Vancouver-based Equinox Gold suspends its biggest mine over fresh blockade

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Shares of Vancouver-based Equinox Gold Corp. on Thursday morning reached their lowest price in more than a year after the company temporarily suspended its mining activities at its Los Filos mine in Mexico due to a blockade by members of the nearby Mezcala community.

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The blockade stopped the delivery of certain supplies that are required to maintain the mine’s operations, the company said in a press release, calling it “illegal” without providing any further details.

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“We have not yet met with the community leaders,” Rhylin Bailie, a company spokesperson said. “After that meeting, we’ll have a better understanding of their concerns and the path to resolution so the mine can resume normal operations.”

Located about 180 kilometres south of Mexico City, Los Filos is the company’s biggest mine in terms of production, which began in 2008. In 2022, it’s expected to produce about 155,000 to 170,000 ounces of gold.

Equinox has seven producing gold mines and a strong growth profile from three development projects and two expansion projects. The company operates entirely in the Americas, with two projects in the United States, two in Mexico and five in Brazil.

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This is the third time in two years that Equinox has had to suspend operations due to a blockade. In September 2020, a road blockade by members of the Carrizalillo community, who alleged non-compliance with a community agreement, suspended most work at the mine for about three months before Equinox and the members settled the issue.

In June last year, the company shut the mine again for nearly two months because of a blockade organized by a group of unionized employees and members of the Xochipala community. Equinox said the groups were “demanding payments in excess of their contractual agreements.” The situation was resolved in August 2021.

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The company also had to suspend its operations at its RDM mine in Brazil for more than a month in mid-May due to a delay in receiving the necessary permits to raise the mine’s tailing dam.

Last month, Equinox appointed Greg Smith as chief executive, replacing Christian Milau, who, the company said, left to pursue a “new opportunity in the global carbon finance industry.

BMO analyst Ryan Thompson said in a note to clients on Thursday that he had reduced his overall target price for Equinox by a dollar to $8.50. At 2:30 p.m., shares of Equinox were trading at $4.42, down 19 cents or 4.1 per cent, after dropping to $4.19 in the morning.

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