In short: Passing mention: "Equinox actually has a property right next door to Madsen."
3:56And it's home to some of the bigger companies like Akin Ross, Evolution. Equinox actually has a property right next door to Madsen. So, it's a great mining-friendly jurisdiction. And we took over the Madsen mine in 2023. And we're in the early stages of building out this multi-asset mining platform where we have the existing infrastructure, the permitted mill, the tailings, which we will use as a central hub for this multi-satellite deposit feeding into the mill and complementing the Madsen deposit, which we're mining today.
In short: New pro pick #2 — mid-cap, "a little spicier." Asked why call it out while it is "back in the penalty box": "and that's why I did it." The diagnosis is shareholder turnover, not the business — after the Calibre and Orla acquisitions "there were constituents who owned those stocks for a takeover and when the takeover occurred, their reasons to own the stocks went away. So, they sold the stock. This is a hiatus. You need to replace the people who were selling because they were in it for a takeover with people who understand that the value of the combination is worth more than the price of the constituent parts." The operating catalysts: moving the hard-rock asset to nameplate capacity ("you've started to see the results of that flow through to the income statement"), expanding the Valentine mine, plus the Calibre and Orla development assets. The recycling engine is the reason to hold: "after this acquisition you will see them shed a couple of tier 2 assets or tier 3 assets and you will see them redeploy that capital in the acquisition of another tier one asset." And the Ross Beaty joke that is also a timing call — Beaty "is retired when there is good weather on Bowen Island in June, July and August… we're entering into BC winter again."
Equinox has recently swallowed two other miners, Calibre and Orla. Rule's reason for recommending it now is not a new mine or a new number — it is that he can identify exactly who is selling the stock and why they will stop. Many people owned Calibre and Orla shares as a bet that the companies would be taken over. The takeover happened. The bet paid, the reason to hold vanished, and those holders sold their new Equinox shares indiscriminately. "This is a hiatus."
What has to happen next is a swap of shareholder types: sellers who wanted a deal have to be replaced by buyers who want the combined business, one they judge "worth more than the price of the constituent parts." That transition depresses a share price for months without anything being wrong operationally — which is precisely the window he is pointing at.
Underneath it, real things are improving. A key hard-rock mine is being pushed to full designed output (nameplate capacity), the Valentine mine's capacity is being expanded, and the two acquisitions came with development projects. Then the recycling: he expects Equinox to sell a couple of second- and third-tier mines and put the proceeds into another top-tier one — the model Ross Beaty has run for forty years. His closing note is half joke, half timing call: Beaty only pretends to be retired, and stops pretending when the BC rain returns in late September.
1:03:29They have done two acquisitions, Calibre and Orla. — Yeah. — In both cases, there were constituents who owned those stocks for a takeover and when the takeover occurred, their reasons to own the stocks went away. So, they sold the stock. This is a hiatus. You need to replace the people who were selling because they were in it for a takeover with people who understand that the value of the combination is worth more than the price of the constituent parts.
In short: The bottom of the same ladder — "the smallest one we like is Equinox." Held as the small-cap end of a deliberately wide miner spread rather than a single bet.
Equinox is a much smaller gold producer, and it occupies the opposite end of Oakley's ladder: "the smallest one we like is Equinox." A small miner moves further than a big one when gold rises — and further down when it falls — so he holds it as the high-octane end of a diversified group, not as a standalone bet.
The reason it earns a place at all is arithmetic: he flagged it in his previous appearance at roughly five and a half times its expected 2027 profits, a fraction of what the broad market costs.
28:48Now, if someone tells us they want to buy physical gold, we'll point them a couple different directions, but mainly in the accounts, we're going to own one or two of the exchange traded funds on gold. On the miners, we have a wide array. The biggest one we like is Agnico Eagle. The smallest one we like is Equinox.
In short: Held up as the acquirer that has decoded the tactical playbook: "The Equinox Orla acquisition and before that the Equinox Calibre acquisition weren't strategic acquisitions, they were tactical acquisitions. Ross Beaty and his group have figured out that if they buy reasonably high-quality assets, that simply the growing size of the company, simply the growing trading liquidity of the company, index inclusions which gets them more passive buying, raises the share price and cuts the cost of capital."
Equinox is the buyer, not the target — and Rick uses it to explain a kind of takeover that most analysts score wrongly. Its purchases of Calibre and then Orla weren't strategic (buying a neighbour to feed an existing mill). They were tactical: buying decent assets mainly to become bigger.
Bigger is a strategy in itself when markets are dominated by index funds. Ross Beaty and his team "have figured out" that size and trading liquidity bring index inclusion, index inclusion brings automatic buyers, automatic buyers lift the share price, and a higher share price lowers the company's cost of capital — which funds the next acquisition. The value is created in the plumbing of the market rather than in the ground.
The practical takeaway is the screen it implies. When judging a tactical acquirer or its targets, "the strategic nature of the assets is less important — what you really need to look at is heft and sustainability": is the combined company big enough to attract the passive flows, and are the assets good enough to last?
17:22weren't strategic acquisitions, they were tactical acquisitions. Ross Beaty and his group have figured out that if they buy reasonably high-quality assets that simply the growing size of the company, simply the growing trading liquidity of the company, index inclusions which gets them more passive buying raises the share price and cuts the cost of capital. In that context where the strategic nature of the assets is less important what you really need to look at is heft and sustainability. So you look
In short: "We bought a little company called Equinox selling at five and a half times earnings 27 earnings and it's still a great buy."
Equinox is a smaller gold producer with mines across the Americas — "a little company" in his words. It's the one name where he gives an explicit number: it's "selling at five and a half times earnings" on 2027 estimates, "and it's still a great buy."
Five and a half times earnings means the company's expected annual profit would repay the entire share price in about five and a half years. For comparison, the S&P 500 trades near 25 times. That gap is the whole argument.
37:30We bought went back into Agnico Eagle, bought a little company well, we bought Alamos Gold, which is a great company. We bought a little company called Equinox selling at five and a half times earnings 27 earnings and it's still a great buy. But I and then we bought added some silver back, just a straight silver.
In short: "Equinox I have as a five." He hasn't yet spoken to them about the Jason Simpson CEO change and wants "one, but better yet two more quarters from their Canadian operation… If it shakes in at nameplate capacity, cash is really going to gush through that company" — the cash-generative capability including Valentine is "pretty spectacular," but then the question becomes what they build next. On chairman Ross Beaty: expect nothing until October, then 14-hour days.
Equinox is a mid-tier gold producer that recently changed CEO and is still proving out its big Canadian operation. Rick ranks it a five — a hold-and-watch, not a buy — and says plainly what would change it: "one, but better yet two more quarters" of the Canadian mine running properly.
Why that matters: a mine that reaches its designed production rate ("nameplate capacity") stops consuming cash and starts producing it in volume — "cash is really going to gush through that company." The company's cash-generating potential, including the Valentine deposit, he calls "pretty spectacular." The next question then becomes capital allocation: what do they build with it?
On the chairman, Ross Beaty: expect nothing until October (he is on Bowen Island in his garden and kayak all summer) and then 14-hour days — "I've known Ross for 50 years. This is a firsthand observation."
51:02It would also be useful to see one, but better yet two more quarters from their Canadian operation. That was a really troubled operation and I want to see that shake in. If it shakes in at nameplate capacity, cash is really going to gush through that company. Then the question becomes, where does it go? What assets do they build next? But the cash generative capabilities that they have, including the Valentine deposit, pretty spectacular.
In short: His worked example of tactical M&A rather than a rating: "the growth of Equinox Resources, the recent takeover of Orla — you combine companies that have absolutely no operating synergy. But they know that by combining they have an attractive product pipeline and they're producing a million ounces a year. In other words, you construct a new major and that will get index inclusion and it will get passive buying every two weeks from… workers who don't even know that they own gold stocks."
Equinox is his example of the other kind of merger — tactical rather than strategic. Combining with Orla created no operating synergies at all; the mines are nowhere near each other and share nothing.
What it did create is scale: a company producing a million ounces of gold a year with a credible project pipeline. That size is the qualification for inclusion in the big mining indexes — and once you're in an index, money arrives automatically and forever from people making 401(k) contributions "who don't even know that they own gold stocks."
He offers it as mechanics rather than a rating (his current number on Equinox is in the following session): if you can identify who is deliberately building themselves into an index member, you can buy ahead of the flows.
20:50Agnico takes it over because it has a mill within trucking distance and it doesn't have to build a $350 million mill. In other words, a deposit is more valuable to it than it is to the current shareholders. Those are strategic acquisitions. But there's tactical acquisitions. Now, the growth of Equinox Resources, the recent takeover of Orla — you combine companies that have absolutely no operating synergy.
In short: His example of a "horizontal" merger for scale: its takeover of Orla "suddenly get[s] a million ounce producer that will be must-own" for the indexes, attracting passive buying — the get-bigger-for-flows theme he expects to dominate.
Equinox Gold is a growing gold producer that just absorbed Orla Mining. Rule uses the deal to explain a "horizontal" merger — combining two companies not for operating savings but purely for size. Why size matters: once the combined company produces a million ounces of gold a year, it becomes big enough to be included in the major stock indexes, which forces index funds and other "passive" money to buy it automatically. That mechanical buying is the reward. He expects this get-bigger-for-flows game to be a dominant theme, making Equinox a template for the M&A wave he sees coming.
32:16The takeover of Orla very recently by Equinox is just that sort of acquisition. There aren't very many operational synergies, but when you combine the two companies, you suddenly get a million ounce producer that will be must-own. Must include in all the indexes and it'll get a lot of passive buying.
In short: The other Beaty-built company — he "founded and built Equinox Gold." Together with Pan American, it grounds the claim that Lumina has "two playbooks" and Beaty has executed both.
Equinox Gold is a gold-mining company Ross Beaty also founded and built. Like Pan American Silver, it's mentioned only to back the claim that Beaty has "two playbooks" and has successfully executed the build-and-operate one before — so Lumina genuinely has the option to build rather than just sell. No view on Equinox as an investment is given.
29:22Pan American Silver. He founded and built Equinox Gold. And so he has two playbooks and we never know which playbook we're going to fit into. It's
29:31our job to get to the point where we have options and many options to go in either path and that's what we're focused on. But given the scale of
In short: He's a shareholder averaging in; moved it back to a "5" to digest the Orla deal, but the combined company tips past 1M oz into major-producer status → more index buying.
Equinox grows by buying other miners (Calibre, then Orla) mainly to get bigger — because a larger company gets pulled into stock indexes, which forces index funds to buy it automatically. Rule owns it and keeps adding. He temporarily marked it a "5" because the stock tends to drift sideways while it digests a deal (people who only owned the target for the buyout payday now sell out). But once it finishes, Equinox sells off the weaker mines, keeps the best, and crosses 1 million ounces of annual production into "major producer" territory — which triggers more index buying.
7:40I need to see them digest the Orla acquisition. You'll recall many years ago, I don't know if it was on VRIC or on your own show when Equinox had fallen fairly rapidly in price. And I said that was really a consequence of the uh cost overruns at Hard Rock. Once they get the once they got Hard Rock tucked away, if they ever got it to name plate capacity, that the stock would do well.
In short: The archetype of "tactical" growth-for-growth M&A (Calibre, then Orla) — no strategic synergy, but he thinks both deals were good: scale buys liquidity, index inclusion, passive flows and a lower cost of capital.
Equinox is Rule's prime example of "tactical" takeovers — buying other miners (first Calibre, then Orla) purely to get bigger, not because the mines fit together. Why bother? Size itself pays off: a bigger company gets included in stock indexes, which forces index funds to buy it automatically, and lifts its trading volume and lowers its borrowing costs. He thinks both deals were good ones for exactly that reason.
36:33Uh those are really good acquisitions mostly, but you're starting to see tactical acquisitions now. Uh growth for growth's sake. The acquisition by Equinox uh of first caliber and then Ora uh exhibited no strategic synergy. Uh it was growth for growth sake. Now, I I happen to believe that both acquisitions were good acquisitions, but what they really were looking to do was increase the size and trading liquidity of Equinox so that they allowed Equinox to enjoy more index inclusion and more passive buying. larger companies have greater
In short: Cited (with Orla) as evidence "M&A love is in the air" in gold — the deal announced that week.
Equinox is a gold miner. He mentions it only because of its deal with Orla announced that week — his proof that takeover activity ("M&A love") is heating up again across the gold sector. Not a stance on the stock itself.
37:36— Does a third party enter, or no? I think it is this this is a deal that has to be done between Newmont and Barrick. Um and we actually just saw a gold deal today um this week, Equinox and Orla. So, there is some sort of M&A love is in the air. I'd love to talk just a beat about gold in general.
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