - December 31, 2019										56,146
		Issued in Leagold Acquisition										8,543
		Warrants exercised										(43,885)
		Change in fair value (note 21)										29,862
		Balance - December 31, 2020									$	50,666

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

12. Derivative financial instruments (continued)

The fair value of non-traded warrants was calculated with the following weighted average assumptions:
		December 31, 2020		December 31, 2019
	Risk-free rate		0.2%	1.7%
	Warrant expected life		1.0 years	1.2 years
	Expected volatility		47.1%	45.1%
	Expected dividend		0.0%	0.0%
	Share price (C$)		$14.02	$10.16
The fair value of traded warrants was based on the market price of C$0.58 per warrant on December 31, 2020 (December 31, 2019 - C$0.42).

13. Reclamation obligations
		Mexico			Brazil			USA			Total
Balance - December 31, 2018	$	—		$	4,079		$	19,863		$	23,942
Accretion		—			334			385			719
Change in estimates		—			3,586			2,087			5,673
Foreign exchange translation		—			(105	)		—			(105	)
Balance - December 31, 2019		—			7,894			22,335			30,229
Assumed with the Leagold Acquisition		32,878			29,360			—			62,238
Accretion		179			1,845			185			2,209
Change in estimates		16,634			10,241			4,662			31,537
Reclamation expenditures		(49	)		(276	)		(71	)		(396	)
Foreign exchange translation		—			(5,026	)		—			(5,026	)
Balance - December 31, 2020		49,642			44,038			27,111			120,791

Less: Current portion		(2,410	)		(1,278	)		—			(3,688	)
Non-current portion	$	47,232		$	42,760		$	27,111		$	117,103
The Company’s environmental permits require that it reclaims any land disturbed during mine development, construction and operations. The majority of these reclamation costs are expected to be incurred subsequent to the end of the expected useful life of the operation to which they relate. The Company’s provision for mine closure and reclamation consists of costs accrued based on the current best estimate of mine closure and reclamation activities. The Company’s provision for future site closure and reclamation costs is based on the level of known disturbance at the reporting date, known legal requirements and internal and external cost estimates. The Company measures the provision at the expected value of future cash flows using inflation rates of 2.0% to 3.5% (2019 - 2.2% to 3.3%) and discounted to the present value using discount rates of 0.9% to 6.9% (2019 - 1.8% to 5.8%) depending on the region in which the liabilities will be realized. The undiscounted value of the provision as of December 31, 2020 was $167.1 million (2019 - $38.1 million). The Company’s subsidiary, Western Mesquite Mines Inc., is required to post security for reclamation and for closure with Imperial County, California as lead agency under the California Surface Mining and Reclamation Act, and for pit backfill with the California State Lands Commission under a public/private land lease agreement. The Company has met its security requirements in the form of bonds posted through surety underwriters totaling $0.3 million.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

14. OTHER LONG-TERM Liabilities
		Note		December 31, 2020		December 31, 2019
	Provision for legal and tax matters	30	$	13,241	$	4,049
	Lease liabilities	15(b)		9,949		848
	Cash-settled equity awards	16(c)		3,992		253
	Other liabilities			5,587		—
			$	32,769	$	5,150

15. Leases
(a) Right-of-use assets
			Plant and equipment	Computer and office equipment
	Balance - December 31, 2018	$	—	$	229
	Additions		782		537
	Depreciation		(202	)	(225)
	Balance - December 31, 2019		580		541
	Recognized in Leagold Acquisition		10,386		318
	Additions		13,612		56
	Depreciation		(8,195	)	(329)
	Balance - December 31, 2020	$	16,383	$	586

(b) Lease liabilities
			December 31, 2020		December 31, 2019
	Current lease liabilities included in other current liabilities	$	8,935	$	501
	Non-current lease liabilities included in other long-term liabilities		9,949		848
		$	18,884	$	1,349

In June 2020, the Company entered into a new lease agreement for the use of mining equipment in relation to contract mining at Castle Mountain for a period of four years. The Company makes fixed payments and additional variable lease payments depending on the usage of the assets during the contract period. On commencement of the lease, the Company recognized a $13.4 million right-of-use asset and related lease liability.

16. Share capital

(a) Authorized and issued

The Company is authorized to issue an unlimited number of common shares with no par value.

On August 20, 2019, the Company completed a consolidation of its common shares at a ratio of five pre-consolidation common shares for one post-consolidation common share (the “Consolidation”). No fractional common shares were issued in connection with the Consolidation. As a result of the Consolidation, shares issuable pursuant to the Company’s outstanding stock options, share purchase warrants, RSUs and other convertible securities were proportionally adjusted on the same basis.

At December 31, 2020, 242.4 million common shares were issued and outstanding.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

(b) Share issuances
On March 10, 2020, in conjunction with the Leagold Acquisition and concurrent financings, the Company closed a non-brokered private placement for 6,472,491 common shares of the Company at a price of $6.18 per share for gross proceeds of $40 million, including $36.0 million in common shares issued to the Company’s Chairman, Ross Beaty, which is a related party transaction. The Company incurred $0.1 million in share issuance costs. Pacific Road exercised its anti-dilution option pursuant to its investor rights agreement with the Company in relation to the issuance of shares for the Leagold Acquisition. On April 9, 2020, the Company issued 461,947 common shares to Pacific Road at a price of $6.18 per common share for proceeds of $2.9 million. During the year ended December 31, 2020, the Company issued 26.5 million (2019 - 0.4 million) common shares for warrants and options exercised and received proceeds of $171.5 million (2019 - $0.7 million). On June 30, 2019, the Company issued 2.2 million common shares as settlement of the first principal instalment and accrued interest due under the Debenture (note 11(e)). On March 17, 2021, the Company completed the first tranche of a non-brokered private placement (the “Private Placement”) of subscription receipts at a price of C$10.00 per subscription receipt for gross proceeds of C$67.9 million. The second tranche of the Private Placement is expected to close in late March 2021, for total proceeds to the Company of up to C$75.0 million. The Private Placement is in conjunction with the expected closing of the acquisition of Premier Gold. Each subscription entitled the holder to receive one common share of Equinox Gold. Certain of the Company’s executives and directors subscribed for C$40.4 million in subscription receipts which is a related party transaction.
(c) Share-based compensation plans
The following table summarizes non-cash share-based compensation for the period:
			2020		2019
	Share purchase option expense	$	618	$	903
	RSU expense		3,320		2,542
	PSU expense		3,882		2,187
	DSU expense		320		—

	Total compensation expense	$	8,140	$	5,632

	Compensation expense included in:
	General and administration	$	6,751	$	5,017
	Operating expenses		1,063		386
	Exploration		326		229
		$	8,140	$	5,632
(i) Share purchase options
The Company has an incentive stock option plan (the “Option Plan”) whereby the Company may grant stock options to eligible employees, officers, directors and consultants with the exercise price, expiry date, and vesting conditions determined by the Board of Directors. All options are equity settled. The Option Plan provides for the issuance of up to 10% of the Company’s issued common shares as at the date of the grant.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

During the year ended December 31, 2020, the Company granted 0.2 million (2019 - 0.4 million) share purchase options to directors, officers, employees and consultants of the Company. The fair value of options granted was determined using the Black-Scholes option pricing model using the following weighted average assumptions:
							2020			2019
	Exercise price (C$)						$11.80			$5.30
	Risk-free interest rate						0.4%			1.8%
	Volatility						65.2%			65.7%
	Dividend yield						0%			0.0%
	Expected life						5.0 years			5.0 years
Total share-based compensation expense for the year ended December 31, 2020 related to the vesting of stock options was $0.6 million (2019 - $0.9 million).
A summary of the Company’s share purchase options is as follows:
						Shares issuable on exercise of options		Weighted average exercise price (C$)
	Outstanding, December 31, 2018					2,776,302		$		6.35
	Granted					359,210				5.30
	Exercised					(240,895)				2.85
	Expired/forfeited					(219,504)				10.97
	Outstanding, December 31, 2019					2,675,113		$		5.99
	Issued in Leagold Acquisition					5,728,647				7.77
	Granted					156,200				11.80
	Exercised					(5,559,803)				7.38
	Expired/forfeited					(81,087)				8.52
	Outstanding, December 31, 2020					2,919,070		$		7.09

At December 31, 2020, the Company had the following options issued and outstanding:
	Options Outstanding						Options Exercisable
	Range of exercise price (C$)	Number of options		Weighted average exercise price (C$)	Weighted average remaining contractual life (years)		Number of options		Weighted average exercise price (C$)
	$1.89 - $2.99	591,820	$	2.89	0.71		591,820	$	2.89
	$3.00 - $4.99	3,000		4.75	2.61		3,000		4.75
	$5.00 - $6.99	1,211,514		5.72	2.06		1,070,223		5.78
	$7.00 - $8.99	687,374		8.53	1.28		687,374		8.53
	$9.00 - $17.15	425,362		14.52	2.04		269,162		16.10
		2,919,070					2,621,579
The weighted average exercise price of options exercisable at December 31, 2020, was C$6.90.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

(ii) Restricted share units
Equity settled RSUs
Under the terms of the Equinox Gold Restricted Share Unit Plan (“RSU Plan”) the Board of Directors may, from time to time, grant to directors, officers, employees, and consultants, RSUs and performance based RSUs (“pRSUs”) in such numbers and for such terms as may be determined by the Board of Directors. RSUs granted under the RSU Plan are exercisable in shares after the vesting conditions, as specified by the Board of Directors, are met and until the third calendar year after the year in which the RSUs have been granted. During year ended December 31, 2020, the Company granted 0.4 million RSUs (2019 - 0.5 million) and 0.2 million pRSUs (2019 - 0.1 million) to directors, officers and employees. The fair value of RSUs was determined based on the Company’s share price on the date of grant. The weighted average share price for RSUs granted in the year was C$11.25 (2019 - C$5.65). The pRSUs vest in two tranches and the number of shares issued will range from 0% to 200% of the grant based on the achievement of gold production targets and total shareholder return compared to the S&P Gold Miners Index over a three-year period. Compensation expense related to the pRSUs is recorded over the three-year vesting period and the amount is adjusted at each reporting period to reflect the change in quoted market value of the Company’s common shares, the number of pRSUs expected to vest, and the expected performance factor. During the year ended December 31, 2020, the Company issued 0.5 million and 0.2 million common shares to settle RSUs and pRSUs, respectively (2019 - 0.2 million RSUs; 0.1 million pRSUs). Total share-based compensation expense for the year ended December 31, 2020 related to the vesting of RSUs and pRSUs was $6.2 million (2019 - $3.9 million).
A continuity table of the equity-settled RSUs and pRSUs outstanding is as follows:
		RSUs		pRSUs
	Outstanding, December 31, 2018	543,276		1,142,544
	Granted	488,560		143,740
	Settled	(220,289	)	(129,706)
	Forfeited	(8,500	)	(44,200)
	Outstanding, December 31, 2019	803,047		1,112,378
	Granted	375,017		213,600
	Settled	(463,608	)	(179,938)
	Forfeited	(4,750	)	(740)
	Outstanding, December 31, 2020	709,706		1,145,300

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

Cash-settled RSUs
Under the terms of the RSU plan, certain RSUs granted to eligible employees entitle the holder to a cash payment equal to the number of RSUs granted, multiplied by the quoted market value of the Company’s common shares on completion of the vesting period (the “cash-settled RSUs”). Compensation expense related to these RSUs is recorded over a two-year vesting period. The amount of compensation expense is adjusted at each reporting period to reflect the change in quoted market value of the Company’s common shares and the number of RSUs expected to vest. During the year ended December 31, 2020, the Company granted 0.1 million cash-settled RSUs (2019 - 0.2 million) with a weighted average grant date fair value of C$10.52.
A continuity table of the cash-settled RSUs outstanding is as follows:
			RSUs outstanding
	Outstanding, December 31, 2018		—
	Granted		168,800
	Outstanding, December 31, 2019		168,800
	Granted		78,900
	Settled		(65,900)
	Forfeited		(37,000)
	Outstanding, December 31, 2020		144,800
The total fair value of cash-settled RSUs outstanding as at December 31, 2020 was $1.2 million (December 31, 2019 - $0.2 million) and is included in other liabilities.
(iii) Performance share units
As part of the Leagold Acquisition (note 5), the Company issued 369,915 replacement performance share units (“PSUs”) under Leagold’s PSU plan. The PSUs vest in three tranches based on the achievement of certain gold production targets at the Los Filos, Fazenda, RDM, Pilar and Santa Luz mines and are payable in cash. All unvested PSUs expire on December 31 of the third year following the calendar year in which the PSUs were granted. The fair value of the PSUs is based on the current share price and reflects management’s best estimates of the probability that gold production targets will be achieved.
A continuity table of the PSUs outstanding is as follows:
		PSUs outstanding
	Outstanding, December 31, 2019	—
	Issued in Leagold Acquisition	369,915
	Settled	(72,533)
	Forfeited	(14,506)
	Outstanding, December 31, 2020	282,876
The total fair value of PSUs outstanding as at December 31, 2020 was $2.3 million (December 31, 2019 - $nil) and is included in other liabilities.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

(iv) Deferred share units
Under the terms of the Equinox Gold DSU Plan (“DSU Plan”), non-executive directors may elect to receive all or a portion of their annual compensation in the form of deferred share units (“DSUs”) which are linked to the value of the Company’s common shares. DSUs are issued on a quarterly basis under the terms of the DSU Plan, based on the five-day volume weighted average trading price of the Company’s common shares at the date of grant. DSUs vest immediately and are redeemable in cash. As part of the Leagold Acquisition (note 5), the Company issued 319,286 replacement DSUs to non-executive directors of Leagold. The DSUs are redeemable for 90 days from the date a director ceases to be a member of the Board.
A continuity table of the DSUs outstanding is as follows:
				DSUs outstanding
		Outstanding, December 31, 2019		—
		Issued in Leagold Acquisition		319,286
		Granted		8,266
		Redeemed		(202,115)
		Outstanding, December 31, 2020		125,437
The weighted average fair value of DSUs granted in the year was C$16.44 per unit at the date of grant. The total fair value of DSUs outstanding as at December 31, 2020 was $1.3 million (December 31, 2019 - $nil) and is included in other liabilities.
(v) Share purchase warrants
A continuity of the Company’s share purchase warrants is as follows:
			Shares issuable on exercise of warrants		Weighted average exercise price (C$)
	Outstanding, December 31, 2018		24,565,862		$	11.90
	Exercised		(363,235		)	5.36
	Expired		(151,437		)	14.60
	Outstanding, December 31, 2019		24,051,190		$	12.00
	Issued in Leagold Acquisition		16,626,569			11.14
	Exercised		(20,976,625		)	9.48
	Expired		(675,976		)	13.16
	Outstanding, December 31, 2020		19,025,158		$	14.00

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

16. Share capital (continued)

At December 31, 2020, the Company had the following share purchase warrants issued and outstanding:
	Range of exercise price (C$)⁽¹⁾	Shares issuable on exercise of warrants	Weighted average exercise price (C$)⁽¹⁾		Expiry dates
	$3.67 - $4.99	317,454	$	3.67	May 2021
	$5.00 - $9.99	840,776		5.61	March 2021 - May 2023
	$10.00 - $14.99	1,849,262		10.91	January 2021 - March 2022
	$15.00	16,017,666		15.00	October 2021
		19,025,158
⁽¹⁾ 17,701,156 warrants with a weighted average exercise price of C$14.21 are exercisable into one common share of Equinox Gold and one-quarter of a share of Solaris. Equinox Gold will receive nine-tenths of the proceeds from the exercise of each of these warrants and the remaining proceeds will be paid to Solaris.

17. Revenue
Revenue from contracts with customers disaggregated by metal were as follows:
			2020		2019
	Gold	$	841,195	$	281,697
	Silver		1,312		—
	Total revenue	$	842,507	$	281,697
(a) Gold offtake arrangement
As part of the Leagold Acquisition, the Company assumed offtake arrangements with Orion Mine Finance (“Orion”) that provides for gold offtake of 50% of the gold production from Los Filos and 35% of the gold production from the Fazenda, RDM, Pilar and Santa Luz mines at market prices, until a cumulative delivery of 1.1 million ounces and 0.7 million ounces, respectively, to Orion has been achieved. As at December 31, 2020, a total of 0.4 million ounces had been delivered to Orion under the terms of the offtake arrangements.
(b) Silver streaming arrangement
As part of the Leagold Acquisition, the Company assumed a silver streaming agreement with Wheaton Precious Metals Corp. (“WPM”) under which the Company must sell to WPM a minimum of 5 million payable silver ounces produced by Los Filos from August 5, 2010 to the earlier of the termination of the agreement and October 15, 2029 at the lesser of $3.90 per ounce and the prevailing market price, subject to an inflationary adjustment. The contract price is revised each year on the anniversary date of the contract, which at the acquisition date was $4.43 per ounce, and at December 31, 2020 was $4.46 per ounce. As at December 31, 2020, a total of 1.9 million ounces had been delivered to WPM under the terms of the streaming agreement.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

18. operating expenses
Operating expenses consists of the following components by nature:
			2020		2019
	Raw materials and consumables	$	153,038	$	86,407
	Salaries and employee benefits		67,792		36,524
	Contractors		78,919		31,819
	Repairs and maintenance		37,876		20,195
	Site administration		37,464		10,823
	Royalties		23,312		9,451

			398,401		195,219
	Change in inventories		23,860		(36,021)
	Total operating expenses	$	422,261	$	159,198

19. Care and Maintenance

Included in care and maintenance for the year ended December 31, 2020 was $18.2 million (2019 - $nil) in mine standby costs resulting from government mandated shutdowns due to the COVID-19 pandemic at the Company’s mine in Mexico (2020 - $15.3 million; 2019 - $nil) and certain mines in Brazil (2020 - $2.9 million; 2019 - $nil).

On September 3, 2020, the Company temporarily suspended operations at Los Filos as a result of a community blockade. For the year ended December 31, 2020, the Company incurred $44.6 million in care and maintenance costs related to the temporary suspension. Operations at Los Filos resumed on December 23, 2020.

The Company’s Santa Luz mine incurred $2.2 million (2019 - $nil) in care and maintenance costs for the year ended December 31, 2020, prior to approval of construction by the board of directors on November 9, 2020.

20. General and administration
General and administration for the Company consists of the following components by nature:
			2020		2019
	Salaries and benefits	$	12,497	$	6,904
	Share-based compensation		6,751		5,017
	Professional fees		12,814		3,672
	Office and other expenses		7,638		3,899
	Amortization		692		484
	Total general and administration	$	40,392	$	19,976

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

21. Other income (expense)
Other income (expense) consists of the following components:
		Note		2020			2019
	Foreign exchange gain (loss)		$	12,050		$	(155)
	Realized and unrealized losses on gold contracts	12(a)		(48,091	)		—
	Change in fair value of warrants	12(c)		(29,862	)		(38,185)
	Realized and unrealized losses on foreign exchange contracts	12(b)		(14,731	)		443
	Expected credit losses			(6,074	)		(444)
	Loss from investment in associate	8		(5,388	)		(881)
	Dilution gain (loss) from investment in associate	8		8,033			243
	Other income (expense)			(7,861	)		(13,744)
	Total other income (expense)		$	(91,924	)	$	(52,723)
During the year ended December 31, 2020, the Company recognized expected credit losses of $6.1 million (2019 - $0.4 million) related to the Company’s non-trade receivables.

22. Income taxes
Income tax expense differs from the amount that would result from applying Canadian federal and provincial income tax rates of 27% (2019 - 27%) to earnings before income taxes. These differences result from the following items:
			2020			2019
	Income (loss) before income taxes	$	41,531		$	(13,186)
	Canadian federal and provincial income tax rates		27%			27%
	Expected income tax expense (recovery) based on the above rates		11,213			(3,560)
	Non-deductible expenses		24,003			3,000
	Change in fair value of derivative liabilities		8,063			10,310
	Impact of US percentage depletion		(10,325	)		—
	Impact of Mexican inflation		(2,311	)		—
	Repayment of long-term debt		—			1,448
	Deconsolidation of Solaris		—			1,008
	Impairment and disposition of Elk Gold		—			536
	Tax effect of deferred tax assets for which no tax benefit has been recognized		6,424			5,238
	Foreign exchange and other		(16,256	)		(10,842)
	Total tax expense	$	20,811		$	7,138

	Current tax expense		35,050			7,250
	Deferred tax recovery		(14,239	)		(112)
	Total tax expense	$	20,811		$	7,138

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

22. Income taxes (continued)

The significant components of the Company’s recognized net deferred tax assets and liabilities are as follows:
			December 31, 2020			December 31, 2019

	Non-capital losses	$	22,421		$	11,698
	Mineral property, plant and equipment		45,109			4,727
	Reclamation obligation		15,080			—
	Other		20,307			1,290
	Total deferred tax assets	$	102,917		$	17,715

	Mineral properties, plant and equipment	$	(296,861	)	$	(18,456)
	Intercompany loan		(16,757	)		—
	Reclamation obligation		(5,631	)		—
	Other		(13,528	)		(9,971)
	Total deferred tax liabilities	$	(332,777	)	$	(28,427)
	Net deferred tax liability	$	(229,860	)	$	(10,712)

The movement in the deferred tax assets and liabilities during the year is as follows:

	Balance - December 31, 2018				$	(8,488)
	Recognized in net income (loss)					112
	Recognized in equity component of Convertible Notes					(2,336)
	Balance - December 31, 2019				$	(10,712)
	Recognized in net income (loss)					14,239
	Acquisition of Leagold					(230,458)
	Recognized in equity component of Convertible Notes					(2,929)
	Balance - December 31, 2020				$	(229,860)
A reconciliation of net deferred tax assets and liabilities to the amounts presented in the consolidated statements of financial position follows:
			December 31, 2020			December 31, 2019
	Deferred tax asset	$	—		$	—
	Deferred tax liability		(229,860	)		(10,712)
	Net deferred tax liability	$	(229,860	)	$	(10,712)

In assessing the recoverability of deferred tax assets other than deferred tax assets arising from the initial recognition of assets and liabilities that do not affect accounting or taxable profit, management considers whether it is probable that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

22. Income taxes (continued)

Deductible temporary differences, unused tax losses and unused tax credits for which deferred tax assets have not been recognized are as follows:
			December 31, 2020		December 31, 2019
	Non-capital losses	$	309,635	$	41,647
	State non-capital losses		47,445		41,025
	Mineral properties, plant and equipment		277,097		18,735
	Derivatives		97,647		—
	Share issue and finance costs		21,471		4,522
	Inventory		18,978		27,422
	Unrealized foreign exchange losses on investment and advances		12,021		38,948
	Reclamation obligation		54,996		28,609
	State alternative minimum tax credit		7,787		6,525
	Capital losses		26,826		36,570
	Interest expense		19,350		16,557
	Other		903		2,100
		$	894,156	$	262,660
At December 31, 2020, the Company had the following estimated tax operating losses available to reduce future taxable income, including both losses for which deferred tax assets are utilized to offset applicable deferred tax liabilities and losses for which deferred tax assets are not recognized as listed in the table above. The loss carryforwards expire as follows:
					December 31, 2020
	Brazil (no expiry)			$	111,752
	Mexico (expire between 2025-2028)				100,613
	Canada (expire between 2035-2040)				151,726
	United States - California (expire between 2032-2038 or after)				47,445
	Other (2026 and onwards)				8,600
				$	420,136

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

23. Segmented information
	Year ended December 31, 2020
		Revenue		Operating expenses			Depreciation and depletion				Exploration expenses				Other expenses			Income (loss) from operations
	Mesquite	$	245,931	$	(126,334)		$		(19,655)		$		—		$		—	$		99,942
	Aurizona		229,644		(92,398)				(41,991)				(5,109)				—			90,146
	Los Filos		105,872		(80,587)				(13,264)				(216)				(59,876)			(48,071)
	RDM		106,635		(48,582)				(20,601)				—				(937)			36,515
	Other operating mines⁽¹⁾		154,425		(74,360)				(36,121)				(6,515)				(1,969)			35,460
	Development projects⁽²⁾		—		—				—				—				(2,213)			(2,213)
	Corporate and other		—		—				—				—				(40,392)			(40,392)
		$	842,507	$	(422,261)		$		(131,632)		$		(11,840)		$		(105,387)	$		171,387
⁽¹⁾Includes Fazenda and Pilar, which were both acquired on March 10, 2020, and Castle Mountain. ⁽²⁾Includes Santa Luz, which was acquired on March 10, 2020. Castle Mountain was transferred out of Development projects to Other operating mines on achievement of commercial production on November 21, 2020.

	Year ended December 31, 2019
		Revenue		Operating expenses			Depreciation and depletion				Exploration expenses				Other expenses			Income (loss) from operations
	Mesquite	$	178,175	$	(108,573)		$		(16,764)		$		—		$		—	$		52,838
	Aurizona		103,522		(50,625)				(21,881)				(2,028)				—			28,988
	Development projects⁽²⁾		—		—				—				(6,726)				(1,115)			(7,841)
	Corporate and other⁽³⁾		—		—				—				—				(18,861)			(18,861)
		$	281,697	$	(159,198)		$		(38,645)		$		(8,754)		$		(19,976)	$		55,124
⁽¹⁾Includes Fazenda and Pilar, which were both on acquired March 10, 2020 ⁽²⁾Includes Castle Mountain and Santa Luz, which was acquired on March 10, 2020. ⁽³⁾Includes Gold Mountain, which was divested in May 2019, and Solaris, which was deconsolidated effective June 30, 2019.
Information about the carrying amount of the Company’s assets and liabilities by operating segment at December 31 is detailed below:
								Total assets								Total liabilities
								2020				2019				2020					2019⁽¹⁾
	Los Filos					$		1,066,378		$		—		$		(271,712)			$		—
	Aurizona							338,792				380,641				(49,261)					(55,625)
	Mesquite							262,758				247,797				(36,032)					(38,190)
	RDM							144,025				—				(42,146)					—
	Other operating mines							447,104				—				(97,320)					—
	Development projects⁽²⁾							209,215				158,127				(10,605)					(11,231)
	Corporate and other							203,559				52,785				(717,800)					(331,245)
						$		2,671,831		$		839,350		$		(1,224,876)			$		(436,291)
⁽¹⁾Total liabilities balances as at December 31, 2019 for Mesquite and Corporate and other have been reclassified to conform with the current period presentation. ⁽²⁾Includes Santa Luz, which was acquired on March 10, 2020. Castle Mountain was transferred out of Development projects to Other operating mines on achievement of commercial production on November 21, 2020.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

23. Segmented information (continued)

Information about the Company’s non-current assets and revenue by jurisdiction is detailed below:
		December 31, 2020		December 31, 2019
	Mexico	$	919,464	$	—
	Brazil		686,804		310,241
	United States		391,525		347,784
	Canada		28,014		32,669
	Total non-current assets	$	2,025,807	$	690,694

Revenue is attributed to regions based on the source location of the product sold.
		December 31, 2020		December 31, 2019
	Brazil	$	484,469	$	103,522
	United States		252,166		178,175
	Mexico		105,872		—
	Total revenue	$	842,507	$	281,697

The Company sells its metals through the corporate office to major metal exchange markets, major financial institutions and to smelters. Given the nature of the Company’s products there are always willing market participants ready to purchase the Company’s products at prevailing market prices. The following table presents sales to individual customers that exceeded 10% of annual metal sales for the year ended December 31, 2020 and 2019.
			2020		2019
	Customer⁽¹⁾
	1	$	354,981	$	—
	2		259,371		—
	3		131,439		—
	4		87,551		280,413
	Total sales to customers exceeding 10% of annual metal sales	$	833,342	$	280,413
	Percentage of total metal sales		98.3%		99.5%
⁽¹⁾A balance is only included for a customer in each year where total sales exceeded 10% of annual metal sales in the period.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

24. Basic and diluted earnings per share
Earnings (loss) per share (“EPS”), calculated on a basic and diluted basis as follows:
		2020					2019
		Weighted average shares outstanding	Net income (loss)		Earnings per share		Weighted average shares outstanding	Net income (loss)		Earnings per share
	Basic EPS	212,487,729	$	20,720	$	0.10	112,001,484	$	(20,324)	$	(0.16)
	Dilutive share options	2,015,014		—		—	—		—		—
	Dilutive RSUs	741,588		—		—	—		—		—
	Dilutive warrants	3,167,640		(1,076)		—	—		—		—
	Diluted EPS	218,411,971	$	19,644	$	0.09	112,001,484	$	(20,324)	$	(0.16)
For the year ended December 31, 2020, 16.0 million warrants, 0.2 million options and 41.0 million shares issuable for convertible notes (2019 - 24.1 million warrants, 0.4 million options, 20.0 million shares issuable for convertible notes) were anti-dilutive.

25. Supplemental cash flow information
During the years ended December 31, 2020 and 2019, the Company conducted the following non-cash investing and financing transactions:
			2020		2019
	Shares, options, warrants, DSUs and PSUs issued in Leagold Acquisition	$	764,083	$	—
	Shares issued to settle debt		—		10,110
	Non-cash changes in accounts payable in relation to capital expenditures		(16,488)		(1,427)
	Non-cash proceeds from sale of assets		514		2,321
	Recoverable taxes reclassified from mineral properties, plant and equipment to accounts receivable and other assets		—		(11,294)
	Right-of-use assets recognized (note 15(a))		13,612		1,548

26. Related party transactions

Related party expenses and balances

The Company’s Chairman, Ross Beaty, is a significant shareholder and considered a related party of the Company. In April 2019, the Company entered into a one-year unsecured $20 million revolving credit facility with Mr. Beaty (note 11), which it repaid in September 2019.

In June 2020, the Company repaid $13.7 million in principal and accrued interest owing to Mr. Beaty related to the Company’s Standby Loan (note 11(d)). In March 2020, Mr. Beaty participated in a private placement by the Company, acquiring $36.0 million in common shares (note 16(b)).

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

26. Related party transactions (continued)

Key management personnel compensation
Key management of the Company comprises executive and non-executive directors and members of executive management. The remuneration of the Company’s directors and other key management personnel during the years ended December 31 are as follows:
			2020		2019
	Salaries, directors’ fees and other short-term benefits	$	6,763	$	2,762
	Share-based payments		3,385		1,940
	Total key management personnel compensation	$	10,148	$	4,702
At December 31, 2020, $2.0 million (December 31, 2019 - $1.2 million) was owed by the Company to management for accrued salary and bonuses and the reimbursement of expenses.

27. Capital management
The Company’s primary objective when managing capital is to ensure it will be able to continue as a going concern and that it has sufficient ability to satisfy its capital obligations and ongoing operational expenses, as well as having sufficient liquidity to fund suitable business opportunities as they arise. The capital of the Company includes the components of equity and loans and borrowings net of cash and cash equivalents. Capital, as defined above, is summarized in the following table:
			December 31, 2020		December 31, 2019
	Equity	$	1,446,955	$	403,059
	Loans and borrowings		545,241		264,049

			1,992,196		667,108
	Cash and cash equivalents		(344,926)		(67,716)
	Total	$	1,647,270	$	599,392
The Company manages its capital structure and makes adjustments as necessary in light of economic conditions. The Company, upon approval from its Board of Directors, intends to balance its overall capital structure through new share issues or by undertaking other activities as deemed appropriate under the specific circumstances. To maintain its capital structure the Company may, from time to time, issue or buy back equity, repay debt or sell assets. In connection with the issuance of the Convertible Notes, the Company and Mubadala entered into an investor rights agreement, providing Mubadala, among certain other rights, the right to a nominee on the Company’s Board of Directors and standard anti-dilution rights.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

28. Financial instrument risk exposure and risk management

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management process.

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s financial assets.

The Company is primarily exposed to credit risk on its cash and cash equivalents, accounts receivable and deposits and reclamation bonds. Exposure to credit risk related to financial institutions and cash deposits is limited through maintaining cash and equivalents and short-term investments with high-credit quality financial institutions and instruments. Credit risk with respect to receivables from the sale of non-core assets is mitigated by security held in the event of default.

The carrying value of these financial assets totaling $404.5 million represents the maximum exposure to credit risk.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company ensures that there is sufficient capital in order to meet short term business requirements after taking into account the Company’s holdings of cash and cash equivalents.

In March 2020, the Company drew $180 million under its Revolving Facility as a cautionary measure given uncertainty regarding the impact of the COVID-19 pandemic on the Company’s operations. The Company had no immediate need for the funds and in August 2020 repaid $200 million principal on the Revolving Facility. Management cannot accurately predict the impact COVID-19 will have on the Company’s operations, the fair value of the Company’s assets, its ability to obtain financing, third parties’ ability to meet their obligations with the Company and the length of travel and quarantine restrictions imposed by governments of the countries in which the Company operates.

A summary of contractual maturities of financial liabilities is included in note 30.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: commodity price risk, interest rate risk and currency risk. Financial instruments affected by market risk include cash and cash equivalents, accounts receivable, marketable securities, reclamation deposits, accounts payable and accrued liabilities, debt and derivatives.

(i) Interest rate risk

Interest on the Company’s Revolving Facility and Term Loan is variable based on LIBOR. Borrowings at variable rates of interest expose the Company to interest rate risk. At December 31, 2020, $200 million is outstanding under the Revolving Facility and $100 million is outstanding under the Term Loan. A 100-basis point change in interest rates at the reporting date would have a $3.2 million impact on net income on an annualized basis.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

28. Financial instrument risk exposure and risk management (continued)

(ii) Foreign currency risk
The Company’s functional currency is the US dollar. The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency, primarily the Brazilian Réal, Mexican Peso and Canadian Dollar.
Financial assets and liabilities denominated in currencies other than the US dollar are as follows:
		December 31, 2020					December 31, 2019
			Financial assets		Financial liabilities		Financial assets		Financial liabilities
	Brazilian Réals	$	73,236	$	61,896	$	28,653	$	28,986
	Mexican Pesos		9,889		5,952		—		—
	Canadian Dollars		13,254		7,671		18,721		6,987
	Total	$	96,379	$	75,519	$	47,374	$	35,973
Of the financial assets listed above, $58.4 million (December 31, 2019 - $12.9 million) represent cash and cash equivalents held in Brazilian Réals, $0.9 million (December 31, 2019 - $nil) represent cash and cash equivalents held in Mexican Pesos and $2.4 million (December 31, 2019 - $7.8 million) represent cash and cash equivalents held in Canadian dollars. Minimal cash is held in other currencies. At December 31, 2020, with other variables unchanged, a 10% strengthening of the US dollar against the above currencies would have decreased net income by approximately $1.9 million (2019 - $1.0 million decrease to net loss). A 10% weakening of the US dollar would have the opposite effect on net income. The Company has a foreign currency exchange risk management program (note 12(b)) in order to manage foreign currency risk on its Brazilian Réal and Mexican Peso expenditures.
(iii) Commodity price risk
Gold prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the political and economic conditions of major gold producing countries. The profitability of the Company is directly related to the market price of gold. A decline in the market price for this precious metal could negatively impact the Company’s future operations. As part of the Leagold Acquisition (note 5 and 12(a)) the Company assumed gold collar and forward swap contracts. The Company has not hedged any of its gold sales, other than those assumed as part of the Leagold Acquisition.

29. Fair value measurements

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 establishes three levels in which to classify the inputs of valuation techniques used to measure fair values.

Level 1 - quoted market 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 - inputs are unobservable (supported by little or no market activity) such as non-corroborative indicative prices for a particular instrument provided by a third party.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

29. Fair value measurements (continued)

As at December 31, 2020, marketable securities and traded warrants are measured at fair value using Level 1 inputs and non-traded warrants, gold collars and forward swap contracts and foreign exchange collars are measured at fair value using Level 2 inputs. The fair value of the long-term receivables, Convertible Notes and Revolving Facility, for disclosure purposes, are determined using Level 2 inputs. The carrying values of cash and cash equivalents, accounts receivable, reclamation bond, and accounts payable and accrued liabilities approximate fair value due to their short terms to maturity. The fair value of marketable securities is measured based on the quoted market price of the related common shares at each reporting date, and changes in fair value are recognized in net income (loss). The fair value of the traded warrants is measured based on the quoted market price of the warrants at each reporting date. The fair value of the non-traded warrants is determined using an option pricing formula (note 12(c)). The fair value of gold collars and forwards swap contracts is measured based on forward gold prices and the fair value of foreign exchange contracts is measured based on forward foreign exchange rates. The fair value of the long-term receivables, Convertible Notes and Revolving Facility, for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of the cash flows discounted using a market rate of interest adjusted for appropriate credit risk. There were no transfers between fair value levels during the year.
The following table provides the fair value of each classification of financial instrument as at December 31:
			2020		2019

	Loans and receivables:
	Cash and cash equivalents	$	344,926	$	67,716
	Restricted cash		3,210		15,285
	Trade receivables		17,212		—
	Receivable from Serabi		6,429		12,033
	Long-term receivables		5,768		11,986
	Reclamation bonds and other receivables		136		577
	Financial assets at FVTPL:
	Marketable securities		3,121		988
	Foreign exchange contracts		—		1,640
	Total financial assets	$	380,802	$	110,225

	Financial liabilities at FVTPL:
	Traded warrants	$	36,455	$	26,056
	Non-traded warrants		14,211		30,090
	Gold collars and forward swap contracts		91,393		—
	Foreign exchange contracts		12,507		—
	Cash settled equity awards		4,831		759
	Other:
	Accounts payable and accrued liabilities		119,641		67,047
	Convertible Notes		281,498		137,995
	Credit Facility		300,599		120,225
	Debenture		—		10,061
	Standby Loan		—		13,252
	Other liabilities		—		1,795
	Total financial liabilities	$	861,135	$	407,280

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

30. Commitments and contingencies
At December 31, 2020, the Company had the following contractual obligations outstanding which are expected to be settled in the time periods indicated:
			Total		Within 1 year		1-2 years		2-3 years		3-4 years		4-5 years		Thereafter
	Loans and borrowings and accrued interest	$	654,805	$	34,924	$	47,675	$	46,960	$	376,358	$	148,888	$	—
	Accounts payable and accrued liabilities		119,641		119,641		—		—		—		—		—
	Reclamation obligations⁽¹⁾		167,142		4,009		6,183		11,045		11,452		16,123		118,330
	Purchase commitments		69,879		64,670		4,264		931		13		—		—
	Gold contracts		91,393		51,805		39,588		—		—		—		—
	Foreign exchange contracts		12,507		12,188		319		—		—		—		—
	Lease commitments		16,006		5,099		4,595		4,487		1,800		6		19
	Total	$	1,131,373	$	292,336	$	102,625	$	63,423	$	389,623	$	165,017	$	118,349
(1) Amount represents undiscounted future cash flows.
Due to the nature of the Company’s operations, various legal, tax, environmental and regulatory matters are outstanding from time to time. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. While the outcomes of these matters are uncertain, based upon the information currently available, the Company does not believe that these matters in aggregate will have a material adverse effect on its consolidated financial statements. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effect of these changes in its consolidated financial statements in the period in which such changes occur. The Company is a defendant in various lawsuits and legal actions, including for alleged fines, taxes and labour related matters in the jurisdictions in which it operates. Management regularly reviews these lawsuits and legal actions with outside counsel to assess the likelihood that the Company will ultimately incur a material cash outflow to settle the claim. To the extent management believes it is probable that a cash outflow will be incurred to settle the claim, a provision for the estimated settlement amount is recorded. At December 31, 2020, the Company recorded a legal provision for these items totaling $13.2 million (December 31, 2019 - $4.0 million) which is included in other long-term liabilities. The Company is contesting federal income and municipal VAT assessments in Brazil. Brazilian courts often require a taxpayer to post cash or a guarantee for the disputed amount before hearing a case. It can take up to five years to complete an appeals process and receive a final verdict. At December 31, 2020, the Company recorded restricted cash of $1.2 million (December 31, 2019 - $13.9 million) in relation to insurance bonds for tax assessments in the appeals process. The Company may in the future have to post security, by way of cash, insurance bonds or equipment pledges, with respect to certain federal income and municipal tax assessments being contested, the amounts and timing of which are uncertain. The Company and its advisor believe the federal income and municipal tax assessments under appeal are wholly without merit and no provision has been recorded with respect to these matters. In certain jurisdictions where the Company operates, entities that are exporters are permitted to maintain offshore bank accounts and are required to register all transactions resulting in deposits into and payments out of those accounts. The Company has identified that in certain instances it has not registered all transactions prior to 2017.

Notes to Consolidated Financial Statements

(Tables expressed in thousands of United States dollars, except share and per share amounts)

For the years ended December 31, 2020 and 2019

30. Commitments and contingencies (continued)

The Company has been advised by its tax and foreign trade legal advisors that material fines that could result from non-compliance are imposable under statute with a five-year statute of limitations.

If the Company is unable to resolve all these matters favorably, there may be an adverse impact on the Company’s financial performance, cash flows and results of operations.

The Company will continue to closely monitor the COVID-19 situation. Should the duration, spread or intensity of the pandemic further develop in 2021, the Company’s supply chain, market pricing, operations and customer demand could be affected. These factors may further impact the Company’s operating plan, its liquidity and cash flows, and the valuation of its long-lived assets. The COVID-19 situation continues to evolve. The magnitude of its effects on the economy, and on the Company’s financial and operational performance, is uncertain at this time.

31. Subsequent EventS

Acquisition of Premier Gold Mines

On December 16, 2020, the Company announced that it had entered into a definitive agreement with Premier Gold Mines Limited (“Premier”) whereby the Company will acquire all of the outstanding shares of Premier (the “Transaction”). On closing of the Transaction, Premier shareholders will receive 0.1967 of an Equinox Gold share.

On February 23, 2021, Premier securityholders voted to approve the Transaction. The Transaction is expected to close near the end of the first quarter of 2021 subject to certain regulatory approvals and other customary closing conditions.

By approving the Transaction, Premier securityholders also approved the spin-out to Equinox Gold and Premier shareholders shares of a newly created US-focused gold production and development company to be called i-80 Gold Corp.

On March 1, 2021, the Company announced that it had entered into an agreement with Orion Mine Finance Group (“Orion”) to acquire 10% from Orion’s current interest in the Hardrock Mine Project (the “Hardrock Project”) for consideration of $51 million plus certain contingent payment obligations (the “Hardrock Transaction”).

The Hardrock Project is a multi-million-ounce, fully permitted, construction-ready gold project located in Ontario, Canada and currently owned 50% by Orion and 50% by Premier Gold Mines Limited (“Premier”). Equinox Gold will acquire a 50% interest in the Hardrock Project upon completion of the Company’s pending acquisition of Premier, as announced on December 16, 2020, and will subsequently increase its interest to 60% upon completion of the Hardrock Transaction. Orion will hold a 40% interest in the Hardrock Project.

EX-99.2 3 ex992.htm 2020 MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBIT 99.2

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

(Expressed in United States Dollars, unless otherwise stated)

Management’s Discussion and Analysis
For the three months and year ended December 31, 2020

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”) (TSX: EQX, NYSE American: EQX) should be read in conjunction with the audited consolidated financial statements of the Company as at and for the year ended December 31, 2020 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 March 19, 2021. This discussion covers the three months (“Q4 2020” or the “Quarter”) and the year ended December 31, 2020 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. All forward-looking statements are qualified by cautionary notes in this MD&A as well as risks and uncertainties discussed in the Company’s 2019 Annual Information Form dated May 13, 2020 and its Management Information Circular dated April 6, 2020, which are filed on SEDAR and EDGAR.

Throughout this MD&A, cash costs, cash costs per ounce sold, all-in sustaining costs (“AISC”), AISC per ounce sold, AISC contribution margin, adjusted net income, adjusted earnings per share (“EPS”), mine free cash flow, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), net debt, and sustaining and non-sustaining capital expenditures are non-IFRS financial measures with no standard meaning under IFRS. Non-IFRS measures are further discussed in the section Non-IFRS Measures on page 36 of this MD&A.

Throughout this MD&A, the operational and financial results of the assets acquired in the merger with Leagold Mining Corporation (“Leagold”) are included from March 10, 2020 onward.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

CONTENTS

Business Overview	4
2020 Highlights	4
Highlights for the Three Months Ended December 31, 2020	6
Recent 2021 Highlights	6
Managing COVID-19	7
Consolidated Operational and Financial Highlights	8
2020 Guidance Comparison	9
2021 Guidance and Outlook	10
Operations	11
Development Projects	25
Health, Safety, Environment & Community	27
Community Development and ESG Reporting	28
Corporate	29
Recent Developments	30
Financial Results	31
Liquidity and Capital Resources	34
Outstanding Share Data	35
Commitments and Contingencies	35
Related Party Transactions	36
Non-IFRS Measures	36
Risks and Uncertainties	41
Accounting Matters	56
Management’s Report on Internal Controls Over Financial Reporting	60
Cautionary Notes and Forward-looking Statements	61
Technical Information	62

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Business Overview

Operations description

Equinox Gold is a growth-focused mining company delivering on its strategy of becoming the premier Americas gold producer. The Company has quickly grown from a single-asset developer to a multi-asset gold producer with seven operating gold mines at the date of this MD&A, a multi-million-ounce gold reserve base and a strong growth profile from a pipeline of development and expansion projects. Equinox Gold operates entirely in the Americas, with two properties in the United States, one in Mexico and five in Brazil. Each asset is wholly owned by the Company.

Equinox Gold was created with the strategic vision of building a company that will responsibly and safely produce more than one million ounces of gold annually, bring long-term social and economic benefits to its host communities, create a safe and rewarding workplace for its employees and contractors, and provide above-average investment returns to its shareholders. To achieve its growth objectives, Equinox Gold intends to expand production from its current asset base through exploration and development and look for opportunities to acquire other companies, producing mines and/or development projects that fit the Company’s portfolio and strategy.

Equinox Gold’s common shares trade under the symbol “EQX” on the Toronto Stock Exchange (“TSX”) in Canada and under the symbol “EQX” on the NYSE American Stock Exchange (“NYSE-A”) in the United States. The Company has warrants that trade on the TSX under the symbol “EQX.WT”.

2020 Highlights

Operational

• Completed 13 million work hours with nine lost-time injuries across all sites

• Implemented proactive COVID-19 testing and safety protocols to keep the mines operating effectively while protecting the health, safety and economic wellbeing of our workforce and local communities

• Exceeded revised production guidance with total production of 477,186 ounces (“oz”) of gold with mine cash costs of $847 per oz and mine AISC of $1,025 per oz⁽¹⁾

• Sold 471,786 oz of gold at average realized gold price of $1,783 per oz

• Improved total recordable injury frequency and reportable environmental incident rates

Earnings

• Earnings from mine operations of $288.6 million

• Net income of $20.7 million or $0.10 per share

• Adjusted net income of $81.1 million or $0.38 per share, after adjusting for non-cash expenses^(1,2)

Financial

• Cash flow from operations before changes in working capital of $231.7 million ($216.5 million after changes in working capital)

• Adjusted EBITDA of $274.6 million^(1,2)

• Expenditures of $76.3 million in sustaining capital and $92.8 million in non-sustaining capital⁽¹⁾

• Refinanced debt with a low-cost $500 million corporate credit facility

• Cash and cash equivalents (unrestricted) of $344.9 million at December 31, 2020

• Net debt of $200.3 million at December 31, 2020 (including $278.9 million of in-the-money convertible notes)⁽¹⁾

¹Mine cash cost per oz sold, AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted EPS, sustaining capital, non-sustaining capital and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

²Primary adjustments for full-year 2020 were $29.9 million unrealized loss on the change in fair value of warrants, $14.1 million unrealized loss on the change in fair value of foreign exchange contracts and $12.9 million unrealized loss on the change in fair value of gold collars and forward contracts.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Corporate

• Completed at-market merger with Leagold, expanding the Company’s asset portfolio with four new mines in Mexico and Brazil and a development-stage project in Brazil

• Announced acquisition of Premier Gold Mines (TSX: PG), which will further increase diversification and scale with the addition of a producing mine in Mexico and a construction-ready project in Ontario, Canada

• Increased average daily share trading liquidity from C$3 million in 2019 to over C$40 million in 2020

• Achieved inclusion in global indices including the GDX, GDXJ, FTSE and S&P/TSX Composites

• Invested C$10.4 million in Solaris Resources (TSX: SLS) to maintain an approximate 26% interest on a fully diluted basis; current market value of Equinox Gold’s basic interest is approximately C$225 million

• Commenced online Environment, Social & Governance (“ESG”) quarterly reporting

• Increased technical expertise, governance oversight and diversity with Board and management appointments

Construction, development and exploration

• Completed construction and commissioning of Castle Mountain Phase 1 Mine with no lost-time incidents and achieved commercial production on November 21, 2020

• Increased Mesquite Mineral Reserves by 28% and Measured & Indicated Resources by 94%

• Extended mine life at Mesquite, Aurizona and Fazenda with exploration success

• Completed maiden Indicated Resource for Tatajuba deposit at Aurizona

• Completed a positive PEA for potential Aurizona underground development showing 740,500 oz of gold production over a 10-year mine life, an after-tax NPV_5% of $288 million and an IRR of 38% at $1,620/oz gold⁽³⁾

• Completed 23,916 metres of underground drilling and advanced technical studies to support a prefeasibility study for potential Aurizona underground development

• Completed a positive feasibility study for Santa Luz showing 903,000 oz of gold production over an initial 9.5-year mine life, an after-tax NPV_5% of $362 million and an IRR of 67% at $1,600/oz gold

• Commenced construction at Santa Luz in the Q4 2020

• Advanced Los Filos optimization study for new carbon-in-leach plant, heap leach expansion, updated mine planning and a Mineral Reserve and Mineral Resource update; targeted for completion in H1 2021

³ The Preliminary Economic Assessment (“PEA”) is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the results contemplated in the PEA will be realized.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Highlights for the Three Months Ended December 31, 2020

Operational

• Completed more than 2.9 million work hours with one lost-time injury across all sites

• Produced 136,352 oz and sold 134,895 oz of gold

• Mine cash costs of $842 per oz and mine AISC of $1,086 per oz⁽¹⁾

• Resumed operations at Los Filos following withdrawal of community blockade

Earnings

• Earnings from mine operations of $96.1 million

• Net income of $89.7 million or $0.37 per share

• Adjusted net income of $34.1 million or $0.14 per share, after adjusting for non-cash expenses^(1,2)

Financial

• Cash flow from operations before changes in working capital of $86.8 million ($82.9 million after changes in working capital)

• Adjusted EBITDA of $80.2 million^(1,2)

• Expenditures of $31.5 million in sustaining capital and $15.3 million in non-sustaining capital⁽¹⁾

Recent 2021 Highlights

• Provided 2021 production and cost guidance of 600,000 to 665,000 oz of gold at mine cash costs of $940 to $1,000 per oz and AISC of $1,190 to $1,275 per oz

• Gold production is expected to increase and AISC decrease each quarter during the year, with approximately 30% of production occurring in Q4 2021

• Announced positive drill results from Piaba Underground and Genipapo targets at Aurizona

• Santa Luz construction more than 25% complete and on schedule for first gold pour in Q1 2022

• Announces agreement with Orion Mine Finance Group (“Orion”) to acquire an additional 10% of the Hardrock Project in Ontario, Canada, bringing the Company’s total interest to 60% following completion of the Premier acquisition (through which the Company will acquire Premier’s 50% interest in Hardrock)

• Completed first tranche of non-brokered private placement for C$67.9 million of subscription receipts at a price of C$10.00 per subscription receipt in conjunction with the expected closing of the Premier acquisition

• Premier acquisition expected to close near the end of the first quarter of 2021, and the additional 10% interest of Hardrock shortly thereafter

• Premier securityholders approved the acquisition on February 23, 2021

• Require Mexican Comisión Federal de Comptetencia Económica anti-trust clearance decision and other regulatory approvals

² Primary adjustments during Q4 2020 were $17.5 million unrealized gain on the change in fair value of warrants, $11.1 million unrealized gain on the change in fair value of foreign exchange contracts, $11.2 million unrealized gain on the change in fair value of gold collars and forward contracts and $18.5 million unrealized gain on foreign exchange recognized within deferred tax expense.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Managing COVID-19

Each of the Company’s operations has implemented preventive measures in collaboration with the Company’s employees, contractors, host communities and governments to limit COVID-19 exposure and transmission as much as possible. The Company continues to enforce stringent operational and safety procedures in accordance with guidelines outlined by the World Health Organization, the US Centre for Disease Control, consulting health professionals, and the local, state and federal governments at each of its sites.

All COVID-19 protocols remain in place including travel restrictions, limiting mine site access to essential personnel only, enforced physical distancing and other safety precautions, enhanced cleaning and sanitizing, using extra protective gear and remote work policies where possible. The Company also continues to support local communities by donating supplies and support to local health clinics and communities and assisting with COVID-19 testing for community members.

The Company undertakes routine COVID-19 testing at all of its sites with the objective of identifying carriers early so they can self-isolate before inadvertently spreading the virus to others. All individuals who test positive, regardless of whether they show any symptoms, are asked to immediately self-isolate for two weeks and can only return to work once they have tested negative for COVID-19 and been cleared for work by a health professional. Workers from outside the region must test negative for COVID-19 before commencing their journey to site.

While all of the Company’s operations have experienced some effect from COVID-19, there were no government-mandated restrictions during the second half of the year and the Company has not experienced any material sales or supply chain disruptions to date. The COVID-19 effects relate primarily to the additional cost and time to implement enhanced health and safety protocols, and occasional workforce restrictions as workers attend to family responsibilities or self-isolate after exposure or potential exposure to the virus. The Company has implemented cross-functional training at each of its sites to ensure its ability to continue operating effectively despite occasional workforce restrictions.

Additional costs related to COVID-19 can be divided into three major categories:

• Mine standby costs, which includes costs associated with placing mines in care and maintenance and the subsequent ramp-up of those operations, of which none related to COVID-19 were incurred during the Quarter

• Incremental costs related to increased COVID-19 health and safety protocols, higher transportation costs to allow for physical distancing, overtime costs resulting from physical distancing and operating with a reduced workforce, and additional community donations to support COVID-19 education, preventive measures and medical supplies; and

• Direct COVID-19 costs related to expenditures incurred solely due to the COVID-19 pandemic that would not have been incurred otherwise, such as testing employees for the presence of the virus.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Consolidated Operational and Financial Highlights
		Three months ended				Year ended
Operating data	Unit	December 31, 2020⁽¹⁾	September 30, 2020⁽¹⁾	December 31, 2019		December 31, 2020	December 31, 2019
Gold produced⁽²⁾	oz	136,352	124,867	80,176		477,186	201,017
Gold sold	oz	134,895	128,437	80,330		471,786	196,803
Average realized gold price	$/oz	1,871	1,899	1,482		1,783	1,431
Mine cash cost per oz sold	$/oz	842	876	768		847	807
Mine AISC per oz sold^(3,4)	$/oz	1,086	1,077	856		1,025	929
Financial data
Revenue	M$	252.6	244.5	119.0		842.5	281.7
Earnings from mine operations	M$	96.1	88.7	38.5		288.6	83.9
Net income (loss)	M$	89.7	3.2	(8.5	)	20.7	(20.3)
Earnings (loss) per share	$/share	0.37	0.01	(0.08	)	0.10	(0.16)
Adjusted EBITDA⁽⁴⁾	M$	80.2	89.2	44.6		274.6	96.5
Adjusted net income⁽⁴⁾	M$	34.1	30.8	20.5		81.1	37.5
Adjusted EPS⁽⁴⁾	$/share	0.14	0.13	0.18		0.38	0.34
Balance sheet and cash flow data
Cash and cash equivalents (unrestricted)	M$	344.9	310.7	67.7		344.9	67.7
Net debt⁽⁴⁾	M$	200.3	232.4	196.3		200.3	196.3
Operating cash flow before changes in working capital	M$	86.8	78.9	35.3		231.7	76.1
(1) At December 31, 2020, the Company adjusted the fair value of heap leach inventory to reflect an updated estimate of conversion costs for heap leach inventory and forward gold prices as of the acquisition date, resulting in a net increase to heap leach inventories, including reprocess material of approximately $10.7 million. The Company has updated financial results for the periods impacted. (2) For the year ended December 31, 2020, includes 1,523 oz of gold produced at Castle Mountain during ramp-up and commissioning. For the year ended December 31, 2019, includes 6,076 oz of gold produced at Aurizona during ramp-up and commissioning. (3) Consolidated mine AISC per oz sold excludes corporate general and administration expenses. (4) AISC per oz sold, adjusted EBITDA, adjusted net income, adjusted EPS and net debt are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
The Company realized revenue of $252.6 million on sales of 134,895 oz of gold during the Quarter, compared to revenue for the three months ended September 30, 2020 (“Q3 2020”) of $244.5 million on sales of 128,437 oz of gold. The increase in ounces sold from Q3 2020 to Q4 2020 is mainly due to increased production at Aurizona as a result of increased mill throughput and better grades, and the commencement of operations at Castle Mountain. The quarter-on-quarter increase in revenue is due to the increase in ounces sold, partly offset by a decrease in average realized gold price per oz from $1,899 for Q3 2020 to $1,871 for Q4 2020.
Earnings from mine operations in Q4 2020 of $96.1 million increased from $88.7 million in Q3 2020 largely due to higher grades mined and processed at Mesquite, Aurizona and Fazenda, resulting in lower cash costs. Net income in Q4 2020 was $89.7 million compared to $3.2 million in Q3 2020 due to a decrease in non-cash expenses arising from changes in the fair values of the Company’s foreign exchange and gold contracts and the non-cash change in fair value of the derivative liability for the Company’s share purchase warrants as compared to Q3 2020, as well as a deferred tax recovery of $33.7 million primarily due to appreciation of the Mexican Peso against the US Dollar. The Company’s foreign exchange contracts, gold collars and gold forward swap contracts have not been designated as hedges and are recorded at fair value at the end of each reporting period with changes in fair value recognized in other expense. The Company’s functional currency is the US dollar whereas the exercise price of the Company’s share purchase warrants is fixed in Canadian dollars. As a result, these warrants are considered a derivative and are accounted for as a derivative liability at fair value through net income or loss.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Adjusted EBITDA for Q4 2020 of $80.2 million decreased from $89.2 million in Q3 2020. Decrease in EBITDA from Q3 2020 was due to higher care and maintenance costs at Los Filos in the Quarter due to the community blockade. Adjusted net income of $34.1 million for Q4 2020 increased from $30.8 million in Q3 2020. Increase in adjusted net income from Q3 2020 was primarily due to a tax recovery in the Quarter arising from true ups from forecasted tax expense for the year.

Adjusted EBITDA and adjusted net income increased significantly in 2020 from comparative periods in 2019 due to the addition of mines acquired through the Leagold Merger.

2020 Guidance Comparison
In November, the Company withdrew its 2020 guidance for Los Filos as a result of uncertainties due to the temporary suspension of operations from a community blockade, which ended on December 23, 2020. The Company achieved its revised 2020 production guidance of 425,000 to 465,000 oz of gold as outlined below:
	2020 Actuals				2020 Guidance⁽¹⁾
	Production (oz)			Mine AISC ($/oz)⁽²⁾	Production (oz)			AISC ($/oz)⁽²⁾
Los Filos^(3,4)	58,453			1,174	44,837			$1,047
Mesquite	141,270			1,091	130,000 - 140,000			$975 - $1,025
Aurizona	130,237			926	120,000 - 130,000			$1,000 - $1,050
Fazenda⁽⁴⁾	51,611			844	50,000 - 55,000			$925 - $975
RDM⁽⁴⁾	59,354			1,041	50,000 - 55,000			$1,000 - $1,050
Pilar⁽⁴⁾	30,923			1,139	25,000 - 30,000			$1,200 - $1,300
Castle Mountain	5,338			873	5,000 - 10,000			$750 - $800
Total	477,186			1,025	425,000 - 465,000			$975 - $1,025
Capital expenditures were lower than 2020 guidance as outlined below:
	2020 Actuals					2020 Guidance
$ amounts in millions		Sustaining⁽²⁾		Non-sustaining⁽²⁾		Sustaining⁽²⁾		Non-sustaining⁽²⁾
Los Filos^(3,4)	$	11	$	17	$	21	$	58
Mesquite		24		9		12		11
Aurizona⁽⁵⁾		24		5		36		3
Fazenda⁽⁴⁾		5		5		7		4
RDM⁽⁴⁾		9		1		9		4
Pilar⁽⁴⁾		4		1		5		2
Castle Mountain⁽⁵⁾		-		51		-		52
Santa Luz		-		5		-		10
Total	$	77	$	94	$	90	$	144
(1) Guidance was updated on August 10, 2020 primarily to reflect the effect of government-mandated temporary restrictions related to COVID-19, and revised on November 9, 2020 to reflect the effect of the community blockade at Los Filos, which was withdrawn in December. (2) AISC per oz sold, sustaining capital and non-sustaining capital are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes. (3) Los Filos full-year guidance was withdrawn on November 9, 2020. Guidance above for Los Filos is actual production and AISC to the end of Q3 2020. (4) Production and costs attributable to Equinox Gold post completion of the Leagold merger on March 10, 2020. (5) Non-sustaining capital expenditures for Aurizona and Castle Mountain include $3.5 million and $6.5 million, respectively, of exploration costs expensed.
Capital expenditures were significantly lower than planned during the year primarily due to the suspension of mining and development activities at Los Filos as the result of a community blockade, and less spend at Santa Luz as the project prepared for full-scale construction.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

2021 Guidance and Outlook
The Company’s 2021 production guidance of 600,000 to 665,000 oz of gold represents an approximate 30% increase over the Company’s 2020 full-year production. Cost guidance includes cash costs of $940 to $1,000 per oz of gold sold and AISC of $1,190 to $1,275 per oz of gold sold.
Consolidated gold production is expected to increase quarter-over-quarter during the year, with the fourth quarter benefiting from higher-grade ore at both Los Filos and Mesquite. Cash costs for 2021 reflect the lower grades mined at Los Filos for the first half of the year until the Guadalupe stripping program and Bermejal underground development are complete, providing access to higher-grade ore. Bermejal underground development will not commence, however, until successful resolution of an amended community support agreement with the Carizalillo community. AISC in 2021 reflect significant development and stripping campaigns at Los Filos, Mesquite and Aurizona to access higher-grade ore, which will boost production and reduce costs in the second half of the year. The Company is investing significantly in its projects in 2021, setting the foundation for lower-cost, longer-life mines and substantial production growth going forward. The Company has budgeted $178 million in sustaining capital for 2021 (including some capital carried over from 2020), compared to the total spend in 2020 of approximately $77 million. The Company is also undertaking meaningful growth projects this year, including construction of the Santa Luz mine, advancing expansion projects at the Los Filos mine, completing a pit expansion at the RDM mine and significant exploration programs focused on mine life extension. The Company has budgeted $249 million in non-sustaining growth capital for 2021, compared to approximately $94 million in 2020.
	Production (oz)		Cash Costs ($/oz)⁽¹⁾		AISC ($/oz)^(1,2)		Sustaining Capital (M$)⁽¹⁾		Non-sustaining Capital (M$)⁽¹⁾
Mexico
Los Filos	170,000 - 190,000	$	1,125 - 1,200	$	1,330 - 1,390	$	38	$	95
USA
Mesquite	130,000 - 140,000		925 - 975		1,275 - 1,325		48		9
Castle Mountain	30,000 - 40,000		725 - 775		1,100 - 1,150		14		10
Brazil
Aurizona	120,000 - 130,000		720 - 770		1,075 - 1,125		46		4
Fazenda	60,000 - 65,000		820 - 870		1,075 - 1,125		15		2
RDM	55,000 - 60,000		1,000 - 1,050		1,175 - 1,225		10		35
Pilar	35,000 - 40,000		1,200 - 1,300		1,400 - 1,500		7		-
Santa Luz	-		-		-		-		94
Total	600,000 - 665,000	$	940 - 1,000	$	1,190 - 1,275	$	178	$	249
(1) Cash costs per oz sold, AISC per oz sold, sustaining capital and non-sustaining capital are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes. (2) Consolidated mine AISC per oz sold excludes corporate general and administration expenses.
Guidance will be updated to include the Mercedes mine and Hardrock project following completion of the proposed acquisition of Premier, which is expected to close in March subject to all necessary securityholder and regulatory approvals. The Company may revise guidance during the year to reflect changes to expected results.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Operations

Mesquite Gold Mine, California, USA
Mesquite is an open-pit, run-of-mine (“ROM”) heap leach gold mine located in Imperial County, California, approximately 200 miles south of Castle Mountain. Mesquite has been in production since 1985 and was acquired by Equinox Gold in October 2018.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Ore mined and stacked on leach pad	kt	3,498	4,350	5,547	17,351	25,221
Waste mined	kt	8,487	8,163	8,403	30,782	32,925
Open pit strip ratio	w:o	2.43	1.88	1.52	1.77	1.31
Average gold grade stacked to leach pad	g/t	0.72	0.57	0.31	0.48	0.32
Gold produced	oz	33,717	31,024	40,321	141,270	125,736
Gold sold	oz	33,032	31,419	41,316	139,872	126,724
Financial data
Revenue	M$	61.5	59.6	61.2	245.9	178.2
Cash costs⁽¹⁾	M$	29.5	28.8	35.4	125.8	108.3
Sustaining capital⁽¹⁾	M$	10.5	7.4	0.8	24.1	7.0
Reclamation expenses	M$	0.4	0.6	0.8	2.7	2.6
Total AISC⁽¹⁾	M$	40.5	36.8	37.0	152.6	117.9
AISC contribution margin⁽¹⁾	M$	21.0	22.8	24.1	93.3	60.3
Non-sustaining capital⁽¹⁾	M$	(0.6)	(1.8)	(2.0)	(9.2)	(8.6)
Mine free cash flow⁽¹⁾	M$	20.4	21.0	22.1	84.1	51.7
Unit analysis
Realized gold price per ounce sold	$/oz	1,861	1,898	1,481	1,758	1,406
Cash cost per ounce sold⁽¹⁾	$/oz	894	917	858	899	855
AISC per ounce sold⁽¹⁾	$/oz	1,225	1,172	897	1,091	930
Mining cost per tonne mined	$/t	1.57	1.36	1.53	1.42	1.48
Processing cost per tonne processed	$/t	3.36	2.77	2.21	2.81	1.78
G&A cost per tonne processed	$/t	1.19	0.90	0.69	0.85	0.56
(1) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Q4 and 2020 Analysis
Production
During Q4 2020, Mesquite produced 33,717 oz of gold (Q3 2020 - 31,024 oz) and sold 33,032 oz (Q3 2020 - 31,419 oz), realizing revenue of $61.5 million (Q3 2020 - $59.6 million) for the Quarter, at an AISC of $1,225 per oz (Q3 2020 - $1,172 per oz) and an average realized gold price of $1,861 per oz (Q3 2020 - $1,898 per oz). The mine outperformed plan for the Quarter and the full year.
During the Quarter the Company stacked one million tonnes of ore-grade oxide mineralized material identified in historical dumps, which required no blasting and had shorter hauls than material mined from the open pits. The Company also completed the mining of an in-situ non-oxide ore source at Vista East and has commenced stripping an oxide ore source at the Brownie deposit.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

With total 2020 production of 141,270 oz of gold (2019 - 125,736 oz), Mesquite exceeded the upper end of production guidance, which was forecast at 130,000 to 140,000 oz of gold. For 2020, AISC per oz of gold sold was $1,091, compared to guidance of $975 to $1,025 per oz sold, reflecting sustaining capital spent during 2020 for the Brownie stripping campaign that was originally planned for Q1 2021.

During 2020 Mesquite had one lost-time injury, achieving a Lost-time Injury Frequency Rate (“LTIFR”) and Total Reportable Injury Frequency Rate (“TRIFR”) per million hours worked of 1.3 and 6.6, respectively.

Exploration and development

Early in Q4 2020 the Company announced an updated Mineral Resource and Mineral Reserve estimate that included 10,785 metres (“m”) (77 holes) of bedrock drilling and 36,785 m (661 holes) of historical waste dump drilling that was completed in H1 2020. The results confirmed that the dump material overlying the Brownie deposit area contains significant gold resources and that in-situ mineralization is present adjacent to and extending from the resource pit. A follow-up 13,897 m drill program to test the potential to extend mineralization in the Brownie deposit along strike and down dip was initiated in Q3 2020 and completed in early Q4 2020. A separate program including 1,020 m of sonic drilling and 3.5 line-km of geophysical surveying (resistivity) on the leach pad was also completed during the Quarter.

The Company has started reinvesting in key infrastructure at Mesquite during the year to enable efficient operations for a longer mine life than originally contemplated at acquisition. Mesquite began replacing its mature truck fleet, expanded refinery capacity to also service Castle Mountain’s needs, increased carbon column capacity and upgraded solution pumping capacity. During the Quarter, the Company spent $10.5 million of sustaining capital related primarily to capitalized stripping of Brownie, water well improvements and process equipment upgrades. Non-sustaining capital expenditures in the Quarter of $0.6 million related entirely to exploration drilling of historical dumps and other targets, which are expected to add to production in the future.

During 2020 the Company spent $24.1 million of sustaining capital related mainly to capitalized stripping and process equipment upgrades, and $9.2 million of non-sustaining capital related to exploration projects with the objective of mine life extension.

Outlook

Mesquite production for 2021 is estimated at 130,000 to 140,000 oz of gold with cash costs of $925 to $975 per oz and AISC of $1,275 to $1,325 per oz.

The increase in AISC compared to 2020 reflects a year of significant investment at Mesquite with a focus on mine life extension. Sustaining capital of $48 million relates primarily to a $30 million stripping program to access the higher-grade oxide Brownie deposit, which will contribute significantly to production beginning in H2 2021. Ore stacking activity in H1 2021 is expected to be significantly lower than in H2 2021 due to Brownie stripping. This will result in higher per ounce costs in the earlier part of the year as compared to H2 2021. In addition, the Company has budgeted $10 million for leach pad expansion and $6 million for mining and processing equipment. The Company has also leased ten new CAT 793 haul trucks to upgrade the Mesquite fleet, of which three were received in Q4 2020 with the remainder expected in H1 2021. This investment underscores Equinox Gold’s commitment to mine life extension and will result in improved efficiencies and reduced operating costs.

Building on the Company’s exploration success in 2020, which increased Mesquite Mineral Reserves by 28% and Measured & Indicated Mineral Resources by 94%, non-sustaining capital of $9 million is allocated entirely to exploration with a focus on resource growth in the Brownie, Vista East and Rainbow deposits as well as reserve replacement.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Aurizona Gold Mine, Maranhão, Brazil
Aurizona is an open-pit gold mine located in northeastern Brazil that achieved commercial production on July 1, 2019. The Company believes the mine life can be extended with exploration success along strike from existing Mineral Reserves, as well as from underground Mineral Resources below the existing Piaba open pit. During 2020 the Company completed a preliminary economic assessment (“PEA”)⁽¹⁾ demonstrating the opportunity for both mine life extension and increased annual gold production with development of an underground mine that could operate concurrently with the existing and future open-pit mines, and is advancing a prefeasibility study (“PFS”) for the project with completion targeted for Q4 2021.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Ore mined	kt	1,231	955	1,271	3,267	1,845
Waste mined	kt	7,301	7,493	7,239	19,901	12,082
Open pit strip ratio	w:o	5.93	7.85	5.69	6.09	6.55
Tonnes processed	kt	846	832	800	3,227	1,571
Average gold grade processed	g/t	1.59	1.38	1.62	1.41	1.46
Recovery	%	90.6	89.9	90.1	89.8	91.0
Gold produced⁽²⁾	oz	37,438	33,248	39,855	130,237	75,282
Gold sold	oz	38,213	33,238	39,014	129,004	70,080
Financial data
Revenue	M$	71.6	63.5	57.8	229.6	103.5
Cash costs⁽³⁾	M$	23.3	22.5	26.2	92.4	50.6
Sustaining capital⁽³⁾	M$	10.6	8.7	5.2	24.4	13.7
Reclamation and exploration expenses	M$	0.5	1.0	0.3	2.7	0.7
Total AISC⁽³⁾	M$	34.4	32.2	31.7	119.5	65.0
AISC contribution margin⁽³⁾	M$	37.2	31.3	26.1	110.1	38.5
Non-sustaining capital⁽³⁾	M$	(1.1)	(1.3)	(6.8)	(4.6)	0.5
Mine free cash flow⁽³⁾	M$	36.1	30.0	19.3	105.5	39.0
Unit analysis
Realized gold price per ounce sold	$/oz	1,874	1,909	1,482	1,780	1,477
Cash cost per ounce sold⁽³⁾	$/oz	610	675	672	716	722
AISC per ounce sold⁽³⁾	$/oz	901	968	814	926	928
Mining cost per tonne mined	$/t	1.78	1.42	1.89	1.87	2.01
Processing cost per tonne processed	$/t	8.18	7.36	8.79	8.44	8.62
G&A cost per tonne processed	$/t	4.14	4.10	5.94	4.10	4.91
(1) The Aurizona PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the results contemplated in the PEA will be realized. (2) Aurizona achieved commercial production on July 1, 2019. For the year ended December 31, 2019, gold produced includes 6,076 oz from the pre-commercial production phase. (3) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Q4 and 2020 Analysis

Production

During Q4 2020, Aurizona produced 37,438 oz of gold (Q3 2020 - 33,248 oz) and sold 38,213 oz (Q3 2020 - 33,238 oz), realizing revenue of $71.6 million (Q3 2020 - $63.5 million) for the Quarter, at an AISC of $901 per oz (Q3 2020 - $968 per oz) and an average realized gold price of $1,874 per oz (Q3 2020 - $1,909 per oz).

Aurizona had a strong finish to the year in Q4 2020, with the highest production, grade and tonnes processed during 2020. Recoveries improved during the Quarter following commissioning of the new carbon-in-leach (“CIL”) circuit and averaged 90.6%.

With total 2020 production of 130,237 oz of gold (2019 - 75,282 oz, including gold produced during commissioning prior to achieving commercial production on July 1, 2019), Aurizona exceeded the upper end of production guidance, which was forecast at 120,000 to 130,000 oz of gold. AISC was $926 per oz sold, compared to guidance of $1,000 to $1,050 per oz, due in part to favourable foreign exchange rates and deferred waste stripping and other capital projects.

During 2020 Aurizona had three lost-time injuries, achieving LTIFR and TRIFR of 1.0 and 3.1, respectively.

Exploration and development

The Company spent $1.5 million on exploration during the Quarter. The Company concluded a 23,916m program (52 holes) on the Piaba deposit to increase confidence in the continuity of mineralization, expand the underground mineral resources and upgrade the classification of the resources from Inferred to Indicated to support the underground PFS that is underway. At the Genipapo target, a third phase of exploration was carried out during the Quarter including 2,430 m of reverse circulation drilling (25 holes), which completed the 2020 program (5,761 m in 75 holes) on that target. Additional drilling activities included completion of 5,151 m (24 holes) at the Touro target and 787 m (4 holes) within the Piaba Trend between the Piaba and Tatajuba deposits. Exploration expenditure for the year totalled $5.3 million, of which $1.6 million was allocated to sustaining capital with the remainder as non-sustaining.

During Q4 2020, the Company spent $10.6 million of sustaining capital primarily related to the planned tailings storage facility (“TSF”) raise and capitalized stripping. The Company spent $1.1 million of non-sustaining capital on exploration during the Quarter.

During 2020, the Company spent $24.4 million of sustaining capital primarily for the TSF raise and capitalized stripping, and $4.7 million on non-sustaining capital expenditures.

Outlook

Aurizona production for 2021 is estimated at 120,000 to 130,000 oz of gold with cash costs of $720 to $770 per oz and AISC of $1,075 to $1,125 per oz.

AISC for 2021 includes $46 million budgeted for sustaining capital, allocated primarily to $27 million in capitalized waste stripping and $15 million for the next planned TSF raise. Non-sustaining capital of $4 million is directed to exploration, and completion of the Piaba underground PFS.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Fazenda Gold Mine, Bahia, Brazil
Equinox Gold acquired Fazenda on March 10, 2020 as part of the Leagold Merger. Fazenda is located in Bahia State, Brazil and has been in operation for more than two decades. Fazenda is primarily an underground operation complemented with some small open pits.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	June 30, 2020	December 31, 2020⁽¹⁾
Ore mined - underground	kt	302	318	317	1,014
Tonnes processed	kt	332	340	333	1,087
Average gold grade processed	g/t	1.91	1.51	1.44	1.63
Recovery	%	89.9	91.4	90.3	90.6
Gold produced	oz	18,196	15,118	13,954	51,611
Gold sold	oz	18,237	15,346	14,151	51,056
Financial data
Revenue	M$	34.0	29.2	24.1	92.4
Cash costs⁽²⁾	M$	13.3	11.8	10.9	37.6
Sustaining capital⁽²⁾	M$	2.7	0.6	1.3	4.8
Reclamation expenses	M$	0.1	0.1	0.4	0.7
Total AISC⁽²⁾	M$	16.1	12.5	12.6	43.1
AISC contribution margin⁽²⁾	M$	17.9	16.7	11.5	49.3
Non-sustaining capital⁽²⁾	M$	(2.1)	(1.5)	(0.8)	(4.6)
Mine free cash flow⁽²⁾	M$	15.8	15.2	10.7	44.7
Unit analysis
Realized gold price per ounce sold	$/oz	1,859	1,902	1,701	1,807
Cash cost per ounce sold⁽²⁾	$/oz	728	767	773	737
AISC per ounce sold⁽²⁾	$/oz	881	816	891	844
Mining cost per tonne mined	$/t	20.84	15.33	17.41	17.60
Processing cost per tonne processed	$/t	12.66	10.72	9.94	10.86
G&A cost per tonne processed	$/t	5.59	4.00	4.35	4.57
(1) Fazenda was acquired as part of the Leagold Merger. As such, comparative figures from previous quarters are not presented. Operating and financial results for the three months ended March 31, 2020 (“Q1 2020”) are for the period from March 10 to March 31, 2020. (2) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

Q4 and 2020 Analysis

Production

During Q4 2020, Fazenda produced 18,196 oz of gold (Q3 2020 - 15,118 oz) and sold 18,237 oz (Q3 2020 - 15,346 oz), realizing revenue of $34.0 million (Q3 2020 - $29.2 million) for the Quarter, at an AISC of $881 per oz (Q3 2020 - $816 per oz) and an average realized price of $1,859 per oz (Q3 2020 - $1,902 per oz).

Plant feed grades in Q4 2020 of 1.91 g/t were higher than in Q3 2020 of 1.51 g/t following improvements in grade control and higher than expected grades in some mining blocks. Costs were higher in Q4 2020 than the previous quarter due in part to refurbishment of equipment as well as sustaining capital expenditures that had been deferred from Q3 2020.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

With total 2020 production attributable to Equinox Gold of 51,611 oz gold, Fazenda achieved the lower end of production guidance, which was forecast at 50,000 to 55,000 oz of gold. AISC in 2020 was $844 per oz gold sold, compared to guidance of $925 to $975 per oz, largely as the result of favourable foreign exchange rates and fuel costs and the deferral of some expenditures due to staffing constraints and mine plan sequencing.

During 2020 Fazenda had no lost-time injuries, achieving LTIFR and TRIFR of 0.0 and 2.1, respectively.

Exploration and development

The Company drilled 8,523 m during the Quarter, completing a 33,541-m program (212 holes) focused on reserve replacement adjacent to existing mine infrastructure. An additional 5,832 m was drilled from surface as part of an accelerated reserve replacement program focused on the potential for delineation of additional reserves hosted in the Canto 2 Sequence. Exploration expenditure for the year totalled $2.2 million, which was all non-sustaining.

During Q4 2020, sustaining capital expenditures of $2.7 million focused primarily on underground development as well as a scheduled TSF raise. Non-sustaining capital of $2.1 million was related to underground development of the Canto Sequence.

During 2020, the Company spent $4.8 million of sustaining capital at Fazenda, focused primarily on capitalized stripping and underground development, the TSF raise and mine and plant equipment. During 2020, the company spent $4.6 million of non-sustaining capital, primarily for exploration and underground development of the Canto Sequence.

Outlook

Fazenda production for 2021 is estimated at 60,000 to 65,000 oz of gold with cash costs of $820 to $870 per oz and AISC of $1,075 to $1,125 per oz.

AISC for 2021 includes $15 million of sustaining capital allocated primarily to $8 million for underground development and equipment and $4 million in open-pit waste stripping. Non-sustaining capital of $2 million relates entirely to exploration.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

RDM Gold Mine, Minas Gerais, Brazil
Equinox Gold acquired RDM on March 10, 2020 as part of the Leagold Merger. RDM is located in Minas Gerais State, Brazil and commenced production in early 2014 as a conventional open-pit operation.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	June 30, 2020	December 31, 2020⁽¹⁾
Ore mined	kt	680	686	569	1,981
Waste mined	kt	6,310	5,947	5,345	18,218
Open pit strip ratio	w:o	9.28	8.67	9.39	9.19
Tonnes processed	kt	714	662	688	2,218
Average gold grade processed	g/t	0.92	0.97	1.09	0.97
Recovery	%	86.4	86.7	84.0	85.6
Gold produced	oz	18,068	18,008	19,578	59,354
Gold sold	oz	18,263	18,675	19,018	58,723
Financial data
Revenue	M$	34.1	35.7	32.5	106.6
Cash costs⁽²⁾	M$	19.2	16.7	14.1	51.8
Sustaining capital⁽²⁾	M$	3.7	1.6	3.2	8.8
Reclamation expenses	M$	0.1	0.2	0.2	0.5
Total AISC⁽²⁾	M$	23.0	18.5	17.5	61.1
AISC contribution margin⁽²⁾	M$	11.1	17.2	15.0	45.5
Care and maintenance	M$	-	-	-	0.5
Non-sustaining capital⁽²⁾	M$	-	-	-	0.5
Mine free cash flow⁽²⁾	M$	11.1	17.2	15.0	44.5
Unit analysis
Realized gold price per ounce sold	$/oz	1,857	1,901	1,698	1,805
Cash cost per ounce sold⁽²⁾	$/oz	1,050	894	740	882
AISC per ounce sold⁽²⁾	$/oz	1,261	992	917	1,041
Mining cost per tonne mined	$/t	1.58	1.62	1.68	1.64
Processing cost per tonne processed	$/t	9.03	8.59	7.66	8.52
G&A cost per tonne processed	$/t	2.37	2.08	1.28	1.98
(1) RDM was acquired as part of the Leagold Merger. As such, comparative figures for previous quarters are not presented. Operating and financial results for Q1 2020 are for the period from March 10 to March 31, 2020. (2) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

Q4 and 2020 Analysis

Production

During Q4 2020, RDM produced 18,068 oz of gold (Q3 2020 - 18,008 oz) and sold 18,263 oz (Q3 2020 - 18,675 oz), realizing revenue of $34.1 million (Q3 2020 - $35.7 million) for the Quarter, at an AISC of $1,261 per oz (Q3 2020 - $992 per oz) and an average realized price of $1,857 per oz (Q3 2020 - $1,901 per oz).

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

RDM performed well in Q4 2020, with good productivity and grades, although recoveries were slightly lower than Q3 2020 due to the type of ore mined during December. AISC for Q4 2020 was higher than previous quarters as the result of commencing a large stripping campaign that will continue into 2021.

With total 2020 production attributable to Equinox Gold of 59,354 oz gold, RDM exceeded the upper end of production guidance, which was forecast at 50,000 to 55,000 oz of gold. RDM implemented a number of optimizations during 2020 to stabilize recoveries, which improved quarter-over-quarter, including new plant process automation and improvement blast fragmentation and grind size. AISC in 2020 was $1,041 per oz sold, compared to guidance of $1,000 to $1,050 per oz sold, largely the result of favourable foreign exchange rates offsetting a higher amount of capitalized stripping classified as sustaining.

During 2020 RDM had no lost-time injuries, achieving LTIFR and TRIFR of 0.0 and 2.9, respectively.

Development

Sustaining capital expenditures in Q4 2020 were $3.7 million, related primarily to capitalized stripping.

During 2020, the Company spent $8.8 million on sustaining capital expenditures, focused primarily on capitalized stripping. The Company spent $0.6 million of non-sustaining capital during the year, allocated primarily to capitalized stripping.

Outlook

RDM production for 2021 is estimated at 55,000 to 60,000 ounces of gold with cash costs of $1,000 to $1,050 per oz and AISC of $1,175 to $1,225 per oz.

AISC at RDM in 2021 includes sustaining capital of $10 million to increase capacity of the TSF. Non-sustaining capital of $35 million relates entirely to capitalized stripping for a major expansion pushback of the main open-pit, providing improved access to the ore body in future years.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Pilar Gold Mine, Goiás, Brazil
Equinox Gold acquired Pilar on March 10, 2020 as part of the Leagold Merger. Pilar is located in Goiás State, Brazil, and began operations in October 2014. The operation consists of two underground mines feeding a carbon-in-pulp plant.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	June 30, 2020	December 31, 2020⁽¹⁾
Ore mined	kt	216	191	158	597
Tonnes processed	kt	390	375	355	1,205
Average gold grade processed	g/t	0.88	0.90	0.85	0.88
Recovery	%	90.7	91.8	91.0	91.0
Gold produced	oz	9,980	9,940	8,646	30,923
Gold sold	oz	10,071	10,003	8,750	30,656
Financial data
Revenue	M$	18.8	19.1	15.0	55.8
Cash costs⁽²⁾	M$	11.2	10.3	7.9	31.1
Sustaining capital⁽²⁾	M$	0.7	0.7	1.3	3.0
Reclamation expenses	M$	0.2	0.2	0.2	0.8
Total AISC⁽²⁾	M$	12.1	11.2	9.4	34.9
AISC contribution margin⁽²⁾	M$	6.7	7.9	5.6	20.9
Care and maintenance	M$	-	-	(0.6)	(0.7)
Non-sustaining capital⁽²⁾	M$	(0.4)	(0.3)	(0.1)	(0.7)
Mine free cash flow⁽²⁾	M$	6.3	7.6	4.9	19.5
Unit analysis
Realized gold price per ounce sold	$/oz	1,855	1,901	1,707	1,810
Cash cost per ounce sold⁽²⁾	$/oz	1,109	1,029	901	1,016
AISC per ounce sold⁽²⁾	$/oz	1,202	1,121	1,077	1,139
Mining cost per tonne mined	$/t	24.93	29.53	22.70	26.22
Processing cost per tonne processed	$/t	8.51	7.53	7.48	7.90
G&A cost per tonne processed	$/t	4.06	3.43	3.63	3.62
(1) Pilar was acquired as part of the Leagold Merger. As such, comparative figures for previous quarters are not presented. Operating and financial results for Q1 2020 are for the period from March 10 to March 31, 2020. (2) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

Q4 and 2020 Analysis

Production

During Q4 2020, Pilar produced 9,980 oz of gold (Q3 2020 - 9,940 oz) and sold 10,071 oz (Q3 2020 - 10,003 oz), realizing revenue of $18.8 million (Q3 2020 - $19.1 million) for the Quarter, at an AISC of $1,202 per oz (Q3 2020 - $1,121 per oz) and an average realized price of $1,855 per oz (Q3 2020 - $1,901 per oz).

Pilar continued to experience variable grades of ore being fed from two underground sources and a low-grade stockpile in Q4 2020, which was partially offset by higher than forecast tonnes processed and good recoveries consistently above 90%.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Although Q4 2020 AISC benefited from favourable foreign exchange rates and were in line with forecast, the savings were partially offset by higher maintenance costs to improve fleet availability and costs related to the planned TSF raise that were deferred from Q1 2020 as the result of excessive rain.

With total 2020 production attributable to Equinox Gold of 30,923 oz gold, Pilar exceeded the upper end of production guidance, which was forecast at 25,000 to 30,000 oz of gold, despite government-mandated restrictions during March and April related to COVID-19. AISC per oz sold in 2020 was $1,139, compared to guidance of $1,200 to $1,300 per oz, largely the result of favourable foreign exchange rates.

During 2020 Pilar had two lost-time injuries, achieving LTIFR and TRIFR of 1.6 and 3.1, respectively.

Exploration and development

The Company drilled 3,844 m in eight holes during Q4 2020, focused on reserve replacement adjacent to existing mine infrastructure. Exploration expenditures for the year totalled $0.5 million, which was allocated to non-sustaining capital.

The TSF raise and underground mine development account for the majority of the $0.7 million in sustaining capital spent during the Quarter. Non-sustaining capital expenditures during the Quarter were only $0.4 million since the Company has not yet gained access to certain land required to complete permitting the Três Buracos deposit.

During 2020, the Company spent $3.5 million of sustaining capital, focused primarily on underground development and the TSF raise. Non-sustaining capital expenditures in 2020 totalled $0.6 million.

Outlook

Pilar production for 2021 is estimated at 35,000 to 40,000 oz of gold with cash costs of $1,200 to $1,300 per oz and AISC of $1,400 to $1,500 per oz.

AISC at Pilar in 2021 includes sustaining capital of $7 million for underground development. The Company has not allocated any non-sustaining capital to Pilar during 2021. While the Company continues to advance environmental studies, permitting and land access activities related to the Três Buracos deposit, mining of the deposit is not expected to commence until the end of 2021.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Castle Mountain Gold Mine, California, USA
Castle Mountain is an open-pit heap leach gold mine located in San Bernardino County, California, approximately 200 miles north of Mesquite. Under a previous owner, Castle Mountain produced more than 1.3 million oz of gold from 1992 to 2004 when production ceased due to low gold prices. Equinox Gold acquired Castle Mountain in December 2017 and completed a PFS for the project in July 2018 with the intention of restarting operations, outlining a two-phase development plan with average annual production of approximately 40,000 oz of gold during Phase 1 and an expansion to 200,000 oz of gold during Phase 2 operations. The Company commenced Phase 1 construction on October 30, 2019, poured first gold on October 15, 2020 and commenced commercial production on November 21, 2020.
Operating and financial results for the three months and year ended December 31, 2020
Operating data	Unit	November 21 to December 31, 2020⁽¹⁾
Ore mined and stacked to leach pad	kt	1,197
Waste mined	kt	130
Open pit strip ratio	w:o	0.11
Average gold grade stacked to leach pad	g/t	0.33
Gold produced	oz	5,338
Gold sold	oz	3,339
Financial data
Revenue	M$	6.2
Cash costs⁽²⁾	M$	2.9
Sustaining capital⁽²⁾	M$	-
Total AISC⁽²⁾	M$	2.9
AISC contribution margin⁽²⁾	M$	3.3
Non-sustaining capital⁽²⁾	M$	-
Mine free cash flow⁽²⁾	M$	3.3
Unit analysis
Realized gold price per oz sold	$/oz	1,867
Cash cost per oz sold⁽²⁾	$/oz	873
AISC per oz sold⁽²⁾	$/oz	873
Mining cost per tonne mined	$/t	2.01
Processing cost per tonne processed	$/t	0.97
G&A cost per tonne processed	$/t	1.50
(1) Castle Mountain commenced commercial production on November 21, 2020. Gold produced includes 1,523 oz poured and sold prior to commencement of commercial production. (2) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.
Q4 and 2020 Analysis
Production
The Company completed Castle Mountain construction with no lost-time incidents. The Company continued to ramp up mine production in Q4 2020, completed plant commissioning and declared commercial production on November 21, 2020.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

During Q4 2020, Castle Mountain produced 5,338 oz of gold and sold 3,339 oz of gold, realizing revenue of $6.2 million for the Quarter, at an AISC of $873 per oz and an average realized price of $1,867 per oz. Gold produced includes 1,523 oz poured and sold during commissioning and ramp-up of operations. AISC per oz of gold sold was higher than guidance of $750 to $800 per oz reflecting ongoing improvements to operations and infrastructure. COVID-19 delays slightly impacted commissioning and ramp up of gold production. During 2020 Castle Mountain had no lost-time injuries, achieving LTIFR and TRIFR of 0.0 and 0.0, respectively.
Exploration and development
The Company did not undertake any exploration programs at Castle Mountain during 2020.
The Company’s construction spend during 2020 was $45.4 million, which includes $11.6 million of pre-production inventory. The total spend to complete construction, including capital spent in 2019, was $56.1 million, net of pre-production inventory. Non-sustaining capital for the year totalled $51.9 million, of which $6.5 million related to non-sustaining exploration expenses on the Phase 2 feasibility study.
Outlook
Castle Mountain production for 2021 is estimated at 30,000 to 40,000 ounces of gold with cash costs of $725 to $775 per ounce and AISC of $1,100 to $1,150 per ounce.
AISC at Castle Mountain in 2021 includes sustaining capital of $14 million primarily comprising $9 million for a leach pad expansion that will accommodate the entirety of Phase 1 operations and $3 million for plant optimization.
Equinox Gold is finalizing a feasibility study for the Phase 2 expansion at Castle Mountain, as described in Development Projects below. Non-sustaining capital of $10 million budgeted for Castle Mountain in 2021 includes $7 million to complete the feasibility study and commence permitting for the expansion and $2 million to construct an assay lab on site.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Los Filos Gold Mine, Guerrero, Mexico
Equinox Gold acquired Los Filos on March 10, 2020 as part of the Leagold Merger. The Los Filos gold mine is located in Guerrero State, Mexico, and began production in 2008. Current operations comprise two open pits (Los Filos and Bermejal), one underground mine (Los Filos) and secondary recovery from previously leached ores. Ore from these deposits is processed using heap leach recovery. An expansion project is planned in order to increase annual production and extend the mine life, including the addition of an underground mine (Bermejal), another open pit (Guadalupe) and a CIL plant to operate concurrently with the existing heap leach operation.
Operating and financial results for the three months and year ended December 31, 2020
		Three months ended			Year ended
Operating data	Unit	December 31, 2020	September 30, 2020	June 30, 2020	December 31, 2020⁽¹⁾
Ore mined - open pit	kt	-	418	36	496
Waste mined - open pit	kt	399	3,896	623	7,065
Open pit strip ratio	w:o	-	9.33	17.43	14.25
Average open pit gold grade	g/t	-	0.36	0.23	0.34
Ore mined - underground	kt	-	115	29	191
Average underground gold grade	g/t	1.83	4.09	3.54	4.00
Ore re-handled for secondary leaching	kt	403	2,477	812	4,547
Gold produced	oz	13,615	17,530	17,691	58,453
Gold sold	oz	13,740	19,757	18,170	59,135
Financial data
Revenue	M$	26.4	37.2	30.6	105.9

Cash costs⁽²⁾	M$	14.2	22.5	14.4	57.8
Sustaining capital⁽²⁾	M$	3.2	4.3	3.0	11.2
Reclamation expenses	M$	0.1	0.2	0.1	0.4
Total AISC⁽²⁾	M$	17.5	27.0	17.5	69.4

AISC contribution margin⁽²⁾	M$	8.9	10.2	13.1	36.5
Care and maintenance	M$	(16.7)	(6.4)	(19.0)	(42.1)
Non-sustaining capital⁽²⁾	M$	(2.9)	(7.0)	(2.6)	(16.6)
Mine free cash flow⁽²⁾	M$	(10.7)	(3.2)	(8.5)	(22.2)
Unit analysis
Realized gold price per ounce sold	$/oz	1,932	1,878	1,675	1,786
Cash cost per ounce sold⁽²⁾	$/oz	1,035	1,139	795	978
AISC per ounce sold⁽²⁾	$/oz	1,271	1,368	962	1,173
Mining cost per tonne mined - open pit	$/t	1.85	1.79	1.79	1.65
Mining cost per tonne mined - underground	$/t	168.60	72.26	67.42	68.36
Processing cost per tonne processed	$/t	n/a	5.06	8.04	5.90
G&A cost per tonne processed	$/t	n/a	1.21	0.99	1.00

(1) Los Filos was acquired as part of the Leagold Merger. As such, comparative figures to previous quarters are not presented. Operating and financial results for Q1 2020 are for the period from March 10 to March 31, 2020. (2) Cash costs, sustaining capital, non-sustaining capital, AISC, AISC contribution margin, mine free cash flow, cash cost per oz sold, and AISC per oz sold are non-IFRS measures. See Non-IFRS Measures and Cautionary Notes.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Q4 and 2020 Analysis

Production

During Q4 2020, Los Filos produced 13,615 oz of gold (Q3 2020 - 17,530 oz) and sold 13,740 oz (Q3 2020 - 19,757 oz), realizing revenue of $26.4 million (Q3 2020 - $37.2 million) for the Quarter, at an AISC of $1,271 per oz (Q3 2020 - $1,368 per oz) and an average realized price of $1,932 per oz (Q3 2020 - $1,878 per oz).

Mining and development activities were suspended in early September due to a blockade from members of one of the three primary communities from which the mine draws its workforce. The blockade was removed in late December and access to the mine was restored. The Company began a staged restart following removal of the blockade and poured 13,615 oz in December from the gold adsorbed in carbon during the suspension.

Los Filos 2020 production attributable to Equinox Gold totalled 58,453 oz of gold. Production was lower than expected as the result of a temporary suspension of mining activities for the majority of Q2 2020 in compliance with government-mandated restrictions related to COVID-19, and again from the community blockade from early September through late December 2020. The suspensions also interrupted development activities, delaying access to higher-grade ore that was expected to contribute to 2020 production. Los Filos guidance was withdrawn on November 9, 2020, since the Company could not forecast timing for the restart of operations.

Los Filos AISC for 2020 was $1,189 per oz of gold sold, reflecting the reduction in ounces produced. Costs directly associated with the temporary suspension and restart of activities were recorded as care and maintenance and excluded from AISC.

During 2020 Los Filos had one lost-time injury, achieving LTIFR and TRIFR of 0.3 and 4.4, respectively.

Exploration and development

All on-site development and exploration activities were suspended for the majority of Q2 2020 and from September through December. Exploration activities recommenced in January 2021.

During Q4 2020, as a result of the suspension, sustaining capital expenditures were only $3.2 million, primarily for equipment refurbishments. The Company continued to advance technical studies related to the planned expansion, as described in Development Projects below. Non-sustaining capital expenditures of $2.9 million during the Quarter related primarily to off-site engineering, design and feasibility study work.

During 2020, the Company spent $11.2 million of sustaining capital expenditures and $16.5 million of non-sustaining capital, both related primarily to stripping of the Guadalupe open pit.

Outlook

Representatives from Los Filos continue to meet regularly with community leaders to reach consensus on the remaining items related to benefits provided under the community’s social collaboration agreement.

Los Filos production for 2021 is estimated at 170,000 to 190,000 oz of gold, with production weighted heavily toward the second half of the year. Production will gradually increase during Q1 2021 as mining activities and leaching ramp up following the December restart, and also increase quarter-over-quarter as development activities provide access to higher-grade ore from the Guadalupe open pit. Additional ore will be sourced from the Bermejal underground deposit upon commencement of underground development, which is on hold pending finalization of the community social collaboration agreement.

Cash costs and AISC are expected to be higher at the start of the year and lower in H2 2021 as grade and production increases, with full-year cost guidance estimated at cash costs of $1,125 to $1,200 per oz sold, with AISC of $1,330 to $1,390 per oz sold.

Capital investments at Los Filos during 2021 will set the stage for production growth and mine life extension, with a total budget of $133 million for the year. AISC includes $38 million of sustaining capital, with $13 million allocated for fleet refurbishment and processing equipment, $9 million for development at the Los Filos underground mine and $13 million for capitalized stripping of the Los Filos and Guadalupe open pits.

Non-sustaining capital of $95 million relates to the expansion project and was in part deferred from 2020, including $48 million for Bermejal underground development, $10 million for pre-stripping of the Guadalupe open pit and $25 million for fleet rebuilds and new equipment. In addition, $9 million is directed to exploration and Los Filos underground development.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Development Projects

Santa Luz Gold Mine, Bahia, Brazil

The Company announced construction of Santa Luz on November 9, 2020 with an approved budget of $103 million.

Santa Luz is a past-producing open-pit mine in Bahia State, Brazil, that commenced operations in mid-2013 but was placed on care and maintenance in September 2014 due in part to lower than planned gold recovery. Following its acquisition of Santa Luz in May 2018, Leagold completed an updated feasibility study incorporating resin-in-leach processing to increase gold recovery.

Following its acquisition of Leagold, Equinox Gold continued reviewing plans for the Santa Luz restart and published its results on November 9, 2020, outlining the design of a mine that is expected to produce 903,000 oz of gold and generate $436 million in after-tax net cash flow (at the base case $1,500 per oz gold price) over an initial 9.5-year mine life, with additional upside from underground Mineral Resources.

Q4 2020 analysis and outlook

As a brownfields past-producing mine, the majority of site services and infrastructure is already in place at Santa Luz. Primary activities to restart the mine include refurbishing existing infrastructure, retrofitting the plant, installing additional grinding capacity and increasing the storage capacities of the existing tailings and water storage facilities.

Work during the Quarter focused on earthworks to prepare site areas for concrete pours in Q1 2021. Assembly of the concrete batch plant was completed and the cement silo erected, and fabrication at the on-site vendor shops has begun. Refurbishment of the existing process plant is underway and tailings and water storage facility raise engineering is nearing completion. The general contractor agreement with MIP Engenharia was signed during the Quarter and personnel mobilization was initiated, with site office mobilization complete. Mining contractor negotiations are ongoing.

Of the $103 million total capital cost for the project, the Company had $6.7 million in committed contracts and project incurred $3.5 million as of December 31, 2020. The project is on schedule, with completion of construction expected by year-end 2021 and commissioning and first gold pour in Q1 2022.

Castle Mountain Gold Mine, California, USA

With Phase 1 operations underway, the Company is focused on optimizing Phase 1 operations while completing the feasibility study for the Phase 2 expansion. The feasibility study is targeted for completion in Q1 2021 at which point the Company will commence expansion permitting. While Phase 2 is expected to operate within the existing approved mine boundary, the changes to previously analyzed impacts, such as increased land disturbance within the mine boundary and increased water use, will require amendments to the Company’s Mine and Reclamation Plan (Plan of Operation) for the Project.

Aurizona Underground Studies, Brazil

In May 2020 the Company announced the results of a positive PEA for potential underground development of the Piaba deposit at Aurizona. It is anticipated that the underground deposit could be mined and processed concurrently with mill feed from the open pit at Aurizona, resulting in a higher average mill feed grade. The underground mine would use and benefit from the existing process plant and other infrastructure currently used by the operating open-pit mine including power, water and current and expanded tailings storage facilities.

Over an estimated ten-year mine life, the underground mine has the potential to produce 740,500 oz of gold in addition to existing open-pit production, with an after-tax NPV_5% of $122 million and IRR of 25% at the base case gold price of $1,350 per oz ($228 million and 38%, respectively, at $1,620 per oz).

The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the results contemplated in the PEA will be realized.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Q4 2020 analysis and outlook

In Q4 2020, the Company commenced a PFS for potential development of an underground mine at Aurizona. As contemplated, the underground mine would operate concurrently with the open-pit mine, providing higher-grade ore feed to the existing process plant, and would benefit from infrastructure currently used by the operating open-pit mine including power, water and the current and expanded TSFs. The PFS is targeted for completion in Q4 2021.

The Company drilled a total of 23,916 metres in 52 holes during 2020 to increase confidence in the continuity of mineralization, expand the underground Mineral Resources and upgrade the classification of the resources from Inferred to Indicated to support the PFS. Every hole intersected gold mineralization and 47 of the 49 holes, for which assays have been received thus far, intersected significant gold mineralization. The 2020 drill program tested the deposit to depths of 1,000 m below surface and results to date have shown that the deposit remains open at depth. Assay results were reported in an Equinox Gold press release on January 18, 2021.

Work to support the PFS is underway including in-fill drilling, resource estimation and early-stage mine planning. The Company has planned an additional $1.0 million exploration spend (approximately 7,000 m) for 2021 focused on the underground deposit. Geotechnical and hydrogeological work is well advanced and expected to be complete in Q1 2021.

Los Filos Gold Mine, Guerrero, Mexico

The Company is planning an expansion of the Los Filos gold mine complex including enlarging the Los Filos open pit, developing a second underground mine (Bermejal), adding a new open pit (Guadalupe) and constructing a new CIL plant to process higher-grade ore. The expansion is expected to increase Los Filos production to more than 350,000 oz of gold per year.

Q4 2020 analysis and outlook

Initial mining in the Guadalupe open pit and preparatory work for Bermejal underground mining continued to be suspended throughout the Quarter due to the community blockade. Guadalupe pre-stripping recommenced in late December following removal of the community blockade; Bermejal underground development is suspended until finalization of the community social collaboration agreement with the Carizalillo community.

Engineering and optimization studies related to the new CIL plant continued through Q4 2020. Mine planning and scheduling is also being updated to reflect the larger, more efficient plant size, optimized plant layout and higher gold prices as well as identifying additional ore to expand the current heap leach operations. This update is expected to allow for conversion of additional ounces from Mineral Resources to Mineral Reserves, which would extend the mine life. As with the Bermejal underground expansion, a decision about moving forward with the CIL plant construction will depend on successful resolution of the community social collaboration agreement with the Carizalillo community.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Health, Safety, Environment & Community

Health & Safety

Equinox Gold had one lost-time injury during the Quarter over more than 2.9 million hours worked, and a total of nine lost-time injuries during for full-year 2020 over more than 13 million hours worked. Equinox Gold’s LTIFR at the end of 2020 is 0.69 per million hours worked. The Company’s TRIFR, which is a measure of all injuries that require the attention of medically trained personnel, is 3.67 for the year. Both the LTIFR and TRIFR are well below the targets set for 2020, which were based on a 10% reduction from 2019 full-year results. The LTIFR was 27% below target and the TRIFR was 24% below target.

COVID-19 has continued to provide additional health and safety challenges. Equinox Gold took early precautionary measures at all of its operations to manage issues related to the COVID-19 pandemic with the primary goal of protecting the health, safety and economic wellbeing of the Company’s workforce and local communities. During Q4 2020 the Company expanded testing to include the Corporate Office, and continued with routine COVID-19 testing at all of its mine sites with the objective of identifying carriers early so they can self-isolate before inadvertently spreading the virus to others. While all of the Company’s sites have experienced some cases of COVID-19, the vast majority of cases have been asymptomatic.

Environment

In total, there were 48 environmental incidents reported during the Quarter with only four considered “significant” as defined by the Company’s policies, and all of the “significant” incidents were determined to have “moderate” consequence.

Two of these incidents related to spills: one lime spill at Castle Mountain and one cyanide spill at Los Filos. The incidents were reported to the relevant authorities and no further action is pending. The two remaining incidents were related to wildlife mortalities from ingestion of cyanide. Perimeter security on the relevant areas at Castle Mountain and Los Filos has been rechecked and improved where needed.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Community Development and ESG Reporting

Community Development

Equinox Gold engages in early, frequent and transparent dialogue with stakeholders as a means to build trust and provide a space for collaboration and long-term commitment. The Company maintains formal systems to identify stakeholders and communities of interest and strives to maintain strong local relationships by meeting regularly with host communities to discuss activities, report on environmental performance and discuss concerns. At all operations, dedicated community departments seek local feedback, particularly where improvements are needed and collaborative solutions can be implemented.

In 2020, the COVID-19 pandemic had a significant impact on the Company’s community engagement and investment programs across all operations. The Company proactively communicated with community leaders and other local authorities about the health and safety protocols adopted by the mine sites, and collaboratively identified ways to support both the health and economic wellbeing of local communities.

Many of Equinox Gold’s community activities were temporarily suspended in 2020 due to the pandemic, such as site visits, school and community events and some hands-on training programs. Other activities have continued with the implementation of appropriate health and safety protocols as well as on-line tools.

A highlight of Equinox Gold’s 2020 community investment program and an example of partnership and collaboration among the Aurizona mine and state and municipal governments was construction of the Dona Izabel Andrade Elementary School for the community of Aurizona, completed during Q4 2020. Equinox Gold also supported community infrastructure works such as the construction of an auditorium in Mezcala, one of the host communities at Los Filos. The community auditorium was completed in the summer of 2020.

Environmental, Social & Governance (ESG) Reporting

In 2020 the Company held a series of management sessions, facilitated by external consultants, to define its sustainability strategy and approach to managing ESG issues and priorities. The senior management team discussed topics such as ethics and business conduct, inclusion and diversity, risk management, local employment and procurement, community engagement and investment, biodiversity, tailings and waste management, water usage and climate change. As a result, the Company developed a work plan that identifies commitments, key performance indicators and targets for external reporting going forward. In 2020 the Company also started publishing select ESG data quarterly on its website. Equinox Gold looks forward to expanding its ESG disclosure process to facilitate an increased level of engagement and discussion with the Company’s stakeholders.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Corporate

Mergers and Acquisitions

Acquisition of Premier Gold Mines Limited

On December 16, 2020, Equinox Gold announced that it had entered in a definitive agreement with Premier whereby Equinox Gold will acquire all of the outstanding shares of Premier (the “Premier Transaction”). On closing of the Premier Transaction, Premier shareholders will receive 0.1967 of an Equinox Gold share for each Premier share hold, such that existing Equinox Gold and Premier shareholders will own approximately 84% and 16% of Equinox Gold, respectively, on an issued share basis.

Equinox Gold will retain Premier’s interest in the producing Mercedes Mine in Mexico, the construction-ready Hardrock Project in Ontario, Canada, and the exploration-stage Hasaga and Rahill-Bonanza properties in Red Lake, Ontario.

Concurrent with the completion of the Premier Transaction, Premier will spin-out to Equinox Gold and to shareholders shares of a newly created US-focused gold production and development company to be called i-80 Gold Corp. (“i-80 Gold”, and together with the Agreement, the “Premier Transaction”) that will own the South-Arturo and McCoy-Cove properties and will complete Premier’s previously announced acquisition of the Getchell Project, all in Nevada. Upon completion of the Premier Transaction and prior to giving effect to the issuance of any i-80 Gold shares in connection with any equity financing or acquisition to be completed by i-80 Gold, Equinox Gold and existing shareholders of Premier will own 30% and 70% of i-80 Gold, respectively.

Merger with Leagold

The Company completed its merger with Leagold (the “Leagold Merger”) on March 10, 2020. Leagold shareholders received 0.331 of an Equinox Gold common share for each Leagold share held. The transaction resulted in the issuance of 94,635,765 common shares to the former shareholders of Leagold. In addition, each Leagold warrant and option became exercisable into Equinox Gold common shares, as adjusted in accordance with the exchange ratio.

In accordance with the acquisition method of accounting, the consideration transferred was allocated to the underlying assets acquired and liabilities assumed, based upon their estimated fair values as at the date of the acquisition, as detailed in note 5 to the annual consolidated financial statements.

Concurrent Financings

Concurrent with closing of the Leagold Merger, Equinox Gold completed a $670 million debt and equity financing package (the “Merger Refinancing”) comprising a $40 million at-market equity investment, a $130 million subordinated convertible debenture issued to Mubadala, a $400 million senior corporate revolving credit facility and a $100 million senior amortizing term loan.

Ross Beaty subscribed for $36 million of the $40 million private placement, allowing him to maintain his approximately 9% stake in the Company. Under the private placement, Equinox Gold common shares were issued at a price of C$8.15 per share, which was the TSX closing price of Equinox Gold shares the day before announcement of the Leagold Merger.

To refinance pre-merger debt and credit facilities of both Equinox Gold and Leagold, a syndicate of banks led by The Bank of Nova Scotia, Société Générale, Bank of Montreal, and ING Capital LLC provided a 4-year senior revolving credit facility of $400 million and a 5-year senior amortizing term loan of $100 million. The senior credit facility bears interest at LIBOR plus 2.5% - 3.75%, depending on leverage ratio. No principal payments are due on the $100 million senior amortizing term loan until September 2021. The Credit Facility is secured by first-ranking security over all present and future property and assets of the Company.

Mubadala subscribed for $130 million in a new subordinated 5-year convertible debenture bearing interest at 4.75% and convertible into Equinox Gold common shares at a fixed US$ price of $7.80 per share, for an approximate 25% premium over Equinox Gold’s C$8.15 share price the day before announcement of the Leagold Merger. Security for the convertible notes includes a charge over all present and future property and assets of the Company and is subordinate to the Credit Facility.

Exercise of Warrants and Options

During the year, the Company received proceeds of $171.5 million from the exercise of warrants and options.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Pacific Road Anti-dilution Right

On April 9, 2020, the Company received proceeds of and issued $9.3 million in convertible notes (the Notes”) and $2.9 million in common shares to funds managed by Pacific Road Resources Funds (“Pacific Road”) pursuant to Pacific Road’s pre-existing non-dilution right related to an investment agreement dated May 7, 2015. The Notes were issued on the same terms as the $130 million convertible debenture issued to Mubadala and described further below.

Appointments

On September 1, 2020, Doug Reddy was promoted from EVP Technical Services to Chief Operating Officer upon the retirement of the Company’s previous Chief Operating Officer.

Changes to Board of Directors

At the Company’s Annual General Meeting on May 15, 2020, shareholders approved all of the director nominees. Ross Beaty was re-appointed as Chairman, Lenard Boggio, Tim Breen, Gordon Campbell, Wesley Clark, Marshall Koval, Peter Marrone and Neil Woodyer were re-appointed as directors, and Christian Milau and Maryse Bélanger were appointed as new directors.

On June 5, 2020, the Company announced the retirement of Neil Woodyer from the Board of Directors.

On November 2, 2020, the Company announced the appointment of Dr. Sally Eyre to the Company’s Board of Directors, succeeding Mr. Peter Marrone, who stepped down.

Index Inclusions

During the year, as a result of the Company’s increased scale and significantly increased daily trading liquidity, the Company was added to the GDXJ (VanEck Vectors Junior Gold Miners ETF), the GDX (VanEck Gold Miners ETF), the S&P/TSX Composite Index, the S&P/TSX Global Gold Index and the FTSE (Financial Times Stock Exchange) Canada Small Cap Index.

Recent Developments

On January 18, 2021, Equinox Gold announced drill results from the 2020 Aurizona exploration program focused on the Piaba Underground deposit and the Genipapo target.

On February 23, 2021, Premier securityholders voted 99.9% to approve the Premier Transaction, which is expected to close in March 2021 subject to certain regulatory approvals, including the approvals of the Mexican Comisión Federal de Competencia Económica, the TSX, the NYSE-A, and other customary closing conditions.

On March 1, 2021, the Company entered into an agreement to acquire 10% of Orion’s current interest in the Hardrock Project for consideration of $51 million plus certain contingent payment obligations (the “Hardrock Transaction”). The Hardrock Transaction is subject to closing of the Company’s acquisition of Premier.

Terms of the Hardrock Transaction include:

• Payment on closing of $51 million, of which up to $41 million can be paid in shares of Equinox Gold, at the Company’s option; and

• Assumption of certain contingent payment obligations comprising:

• $5 million in cash 24 months after a positive mine construction decision for the Hardrock Project; and

• Delivery of approximately 2,200 ounces of refined gold, the cash equivalent value of such refined gold, or a combination thereof, after production milestones of 250,000 oz, 500,000 oz and 700,000 oz from the Hardrock Project.

On March 17, 2021, the Company completed the first tranche of a non-brokered private placement (the “Private Placement”) of subscription receipts at a price of C$10.00 per subscription receipt for gross proceeds of C$67.9 million. The second tranche of the Private Placement is expected to close in late March 2021, for total proceeds to the Company of up to C$75.0 million. The Private Placement is in conjunction with the expected closing of the acquisition of Premier Gold. Each subscription entitled the holder to receive one common share of Equinox Gold. Certain of the Company’s executives and directors subscribed for C$40.4 million in subscription receipts which is a related party transaction.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Financial Results

Selected financial results for the three months and year ended December 31, 2020 and 2019⁽¹⁾

$ amounts in millions, except per share amounts	Three months ended				Year ended
$ amounts in millions, except per share amounts	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Revenue	$	252.6	$	119.0	$	842.5	$	281.7
Operating expenses		(113.1)		(61.0)		(422.3)		(159.2)
Depreciation and depletion		(43.4)		(19.3)		(131.6)		(38.6)
Earnings from mine operations		96.1		38.5		288.6		83.9
Care and maintenance		(29.4)		-		(65.0)		-
Exploration		(2.4)		(1.7)		(11.8)		(8.8)
General and administration		(16.1)		(9.9)		(40.4)		(20.0)
Income from operations		48.2		26.9		171.4		55.1
Other income (expense)		17.5		(32.6)		(129.9)		(68.3)
Net income (loss) before taxes		65.7		(5.7)		41.5		(13.2)
Tax (expense) recovery		24.0		(2.8)		(20.8)		(7.1)
Net income (loss) and comprehensive income (loss)		89.7		(8.5)		20.7		(20.3)
Net income (loss) per share attributable to Equinox Gold shareholders,
Basic		0.37		(0.08)		0.10		(0.16)
Diluted		0.30		(0.08)		0.09		(0.16)
(1) During the three months and year ended December 31, 2019, the Company had only the Mesquite and Aurizona mines in operation, with the Aurizona mine commencing commercial production on July 1, 2019. During the year ended December 31, 2020, it had the Mesquite and Aurizona mines in operation and, on March 10, 2020, added four additional operating mines acquired through the Leagold Merger.

Earnings from mine operations

Revenue for Q4 2020 was $252.6 million (Q4 2019 - $119.0 million) on sales of 134,895 oz (Q4 2019 - 80,330 oz) of gold and for the year ended December 31, 2020 was $842.5 million (year ended December 31, 2019 - $281.7 million) on sales of 471,786 oz (year ended December 31, 2019 - 196,803 oz) of gold. The increase in revenue from comparative periods is primarily due to increased gold ounces sold as the result of acquiring the Leagold mines in March 2020. Sales from the acquired sites contributed 199,570 oz for the period from acquisition on March 10, 2020 to December 31, 2020, generating revenue of $360.7 million. The Company’s Castle Mountain Phase 1 mine also commenced commercial production in November 2020, resulting in an additional 4,862 oz gold sold in the current period. The Company’s realized gold price also increased to $1,871 per oz in Q4 2020 from $1,481 per oz in Q4 2019. For the year ended December 31, 2020, the increase in revenue is also partly attributed to a full year of production from Aurizona, which commenced operations on July 1, 2019.

Operating expenses increased in Q4 2020 to $113.1 million (Q4 2019 - $61.0 million) and for the year ended December 31, 2020 to $422.3 million (year ended December 31, 2019 - $159.2 million). Depreciation and depletion in Q4 2020 was $43.4 million (Q4 2019 - $19.3 million) and for the year ended December 31, 2020 was $131.6 million (year ended December 31, 2019 - $38.6 million). The increase from comparative periods in 2019 is due to expanded operations from the addition of the Leagold mines.

Care and maintenance

Care and maintenance costs in Q4 2020 were $29.4 million and for the year ended December 31, 2020 were $65.0 million (Q4 2019 and year ended December 31, 2019 - $nil). Care and maintenance costs in the Quarter were incurred at Los Filos due to the temporary suspension of operations as a result of a community blockade. Los Filos resumed operations in late December 2020. Care and maintenance costs from earlier in 2020 were largely related to temporary suspensions at the Los Filos, RDM and Pilar mines due to the COVID-19 pandemic.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Exploration

Exploration in Q4 2020 was $2.4 million (Q4 2019 - $1.7 million) and for the year ended December 31, 2020 was $11.8 million (year ended December 31, 2019 - $8.8 million). The increase in exploration expenditures from prior comparative periods is related to increased exploration activity at a larger number of properties.

General and administration

General and administration expenditures in Q4 2020 were $16.1 million (Q4 2019 - $9.9 million) and for the year ended December 31, 2020 were $40.4 million (year ended December 30, 2019 - $20.0 million). The increase from comparative periods in 2019 was primarily due to salaries and wages associated with the increased number of employees as the Company has grown.

Included in general and administration expenditures for the year ended December 31, 2020 was $5.8 million (Q4 2020 - $2.0 million) in costs which are considered one-off in nature and related to the acquisition of Leagold as well as due diligence on a number of opportunities including the Premier Gold acquisition. In addition, general and administration expenditures include $6.8 million (Q4 2020 - $1.5 million) related to non-cash share-based compensation.

Other expense

Other expense comprises finance (including interest) expense, finance income and other income (expense).

Other income for Q4 2020 was $25.5 million (Q4 2019 - other expense of $28.1 million); for the year ended December 31, 2020 other expense was $91.9 million (year ended December 31, 2019 - $52.7 million). Other income in Q4 2020 was largely driven by an unrealized gain on the change in fair value of share purchase warrants of $17.5 million due to a decrease in the Company’s share price since Q3 2020 and an unrealized gain on the change in fair value of foreign exchange contracts of $11.1 million due to appreciation of the Brazilian Réal and Mexican Peso against the US Dollar. For the year ended December 31, 2020, the Company recorded overall losses on the change in fair value of warrants and change in fair value of foreign exchange contracts of $29.9 million and $14.1 million, respectively. The Company also recorded a $35.0 million loss on settlement of gold collar and forward swap contracts and a $12.9 million loss on the change in fair value of gold collar and forward swap contracts outstanding, which were acquired as part of the Leagold Merger.

Finance expense in Q4 2020 was $8.6 million (Q4 2019 - $5.1 million) and for the year ended December 31, 2020 was $39.7 million (year ended December 31, 2019 - $17.5 million). The increase from the prior year is due to more interest expense on a larger balance of debt.

Finance income in Q4 2020 was $0.6 million (Q4 2019 - $0.6 million) and for the year ended December 31, 2020 was $1.8 million (year ended December 31, 2019 - $1.9 million) and relates to interest earned on cash balances.

Tax expense

Tax recovery in Q4 2020 was $24.0 million (Q4 2019 - $2.8 million expense). Tax expense for the year ended December 31, 2020 was $20.8 million (year ended December 31, 2019 - $7.1 million recovery). Tax recovery in the Quarter was comprised of current tax expense of $9.7 million and a deferred tax recovery of $33.7 million. The net tax recovery in the period was largely due to appreciation of the Mexican Peso and Brazilian Real which decreased the value of deferred income tax liabilities recorded at December 31, 2020. Tax expense for the year ended December 31, 2020 was comprised of current tax expense of $35.0 million and a deferred tax recovery of $14.2 million. The increase in net tax expense from prior year was due to increased taxable income as the result of increased income from owning five additional operating mines.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Selected quarterly information

The following tables set out selected unaudited consolidated quarterly results for the last eight quarters through December 31, 2020:

$ amounts in millions, except per share amounts	December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
Revenue	$	252.6	$	244.5	$	215.4	$	130.0
Operating costs		(113.1)		(119.7)		(113.0)		(76.5)
Depreciation and depletion		(43.4)		(36.1)		(35.2)		(16.9)
Earnings from mine operations		96.1		88.7		67.2		36.6
Care and maintenance		(29.4)		(13.1)		(21.6)		(0.9)
Exploration		(2.4)		(2.9)		(3.9)		(2.6)
General and administration		(16.1)		(8.1)		(9.6)		(6.7)
Income from operations		48.2		64.6		32.1		26.4
Other income (expense)		17.5		(51.7)		(104.6)		9.0
Net income (loss) before taxes		65.7		12.9		(72.5)		35.4
Tax recovery (expense)		24.0		(9.7)		(5.3)		(29.8)
Net income (loss) and comprehensive income (loss)		89.7		3.2		(77.8)		5.6
Net income (loss) per share attributable to Equinox Gold shareholders,
Basic		0.37		0.01		(0.34)		0.04
Diluted		0.30		0.02		(0.34)		0.07
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
Revenue	$	119.0	$	91.9	$	35.4	$	35.4
Operating costs		(61.0)		(49.9)		(24.0)		(24.1)
Depreciation and depletion		(19.4)		(11.2)		(3.8)		(4.2)
Earnings from mine operations		38.5		30.8		7.6		7.1
Exploration		(1.7)		(0.9)		(3.2)		(2.9)
General and administration		(9.9)		(3.3)		(3.7)		(3.1)
Income from operations		26.9		26.5		0.7		1.0
Other expense		(32.6)		(14.9)		(13.5)		(7.3)
Net income (loss) before taxes		(5.7)		11.6		(12.7)		(6.3)
Tax (expense) recovery		(2.8)		(3.5)		1.2		(2.0)
Net income (loss) and comprehensive income (loss)		(8.5)		8.1		(11.5)		(8.3)
Net income (loss) per share attributable to Equinox Gold shareholders, basic and diluted		(0.08)		0.07		(0.09)		(0.07)

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Liquidity and Capital Resources

Working capital

At December 31, 2020, Equinox Gold had $344.9 million (2019 - $67.7 million) in unrestricted cash. The Company had working capital of $423.4 million at December 31, 2020, compared to $16.7 million at December 31, 2019. The increase in working capital from December 31, 2019 was largely due to the Leagold Merger as well as $171.5 million in proceeds received from warrant and option exercises.

As at December 31, 2020, trade and other receivables were $55.9 million (2019 - $31.8 million) comprised of $17.2 million (December 31, 2019 - $nil) receivable from gold sales, $23.9 million of value-added taxes receivable from the Brazilian and Mexican governments (December 31, 2019 - $11.7 million), and $6.4 million (December 31, 2019 - $12.0 million) receivable from Serabi Gold plc from the sale of Anfield’s Coringa project.

Current inventory at December 31, 2020 totalled $208.3 million, up from $46.3 million at December 31, 2019. The increase in inventories was due to the addition of inventories acquired as part of the Leagold Merger and an increase in the number of ounces expected to be produced from the heap leach at Mesquite within the next twelve months.

Current liabilities at December 31, 2020 were $222.7 million (December 31, 2019 - $131.9 million). The increase in current liabilities was mainly due to derivative liabilities for gold collars and forward swap contracts assumed in the Leagold Merger and trade accounts payables from the Leagold sites.

In March 2020, the Company drew $180 million on its revolving credit facility as a cautionary measure given the uncertainty regarding the potential impact of the COVID-19 pandemic. The Company had no immediate need for the funds and, in August 2020, repaid $200 million in principal on its revolving credit facility. Management cannot accurately predict the impact COVID-19 will have on the Company’s operations, the fair value of the Company’s assets, its ability to obtain financing, third parties’ ability to meet their obligations with the Company and the length of travel and quarantine restrictions imposed by governments of the countries in which the Company operates.

Cash flow

The Company generated $83.0 million in cash from operations in Q4 2020 (Q4 2019 - $38.1 million) and $216.6 million for the year ended December 31, 2020 (year ended December 31, 2019 - $59.7 million). The increase resulted from increased production from seven operating mines in Q4 2020 compared to two operating mines in Q4 2019, and higher realized gold prices.

Cash used in investing activities in Q4 2020 was $56.4 million (Q4 2019 - $17.1 million) and for the year ended December 31, 2020 was $129.3 million (year ended December 31, 2019 - $111.3 million). On closing of the Leagold Merger, the Company acquired $55.2 million in cash, which was offset by capital expenditures of $50.9 million in the Quarter and $172.9 million for the year ended December 31, 2020.

Cash generated from financing activities in Q4 2020 was $2.2 million (Q4 2019 - $0.2 million) and $190.1 million for the year ended December 31, 2020 (year ended December 31, 2019 - $57.0 million). The Company has received aggregate proceeds of $171.5 million from the exercise of warrants and options in 2020. Additionally, the Company issued $139.3 million in convertible notes, drew $400 million from its senior secured credit facilities and completed a $40 million private placement concurrent with the Leagold Merger. These proceeds were offset by $546.3 million in debt repayments including extinguishment of $320 million debt outstanding in Leagold at the acquisition date, and $22.4 million for the Company’s Standby Loan and Convertible Debenture in Q2 2020.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Share capital transactions
The Company issued shares in conjunction with the following transactions during the year:
	# Shares
Balance December 31, 2019	113,452,363

Issued in Leagold Merger	94,635,765
Issued in private placement	6,472,491
Issued on exercise of Pacific Road anti-dilution right	461,947
Issued on exercise of warrants, stock options and vested RSUs	27,331,840
Balance December 31, 2020	242,354,406

Outstanding Share Data

As at the date of this MD&A, the Company has 242,819,692 shares issued and outstanding, 2,891,915 shares issuable under stock options, 18,795,339 shares issuable under share purchase warrants and 2,356,551 shares issuable under restricted share units (RSUs). The Company also has 44,458,207 shares issuable under in-the-money convertible notes. The fully diluted outstanding share count is 311,321,704.

Commitments and Contingencies

At December 31, 2020, the Company had the following contractual obligations outstanding:

$ amounts in thousands		Total		Within 1 year		1-2 years		2-3 years		3-4 years		4-5 years	Thereafter
Loans, borrowings and interest	$	654.8	$	34.9	$	47.7	$	47.0	$	376.3	$	148.9	$	-
Accounts payable and accrued liabilities		119.6		119.6		-		-		-		-		-
Reclamation payments⁽¹⁾		167.1		4.0		6.2		11.0		11.5		16.1		118.3
Purchase commitments		69.9		64.7		4.3		0.9		-		-		-
Gold contracts		91.4		51.8		39.6		-		-		-		-
Foreign exchange contracts		12.5		12.2		0.3		-		-		-		-
Lease payments		16.0		5.1		4.6		4.5		1.8		-		-
Total	$	1,131.3	$	292.3	$	102.7	$	63.4	$	389.6	$	165.0	$	118.3
(1) Amount represents undiscounted future cash flows.
Due to the nature of the Company’s operations, various legal, tax, environmental and regulatory matters are outstanding from time to time. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. While the outcomes of these matters are uncertain, based upon the information currently available, the Company does not believe that these matters in aggregate will have a material adverse effect on its consolidated financial statements. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of these changes in its consolidated financial statements in the period in which such changes occur. The Company is a defendant in various lawsuits and legal actions, including for alleged fines, taxes and labour related matters in the jurisdictions in which it operates. Management regularly reviews these lawsuits and legal actions with outside counsel to assess the likelihood that the Company will ultimately incur a material cash outflow to settle the claim. To the extent management believes it is probable that a cash outflow will be incurred to settle the claim, a provision for the estimated settlement amount is recorded. At December 31, 2020, the Company recorded a legal provision for these items totaling $13.2 million (2019 - $4.0 million) which is included in other long-term liabilities. The Company is contesting federal income and municipal value-added tax assessments in Brazil. Brazilian courts often require a taxpayer to post cash or a guarantee for the disputed amount before hearing a case. It can take up to five years to complete an appeals process and receive a final verdict. At December 31, 2020, the Company has recorded restricted cash of $1.2 million (2019 - $13.9 million) in relation to insurance bonds for tax assessments in the appeals process. The Company may in the future have to post security, by way of cash, insurance bonds or equipment pledges, with respect to certain federal income and municipal tax assessments being contested, the amounts and timing of which are uncertain. The Company and its advisors believe that the federal income and municipal tax assessments under appeal are wholly without merit and no provision has been recorded with respect to these matters.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

In certain jurisdictions where the Company operates, entities that are exporters are permitted to maintain offshore bank accounts and are required to register all transactions resulting in deposits into and payments out of those accounts. The Company has identified that in certain instances it has not registered all transactions prior to 2017. The Company has been advised by its tax and foreign trade legal advisors that material fines that could result from non-compliance are imposable under statute with a five-year statute of limitations.

If the Company is unable to resolve all these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows and results of operations.

The Company will continue to closely monitor the COVID-19 situation. Should the duration, spread or intensity of the pandemic further develop in 2020 and 2021, the Company’s supply chain, market pricing, operations and customer demand could be affected. These factors may further impact the Company’s operating plan, its liquidity and cash flows, and the valuation of its long-lived assets. The COVID-19 situation continues to evolve. The magnitude of its effects on the global economy, and on the Company’s financial and operational performance, is uncertain at this time.

Related Party Transactions
The Company’s Chairman, Ross Beaty, is a related party. His $36.0 million subscription for common shares in connection with the Leagold Merger and related financings is a related party transaction. In June 2020, the Company repaid in full the $13.7 million in principal and accrued interest due on the Standby Loan to Mr. Beaty.
Key management of the Company comprises executive and non-executive directors and members of executive management. The remuneration of the Company’s directors and other key management personnel during the year ended December 31, 2020 and 2019 are as follows:
		2020		2019
Salaries, directors’ fees and other short-term benefits	$	6.8	$	2.8
Share-based payments		3.4		1.9
Total key management personnel compensation	$	10.2	$	4.7

Non-IFRS Measures

This MD&A refers to cash costs, cash costs per oz sold, AISC, AISC per oz sold, AISC contribution margin, adjusted net income, adjusted EPS, mine-site free cash flow, adjusted EBITDA, net debt, and sustaining and non-sustaining capital expenditures that are measures with no standardized meaning under International Financial Reporting Standards (“IFRS”), i.e. they are non-IFRS measures, and may not be comparable to similar measures presented by other companies. Their measurement and presentation is consistently prepared and is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Cash costs and cash costs per oz sold

Cash costs is a common financial performance measure in the gold mining industry; however, it has no standard meaning under IFRS. The Company reports total cash costs on a per oz sold basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate operating income and cash flow from mining operations. Cash costs include mine site operating costs plus lease principal payments, but are exclusive of depreciation and depletion, reclamation, capital and exploration costs and net of by-product sales and then divided by ounces sold to arrive at cash costs per oz. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

AISC per oz sold
The Company is reporting AISC per oz of gold sold. The methodology for calculating AISC was developed internally and is calculated below, and readers should be aware that this measure does not have a standardized meaning. Current IFRS measures used in the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain gold production. The Company believes the AISC measure provides further transparency into costs associated with producing gold and will assist analysts, investors and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value.
Cash cost and AISC reconciliation
Previously, cash cost per oz sold and AISC per oz sold were calculated including purchase price allocation adjustments for the fair values of inventory as the fair values approximated the Company’s actual production costs. Due to the significant increase in gold prices during the year, the fair values attributed to acquired inventory in the Leagold Merger do not approximate actual production costs; as such, cash cost per oz sold and AISC per oz sold have been normalized for the purchase price allocation adjustments to inventory. Comparative periods have also been adjusted to conform with the current methodology and are different from those previously reported. The following table provides a reconciliation of cash costs per oz of gold sold and AISC per oz of gold sold to the most directly comparable IFRS measure on an aggregate basis.
$’s in millions, except oz and per oz figures		Three months ended			Year ended
$’s in millions, except oz and per oz figures		December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Gold oz sold		134,895	128,437	80,330	471,786	196,803
Operating expenses excluding depreciation and depletion	$	113.0	119.6	61.0	422.3	159.2
Add: Lease payments		1.7	0.9	-	3.9	-
Less: Non-cash purchase price allocation adjustments to inventory		(1.1)	(8.0)	0.7	(26.6)	(0.3)
Total cash costs		113.6	112.5	61.7	399.5	158.9
Cash costs per gold oz sold	$	842	876	768	847	807
Total cash costs	$	113.6	112.5	61.7	399.5	158.9
Add: Sustaining capital expenditures		31.5	23.3	6.0	76.3	20.8
Reclamation expenses		1.1	1.8	1.0	6.3	2.8
Sustaining exploration expensed		0.3	0.7	0.1	1.5	0.4
Total AISC		146.5	138.3	68.8	483.6	182.9
AISC per gold oz sold	$	1,086	1,077	856	1,025	929

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Sustaining and non-sustaining capital reconciliation
The following table provides a reconciliation of sustaining and non-sustaining capital to the most directly comparable IFRS measure on an aggregate basis.
		Three months ended				Year ended
$’s in millions		December 31, 2020	September 30, 2020	December 31, 2019		December 31, 2020	December 31, 2019
Capital additions on mineral properties, plant and equipment⁽¹⁾	$	49.2	47.7	28.3		177.5	90.0
Less: Non-sustaining capital expenditures		(6.0)	(10.6)	(20.3)		(32.4)	(71.8)
Capital expenditures from development projects and corporate⁽²⁾		(9.3)	(12.5)	(2.0)		(49.9)	(8.7)
Other non-cash additions⁽³⁾		(2.4)	(1.3)	-		(18.9)	11.3
Sustaining capital expenditures	$	31.5	23.3	6.0		76.3	20.8
(1) Per note 9 of the consolidated financial statements. Capital additions are exclusive of non-cash changes to reclamation assets arising from changes in discount rate and inflation rate assumptions in the reclamation provision. (2) Non-sustaining capital expenditures include construction expenditures and pre-production inventory classified as construction-in-progress at Castle Mountain for all periods presented, and at Aurizona for the year ended December 31, 2019. Santa Luz construction expenditures are included in non-sustaining capital expenditures for the year ended December 31, 2020. (3) Non-cash additions include right-of-use assets associated with leases recognized in the period and capitalized depreciation for deferred stripping activities. For the year ended December 31, 2019, other non-cash additions relate to value added tax credits related to Aurizona construction recorded net of capital additions.
Total mine-site free cash flow
Mine-site free cash flow is a non-IFRS financial performance measure. The Company believes this to be a useful indicator of its ability to operate without reliance on additional borrowing or usage of existing cash. Mine-site free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Mine-site free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following table provides a reconciliation of mine-site free cash flow to the most directly comparable IFRS measure on an aggregate basis:
		Three months ended				Year ended
$’s in millions		December 31, 2020	September 30, 2020		December 31, 2019	December 31, 2020	December 31, 2019
Operating cash flow before non-cash changes in working capital	$	86.7	35.3		36.2	231.7	76.1
Add: Operating cash flow used by non-mine site activity⁽¹⁾		33.4	87.7		20.8	159.3	45.4
Cash flow from operating mine sites		120.1	123.0		57.0	391.0	30.7

Mineral property, plant and equipment additions		49.2	47.7		28.3	177.5	90.0
Less: Capital expenditures from development projects and corporate and other non-cash additions		(11.7)	(13.8)		(2.0)	(68.8)	2.6
Capital expenditure from operating mine sites		37.5	33.9		26.3	108.7	92.6
Non-sustaining exploration expensed		1.2	1.3		1.0	3.8	1.0
Total mine site free cash flow	$	81.4	87.8		29.7	278.5	(62.9)

(1) Includes taxes paid which are not factored into mine site free cash flow and finance fees paid which are included in operating cash flow before non-cash changes in working capital on the statement of cash flows.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

EBITDA, adjusted EBITDA and AISC contribution margin
The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use adjusted EBITDA and all-in sustaining contribution margin to evaluate the Company’s performance and ability to generate cash flows and service debt. EBITDA is defined as earnings before interest, tax, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, and amortization, adjusted to exclude specific items that are significant but not reflective of the underlying operating performance of the Company, such as the impact of fair value changes in the value of warrants, foreign exchange contracts and gold contracts, unrealized foreign exchange gains and losses, and share-based compensation. It is also adjusted to exclude items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance, such as impairments and gains and losses on disposals of assets.
The following tables provides the calculation of AISC contribution margin (revenue less AISC), EBITDA and adjusted EBITDA, as calculated by the Company:
AISC Contribution Margin
		Three months ended			Year ended
$’s in millions		December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Revenue	$	252.6	244.5	119.0	842.5	281.7
Less: AISC		(146.5)	(138.3)	(68.8)	(483.6)	(182.9)
AISC contribution margin	$	106.1	106.2	50.2	358.9	98.8

EBITDA and Adjusted EBITDA
		Three months ended			Year ended
$’s in millions		December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Net income (loss) before tax	$	65.7	12.9	(5.7)	41.5	(13.2)
Depreciation and depletion		43.5	36.3	19.7	132.3	39.1
Finance costs		8.6	12.8	5.1	39.8	17.5
Finance income		(0.6)	(0.6)	(0.6)	(1.8)	(1.9)
EBITDA		117.2	61.4	18.5	211.8	41.5
Non-cash share-based compensation		1.4	2.0	2.0	6.7	5.0
Non-cash change in fair value of warrants		(17.5)	8.6	26.8	29.9	38.2
Unrealized loss (gain) on gold contracts		(11.2)	10.2	-	12.9	-
Unrealized loss (gain) on foreign exchange contracts		(11.1)	2.7	(3.2)	14.1	(1.6)
Unrealized foreign exchange (gains) losses		1.3	(0.8)	(1.7)	(12.1)	(1.4)
Other expenses (income)		(0.0)	5.1	2.4	11.3	14.8
Adjusted EBITDA	$	80.2	89.2	44.6	274.6	96.5

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Adjusted net income and adjusted EPS
Adjusted net income and adjusted EPS are used by management and investors to measure the underlying operating performance of the Company. Adjusted net income is defined as net income adjusted to exclude specific items that are significant but not reflective of the underlying operating performance of the Company, such as the impact of fair value changes in the value of warrants, foreign exchange contracts and gold contracts, unrealized foreign exchange gains and losses, share-based compensation. It is also adjusted to exclude items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance, such as impairments and gains and losses on disposals of assets. Adjusted net income per share amounts are calculated using the weighted average number of shares outstanding on a basic and diluted basis as determined by IFRS.
The following table provides the calculation of adjusted net income and adjusted EPS, as adjusted and calculated by the Company:
		Three months ended			Year ended
$’s in millions		December 31, 2020	September 30, 2020	December 31, 2019	December 31, 2020	December 31, 2019
Basic weighted average shares outstanding		242,118,375	241,249,679	113,420,056	212,487,729	112,001,484
Diluted weighted average shares outstanding		290,888,147	244,066,116	141,965,548	218,411,971	133,687,303
Net income (loss) attributable to Equinox Gold shareholders	$	89.7	3.2	(8.5)	20.7	(20.3)
Add: Non-cash share-based compensation		1.4	2.0	2.0	6.8	5.0
Non-cash change in fair value of warrants		(17.5)	8.6	26.8	29.9	38.2
Unrealized loss (gain) on gold contracts		(11.2)	10.2	-	12.9	-
Unrealized loss (gain) on foreign exchange contracts		(11.1)	2.7	(3.2)	14.1	(1.6)
Unrealized foreign exchange (gains) losses		1.3	(0.8)	(1.7)	(12.1)	(1.4)
Other expenses (income)		(0.0)	5.1	2.4	11.3	14.8
Unrealized foreign exchange (gains) losses recorded in deferred tax expense		(18.5)	(0.2)	2.7	(2.5)	2.8
Adjusted net income		34.1	30.8	20.5	81.1	37.5
Per share - basic ($/share)	$	0.14	0.13	0.18	0.38	0.34
Per share - diluted ($/share)	$	0.12	0.13	0.14	0.37	0.28

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Net debt
The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use net debt to evaluate the Company’s performance. Net debt does not have any standardized meaning prescribed under IFRS, and therefore it may not be comparable to similar measures employed by other companies. The data are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performances prepared in accordance with IFRS. Net debt is calculated as the sum of the current and non-current portions of long-term debt net of the cash and cash equivalent balance as at the balance sheet date. A reconciliation of net debt is provided below.
		December 31, 2020	September 30, 2020	December 31, 2019
Current portion of loans and borrowings	$	13.3	6.7	61.5
Non-current loans and borrowings		531.9	536.4	202.5
Total debt		545.2	543.1	264.0
Less: Cash and cash equivalents (unrestricted)		(344.9)	(310.7)	(67.7)
Net debt	$	200.3	232.4	196.3

Risks and Uncertainties

Financial instrument risk exposure

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management process.

(i) Credit risk

The carrying value of these financial assets totaling $404.5 million represents the maximum exposure to credit risk.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company ensures that it has sufficient capital in order to meet short term business requirements after taking into account the Company’s holdings of cash and cash equivalents.

In March 2020, the Company drew $180 million under its revolving credit facility as a cautionary measure given the uncertainty regarding the impact of the COVID-19 pandemic. The Company had no immediate need for the funds and in August 2020, repaid $200 million in principal on its revolving credit facility. However, management cannot accurately predict the impact COVID-19 will have on the Company’s operations, the fair value of the Company’s assets, its ability to obtain financing, third parties’ ability to meet their obligations with the Company and the length of travel and quarantine restrictions imposed by governments of the countries in which the Company operates.

(iii) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: commodity price risk; interest rate risk and currency risk. Financial instruments affected by market risk include cash and cash equivalents, accounts receivable, marketable securities, reclamation deposits, accounts payable and accrued liabilities, debt and derivatives.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Interest rate risk
Interest on the Company’s Revolving Facility and Term Loan is variable based on LIBOR. Borrowings at variable rates of interest expose the Company to interest rate risk. At December 31, 2020, $200 million is outstanding under the Revolving Facility and $100 million is outstanding under the Term Loan. A 100-basis point change in interest rates at December 31, 2020 would have a $1.9 million impact on net income on an annualized basis.
Foreign currency risk
The Company’s functional currency is the US dollar. The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency, primarily the Brazilian Real, Mexican Peso and Canadian dollar.
					December 31, 2020						December 31, 2019
						Financial assets			Financial liabilities			Financial assets			Financial liabilities
	Brazilian Reals				$	73.2		$	61.9		$	28.7		$	29.0
	Mexican Pesos					9.9			6.0			-			-
	Canadian Dollars					13.3			7.7			18.7			7.0
					$	96.4		$	75.5		$	47.4		$	36.0
Of the financial assets listed above, $58.4 million (December 31, 2019 - $12.9 million) represent cash and cash equivalents held in Brazilian Reals, $0.9 million (December 31, 2019 - nil) represent cash and cash equivalents held in Mexican Peso and $2.4 million (December 31, 2019 - $7.8 million) represent cash and cash equivalents held in Canadian dollars. Minimal cash is held in other currencies. At December 31, 2020, with other variables unchanged, a 10% strengthening of the US dollar against the above currencies would have decreased net income by approximately $1.9 million (December 31, 2019 - $1.0 million decrease to net loss). A 10% weakening of the US dollar would have the opposite effect on net loss. The Company has a foreign currency exchange risk management program in order to manage foreign currency risk on its Brazilian Real and Mexican Peso expenditures. As at December 31, 2020, the Company had in place USD:BRL and USD:MXP put and call options with the following notional amounts, weighted average rates and maturity dates:
			USD notional amount							Call options’ weighted average strike price			Put options’ weighted average strike price
		Currency		Within 1 year			1-2 years
		BRL	$	164.8		$	14.5			4.51			5.17
		MXP		24.0			2.0			21.75			25.99
Commodity price risk
Gold prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the political and economic conditions of major gold producing countries. The profitability of the Company is directly related to the market price of gold. A decline in the market price for this precious metal could negatively impact the Company’s future operations. As part of the Leagold Merger, the Company assumed gold collar and forward swap contracts. The Company has not hedged any of its gold sales, other than those assumed as part of the Leagold Merger. The gold collars have put and call strike prices of $1,325 and $1,430 per ounce, respectively, for 3,750 ounces per month from acquisition to September 2022 for a total of 116,250 ounces. The forward swap contracts cover 4,583 ounces per month from acquisition to September 2022 for a total of 142,083 ounces, at an average fixed gold price of $1,350 per ounce. As of December 31, 2020, the Company had 78,764 ounces and 96,234 ounces remaining to be delivered under its gold collars and forward swap contracts, respectively.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Other risk factors

Equinox Gold’s business activities are subject to significant risks including, but not limited to, those described in previous disclosure documents. Any of these risks could have a material adverse effect on Equinox Gold, its business and prospects, and could cause actual events to differ materially from those described in forward-looking statements related to Equinox Gold. These risks are in addition to those discussed in technical reports and other documents filed by Equinox Gold from time to time on SEDAR and on EDGAR. In addition, other risks and uncertainties not presently known by management of Equinox Gold or that management currently believes are immaterial could affect Equinox Gold, its business and prospects.

Community action

Communities and non-governmental organizations (NGOs) are increasingly vocal and active with respect to mining activities at or near their communities. Some communities and NGOs have taken actions that could have an adverse effect on the Company’s operations and reputation, such as establishing blockades that prevent access to the Company’s operations or restrict the delivery of supplies and personnel, and commencing lawsuits. In certain circumstances, such actions could ultimately result in the cessation of mining activities and the revocation of permits and licenses.

Equinox Gold has initiated various programs to enhance its community engagement processes, achieve industry standard environmental practices and reinforce the Company’s commitment to the safety and health of its workforce and surrounding communities. There is no assurance, however, that these efforts will be successful at mitigating all impacts of community actions to the Company’s operations, and the Company may suffer material negative consequences to its business.

COVID-19

COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. Since then, COVID-19 has had, and will continue to have, a negative impact on global financial conditions. Almost all countries globally are experiencing restrictions and negative impacts as the result of COVID-19, including Canada, the U.S.A., Mexico, and Brazil where the Company operates and has offices. A sustained slowdown in economic growth could have an adverse effect on the price and/or demand for gold. Further, as the prevalence of COVID-19 continues, governments continue to implement regulations and restrictions regarding the flow of labour, services and products. Consequently, the Company’s operations, including through limited availability of labour, suppliers, customers and distribution channels could be impacted.

Some of the Company’s operations had some or all site activities temporarily suspended during 2020 as a result of COVID-19 related impacts. It remains possible that further suspensions could be applied during 2021 and the Company’s production and planned projects delayed as a result.

The Company is actively monitoring the evolution of the pandemic. Each of the Company’s operations implemented early preventive measures in collaboration with the Company’s employees, contractors and host communities to limit COVID-19 exposure and transmission. The Company continues to enforce stringent operational and safety procedures in accordance with guidelines outlined by the World Health Organization, the United States and Canada Centres for Disease Control and the local, state and federal governments at each of its sites.

The Company engages regularly with community leaders to discuss preventive measures at site and address any concerns, and to share and develop strategies to manage COVID-19 challenges.

Production and cost estimates

Equinox Gold prepares estimates of operating costs and/or capital costs for each operation and project. Equinox Gold’s actual costs may vary from estimates. Equinox Gold’s actual costs are dependent on several factors, including, but not limited to:

• the exchange rate between the United States dollar, Mexican Pesos, Brazilian Real and the Canadian dollar;

• the price of gold and by-product metals;

• smelting and refining charges;

• royalties;

• the timing and cost of construction and maintenance activities at processing facilities;

• the availability and costs of skilled labour and specialized equipment;

• the availability and cost of appropriate processing and refining arrangements;

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

• potential increases in operating costs due to changes in the cost of fuel, power, materials and other inputs used in mining operations; and

• production levels.

Forecasts of future production are estimates based on interpretation and assumptions, and actual production may be less than estimated. Unless otherwise noted, Equinox Gold’s production forecasts are based on full production being achieved. Equinox Gold’s ability to achieve and maintain full production rates is subject to a number of risks and uncertainties, including the accuracy of Mineral Reserve and Mineral Resource estimates, the accuracy of assumptions regarding ore grades and recovery rates, ground conditions, physical characteristics of ores, the accuracy of estimated rates and costs of mining and processing, and the receipt and maintenance of permits.

Operational risks

Equinox Gold’s principal business is the mining, processing of and exploration for precious metals. Equinox Gold’s mining operations and processing and related infrastructure facilities are subject to risks normally encountered in the mining and metals industry. Although adequate precautions to minimize risk will be taken, operations are subject to hazards that could have an adverse effect on the business, results of operations and financial position of Equinox Gold.

Such risks include, without limitation, environmental hazards, tailings risks, industrial accidents, labour disputes, changes in laws, technical difficulties or failures, late delivery of supplies or equipment, unusual or unexpected geological formations or pressures, cave-ins, pit-wall failures, rock falls, unanticipated ground, grade or water conditions, climate change related events such as flooding and droughts, actual ore mined varying from estimates of grade or tonnage, metallurgical or other characteristics, interruptions in or shortages of electrical power or water, periodic or extended interruptions due to the unavailability of materials and force majeure events.

Additionally, Equinox Gold’s operations are subject to seasonal conditions. As a result of potentially heavy rainfall, pit access and the ability to mine ore may be lower in the first half of the year and the cost of mining may also be higher. In addition, a prolonged dry season may result in drought conditions, which may also impact production due to a lack of water that is necessary for processing.

Such risks could result in reduced production, damage to, or destruction of, mineral properties or producing facilities, damage to or loss of life or property, environmental damage, delays in mining or processing, losses and possible legal liability.

Climate change may exacerbate such risks in the future. Work is ongoing to understand these risks so that mitigations can be adopted.

It is common in new processing operations to experience unexpected problems and delays during development and start-up. In addition, delays in the commencement of sustainable and profitable production can occur.

Construction risks

Equinox Gold commenced construction of Santa Luz in 2020 and intends to continue with the expansion projects at Los Filos during 2021. Construction of a project requires substantial expenditures and could have material cost overruns versus budget. The capital expenditures and time required to expand Los Filos, re-construct Santa Luz or develop any new mines are considerable and changes in cost or construction schedules can significantly increase both the time and capital required to expand or build the mentioned projects.

Construction costs and timelines can be impacted by a wide variety of factors, many of which are beyond the control of Equinox Gold. These include, but are not limited to, COVID-19, weather conditions, ground conditions, availability of appropriate rock and other material required for construction, availability and performance of contractors and suppliers, delivery and installation of equipment, design changes, accuracy of estimates and availability of accommodations for the workforce. Project development schedules are also dependent on obtaining and maintaining governmental approvals and the timeline to obtain such approvals is often beyond the control of Equinox Gold. A delay in start-up of commercial production would increase capital costs and delay generating revenues. Given the inherent risks and uncertainties associated with construction, there can be no assurance that the construction will continue in accordance with current expectations or at all, that construction costs will be consistent with the budget, that production will be achieved on schedule, or that the mine will operate as planned.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Foreign operations

Equinox Gold conducts mining, development, exploration and other activities through subsidiaries in foreign countries, including the United States, Mexico and Brazil. Mining activities are subject to the risks normally associated with any conduct of business in foreign countries including:

• expropriation, nationalization, and the cancellation, revocation, renegotiation, or forced modification of existing contracts, permits, licenses, approvals, or title, particularly without adequate compensation;

• changing political and fiscal regimes, and economic and regulatory instability;

• unanticipated adverse changes to laws and policies, including those relating to mineral title, royalties and taxation;

• delays or inability to obtain or maintain necessary permits, licenses or approvals;

• opposition to mine projects, which include the potential for violence, property damage and frivolous or vexatious claims;

• restrictions on foreign investment;

• unreliable or undeveloped infrastructure;

• labour unrest and scarcity;

• difficulty obtaining key equipment and components for equipment;

• regulations and restrictions with respect to imports and exports;

• high rates of inflation;

• extreme fluctuations in currency exchange rates and restrictions on foreign exchange, currencies and repatriation;

• inability to obtain fair dispute resolution or judicial determinations because of bias, corruption or abuse of power;

• abuse of power of foreign governments who impose, or threaten to impose, fines, penalties or other similar mechanisms, without regard to the rule of law;

• difficulties enforcing judgments, particularly judgments obtained in Canada or the United States, with respect to assets located outside of those jurisdictions;

• difficulty understanding and complying with the regulatory and legal framework with respect to mineral properties, mines and mining operations, and permitting;

• violence and the prevalence of criminal activity, including organized crime, theft and illegal mining;

• civil unrest, terrorism and hostage taking;

• military repression and increased likelihood of international conflicts or aggression;

• restriction on the movements of personnel and supplies as the result of COVID-19; and

• increased public health concerns.

Mexico has experienced increasing criminal activity over the years which resulted in violence between the drug cartels and authorities and incidents of violent crime theft kidnapping for ransom and extortion by organized crime have increased. Equinox Gold is taking a variety of measures to protect its workforce, property and production facilities from these security risks with respect to Los Filos. Although Equinox Gold has implemented measures to protect its employees, contractors, property and production facilities from these security risks, there can be no assurance that security incidents will not have an adverse effect on the Company’s operations.

The Company’s mining and development properties in Brazil expose the Company to various socioeconomic conditions as well as to the laws governing the mining industry. The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant changes in policies and regulations. Changes, if any, in mining or investment policies or shifts in political attitude in Brazil or any of the jurisdictions in which the Company operates may adversely affect the Company's operations or profitability. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, importation of parts and supplies, income and other taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety.

Uncertainty over whether the Brazilian government will implement changes in policy or regulation may contribute to economic uncertainty in Brazil. Historically, Brazilian politics have affected the performance of the Brazilian economy. Past political crises have affected the confidence of investors and the public, generally resulting in an economic slowdown. In the past, high levels of inflation have adversely affected the economies and financial markets of Brazil, and the ability of its government to create conditions that stimulate or maintain economic growth. Moreover, governmental measures to curb inflation and speculation about possible future governmental measures have contributed to the negative economic impact of inflation in Brazil and have created general economic uncertainty. As part of these measures, the Brazilian government has at times maintained a restrictive monetary policy and high interest rates that have limited the availability of credit and economic growth.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Environmental risks, regulations, and hazards

All phases of Equinox Gold’s mining operations are subject to environmental regulation in the jurisdictions in which they operate. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set out limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will likely, in the future, require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the mining operations. Environmental hazards may exist on the properties which are unknown at present which have been caused by previous or existing owners or operators of the properties. Equinox Gold may become liable for such environmental hazards caused by previous owners or operators of the properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including fines and orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Previous mining by artisanal miners (Garimpeiros) has occurred and continues today at certain of Equinox Gold’s Brazilian properties. Garimpeiros are known to use motor oils, other substances and greases in their mining processes, which can result in environmental damage. While Equinox Gold has taken steps to address the activities of the Garimpeiros and the related environmental impacts, there is no certainty that such activities will be discontinued and Equinox Gold may become liable for such environmental hazards caused by previous owners or operators of the properties.

The extraction process for gold and metals can produce tailings, which are the slurry and sand-like materials which remain from the extraction process. Tailings are stored in engineered facilities that are designed, constructed, operated and closed in conformance with federal and state requirements and standard industry practices. Hazards such as uncontrolled seepage or geotechnical failure of retaining dams around tailings disposal areas, however, may result in environmental pollution and consequent liability.

Equinox Gold’s historical operations have generated chemical and metals depositions in the form of tailing ponds, rock waste dumps, and heap leach pads. The Company’s ability to obtain, maintain and renew permits and approvals and to successfully develop and operate mines may be adversely affected by real or perceived impacts associated with Equinox Gold’s activities or of other mining companies that affect the environment, human health and safety.

The water collection, treatment and disposal operations at Equinox Gold’s mines are subject to strict regulation and involve significant environmental risks. If collection or management systems fail, overflow or do not operate properly, untreated water or other contaminants could discharge into nearby properties or into nearby streams and rivers, causing damage to persons or property, or to aquatic life and economic damages. Liabilities resulting from damage, regulatory orders or demands, revoking of licenses or permits, or similar, could adversely affect Equinox Gold’s business, results of operations and financial condition due to partial or complete shutdown of operations. Moreover, in the event that Equinox Gold is deemed liable for any damage caused by overflow, Equinox Gold’s losses or consequences of regulatory action might not be covered by insurance policies.

Government regulation

The operating, development and exploration activities of Equinox Gold are subject to various laws governing prospecting, development, production, exports, imports, taxes, labour standards and occupational health and safety, mine safety, toxic substances, waste disposal, environmental protection and remediation, protection of endangered and protected species, land use, water use, land claims of local people and other matters. Externally driven regulation changes in the countries in which we operate adds uncertainties that cannot be accurately predicted. Any future adverse changes in government policies or legislation in the jurisdictions in which the Company operates, including with respect to COVID-19, are outside the Company’s control.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Any changes in government policy may result in changes to laws affecting ownership of assets, mining policies, monetary policies, taxation, royalty rates, exchange rates, environmental regulations, labour relations and return of capital. This may affect both Equinox Gold’s ability to undertake operating, development and exploration activities in respect of present and future properties in the manner currently contemplated, as well as its ability to continue to explore, develop and operate those properties in which it has an interest or in respect of which it has obtained exploration and development rights to date. The possibility that future governments may adopt substantially different policies, which might extend to expropriation of assets, cannot be ruled out.

No assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be interpreted in a manner which could have an adverse effect on Equinox Gold and its business, results of operations and financial position. Amendments to current laws, regulations and permits governing operating, development and exploration activities, or more stringent or different implementation, could have an adverse impact on Equinox Gold, or could require abandonment or delays in the development of new mining properties. Failure to comply with any applicable laws, regulations or permitting requirements may result in enforcement actions against Equinox Gold, including significant fines or orders issued by regulatory or judicial authorities causing process, development or exploration activities to cease or be curtailed or suspended, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.

Taxation risk

Equinox Gold is subject to taxes, duties, levies, government royalties and other government-imposed compliance costs in several jurisdictions. New taxes or increases to the rates of taxation could have an adverse impact on the results of operations or the Company’s finances.

The Company has organized its operations in part based on its understanding and assumptions in relation to various tax laws (including but not limited to capital gains, withholding tax, transfer pricing) within the jurisdictions in which the Company operates. The Company believes that its understanding and assumptions are reasonable. However, the Company cannot provide assurance that foreign taxation or other authorities will reach the same conclusion. The results of audit of prior tax filings may have a material impact on Equinox Gold.

Equinox Gold is currently appealing federal and municipal value-added tax assessments in Brazil. While Equinox Gold is confident that long-term regular recovery of value added taxes or other amounts receivable from various governmental and nongovernmental counter parties will be established, Equinox Gold cannot assure investors that such taxes will be recovered or that its activities will result in profitable processing operations.

Uncertainty of Mineral Reserve and Mineral Resource estimates

The Mineral Reserves and Mineral Resources published by Equinox Gold are estimates only and no assurance can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that Mineral Reserves could be mined or processed profitably. There are numerous uncertainties inherent in estimating Mineral Reserves and Mineral Resources, including many factors beyond Equinox Gold’s control. Such estimation is a subjective process, and the accuracy of any Mineral Reserve or Mineral Resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Short-term operating factors relating to the Mineral Reserves, such as the need for orderly development of the ore bodies or the processing of new or different ore grades, may cause the mining operation to be unprofitable in any particular accounting period. In addition, there can be no assurance that metal recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.

Fluctuation in commodities prices, results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may require revision of such estimate. Any material reductions in estimates of Mineral Reserves and Mineral Resources, or of Equinox Gold’s ability to extract these Mineral Reserves, could have an adverse effect on Equinox Gold and its business, results of operations and financial position. Inferred Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. A significant amount of exploration work must be completed in order to determine whether an Inferred Mineral Resource may be upgraded to a higher category.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Permitting

Equinox Gold’s operating, development and exploration activities are subject to receiving and maintaining licenses, permits and approvals (collectively, permits) from appropriate governmental authorities. Before commencing any operations, development or exploration on any of its properties, Equinox Gold must receive numerous permits. As the timing of receiving permits can vary and is largely out of the Company’s control, Equinox Gold may be unable to obtain on a timely basis or maintain in the future all necessary permits to explore and develop its properties, commence construction or operation of mining facilities and properties or maintain continued operations. Delays may occur in connection with obtaining necessary renewals of permits for Equinox Gold’s existing operations and activities, additional permits for existing or future operations or activities, or additional permits associated with new legislation. It is possible that previously issued permits may become suspended or revoked for a variety of reasons, including through change in government regulation or court action. Equinox Gold can provide no assurance that it will continue to hold or obtain, if required to, all permits necessary to develop or continue operating at any particular site, which could adversely affect its operations. Operation, development and exploration of Equinox Gold’s properties require permits from various governmental authorities in the United States, Mexico and Brazil, respectively. There can be no assurance that all future permits that Equinox Gold requires will be obtainable or renewable on reasonable terms, or at all. Delays or a failure to obtain required permits, or the expiry, revocation or failure to comply with the terms of any such permits that Equinox Gold has already obtained, would adversely affect its business.

Debt and liquidity risk

Equinox Gold must generate sufficient internal cash flows and/or be able to utilize available financing sources to finance its growth and sustain capital requirements. If Equinox Gold does not realize satisfactory prices for the gold from its gold mining operations, it could be required to raise significant additional capital through the capital markets and/or incur significant borrowings to meet its capital requirements. These financing requirements could result in dilution to existing Equinox Gold Shareholders and could adversely affect its ability to access the capital markets in the future to meet any external financing requirements Equinox Gold might have. If there are significant delays in when the Company’s growth projects are completed and/or their capital costs were to be significantly higher than estimated, these events could have an adverse effect on Equinox Gold’s business, results of operations and financial position.

Although Equinox Gold secured a $670 million financing package concurrent with the Leagold acquisition, there is no guarantee that additional funding will be available for further development of its projects. Further activities may depend on Equinox Gold’s ability to obtain financing through equity or debt financing and failure to obtain this financing may result in delay or indefinite postponement of its activities.

As of the date of this MD&A, Equinox Gold had aggregate consolidated principal indebtedness in the amount of $581 million (2019 – $284 million). Equinox Gold’s ability to make scheduled payments on the revolving credit facility and any other indebtedness will depend on its financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond its control. There is no guarantee that additional funding will be available for development of projects or to refinance existing corporate and project debt. There may be an inability to complete the investment on the proposed terms or at all due to delays in obtaining or inability to obtain consent of lenders or to execute intercreditor agreements or obtain required regulatory and exchange approvals.

Equinox Gold is exposed to interest rate risk on variable rate debt. Liquidity risk is the risk that Equinox Gold will not be able to meet its financial obligations as they become due, including, among others, debt repayments, interest payments and contractual commitments. If Equinox Gold’s cash flows and capital resources are insufficient to fund its debt service obligations, Equinox Gold could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance Equinox Gold’s indebtedness, including indebtedness under the revolving credit facility. Equinox Gold may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternatives may not allow Equinox Gold to meet its scheduled debt service obligations.

In addition, a breach of debt covenants to third parties, including the financial covenants under the revolving credit facility or Equinox Gold’s other debt instruments from time to time could result in an event of default under the applicable indebtedness. Such a default may allow the lenders to impose default interest rates or accelerate the related debt, which may result in the acceleration of any other debt to which a cross acceleration or cross default provision applies. In the event a lender accelerates the repayment of Equinox Gold’s borrowings, Equinox Gold may not have sufficient assets to repay its indebtedness.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

The revolving credit facility and other debt instruments contain several covenants that impose significant operating and financial restrictions on Equinox Gold and may limit Equinox Gold’s ability to engage in acts that may be in its long-term best interest. In particular, the revolving credit facility restricts Equinox Gold’s ability to dispose of assets to make dividends or distributions and to incur additional indebtedness and grant security interests or encumbrances. As a result of these restrictions, Equinox Gold may be limited in how it conducts its business, may be unable to raise additional debt or equity financing, or may be unable to compete effectively or to take advantage of new business opportunities, each of such restrictions may affect Equinox Gold’s ability to grow in accordance with its strategy.

Further, Equinox Gold’s maintenance of substantial levels of debt could adversely affect its financial condition and results of operations and could adversely affect its flexibility to take advantage of corporate opportunities. Substantial levels of indebtedness could have important consequences to Equinox Gold, including:

• limiting Equinox Gold’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements, or requiring Equinox Gold to make nonstrategic divestitures;

• requiring a substantial portion of Equinox Gold’s cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

• increasing Equinox Gold’s vulnerability to general adverse economic and industry conditions including the impact of COVID-19, that could affect the Company’s ability to operate its mines effectively, or at all;

• exposing Equinox Gold to the risk of increased interest rates for any borrowings at variable rates of interest;

• limiting Equinox Gold’s flexibility in planning for and reacting to changes in the industry in which it competes;

• placing Equinox Gold at a disadvantage compared to other, less leveraged competitors; and

• increasing Equinox Gold’s cost of borrowing.

Share price fluctuation

Securities markets have experienced a high degree of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to their operating performance, underlying asset values or prospects. There can be no assurance that these kinds of share price fluctuations or lack of liquidity will not occur in the future, and if they do occur, the Company does not know how severe the impact may be on Equinox Gold’s ability to raise additional funds through equity issues. If Equinox Gold is unable to generate such revenues or obtain such additional financing, any investment in Equinox Gold may be materially diminished in value or lost.

Water availability

Water availability is an operational risk for all mine sites. Our sites are situated in a variety of climactic zones, including arid and semi-arid, as well as areas with distinct seasonal wet and dry periods.

Access to water at Castle Mountain

Equinox Gold maintains water rights including two producing wells at Castle Mountain and mine has sufficient water supply for processing purposes for Phase 1 operations. However, additional sources of ground water are required to expand throughput and gold production as contemplated in Phase 2. The Company is working to locate and permit additional water supplies. If Equinox Gold is unable to source additional water supplies, it could prevent or limit the Company’s ability to conduct exploration and development activities and ultimately expand production at Castle Mountain.

Availability of sufficient water to support mining operations at RDM

RDM is situated in a semi-arid region of Brazil and is dependent on the annual rainy season for replenishment of the supply of water. Prolonged drought conditions in the region can contribute to lower-than-expected water recharge in wells as well as lower-than-expected water accumulation in the water storage facilities. The Company’s ability to obtain and secure alternate supplies of water at a reasonable cost depends on many factors, including: regional supply and demand, political and economic conditions, problems that affect local supplies, delivery and transportation, and relevant regulatory regimes. There is no guarantee that the Company can secure an alternate source of water in the event of a future prolonged drought.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Previous operators temporarily suspended RDM operations on an annual basis since the mine’s inception in 2014 due to continued regional drought conditions. In 2017, a water storage facility was built to allow for the capture and storage of rainwater and surface water runoff in a larger catchment area; however, insufficient water capture was realized, and operations continued to be temporarily suspended in 2018 and 2019. In 2020, there was sufficient water captured to allow RDM to achieve continued operations through the dry season (May to October) for the first time in the mine’s history.

Availability of sufficient water to support mining operations at Santa Luz

Santa Luz is situated in a semi-arid region of Brazil and is dependent on the annual rainy season for replenishment of the supply of water.

Subsequent to Santa Luz’s shutdown in 2014, the previous operator began to pump water from the nearby Itapicurú River, the main drainage system in the area, and store it within the C1 open pit for future use. The Company is currently converting and expanding an existing tailings storage facility into a water storage facility to increase Santa Luz’s water storage capacity. By late 2021, the water in the C1 pit is to be transferred to the new water storage facility and would then be available for use as process water as a mitigation measure should insufficient water be available to pump from the Itapicurú River throughout the operational life of the mine.

Availability of sufficient water storage capacity to support mining operations at Aurizona

Aurizona is situated in a tropical region of Brazil and receives significant amounts (over 3,000mm on average) of rainfall during the rainy season. Storage of water collected during the rainy season for use for the mineral processing plant throughout the dry season is constrained by the capacity of the existing tailings storage facility.

The deposit of tailings into the tailings storage facility, combined with the necessary water storage requirements, has to be carefully managed as the water reservoir level must be reduced prior to the onset of the dry season to allow the tailings beach adjacent to the tailings embankment to become exposed and to sufficiently dry to allow for the next embankment raise to be constructed in a centreline configuration. The subsequent management of the remaining water within the tailings facility becomes critical to ensure there is enough water available for mineral processing needs for the duration of the dry season and prior to the onset of the subsequent rainy season that will recharge the water in the tailings reservoir.

To mitigate for this lack of available storage capacity, a new tailings storage facility is planned to receive all future tailings deposition, which will allow the existing tailings facility to be used only for longer term water storage.

Future acquisitions, business arrangements or transactions

Equinox Gold will continue to seek new mining and development opportunities in the mining industry as well as business arrangements or transactions. In pursuit of such opportunities, Equinox Gold may fail to select appropriate acquisition targets or negotiate acceptable arrangements, including arrangements to finance acquisitions or integrate the acquired businesses and their workforce into Equinox Gold. Ultimately, any acquisitions would be accompanied by risks, which could include change in commodity prices, difficulty with integration, failure to realize anticipated synergies, significant unknown liabilities, delays in regulatory approvals and exposure to litigation. There is no guarantee that the sources of financing that have been announced will be successful and that additional funding will be available for development of projects or to refinance existing corporate and project debt. There may be an inability to complete the investment on the proposed terms or at all due to delays in obtaining or inability to obtain consent of lenders or to execute intercreditor agreements or obtain required regulatory and exchange approvals. Any issues that Equinox Gold encounters in connection with an acquisition, business arrangement or transaction could have an adverse effect on its business, results of operations and financial position.

Possible failure to realize anticipated benefits of the Premier Transaction

The ability to realize the benefits of the Premier Transaction will depend in part on successfully consolidating functions and integrating operations, procedures, and personnel in a timely and efficient manner, as well as on Equinox Gold’s ability to realize the anticipated growth opportunities and synergies from integrating Premier’s business. This integration will require the dedication of management’s time and resources which could divert focus and resources from other strategic opportunities available to Equinox Gold, and from operational matters. The integration process may result in the loss of key employees or directors and the disruption of ongoing business and employee relationships that may adversely affect the ability of Equinox Gold to achieve the anticipated benefits of the Premier Transaction as well as any anticipated benefits from possible future opportunities.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

While Equinox Gold completed an extensive due diligence investigation of Premier and its assets, including reviewing technical, environmental, legal, tax accounting, financial and other matters, certain risks either may not have been uncovered or are unknown at this time. Such risks may have an adverse impact on Equinox Gold and the combined assets of Equinox Gold and Premier following the Premier Transaction and may have an adverse impact on the trading price and market value of Equinox Gold’s shares and other securities.

Reclamation estimates, costs and obligations

Equinox Gold’s operations are subject to reclamation plans that establish its obligations to reclaim properties after minerals have been mined from a site. While closure costs are estimated using industry standard practices, often using third parties, it is difficult to determine the exact amounts which will be required to complete all land reclamation activities in connection with the properties in which Equinox Gold holds an interest. Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine. Accordingly, these obligations represent significant future costs for Equinox Gold, and it may be necessary to revise planned expenditures, operating plans and reclamation concepts and plans in order to fund reclamation activities. Such increased costs may have an adverse impact upon the business, results or operations and financial position of Equinox Gold.

There is a potential future liability for cleanup of tailings deposited on the mining license areas by others during previous periods of mining and reprocessing. It is not possible to quantify at this time what the potential liability may be and detailed assessments need to be made to determine future land reclamation costs, if any.

Infrastructure

Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants which affect capital and operating costs. Unusual or infrequent weather phenomena, terrorism, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect Equinox Gold’s business, results of operations and financial position.

Properties located in remote areas

Certain of Equinox Gold’s properties are located in remote areas, some of which have severe climates, resulting in technical challenges for conducting both geological exploration and mining. Equinox Gold benefits from modern mining transportation skills and technologies for operating in areas with severe climates. Nevertheless, Equinox Gold may sometimes be unable to overcome problems related to weather and climate at a commercially reasonable cost, which could have an adverse effect on Equinox Gold’s business, results of operations and financial position. The remote location of Equinox Gold’s operations may also result in increased costs and transportation difficulties.

Aurizona is situated in a region where other mining activity is developing. Aurizona has access to existing roads and paved highways as well as local water and power supply; however, the existing road to the village of Aurizona may require relocation in the future to allow access to the western portion of the ore body, which will also require permitting and community support. Generators currently act as back-up for power outages but, despite provision for backup infrastructure, there can be no assurance that challenges or interruptions in infrastructure and resources will not be encountered.

Internal controls over financial reporting

Equinox Gold may fail to maintain the adequacy of its internal controls over financial reporting as such standards are modified, supplemented or amended from time to time, and Equinox Gold cannot ensure that it will conclude on an ongoing basis that it has effective internal controls over financial reporting. Equinox Gold’s failure to satisfy the requirements of Canadian and United States legislation on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm Equinox Gold’s business and negatively impact the trading price and market value of its shares or other securities. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm Equinox Gold’s operating results or cause it to fail to meet its reporting obligations.

Equinox Gold may fail to maintain the adequacy of its disclosure controls. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by Equinox Gold in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated and communicated to Equinox Gold’s management, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

No evaluation can provide complete assurance that Equinox Gold’s financial and disclosure controls will detect or uncover all failures of persons within Equinox Gold to disclose material information otherwise required to be reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. The effectiveness of Equinox Gold’s controls and procedures could also be limited by simple errors or faulty judgements.

As described on page 61, a material weakness in the Company’s internal control over financial reporting was determined to exist at December 31, 2020. The Company’s management, including the chief executive officer and chief financial officer, concluded that our internal control over financial reporting was not effective as of December 31, 2020 due to the presence of this material weakness. While new and revised controls are being adopted to remediate this weakness, if these and other controls fail to adequately remediate this material weakness, it could result loss of investor confidence, which could lead to a decline in our stock price. In addition, if we do not maintain adequate financial and management personnel, processes, and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our share price and harm our ability to raise capital. Failure to accurately report our financial performance on a timely basis could also jeopardize our continued listing on the TSX or NYSE or any other exchange on which our common shares may be listed.

Information systems

Targeted attacks on Equinox Gold’s systems (or on systems of third parties that Equinox Gold relies on), failure or non-availability of key information technology (IT) systems or a breach of security measures designed to protect Equinox Gold’s IT systems could result in disruptions to Equinox Gold’s operations, extensive personal injury, property damage or financial or reputational risks. Equinox Gold has engaged IT consultants to implement and test system controls and disaster recovery infrastructure for certain IT systems. As the threat landscape is ever-changing, Equinox Gold must make continuous mitigation efforts, including risk prioritized controls to protect against known and emerging threats, adopt tools to provide automate monitoring and alerting, and install backup and recovery systems to ensure the Company’s ability to restore systems and return to normal operations. There is no certainty that Equinox Gold’s efforts will adequately protect the Company’s systems and operations.

Counterparty risk

Counterparty risk is the risk to Equinox Gold that a party to a contract will default on its contractual obligations to Equinox Gold. Equinox Gold is exposed to various counterparty risks including, but not limited to: (i) financial institutions that hold Equinox Gold’s cash and short-term investments; (ii) companies that have payables to Equinox Gold; (iii) providers of its risk management services, such as hedging arrangements; (iv) shipping service providers that move Equinox Gold’s material; (iv) Equinox Gold’s insurance providers; and (v) Equinox Gold’s lenders. Although Equinox Gold makes efforts to limit its counterparty risk, Equinox Gold cannot effectively operate its business without relying, to a certain extent, on the performance of third-party service providers.

Public perception

Damage to Equinox Gold’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. Although Equinox Gold places great emphasis on protecting its image and reputation, it does not ultimately have direct control over how it is perceived by others. Reputation loss may lead to increased challenges in developing and maintaining community relations, decreased investor confidence and act as an impediment to Equinox Gold’s overall ability to advance its projects, thereby having an adverse impact on financial performance, cash flows, growth prospects, and the market value of the Company’s share and other securities.

Equinox Gold may become subject to additional legal proceedings

Equinox Gold is currently subject to litigation and claims in Brazil, Mexico and the United States and may, from time to time, become involved in various claims, legal proceedings, regulatory investigations and complaints. Equinox Gold cannot reasonably predict the likelihood or outcome of any actions should they arise. If Equinox Gold is unable to resolve any such disputes favorably, it may have an adverse effect on Equinox Gold’s financial performance, cash flows, and results of operations. To the extent management believes it is probable that a material cash outflow will be incurred to settle the claim, a provision for the estimated settlement amount is recorded. Equinox Gold’s assets and properties may become subject to further liens, agreements, claims, or other charges as a result of such disputes. Any claim by a third party on or related to any of Equinox Gold’s properties, especially where Mineral Reserves have been located, could result in Equinox Gold losing a commercially viable property. Even if a claim is unsuccessful, it may potentially affect Equinox Gold’s operations due to the high costs of defending against the claim. If Equinox Gold loses a commercially viable property, such a loss could lower its future revenues, or cause Equinox Gold to cease operations if the property represents all or a significant portion of Equinox Gold’s Mineral Reserves.

Equinox Gold could be forced to compensate those suffering loss or damage by reason of its processing, development or exploration activities and could face civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Any such regulatory or judicial action could materially increase Equinox Gold’s operating costs and delay or curtail or otherwise negatively impact Equinox Gold’s activities.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Defects in land title

Title insurance is not available for Equinox Gold’s properties, and Equinox Gold’s ability to ensure that it has obtained a secure claim to individual mineral properties or mining concessions may be severely constrained. Equinox Gold has not conducted surveys of all of the claims in which it holds direct or indirect interests and, therefore, the precise area and location of such claims may be in doubt. Equinox Gold can provide no assurances that there are no title defects affecting its properties. Accordingly, its mineral properties may be subject to prior unregistered liens, agreements, transfers or claims, including indigenous land claims, and title may be affected by, among other things, undetected defects. In addition, Equinox Gold may be unable to operate its properties as permitted or to enforce its rights with respect to its properties.

Management

The success of Equinox Gold will be largely dependent on the performance of its Board of Directors and its management team. The loss of the services of these persons would have an adverse effect on Equinox Gold’s business, results of operations, financial position and prospects. There is no assurance Equinox Gold can maintain the services of its Board of Directors and management or other qualified personnel required to operate its business. Failure to do so could have an adverse effect on Equinox Gold and its business, results of operations, financial position and growth prospects.

Employee recruitment and retention

Recruiting and retaining qualified personnel is critical to Equinox Gold’s success. The number of persons skilled in the acquisition, exploration, development and operation of mining properties is limited and competition for such persons is intense. In particular, there is intense competition for engineers, geologists and persons with mining expertise. As Equinox Gold’s business activity grows, it will require additional key financial, administrative, mining, marketing and public relations personnel as well as additional staff at its operations. Although Equinox Gold believes that it will be successful in attracting and retaining qualified personnel, there can be no assurance of such success as competition for such persons with these skill sets increases. If Equinox Gold is not successful in attracting and retaining qualified personnel, the efficiency of the Company’s operations could be impaired, which could have an adverse impact on Equinox Gold’s future cash flows, earnings, results of operations, and financial condition.

Property commitments

The properties held by Equinox Gold may be subject to various land payments, royalties and/or work commitments. Failure by Equinox Gold to meet its payment obligations or otherwise fulfill its commitments under these agreements could result in the loss of related property interests.

In Mexico, while mineral rights are administered by the federal government through federally issued mining concessions, surface rights over the land located in the mining concessions may be owned by third parties, including an Ejido (communally held land). The Company has secured the surface rights necessary to operate Los Filos through written agreements with Ejidos, individual members of the Ejidos and private owners. However, these agreements are subject to renegotiation, especially with respect to the payments made by the Company to operate on such lands. Absence of agreement on such payment amount during a renegotiation of such written agreements may have significant impacts on the operation of the Los Filos and could result in delays and higher costs to the Company to conduct its operation.

With respect to Los Filos, various land access agreements have been entered into with the main local communities whose properties include the areas occupying Los Filos mine operations and will be renegotiated in 2025. Pursuant to a social collaboration agreement Equinox Gold provides benefits to local communities like the improvement of communal infrastructure or spending in educational and social support. The Company occasionally receives additional requests and complaints from the local communities relating to such commitments. The Company’s failure to answer adequately to the communities’ additional requests or complaints or failure to renegotiate the terms and conditions of the agreements may result in manifestations such as protests, roadblocks, or other forms of public expression against Equinox Gold’s activities and may have a negative impact on Equinox Gold’s reputation and operations.

Competition

The mining industry is very competitive, particularly with respect to properties that produce, or are capable of producing, gold and other metals. Mines have limited lives and, as a result, Equinox Gold continually seeks to replace and expand Mineral Reserves through exploration and the acquisition of new properties. In addition, there is a limited supply of desirable mineral lands available in areas where Equinox Gold would consider conducting exploration and/or production activities. As Equinox Gold faces significant and increasing competition from a number of large established companies, some of which have greater financial and technical resources than Equinox Gold, for a limited number of suitable properties and resource acquisition opportunities, Equinox Gold may be unable to acquire such mining properties which it desires on terms it considers acceptable.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Equinox Gold competes with these other mining companies for the recruitment and retention of qualified directors, professional management, employees and contractors. Competition is also intense for the availability of drill rigs, mining equipment, and production equipment. Competition in the mining business for limited sources of capital could adversely impact our ability to acquire and develop suitable gold mines, gold developmental projects, gold producing companies, or properties having significant exploration potential. As a result, there can be no assurance that the Company’s acquisition and exploration programs will yield new Mineral Reserves to replace or expand current Mineral Reserves, or that the Company will be able to maintain production levels in the future.

Employee and labour relations

Some of Equinox Gold’s employees and contractors are unionized. Although the Company has reached agreements and places significant emphasis on maintaining positive relationships with the union and employees, there is risk of labour strikes and work stoppages. Should they occur, some labour strikes and work stoppages have the potential to significantly affect the Company’s operations and thereby adversely impact the Company’s future cash flows, earnings, production, and financial conditions.

Further, relations with employees may be affected by changes in the scheme of labour relations that may be introduced by the relevant governmental authorities in the jurisdictions in which the mining operations are conducted. Changes in such legislation or otherwise in Equinox Gold’s relationships with its employees may result in strikes, lockouts or other work stoppages, any of which could have an adverse effect on the business, results of operations and financial position.

Climate change

Governments are moving to introduce climate change legislation and treaties at the international, national, state/province and local levels. Regulation relating to emission levels (such as carbon taxes or cap and trade schemes) and energy efficiency is becoming more stringent. If the current regulatory trend continues, Equinox Gold expects that this may result in increased costs. In addition, physical risk of climate change may also have an adverse effect on Equinox Gold’s business and may impact results of operations and financial position. These risks include: sea level rise, extreme weather events, impact on water availability and resource shortages due to delivery disruptions. Equinox Gold can not provide complete assurance that efforts to mitigate the risks of climate changes at all sites or that actions will be effective and that the physical risks of climate change will not have an adverse effect on the Company’s business, results of operations and financial position.

Uninsurable risks

Equinox Gold is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological conditions, ground or slope failures, mechanical failures, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to Equinox Gold’s current properties and future properties of Equinox Gold or the properties of others, delays in mining, monetary losses and possible legal liability.

Equinox Gold maintains insurance to protect against certain risks in such amounts as it considers to be reasonable. However, Equinox Gold cannot provide any assurance that its insurance coverage will be sufficient to cover any resulting liability, or that such insurance will continue to be available at economically feasible premiums or for other reasons.

While Equinox Gold evaluates the risks to its business and carries insurance policies to mitigate the risk of loss where economically feasible, not all of these risks are reasonably insurable and insurance coverages may contain limits, deductibles, exclusions and endorsements. In particular, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to Equinox Gold or to other companies in the mining industry on acceptable terms. Losses from such events may have an adverse effect on Equinox Gold, its business, results of operations and financial position. Equinox Gold may also become subject to liability for pollution or other hazards which may not be insured against or which Equinox Gold may elect not to insure against because of premium costs or other reasons. Losses from these events may cause Equinox Gold to incur significant costs that could have an adverse effect upon its business, results of operations and financial position.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Speculative nature of mining exploration and development

The long-term operation and success of Equinox Gold is dependent, in part, on the cost and success of our exploration and development projects. Mineral exploration and development is highly speculative and involves significant risks. Major expenses are typically required to locate and establish Mineral Reserves.

Development of Equinox Gold’s mineral projects will only follow upon obtaining satisfactory results. Few properties which are explored are ultimately developed into producing properties. There is no assurance that Equinox Gold’s exploration and development activities will result in any discoveries of commercial bodies of ore which will be brought into commercial production.

The processes of exploration and development also involves risks and hazards, including environmental hazards, industrial accidents, labour disputes, unusual or unexpected geological conditions or acts of nature. These risks and hazards could lead to events or circumstances which could result in the complete loss of a project or could otherwise result in damage or impairment to, or destruction of, mineral properties and future production facilities, environmental damage, delays in exploration and development interruption, and could result in personal injury or death.

Corruption and bribery

Equinox Gold’s operations are governed by, and involve interactions with, many levels of government in numerous countries. Equinox Gold is required to comply with anti-corruption and anti-bribery laws, including but not limited to the Canadian Corruption of Foreign Public Officials Act, the United States Foreign Corrupt Practices Act, the Brazil Clean Company Act and the Mexico Criminal Code and Anti-Corruption in Public Contracts Act. In recent years, there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. Furthermore, a company may be found liable for violations by not only its employees, but also by its contractors and third-party agents. Although Equinox Gold has adopted steps to mitigate such risks, including the implementation of training programs, internal monitoring, reviews and audits, and policies to ensure compliance with such laws, such measures may not always be effective in ensuring that Equinox Gold, its employees, contractors or third-party agents will comply strictly with such laws. If Equinox Gold finds itself subject to an enforcement action or is found to be in violation of such laws, this may result in significant penalties, fines and/or sanctions imposed on Equinox Gold resulting in an adverse effect on Equinox Gold’s reputation and business.

Public company obligations

Equinox Gold’s business is subject to evolving corporate governance and public disclosure regulations that have increased both Equinox Gold’s compliance costs and the risk of non-compliance, which could adversely impact Equinox Gold’s share price.

Equinox Gold is subject to changing rules and regulations promulgated by a number of governmental and self-regulated organizations, including the Canadian and United States securities administrators and regulators, the TSX, the NYSE American, and the International Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity creating many new requirements. Equinox Gold’s efforts to comply with such legislation could result in increased general and administration expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

No history of dividends

Equinox Gold has not, since the date of its incorporation, declared or paid any cash dividends on its Common Shares and does not currently have a policy with respect to the payment of dividends. The payment of dividends in the future will depend on the earnings, if any, and Equinox Gold’s financial condition and such other factors as the Board of Directors considers appropriate.

Foreign exchange transactions registration compliance

In certain jurisdictions where Equinox Gold operates, entities that are exporters are permitted to maintain offshore bank accounts and are required to register all transactions resulting in deposits into and payments out of those accounts. Equinox Gold has identified that in certain instances it has not registered all transactions. Equinox Gold has been advised by its tax and foreign trade legal advisors that the maximum fines imposable under statute that could result from non-compliance are up to 15% of the unreported foreign currency transaction, with a five-year statute of limitations.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Significant shareholders

The Company has certain significant shareholders and holders of convertible notes, that have or will have on exercise of such convertible rights the ability to influence the outcome of corporate actions requiring shareholder approval, including the election of directors of Equinox Gold and the approval of certain corporate transactions. Although, each of these significant shareholders is or will be a strategic partner of Equinox Gold, their respective interests may differ from the interests of Equinox Gold or its other shareholders. The concentration of ownership of the shares may also have the effect of dissuading third-party offers or delaying or preventing other possible strategic transactions of Equinox Gold.

Conflicts of interest

Certain of the directors and/or officers of Equinox Gold also serve as directors and/or officers of other companies involved in natural resource exploration, development and mining operations and consequently there exists the possibility for such directors to be in a position of conflict. In particular, Ross Beaty, Chairman of Equinox Gold, is a significant Equinox Gold shareholder, and Tim Breen, a director of Equinox Gold, is also an employee of Mubadala which has a material relationship with Equinox Gold. Any decision made by any of such directors and/or officers will be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of Equinox Gold and Equinox Gold shareholders. In addition, each director is required to declare and refrain from voting on any matter in which such director may have a conflict of interest in accordance with the procedures set forth in the British Columbia Business Corporations Act and other applicable laws.

Accounting Matters

Changes in accounting policies including initial adoption

Depletion of mineral properties

The carrying amounts of mineral properties are amortized using the units-of-production method over the estimated recoverable ounces, which is the estimated total ounces to be extracted in current and future periods based on proven and probable reserves, and, in the case of certain underground mines acquired in 2020, certain measured, indicated and inferred resources.

IAS 16, Property, Plant and Equipment - Proceeds before Intended Use

On May 14, 2020, the IASB published a narrow scope amendment to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use. The amendment prohibits deducting from the cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use. Instead, amounts received will be recognized as sales proceeds and related cost in profit or loss.

The Company intends to adopt the amendment in its financial statements for the annual period beginning on January 1, 2021. On adoption, the Company will reclassify $1.6 million of pre-commercial production net income from property, plant and equipment as at December 31, 2020 to the income statement of income (loss) for the year ended December 31, 2020, comprising $2.9 million in revenue, $1.0 million in production costs and $0.3 million in depreciation.

Interest rate benchmark reform

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Critical accounting estimates

In preparing the Company’s consolidated financial statements in conformity with IFRS, management has made judgements, estimates and assumptions that affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ. All estimated and underlying assumptions are reviewed on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical judgements and estimates in applying accounting policies that have the most significant effect on amounts recognized in the consolidated financial statements are as follows:

Judgements

(i) Acquisitions

(ii) Indicators of impairment

(iii) Commencement of commercial production

Management considers several factors in determining when a mining property is capable of operating at levels intended by management. Until a mine is capable of operating at levels intended by management, costs incurred are capitalized as part of the costs of the related mining properties and proceeds from mineral sales are offset against costs capitalized. Depletion of capitalized costs for mining properties begins when the mine is capable of operating at levels intended by management. Amongst other quantitative and qualitative factors, throughput, mill grades, recoveries, and for a heap leach operation, stacking rates and irrigation rates are assessed over a reasonable period to make this determination. The Company determined that Aurizona was capable of operating at levels intended by management effective July 1, 2019. The Company determined that Phase 1 of Castle Mountain was capable of operating at levels intended by management effective November 21, 2020.

(iv) Investments

Management applies judgement in assessing whether the facts and circumstances pertaining to each investment result in the Company having control, joint control or significant influence over an investee. During the year ended December 31, 2019, the Company determined that Solaris was no longer a controlled subsidiary as the Company’s ownership interest reduced to approximately 30% as a result of the completion of external financings, and Solaris was self-sustaining for an extended period with no capital injections made by Equinox Gold. The Company determined that it retained significant influence over Solaris, and accounts for its interest using the equity method effective June 30, 2019.

(v) Functional currency

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

(vi) Contingencies

Key sources of estimation uncertainty

(i) Fair value of assets and liabilities acquired

(ii) Estimated recoverable ounces

The Company estimates recoverable ounces for determining the number of ounces in heap leach inventory. Changes to the estimates of recoverable ounces in the heap leach inventory can impact the Company’s ability to recover the carrying value of the inventory in the normal course of operations. Estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads, the grade of ore placed on the leach pads and an estimated percentage of recovery. Timing and ultimate recovery of gold contained on leach pads can vary significantly from the estimates.

(iii) Inventory valuation

(iv) Impairment of mineral properties, plant and equipment

The determination of fair value less costs to sell and value in use of an asset or CGU requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, mineral reserves, operating costs, closure and rehabilitation costs and future capital expenditures and discount rates. The estimates and assumptions are subject to risk and uncertainty, hence, there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the asset or CGU. In such circumstances some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded in net income (loss).

(v) Mineral reserve and mineral resource estimates

The Company estimates its mineral reserves and mineral resources based on information compiled by qualified persons as defined by National Instrument (“NI”) 43-101. Mineral reserves and for certain of the underground mines acquired on March 10, 2020, measured, indicated and inferred mineral resources, determined in this way are used in the calculation of depreciation, depletion and impairment charges, and for forecasting the timing of the payment of closure and restoration costs. In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

(vi) Mine closure and reclamation costs

(vii) Valuation of derivatives and other financial instruments

The valuation of the Company’s derivative financial instruments requires the use of option pricing models or other valuation techniques. Measurement of warrants with exercise prices denominated in Canadian dollars that are not listed for trading is based on an option pricing model that uses assumptions with respect to share price, expected life, share price volatility and discount rates. Measurement of foreign exchange contracts are based on forward foreign exchange rates. Measurement of gold hedge contracts are based on forward gold prices. Changes in these assumptions and estimates result in changes in the fair value of these instruments and a corresponding change in the amount recognized in net income (loss).

(viii) Share-based payments

(ix) Income taxes and value-added taxes receivable

The Company has receivables from various governments for federal and state value-added taxes, and for federal income taxes. Significant estimates and judgements are involved in the assessment of recoverability of these receivables. Changes in management’s impairment assumptions may result in an additional impairment provision, or a reduction to any previously recorded impairment provision, with the impact recorded in net income (loss).

(x) Contingencies

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Management’s Report on Internal Controls Over Financial Reporting
Management, with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) as defined in the rules of the United States Securities and Exchange Commission and the Canadian Securities Administrators. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with IFRS as issued by the IASB. The Company’s ICFR includes policies and procedures that: · accounting records are maintained that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company; · are designed to provide reasonable assurance that the Company’s receipts and expenditures are made in accordance with authorizations of management and the Company’s Directors; and · are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. The Company’s ICFR may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures. Management evaluated the effectiveness of ICFR based upon the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Internal Control – Integrated Framework (2013). Based on that assessment, management concluded that the Company’s ICFR was not effective as of December 31, 2020, due to a material weakness in ICFR described below. A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company did not maintain effective controls over the purchase price accounting related to the Leagold acquisition. Specifically, the Company did not (i) identify and deploy control activities through policies that establish expectations and procedures that put policies into action, and (ii) internally communicate information, including objectives and responsibilities for internal control, necessary to support the function of internal control. As a result, there was inadequate control over the determination of the fair value of acquired assets and over the resulting deferred income tax liabilities recognized, as well as inadequate documentation over such controls. This control deficiency resulted in an immaterial misstatement which was corrected in the Company’s audited consolidated financial statements prior to release but creates a reasonable possibility that a material misstatement in the annual or interim financial statements will not be prevented or detected on a timely basis.
The Company has limited the scope of its ICFR and disclosure controls and procedures to exclude controls, policies and procedures of Leagold as allowed by the United States Securities and Exchange Commission and Canadian securities Administrators. The table below presents the summary financial information included in the Company’s consolidated annual financial statements for the excluded controls related to the acquired business:
Leagold Mining Corporation Selected financial information from the statement of income (loss) $ amounts in millions		March 10 to December 31, 2020
Total revenues	$	360.7
Net income		21.8

Selected financial information from the statement of financial position	As at December 31, 2020
Total current assets	$	326.5
Total non-current assets		1,314.6
Total current liabilities		80.8
Total non-current liabilities		317.0
The Company's independent registered public accounting firm, KPMG LLP, has audited the consolidated annual financial statements and has issued an adverse report on the effectiveness of internal control over financial reporting dated March 19, 2021 on the criteria set forth in the COSO Internal Control – Integrated Framework (2013). KPMG LLP’s audit of internal controls over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Leagold.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted by the Company under U.S. and Canadian securities legislation is recorded, processed, summarized and reported within the time periods specified in those rules, and include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted by the Company under U.S. and Canadian securities legislation is accumulated and communicated to management, including the CEO and CFO, as appropriate, to permit timely decisions regarding required disclosure. Management, including the CEO and CFO, believe that any disclosure controls and procedures or ICFR, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgements in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the actions of one individual, by collusion of two or more people, or by unauthorised override of the control. Accordingly, because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in the rules of the U.S. Securities and Exchange Commission and the Canadian Securities Administrators, as at December 31, 2020. Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were not effective as at December 31, 2020 due to a material weakness in internal control over financial reporting, as described above.


Changes in Internal Controls over Financial Reporting
Commencing with the first quarter and throughout the period ended December 31, 2020, the Company implemented social distancing protocols, as per recommended COVID-19 health and safety guidelines, to have the majority of its corporate office and site administrative staff work remotely from home. This change has required certain processes and controls that were previously done or documented manually to be completed and retained in electronic form. Furthermore, in the process of strengthening internal controls the Company implemented new Enterprise Resource Planning (“ERP”) systems at the Corporate office and Aurizona in the second and fourth quarters, respectively. The implementation of the ERP systems is expected to, among other things, improve user access security and automate a number of accounting, back office and reporting processes and activities, thereby decreasing the amount of manual processes previously required. Except for the implementation of the new ERP systems and identification of material weakness noted above during the fourth quarter, there was no change in the Company’s ICFR that occurred during the period ended December 31, 2020, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Under the supervision and with the participation of management, including the CEO and CFO, management is committed to remediating the material weakness in a timely fashion, with appropriate oversight from the Audit Committee. The remediation plan includes strengthening the design of controls and documentation to the accounting for future business combinations, and improving internal communication of related policies or procedures. Management will continue to monitor and evaluate the design and effectiveness of the Company’s ICFR and disclosure controls and procedures, and may make modifications from time to time as considered necessary.

Cautionary Notes and Forward-looking Statements

TThis MD&A contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation and may include future-oriented financial information. Forward-looking statements and forward-looking information in this MD&A relate to, among other things: the Company’s ability to successfully complete the Premier acquisition and achieve the benefits contemplated in the transaction; the Company’s ability to successfully advance and achieve production at Santa Luz; the strategic vision for the Company and expectations regarding exploration potential, production capabilities and future financial or operational performance; the Company’s ability to successfully advance its growth and development projects, including the Hardrock project and the expansion at Los Filos; the duration, extent and other implications of the novel coronavirus (COVID-19) and any related restrictions, regulations and suspensions with respect to our operations; Equinox Gold’s production and cost guidance; and conversion of Mineral Resources to Mineral Reserves. Forward-looking statements or information generally identified by the use of the words “believe”, “will”, “advancing”, “strategy”, “plans”, “budget”, “anticipated”, “expected”, “estimated”, “target”, “objective” and similar expressions and phrases or statements that certain actions, events or results “may”, “could”, or “should”, or the negative connotation of such terms, are intended to identify forward-looking statements and information. Although the Company believes that the expectations reflected in such forward-looking statements and information are reasonable, undue reliance should not be placed on forward-looking statements since the Company can give no assurance that such expectations will prove to be correct. The Company has based these forward-looking statements and information on the Company’s current expectations and projections about future events and these assumptions include: the consummation and timing of the Premier acquisition; the strengths, characteristics and potential of Equinox Gold following the Premier acquisition; Equinox Gold’s ability to achieve the production, cost and development expectations outlined in the Hardrock feasibility study; prices for gold remaining as estimated; currency exchange rates remaining as estimated; construction and development at Santa Luz and Los Filos being completed and performed in accordance with current expectations; tonnage of ore to be mined and processed; ore grades and recoveries; availability of funds for the Company’s projects and future cash requirements; capital, decommissioning and reclamation estimates; Mineral Reserve and Mineral Resource estimates and the assumptions on which they are based; prices for energy inputs, labour, materials, supplies and services; no labour-related disruptions and no unplanned delays or interruptions in scheduled construction, development and production, including by blockade; all necessary permits, licenses and regulatory approvals are received in a timely manner; and the Company’s ability to comply with environmental, health and safety laws. While the Company considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Accordingly, readers are cautioned not to put undue reliance on the forward-looking statements or information contained in this MD&A.

Management’s Discussion and Analysis

For the three months and year ended December 31, 2020

The Company cautions that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements and information contained in this MD&A and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: fluctuations in gold prices; fluctuations in prices for energy inputs, labour, materials, supplies and services; fluctuations in currency markets; operational risks and hazards inherent with the business of mining (including environmental accidents and hazards, industrial accidents, equipment breakdown, unusual or unexpected geological or structural formations, cave-ins, flooding and severe weather); inadequate insurance, or inability to obtain insurance to cover these risks and hazards; employee relations; relationships with, and claims by, local communities and indigenous populations; the Company’s ability to obtain all necessary permits, licenses and regulatory approvals in a timely manner or at all; changes in laws, regulations and government practices, including environmental, export and import laws and regulations; legal restrictions relating to mining including those imposed in connection with COVID-19; risks relating to expropriation; increased competition in the mining industry; and those factors identified in the section titled “Risks and Uncertainties” of this MD&A and in the Company’s Annual Information Form dated May 13, 2020, which is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/EDGAR. Forward-looking statements and information are designed to help readers understand management's views as of that time with respect to future events and speak only as of the date they are made. Except as required by applicable law, the Company assumes no obligation to update or to publicly announce the results of any change to any forward-looking statement or information contained or incorporated by reference to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements and information. If the Company updates any one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements. All forward-looking statements and information contained in this MD&A are expressly qualified in their entirety by this cautionary statement.

Technical Information

Doug Reddy, P.Geo, Chief Operating Officer, and Scott Heffernan, MSc, P.Geo., EVP Exploration, are the Qualified Persons under NI 43-101 for Equinox Gold and have reviewed and approved the technical content of this document.

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