Equatorial Resources Plummets 6.56% Amid Brazil Sale Drama: What's Next for the Gold Miner?

Summary
• Equatorial Resources (EQX) slumps 6.56% to $13.735, erasing $1.0B in market cap
• $1.01B Brazil portfolio sale to CMOC sparks short-term volatility
• Gold sector leader GOLD down 2.33% as bullion nears $4,300/oz
• Options frenzy: 20 contracts traded with 53%+ implied volatility

Equatorial Resources is in freefall as investors digest its landmark Brazil divestiture. The stock has cratered to a 52-week low of $13.73, down from its intraday high of $14.8. With $8M in turnover and a 1.07% turnover rate, the selloff coincides with the company's strategic pivot to North American gold production. Meanwhile, the broader gold sector remains bullish despite EQX's underperformance.

Strategic Divestiture Triggers Short-Term Selloff
Equatorial Resources' 6.56% intraday plunge stems from its $1.01B Brazil portfolio sale to CMOC Group, a transaction expected to close in Q1 2026. While the deal aims to strengthen the company's North American focus and repay $800M in debt, investors are reacting to near-term execution risks. The upfront $900M cash payment is contingent on regulatory approvals, and the $115M production-linked payment hinges on 2026 output thresholds. With the stock trading below its 52-week high of $15.1 and 238x dynamic PE ratio, the market is pricing in execution uncertainty despite the company's long-term growth narrative.

Gold Sector Soars as EQX Diverges
While Equatorial Resources tumbles, the gold sector is surging. Gold.com (GOLD) is down 2.33% as bullion approaches $4,300/oz, driven by Fed rate cut expectations and central bank buying. The sector's 62% YTD gain contrasts with EQX's 6.56% intraday drop, highlighting the stock's divergence from broader gold trends. This disconnect suggests the market is focusing on EQX's execution risks rather than its North American growth potential.

Options Playbook: Capitalizing on Volatility and Technicals
• 52W High: $15.1 (23.8% above current price)
• 52W Low: $4.95 (62.3% below current price)
• RSI: 82.00 (overbought)
• MACD: 0.688 (bullish) with histogram 0.069
• Bollinger Bands: 15.09 (upper), 13.42 (middle), 11.74 (lower)
• 200D MA: $8.48 (far below current price)

EQX is in a short-term bearish correction despite long-term bullish fundamentals. Key support at $12.71 (30D) and resistance at $13.42 (Bollinger middle) define the immediate trading range. The 82 RSI suggests overbought conditions, but the stock remains above its 200D MA, indicating structural strength. For options, focus on high-liquidity contracts with moderate deltas and high gamma to capitalize on volatility.

• EQX20260116C12.5 (Call):
- Strike: $12.5 | Expiry: 2026-01-16 | IV: 51.99% | Delta: 0.776 | Theta: -0.021 | Gamma: 0.138 | Turnover: 1.1M
- High liquidity and moderate delta make this ideal for directional bets. If EQX breaks $13.42, this call could see 32% price change.
- Payoff (5% downside): $13.735 → $12.998 → max(0, 12.998 - 12.5) = $0.498

• EQX20260116P12.5 (Put):
- Strike: $12.5 | Expiry: 2026-01-16 | IV: 53.37% | Delta: -0.229 | Theta: -0.006 | Gamma: 0.136 | Turnover: 1.966K
- High gamma and implied volatility make this put ideal for volatility plays. If EQX tests $12.71 support, this put could see 33% price change.
- Payoff (5% downside): $13.735 → $12.998 → max(0, 12.5 - 12.998) = $0

Aggressive bulls may consider EQX20260116C12.5 into a bounce above $13.42. If $12.71 breaks, EQX20260116P12.5 offers short-side potential.

Backtest Equatorial Resources Stock Performance
The EQX ETF has demonstrated resilience following a notable -7% intraday plunge in 2022, with positive returns over various short-term horizons up to the present day. The 3-Day win rate is 52.48%, the 10-Day win rate is 58.02%, and the 30-Day win rate is 59.77%, indicating a higher probability of positive returns in the short term after the plunge event. The maximum return during the backtest period was 14.51%, which occurred on day 59, suggesting that while the ETF has the potential for gains, the recovery period can vary.

EQX at Crossroads: Strategic Shift or Short-Term Pain?
Equatorial Resources' 6.56% drop reflects near-term execution risks from its Brazil divestiture, but the long-term North American growth story remains intact. With key support at $12.71 and resistance at $13.42, traders should monitor the 52W high of $15.1 as a critical breakout level. The gold sector's 62% YTD gain (GOLD -2.33%) underscores the market's focus on macro trends over EQX's strategic shift. Watch for $12.71 support hold or a break below $11.74 (Bollinger lower) to signal next steps. Investors should balance short-term volatility with the company's $1.01B cash infusion and 2026 production targets.