Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX:TXG)
announces completion of an updated Technical Report (TR) including
a life of mine plan (LOM) for its producing El Limon Guajes (ELG)
Mines, that has increased average annual gold production to 430,000
ounces per year, from 2019 to 2023. The TR also contains an updated
Media Luna Preliminary Economic Assessment (PEA), with an after-tax
NPV (5%) of $582M, and an after-tax IRR of 27%. For purposes
of illustration, the TR includes a Media Luna design utilizing a
conceptual new underground mining technology that Torex is
developing. The new technology, called the Muckahi Mining
System (Muckahi), shows the potential to increase the Media Luna
Project, NPV by $197M. If proven, the Muckahi technology
could be applicable to many other underground deposits.
Fred Stanford, President and CEO of Torex
stated: “With the ELG, ramp-up to steady state nearing completion,
this TR incorporates the ramp-up learnings and illustrates that ELG
is an asset that produces in the lowest quartile of all in
sustaining costs per ounce. The TR also lays out the ground
work for growth through the ELG Underground (ELG UG) mine and Media
Luna deposit, and through the advancement of the conceptual Muckahi
technology.
The updated Media Luna PEA delivers a healthy
after-tax IRR of 27%, and an NPV (5%) of $582M. The CAPEX
estimate is similar to the 2015 estimate, with costs updated to
reflect the changes in design and three years of inflation.
Additional metallurgical test work is underway with the intention
of demonstrating that metal recoveries can be increased.
Infill drilling is ongoing for this project, with the
objective of upgrading 1.85M of the 7.4M Inferred Au Eq. ounces
(25%), to the Indicated confidence category. We look forward
to the completion of this infill drilling and the advancement to
the next levels of technical studies.
As expected, the Muckahi Mining System
illustrates a potential for material improvement over conventional
mining technologies. Using Media Luna as a demonstration
example, the study indicates that utilizing Muckahi produces an
improvement of 19% in after-tax IRR from 27% to 46%. (30% less
underground mining capital, 20% less mine operating cost, and 60%
reduction in time to achieve commercial production.) After
many years of thought and design effort, the Muckahi Mining System
is now shifting to the underground testing phase.
Manufacturing of the first of the prototype machines is underway,
testing underground is scheduled to commence in Q1/19. We
look forward to having a proof of concept before the Media Luna
feasibility study work requires a commitment to mining
method. A technical session to review the technology is
scheduled for September 17th, 2018, between 10 am and 2 pm (ET).
Please contact Gabriela Sanchez for invitation details.
In conclusion, producing the TR has been a
significant undertaking for a dedicated team. I thank them
for grinding through the details and illustrating the potential of
Torex through the ELG Open Pits, ELG Underground, Media Luna, the
Muckahi technology, and other Morelos Property exploration
targets. We look forward to the resetting of financial models
and having many more investors join us as we create value from
these assets.”
The supporting Technical Report for the
Company’s 100% owned Morelos Property in Southwest Mexico, entitled
“NI 43-101 Technical Report ELG Mine Complex Life of Mine Plan and
Media Luna Preliminary Economic Assessment”, which has an effective
date of March 31, 2018, has been filed with SEDAR and posted on the
Company’s website.
A preliminary economic assessment should not be
considered a prefeasibility study or feasibility study, as the
economics and technical viability of the Media Luna Project have
not been demonstrated at this time. The Media Luna 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. It cannot be assumed that all or
any part of the inferred mineral resources will ever be upgraded to
a higher category. Furthermore, there is no certainty that the
conclusions or results as reported in the Media Luna PEA will be
realized. Mineral resources that are not mineral reserves do not do
not have demonstrated economic viability. The Media Luna PEA
includes information on Muckahi. It is important to note that
Muckahi is experimental in nature and has not been tested in an
operating mine. Many aspects of the system are conceptual,
and proof of concept has not been demonstrated.
Table 1 - ELG Life of Mine
Summary http://resource.globenewswire.com/Resource/Download/525997ad-4c89-4205-83e6-99df0079b3d1
Table 2 – Summary Extracts from the
Technical Report, PEA for Media Luna
Project http://resource.globenewswire.com/Resource/Download/53068d52-5471-4209-a1e1-5a3174daa096
References to $ in this news release are USD
unless stated otherwise.
The scientific and technical information
contained in this news release pertaining to the:
ELG Mine Complex Life of Mine Plan has been
reviewed and approved by the following Qualified Persons under
National Instrument 43-101 (“NI 43-101”)who consent to the
inclusion of their names in this release: Dan H. Neff, P.E.
(Infrastructure and Economics); Paul Kaplan, P.E. (Hydrology,
Hydrogeology and Waste Disposal), Bert J. Huls, P.Eng. (Mineral
Processing and Metallurgy); Mark Hertel, RM SME (ELG Mines Mineral
Resource Estimates), Michael Levy, MSc., P.E., P.G., P.Eng. (Open
Pit Geotechnical), each of whom is independent of the Company; and
employees of the Company, Dawson Proudfoot, P.Eng., Vice President,
Engineering (Open Pit Mine Planning, ELG Open Pit Mineral Reserves
and Environmental); Clifford Lafleur, P.Eng., Director of Technical
Services (Underground Mine Planning, ELG Underground Mineral
Reserves).
Media Luna Project, including the PEA and
Muckahi, has been reviewed and approved by the following Qualified
Persons under NI 43-101 who consent to the inclusion of their names
in this release: Robert Davidson, P.E. (Infrastructure and
Economics); Paul Kaplan, P.E. (Hydrology, Hydrogeology and Waste
Disposal), Bert J. Huls, P.Eng. (Mineral Processing and
Metallurgy); Mark Hertel, RM SME (Media Luna Mineral Resource
Estimate), each of whom is independent of the Company; and
employees of the Company, Dawson Proudfoot, P.Eng., Vice President,
Engineering (Environmental); James Joseph Monaghan, P.Eng., a
Principal Mining Engineer (Underground Mine Planning and
Muckahi).
About Torex
Torex is an intermediate gold producer based in
Canada, engaged in the exploration, development and operation of
its 100% owned Morelos Gold Property, an area of 29,000 hectares in
the highly prospective Guerrero Gold Belt located 180 kilometers
southwest of Mexico City. The Company’s principal assets are the El
Limón Guajes mining complex (the “ELG Mine Complex”),
comprised of the El Limón, Guajes and El Limón Sur open pits, the
El Limón Guajes underground mine including zones referred to as
Sub-Sill and El Limón Deep, and the processing plant and related
infrastructure, which is in the commercial production stage as of
April 1, 2016, and the Media Luna deposit, which is an early stage
development project. The property remains 75% unexplored.
For further information, please contact:TOREX
GOLD RESOURCES INC.Fred Stanford
President and CEO
Tel. (647)
260-1502
Email: fred.stanford@torexgold.com
Gabriela SanchezVice President Investor
RelationsTel. (647) 260-1503Email:
gabriela.sanchez@torexgold.com
CAUTIONARY
NOTES PRELIMINARY ECONOMIC ASSESSMENTA
preliminary economic assessment should not be considered a
prefeasibility study or feasibility study, as the economics and
technical viability of the Media Luna Project have not been
demonstrated at this time. The Media Luna 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. It cannot be assumed that all or any part of the inferred
mineral resources will ever be upgraded to a higher category.
Furthermore, there is no certainty that the conclusions or results
as reported in the Media Luna PEA will be realized. Mineral
resources that are not mineral reserves do not do not have
demonstrated economic viability.
The Media Luna PEA includes information on
Muckahi. It is important to note that Muckahi is experimental
in nature and has not been tested in an operating mine. Many
aspects of the system are conceptual, and proof of concept has not
been demonstrated. Drill and blast fundamentals, standards
and best practices for underground hard rock mining are applied in
the Muckahi, where applicable. The proposed application of a
monorail system for underground transportation for mine development
and production mining is unique to underground hard rock mining.
There are existing underground hard rock mines that use a monorail
system for transportation of materials and equipment, however not
in the capacity described in the TR. Aspects of Muckahi
mining equipment are currently in the design stage. The mine
design, equipment performance and cost estimations are conceptual
in nature, and do not demonstrate technical or economic viability.
The approximate timeframe to develop and test the concept would be
approximately two years for the mine development activities and up
to five years for the mine production activities. Further
studies would be required to verify the viability of Muckahi.
Muckahi is not intended as a “trade off study” but is shown to
merely demonstrate the potential benefits Muckahi may have using
the Media Luna deposit as an example. It 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, and there is no
certainty that the preliminary economic assessment will be
realized. Mineral resources that are not mineral reserves do
not have demonstrated economic viability.
FORWARD LOOKING STATEMENTSThis press release
contains “forward-looking information” and “forward-looking
statements” within the meaning of applicable Canadian securities
legislation. Forward-looking information includes, without
limitation, information with respect to proposed exploration and
development activities and their timing, the results set out in the
TR including the Media Luna PEA, including, as applicable, the
resource estimates, reserve estimates and potential mineralization,
the estimates of capital and sustaining costs, projected revenues,
projected future cash flows, anticipated internal rates of return,
future production, operating costs, total cash costs and AISC and
other expenses and other economic parameters, estimated recoveries,
expected mine life or project life, estimated payback period, net
present values, and earnings before interest, depreciation and
amortization, the future price of gold, government regulations and
permitting timelines, requirements for additional capital,
environmental risks, and general business and economic conditions,
the expected benefits and cost savings from the operation of the
SART plan, the expected ramp-up of ELG to steady state full
production, the potential growth of the ELG UG mine, plans to
complete additional metallurgical testing on the Media Luna
mineralized material to demonstrate potential for improved
recoveries, plans to complete an infill drilling program and a
feasibility study of the Media Luna Project, the potential to
upgrade the mineral resources of the Media Luna Project, the
potential of the Muckahi mining system and possible application to
other underground deposits, plans to complete the manufacture of
prototypes for Muckahi and timing on the underground testing of the
prototypes. Generally, forward-looking information can be
identified by the use of terminology such as “plans”, “expects”,
“estimates”, “intends”, “potential”, or variations of such words,
or statements that certain actions, events or results “can”, “may”,
“would”, “will”, or “will be taken”, “occur” or “be
achieved”. Forward-looking information is subject to known
and unknown risks, uncertainties and other factors that may cause
the Company’s actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking information, including, without
limitation, forward-looking statements and assumptions pertaining
to the following: risks associated with completing the ramp up
of the operations to steady-state, risk associated with skarn
deposits including grade variability, fluctuation in gold and other
metal prices, commodity price risk, currency exchange rate
fluctuations, risk that expected benefits of SART plant will not be
realized, risk of illegal blockades impacting access to the ELG
Mine Complex and the Media Luna Project or to supplies and
services, uncertainty as a result of the preliminary nature of the
PEA and the Company’s ability to realize the results of the PEA,
uncertainty regarding the inclusion of inferred mineral resources
in the mineral resource estimate and the Company’s ability to
upgrade the inferred mineral resources to a higher category,
uncertainty regarding the ability to convert any part of the
mineral resource into mineral reserves, uncertainty involving
resource estimates and the ability to extract those resources
economically, or at all, uncertainty involving drilling programs
and the Company’s ability to expand and upgrade existing resource
estimates, the regulatory process and actions, the success of the
Muckahi mining system, ability to finance the Media Luna Project on
reasonable terms, and those risk factors identified in the TR and
the Company’s annual information form and management’s discussion
and analysis. Forward-looking information are based on the
assumptions discussed in the TR and such other reasonable
assumptions, estimates, analysis and opinions of management made in
light of its experience and perception of trends, current
conditions and expected developments, and other factors that
management believes are relevant and reasonable in the
circumstances at the date such statements are made. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
the forward-looking information, there may be other factors that
cause results not to be as anticipated. There can be no assurance
that such information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such information. Accordingly, readers should not place undue
reliance on forward-looking information. The Company does not
undertake to update any forward-looking information, whether as a
result of new information or future events or otherwise, except as
may be required by applicable securities laws.
NON-IFRS MEASURES This press release contains
certain non-International Financial Reporting Standards measures.
Such measures have non-standardized meaning under International
Financial Reporting Standards (“IFRS”) and may not be comparable to
similar measures used by other issuers. Total cash costs and
all-in sustaining costs (“AISC”) are financial performance measures
with no standard meaning under IFRS. Refer to “Non-IFRS Financial
Performance Measures” in Torex’s 2017 Management’s Discussion and
Analysis for further information and a detailed reconciliation
regarding historical performance measures as updated in Torex’s
continuous disclosure documents.
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