Equinox Gold Down 6% As Operations Halted At Los Filos Mine

Shares in Equinox Gold Corp (EQX) dropped 6% on Friday after the company announced that mining activities at its Los Filos Mine in Mexico have been suspended since September 3, 2020 due to an illegal road blockade by members of the nearby Carrizalillo community.

According to Equinox: “The individuals allege non-compliance with the community social collaboration agreement signed in 2019.” The company says it is now in active discussions with the Carrizalillo community leaders to resolve the issues.

The mine remains staffed with a reduced workforce to maintain appropriate safety, security and environmental systems, Equinox Gold adds.

Mining.com cites interviews between local news reports and members of the Carrizalillo community, who say that EQX failed to comply with almost 70% of the clauses of the Los Filos mining agreement. They also accuse the company of racism, discrimination, inadequate Covid-19 protection and environmental damage.

The Los Filos Mine Complex in Guerrero State, Mexico currently comprises two large open pits (Los Filos and Bermejal) and one underground mine (Los Filos). Ore from all three deposits is processed using heap leach recovery. Los Filos production attributable to Equinox Gold in 2020 is estimated at ~180,000 oz of gold at AISC of ~$1,025/oz.

There are also plans to enlarge the Los Filos open pit, add a new open pit, develop a second underground mine, and construct a new carbon-in-leach plant. A 2019 feasibility study estimated total capex of $213M for the expansion. (See EQX stock analysis on TipRanks).

Shares in Equinox are surging 56% year-to-date, and the stock scores a bullish Strong Buy Street consensus. Meanwhile the average analyst price target of $17 indicates 38% upside potential lies ahead.

Most recently, Scotiabank’s Ovais Habib reiterated a buy rating and C$17 price target on the Canadian miner.