Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG)
reports the Company’s financial and operating results for the three
and six months ended June 30, 2019.
Fred Stanford, President & CEO of Torex,
stated:
“We delivered record gold production and sales
in Q2, with gold output increasing and cash costs declining
quarter-over-quarter as anticipated. With the strong production
result, we are well on track to delivering on our full year sales
guidance of 430,000 ounces (+/- 7%) as well as our total cash cost
and all-in sustaining cost guidance. Based on current operational
forecasts, we expect to continue to strengthen our balance sheet
through the remainder of the year. With the open pit and
underground mines running well, our primary focus remains on
enhancing the performance of the processing plant. Through several
initiatives, our aim is to reduce unplanned down-time, which we
expect to result in higher mill throughput and lower unit
costs.
“We are rapidly advancing our proprietary
Muckahi Mining System and remain on track to prove up all aspects
of the system by the end of this year. Through the first half, we
commissioned both the jumbo and the service platform, tested the
ability of the monorail hung jumbo to drive a horizontal tunnel,
and more recently, proved up the ability for the jumbo to drive a
30-degree down ramp. Later this year, we intend to validate the
ability of the system to blast and muck out a long-hole stope,
directly onto a conveyor. Once proved up, we plan to begin training
miners within the ELD underground, as we expect Muckahi will form
the back-bone of our Media Luna project. We also anticipate that
Muckahi will play an important role beyond Media Luna, as we look
to grow the business in an effective and accretive manner.
“Regrettably we had our first reportable spill
in July when we had a leak from a valve in a process water tank.
Process water containing cyanide made its way out of the operating
area and into a ditching area in the natural environment. The
leak was detected quickly, stopped at the source, water redirection
efforts were implemented immediately, and remediation actions
undertaken. Both water and the soil in the impacted area have been
removed and replaced. No permanent environmental damage was done.
At no time were elevated levels of cyanide measured in the nearby
lake. The regulators, community leaders, political leaders
and all employees were informed. An internal investigation is
complete. Corrective actions will include measures to
systematically remove sediment build up in tanks, valving changes,
and additional engineered primary containment, so that an incident
like this will never happen again.”
This release should be read in conjunction with
the Company's June 30, 2019 Financial Statements and MD&A on
the Company's website or on SEDAR.
Q2 2019 HIGHLIGHTS
Operational results
- Record gold production of 113,645 ounces.
- Mine production averaged 145,714 tonnes per
day.
- Mine ore production averaged 19,890 tonnes per
day.
- Grade mined averaged 2.91 grams per
tonne.
- Plant throughput averaged 11,670 tonnes per
day.
- Grade processed averaged 3.92 grams per
tonne.
- Gold recovery of 88%.
- Total cash costs1 per ounce
of gold sold of $606.
- All-in sustaining costs1 per
ounce of gold sold of $760.
Financial results
- Record gold sold for the quarter was 113,419
ounces for proceeds of $149.0 million at an average
realized gold price1 of $1,314 per
ounce.
- Revenue was $150.7 million.
- Earnings from mine operations were $35.0
million.
- Income before income tax was $22.6
million.
- Net income was $10.0 million, or $0.12 per
share on a basic and diluted basis.
- Adjusted net earnings1, which
excludes, amongst other items, certain foreign exchange gains and
losses, totalled $8.8 million, or $0.10 per share on a basic and
diluted basis.
- Cash flow from operations totalled
$48.6 million for the quarter ($67.1 million prior to changes
in non-cash working capital balances).
- Cash balances as at June 30, 2019
totalled $115.8 million (including restricted cash of $32.3
million).
- Principal repayments of $21.7 million in the
quarter, bringing total debt down to $298.2 million.
- Debt refinancing completed in July 2019,
provides greater flexibility with a revised repayment schedule, a
lower interest rate, and permits the development of the Media Luna
Project, the Muckahi mining system, and other existing and future
projects.
Muckahi
- Physical testing of the Muckahi Mining System (“Muckahi”) is
underway.
- The drilling and ground support systems were successfully
tested in a horizontal tunnel. The tests then shifted to
proving these systems, and mucking (rock removal), on a 30-degree
decline tunnel. As of the end of July, eight rounds have been
excavated on the 30-degree decline tunnel. The tunnel
excavation aspects of Muckahi have performed very well and will
continue to be tested through the rest of the year.
- Testing of long hole open stope mining with Muckahi will start
in the next couple of months. In the same time frame, testing
will start on the Muckahi approach for the loading of conveyors in
both the tunnelling and production mining applications.
- We are well on the way to achieving the year end goal of
demonstrating the effectiveness of Muckahi.
Maiden mineral reserves for El Limón
Deep (“ELD”) Underground2
- The Company announced a maiden underground mineral reserve
estimate and resource estimate for ELD.
- The probable mineral reserve at ELD contains 86,000 gold ounces
in 487,000 tonnes at an average gold grade of 5.50 gpt, with a
cut-off grade of 3.70 gpt.
- The mineral reserve is a subset of an indicated mineral
resource at ELD that contains 141,000 gold ounces in 797,000 tonnes
at an average gold grade of 5.52 gpt, with a 2.5 gpt cut-off
grade.
- ELD underground is the test site for Muckahi. Production of ore
from ELD will occur as the Muckahi testing advances.
Conference Call and Webcast
details
The Company will host a conference call today at
9:00 AM (ET) where senior management will discuss the Q2 2019
operational and financial results. Please call the below numbers
approximately 10 minutes prior to the start of the call:
- Toronto local or international: 1-416-915-3239
- Toll-Free (North America): 1-800-319-4610
- Toll-Free (France): 0800-900-351
- Toll-Free (Switzerland): 0800-802-457
- Toll-Free (United Kingdom): 0808-101-2791
A live audio webcast of the conference call will be
available on the Company’s website at www.torexgold.com. The
webcast will be archived on the Company’s website.
- Refer to “Non-IFRS Financial Performance Measures” in the
Company’s June 30, 2019 MD&A for further information and a
detailed reconciliation.
- For more information on the drill results, see the Company’s
news release titled “Torex Announces Maiden Mineral Reserves for
ELD Underground” issued on June 20, 2019, and filed on SEDAR at
www.sedar.com and on the Company’s website at
www.torexgold.com.
Qualified Persons
Scientific and technical information contained in
this news release has been reviewed and approved by Clifford
Lafleur, P.Eng., Director, Technical Services, of Torex Gold
Resources Inc. and a Qualified Person under NI 43-101 – Standards
of Disclosure for Mineral Projects.
About Torex Gold Resources
Inc.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 Direct: (647) 260-1502 Email:
fred.stanford@torexgold.com |
Dan Rollins Vice President, Corporate Development & Investor
Relations Direct: (647) 260-1503 Email:
dan.rollins@torexgold.com |
CAUTIONARY NOTES
Muckahi Mining System The
Company’s most recent annual information form (“AIF”) and the
technical report entitled “Morelos Property, NI 43-101 Technical
Report, ELG Mine Complex, Life of Mine Plan and Media Luna
Preliminary Economic Assessment, Guerrero State, Mexico” with an
effective date of March 31, 2018 (filing date September 4,2018)
(the “Technical Report”) include 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 Technical Report. Aspects of Muckahi
mining equipment are currently in the design and test stage. The
mine design, equipment performance and cost estimations are
conceptual in nature, and do not demonstrate technical or economic
viability. The Company expects to complete the development and test
the concept by the end of 2019 for the mine development and
production activities. Further studies would be required to verify
the viability of Muckahi.
Forward-looking StatementsThis
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 disruptions of its operations. Forward-looking
information includes, but is not limited to, the expectation that
the Company will achieve full year sales guidance, and the total
cash cost per ounce of gold sold and all-in sustaining cost per
ounce of gold sold guidance, the expectation that the Company will
continue to strengthen its balance sheet through the remainder of
the year, focus on enhancing the performance of the processing
plant, aim to reduce unplanned down-time and the expected result of
higher mill throughput and lower unit costs, plans to prove up all
aspects of the Muckahi mining system by year-end, plans to train
miners on the Muckahi system within the ELD underground,
expectation that the Muckahi mining system will be the backbone of
the Media Luna project, potential for the Muckahi mining system to
play an important role in growing the business, plans to grow the
business in an effective and accretive manner, and expectation a
reportable spill will not happen again. 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 involving resource and
reserve estimates and the ability to extract those resources and
reserves economically, or at all, risks associated with skarn
deposits, predictability of the grade, ability to achieve design
gold recovery levels, the ability to achieve targeted throughput,
ability to achieve the expected results from the planned
initiatives, the success of the Muckahi mining system, the ability
to fund the development and testing of Muckahi, the ability of the
corrective actions taken and planned to be taken to prevent future
reportable spills, and those risk factors identified in the
Technical Report and the Company’s annual information form and
management’s discussion and analysis. Forward-looking information
are based on the assumptions discussed in the Technical Report 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.
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