(All amounts expressed in U.S. Dollars
unless otherwise stated)
Torex Gold Resources Inc. (the "Company" or "Torex") (TSX:TXG)
reports the Company’s financial results for the three and nine
months ended September 30, 2018.
Fred Stanford, President & CEO of Torex
stated:
“This was an excellent quarter with record gold
production of over 100,000 ounces as the Company successfully
continues toward full ramp-up. Grades processed were above LOM
average, recoveries above design, and plant throughput is ramping
toward design levels by year end. In October, throughput averaged
above 13,300 t/d, inclusive of two maintenance days to replace the
liners in the ball mill.
The SART plant is operating well and delivered a
$48 per ounce reduction in costs, including byproduct credits. By
year-end, the SART plant is expected to be delivering a net $65 per
ounce benefit and this is expected to be the performance in future
years.
Sub-Sill has ramped up to approximately 500 t/d
by quarter end. Subsequent to the end of the quarter the second
access to the mine was connected, which will facilitate design
ventilation volumes and completing the ramp-up to 850 t/d by year
end. As expected, grades from the Sub-Sill are highly variable.
Quarterly grade reconciliation reporting will be suspended until we
have enough experience and definition drilling in this deposit to
make the reconciliation meaningful. Diamond drilling on this
deposit and El Limon Deep (ELD) continue, with 5 rigs deployed.
Growth and innovation also advanced in the
quarter. A technical report was completed, which included an
updated PEA for Media Luna. In-fill drilling also made good
progress, with 5 drills now active on Media Luna, with one drill
soon to be mobilized to a porphyry target. Our proprietary Muckahi
Mining System was also introduced in the quarter. The first machine
for this system is expected to be shipped to site in the next few
weeks, for testing in the ELD area.
In conclusion, Q3 was a solid quarter with
excellent progress in operating stability, and growth initiatives
through exploration and innovation. We all look forward to
continuing to deliver on these strategic initiatives.”
This release should be read in conjunction with
the Company's September 30, 2018 Financial Statements and MD&A
on the Company's website or on SEDAR.
HIGHLIGHTS
- Record gold
production in the quarter totalled 100,346 ounces in dore,
and an additional 1,135 ounces in carbon fines. Gold produced for
the nine months totalled 246,309 ounces in dore, and an additional
11,322 ounces in carbon fines.
- Record mine
production in the quarter totalled 11,092 kt, averaged
120,561 tpd. For the nine months, mine production totalled 21,326
kt, averaged 82,658 tpd.
- Mine ore
production in the quarter totalled 1,246 kt, averaged
13,539 tpd. For the nine months, mine ore production totalled 3,095
kt, averaging 11,995 tpd.
- Grade mined in the
quarter averaged 2.60 gpt, and 2.66 gpt for the nine months.
- Plant throughput
in the quarter of 1,170 kt, averaged 12,717 tpd. Plant throughput
in the nine months of 2,955 kt, averaged 11,453 tpd.
- Grade processed in
the quarter averaged 3.01 gpt and 2.99 gpt for the nine
months.
- Gold recovery
averaged 89% in the quarter and 88% in the nine months, higher than
design expectations.
- SART plant
construction is complete and has been turned over to the
operating team to continue the ramp up to design capacity. In the
quarter, cost savings from the SART plant, including by-product
revenues, and recovery improvements were $48 per ounce.
- Principal
repayments of $14.1 million in the quarter and $36.3
million in the nine months were made to reduce the Term Loan under
the Debt Facility to $263.7 million.
Technical Report (“TR”) confirms status
as a producer in the lowest cost quartile
- The Company completed an updated TR
including a life of mine plan for its producing El Limón Guajes
(“ELG”) Mine Complex, that has increased average annual gold
production to 430,000 ounces per year, from 2019 to 2023.
- The TR contains an updated Media
Luna Preliminary Economic Assessment (“PEA”),1 with an after-tax
Net Present Value (“NPV”) discounted at 5% of $582.0 million, and
an after-tax internal rate of return (“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”),1 shows the potential to increase the Media Luna
Project, NPV by $197.0 million and after-tax IRR to 46%. If proven,
the Muckahi technology could be applicable to many other
underground deposits.
Initial results from the Media Luna
in-fill diamond drilling program2
- The Company announced the results
from the first 23 holes, of a planned 175 hole in-fill drilling
program at its Media Luna Project. Highlighted intercepts from this
program include 10.5 gpt Au Eq. over 39.2m in borehole ML18-222A,
7.0 gpt Au Eq. over 49.6m in borehole ML18-215, 7.1 gpt Au Eq. over
45.9m in borehole ML18-219W and 8.3 gpt Au Eq. over 22.6m in
borehole ML18-208W.
- This is consistent with the results
from the earlier 100m centers program and bodes well for the
potential of the deposit to live up to expectations. There are
currently 5 drills active on the Media Luna Project. On average
each drill completes two holes per month, which suggests completion
of the program at the end of 2019.
- Significant testing of Muckahi is
expected to be completed by the end of 2019; land lease
negotiations for Media Luna have been completed and permitting
baseline work is underway.
Financial results
- Gold sold for the
quarter totalled 102,919 ounces for total proceeds of $124.9
million at an average realized gold price3 of
$1,214 per ounce. Gold sold for the nine months
ended September 30, 2018 totalled 243,471 ounces for total proceeds
of $309.7 million at an average realized gold
price3 of $1,272 per ounce.
- Revenue totalled
$126.4 million and cost of sales totalled $94.7
million, or $920 per ounce of gold sold for the quarter.
Revenue totalled $312.2 million and cost
of sales totalled $238.2 million, or $978 per ounce of
gold sold for the nine months ended September 30, 2018.
- Earnings from mine
operations totalled $31.7 million for the quarter, and
$74.0 million for the nine months ended September 30, 2018.
- Income before income
tax totalled $28.4 million for the quarter, and $40.0
million for the nine months ended September 30, 2018.
- Net income after
current and deferred income tax expense totalled $23.9 million or
$0.28 per share on a basic and diluted basis for the quarter, and
$21.8 million, or $0.26 per share on a basic and diluted basis for
the nine months ended September 30, 2018. The strengthening of the
peso favourably impacted the deferred tax expense calculated for
the period.
- Adjusted net
earnings3, which excludes, amongst other items, unrealized
derivative and foreign exchange gains and losses, totalled $7.3
million, or $0.09 per share on a basic and diluted basis for the
quarter, and $5.8 million, or $0.07 per share on a basic and
diluted basis for the nine months ended September 30, 2018.
- Cash flow from
operations totalled $77.8 million for the quarter, and
$167.5 million for the nine months ended September 30, 2018.
- Cash balances as
at September 30, 2018 totalled $148.2 million (including restricted
cash of $26.6 million).
- Total cash costs3
of $590 per ounce of gold sold for the quarter, and $655 per ounce
of gold sold for the nine months ended September 30, 2018.
- All-in sustaining
costs3 of $967 per ounce of gold sold for the quarter, and
$980 per ounce of gold sold for the nine months ended September 30,
2018.
- Ore in stockpile
as at September 30, 2018 was 0.9 million tonnes at an average
estimated grade of 1.43 gpt.
- Full year guidance
is unchanged from initial release.
Qualified Persons
Scientific and technical information contained
in this news release has been reviewed and approved by Dawson
Proudfoot, P.Eng., Vice President, Engineering of Torex Gold
Resources Inc. and a Qualified Person under NI 43-101 – Standards
of Disclosure for Mineral Projects.
Conference CallThe Company will
host a conference call today at 9:00 am (ET) where senior
management will discuss the third quarter of 2018 operational and
financial results. Access the conference call as follows:
Webcast access: A live audio webcast of the
conference call will be available on the Company’s website at
www.torexgold.com.
Telephone access: Please call the numbers
below approximately ten minutes prior to the scheduled start of the
call. Toronto local or international 1 (416) 915-3239 Toll-Free
(North America) 1 800-319-4610 Toll-Free (France) 0 800-900-351
Toll-Free (Switzerland) 0-800-802-457 Toll-Free (United Kingdom) 0
808-101-2791
The webcast will be archived on the Company’s
website.
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, and for which the Company issued an updated preliminary
economic assessment in September 2018. 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 Sanchez Vice President Investor
Relations Tel.: (647) 260-1503 Email:
gabriela.sanchez@torexgold.com |
CAUTIONARY NOTES
PRELIMINARY ECONOMIC ASSESSMENT
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 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 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 (approx. second quarter 2020) for the mine
development activities and up to five years for the mine production
activities (approx. second quarter 2023). 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 STATEMENTS
This press release contains "forward-looking
statements" and "forward-looking information" within the meaning of
applicable Canadian securities legislation. Notwithstanding the
Company's efforts, there can be no guarantee that the Company will
not face unforeseen delays or further disruptions of its
operations. Forward-looking information also includes, but is not
limited to, the results of the Media Luna PEA, the Company will
achieve the full year guidance as initially released, the expected
successful completion of the ramp-up, including, the ramp-up of the
processing plant to consistently produce at design rates by
year-end and the ramp up of Sub-Sill ore production, completing the
commissioning and ramp up of the SART plant and achieving the
expected net benefits (including cost reductions), the completion
and timing of the drilling program on Media Luna, including the
porphyry target, the expected potential for the in-fill drilling
program on the Media Luna Project to confirm the earlier results
based in the in-fill drilling results to-date, plans to
further examine the potential of the new mining technology
(Muckahi) including the expected timing and completion of the
testing of the first prototype and the testing of the completed
system, projected annual gold production, and continued safety and
security. Generally, forward-looking information can be identified
by the use of forward-looking terminology such as "plans",
"expects", "estimates", "intends", "anticipates", "believes" or
“potential” or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would",
"might", 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 actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including, without limitation,
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, uncertainty involving resource
estimates and the ability to extract those resources economically,
or at all, risks associated with skarn deposits, uncertainty
involving drilling programs and the Company’s ability to 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.
_________________________________________
1 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 Lunas PEA (as defined
in this MD&A) 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 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 systems are conceptual, and
proof of concept has not been demonstrated.2 For more information
on the drill results, see the Company’s news release titles “Torex
Reports Initial Results from the Media Luna In-fill Diamond
Drilling Program” issued on October 25, 2018, and filed on SEDAR at
www.sedar.com and on the Company’s website at www.torexgold.com.3
Refer to “Non-IFRS Financial Performance Measures” in the Company’s
Q3 2018 Management’s Discussion and Analysis for further
information and a detailed reconciliation.
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