Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG)
expects to produce between 420,000 and 480,000 ounces of gold in
2020, with the mid-point of guidance relatively in line with the
454,810 ounces of gold produced in 2019. Total cash costs1 are
expected to range between $640 and $670 per ounce of gold sold.
All-in sustaining costs1 are anticipated to range between $900 and
$960 per ounce of gold sold.
2020 Operational Outlook
Gold production |
420,000 to 480,000 ounces |
|
|
Total cash cost per ounce of gold sold1 |
$640 to $670 |
All-in sustaining cost per ounce of gold sold1 |
$900 to $960 |
|
|
Capitalized waste stripping |
$51 million |
Other sustaining investment |
$34 million |
Sustaining capital expenditures |
$85 million |
Non-sustaining capital expenditures |
$82 million |
|
|
Fred Stanford, President and CEO of Torex,
stated:
“In 2020 we expect our El Limón Guajes mine to
deliver a similar production result to the record performance
achieved in 2019. This level of production with continuing strength
in the gold market, positions the Company to deliver another year
of strong operating cash flow, which we expect to direct towards
advancing Media Luna, testing Muckahi, and reducing outstanding
debt.
“Growth related capital expenditures are
anticipated to increase year-over-year as we invest $49 million in
the Media Luna project. This investment will include a feasibility
study, early works to begin the access tunnel to the deposit, and
further infill drilling. In addition, we have budgeted capital for
the development of the ELD deposit, which will be mined using the
Muckahi Mining System. Sustaining capital expenditures are expected
to increase relative to 2019 levels. There will be a greater
portion of waste stripping being capitalized. There will be
investment in rebuilding a large portion of the open pit fleet to
extend its life to match the mine life. There is also ongoing
underground development and required investment in the processing
plant to ensure operating availability through to the end of the
mine life of the open pits and beyond for Media Luna.
“Cost guidance has increased relative to 2019
performance, due largely to a change in accounting for stockpile
inventory for open pit and underground ore. A second factor
is an expected continuation of elevated soluble iron in the ores to
be processed. Soluble iron increases reagent costs and, while we
are trialing new methods to reduce reagent consumption, we expect
the levels of soluble iron in feed that occurred in the latter half
of 2019 to continue through 2020.”
2020 Production OutlookGold
production performance is expected to continue at high levels of
between 420,000 and 480,000 ounces. The grade in each quarter is
expected to be relatively consistent (as consistent as a skarn can
be). If we experience variability in gold production on a quarter
by quarter basis, it is expected to be due to SAG Mill throughput
variability. The drive system for the SAG Mill has been
experiencing vibration, which points to an alignment issue. In
January, we took an 88-hour shutdown to correct alignment. If
the alignment doesn’t stay corrected, then the worst-case scenario
is a 7-day outage to re-grout or replace the sole plates under the
mill. At this point it is impossible to tell, if or when this 7-day
outage might be required. The possibility of it occurring is
included in the guidance range.
2020 Cost OutlookThe change in
total cash cost guidance compared to 2019 performance is largely
due to accounting for stockpile inventory for open pit and
underground separately, on a per ounce basis, rather than on a
combined tonnes basis. The impact on total cash costs is estimated
to average $25 per ounce gold sold, with the impact expected to
decline quarter-over-quarter. Additionally, given the potential for
elevated levels of soluble iron to persist with the processing of
ore from Sub-Sill and El Limon Sur, processing costs are expected
to be around $30 per tonne, similar to the levels experienced
during H2 2019.
The increase in all-in sustaining cash cost
guidance reflects the factors noted above, as well as investments
in the plant required to sustain production through to and
including the development of Media Luna.
The strip ratio for 2020 is expected to be 6.8:1
with approximately 55% of mined waste rock expensed and the
remainder capitalized.
2020 Capital Expenditure
OutlookThe Company expects to incur $85 million in
sustaining capital expenditures during 2020 of which $51 million is
related to capitalized waste stripping. The remaining budgeted
spend is earmarked towards investment to sustain operations within
the open-pit (rebuilding the mining fleet which is nearing end of
its recommended life cycle), underground operations (ventilation
and development to open up the ore body at depth), and the
processing plant (improve/maintain the efficiency of the mill/leach
circuits and to sustain operations, including future ore from Media
Luna).
Non-sustaining related capital expenditures in
2020 are guided at $82 million. A majority of the growth-related
expenditures are expected to be directed towards Media Luna and
developing the ELD deposit. The $49 million of investment targeted
at Media Luna includes $11 million for a feasibility study, $25
million for tunnel excavation under the Balsas River, and $13
million to complete a subsequent infill drill program, which is
expected to be completed in time to include the results in the
feasibility study. Capital investment for developing the ELD
underground deposit is guided to $27 million, of which $19
million is for underground development and mining activities, which
will include the further testing of Muckahi.
The infill drill program completed last year was
successful in upgrading 25% of the June 2015 Inferred resource to
the Indicated category. An updated resource estimate has been press
released with the detailed results. With the feasibility mine plan
only able to use Measured & Indicated resources, the Company
believes a subsequent infill drill program could be completed in
time to be incorporated into the feasibility study. The additional
Indicated resources are expected to enhance the mine life outlined
in the feasibility study as well as the underlying economics of the
project outlined in the feasibility study.
1 Refer to “Non-IFRS Financial Performance
Measures” in the Company’s September 30, 2019 MD&A for further
information and a detailed reconciliation.
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 kilometres
southwest of Mexico City. The Company’s principal assets are the El
Limón Guajes mining complex (“ELG” or the “ELG Mine Complex”),
comprising the El Limón, Guajes and El Limón Sur open pits, the El
Limón Guajes underground mine including zones referred to as
Sub-Sill and ELD, 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 “Technical
Report”). 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 SystemThe
Technical Report 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 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 has completed the development and the first
phase of testing the concept for the mine development and
production activities and will move to optimization in 2020 to
further 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 including
without limitation: information with respect to the projected gold
production, total cash cost per ounce of gold sold, AISC per ounce
of gold sold, capitalized waste stripping and other sustaining
investments, and non-sustaining capital expenditures; expectation
that the projected gold production levels with continued strength
in the gold market, positions the Company to deliver another year
of strong operating cash flow; expectation that such cash flow
would be directed towards advancing Media Luna, testing Muckahi,
and reducing outstanding debt; expectation that growth related
capital expenditures will increase year-over-year; plans to invest
$49 million in the Media Luna project; plans to include in such
investment a feasibility study, early works to begin the access
tunnel to the deposit, and further infill drilling on the Media
Luna project; the budgeted capital for the development of the ELD
deposit; plans to mine the ELD deposit using the Muckahi mining
system; expectation that the sustaining capital expenditures will
increase relative to 2019 levels; in relation to such increase in
sustaining capital, expectation that a greater portion of waste
stripping will be capitalized, there will be investment in
rebuilding a large portion of the open pit fleet to extend its life
to match the mine life, there will be ongoing underground
development, and investment in the processing plant will be
required to ensure operating availability through to the end of the
mine life of the open pits and beyond for Media Luna; the
expectation that elevated levels of soluble iron in feed that
occurred in the latter half of 2019 to continue through 2020; plans
to trial new methods to reduce reagent consumption; the expectation
that grade will be relatively consistent in each quarter; the
expectation that if there is variability in production in 2020, it
may be due to SAG mill throughput variability; if there is SAG mill
variability due to the alignment in the drive system of the SAG
mill failing to remain corrected, potential for a future plant
shutdown to complete repairs; the estimated time frame to complete
such repairs, if needed; the expected impact of the accounting for
stockpile inventory on total cash cost guidance and expectation
that the impact will decline quarter-over-quarter; the expected
processing costs per tonne; the expected strip ratio for 2020 and
allocation between waste rock expense and capital; planned
non-sustaining related capital expenditures in 2020 including
growth-related expenditures as detailed herein for Media Luna and
for ELD; the expectation that the additional infill drilling
program on the Media Luna deposit will be completed in time so that
the results may be included in the feasibility study; the
expectation that such infill drilling program will increase the
Indicated resources of the Media Luna project and such additional
Indicated resources will enhance the mine life outlined in the
feasibility study as well as the underlying economics of the
project outlined in the feasibility study. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects",
"believes", “future” or variations of such words and phrases or
state that certain actions, events or results “can”, "may",
"could", "would", "might", "be achieved", “appears” or “bodes
well”. 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 skarns deposits, risks associated with mine
production and gold production, risks associated with cost
estimates, uncertainty related to reducing the reagent consumption
in connection with soluble iron in the ore feed, risks associated
with identifying source of vibration experienced by the SAG mill,
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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