(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 year ended December
31, 2018.
Fred Stanford, President & CEO of Torex
stated:
“2018 is now in the record books and it left
some memories. Most of the memories are very good. Excellent safety
and environmental performance, record production, Sub-Sill ramped
up, SART plant ramp-up, successful exploration at Sub-Sill and ELD,
successful infill drilling at Media Luna, and rapid advance of the
Muckahi technology. A couple of experiences weren’t quite so
fulfilling. Hopefully, this is the last time I ever use the word
‘blockade’ in a press release and we didn’t quite get to design
levels in the processing plant (93%). We could spend capex to close
the gap, but don’t see it as a good investment since the future
underground ores are softer and don’t need the capacity that the
investment would produce. We’ll diligently work on the last 7% the
old-fashioned way, with continuous improvement in operations and
maintenance practices. Life will continue, if it takes a bit longer
to get there. A year of operating at 93% adds a month to the
six-year mine life of the open pits, which in effect, delays the
need for the investment in the replacement underground ores.
With a strong foundation of a splendid asset and
team, and the potential of a proprietary game changing technology,
we have lifted our eyes to the horizon and like what we see. The
Morelos Property has already delivered the ELG open pits, Sub-Sill,
Media Luna, and ELD, and most of the property remains unexplored.
There is tremendous potential to develop new brownfield ore sources
to take advantage of the infrastructure investments already made.
We also have an interest in diversifying our single asset risk. If
proven successful in 2019, the Muckahi technology will reduce the
costs of future underground mining on the Morelos Property and will
provide us with a competitive advantage when bidding on potential
acquisitions and pursuing other options for commercial deployment.
The testing program for the Muckahi technology is expected to be
completed in 2019. The first of four Muckahi machines is on site in
Mexico and we anticipate breaking rock with it in the next couple
of months. As the other machines arrive, we will incorporate them
into the test program. In the meantime, we will continue to add
value with the drill bit, optimize our processes, generate free
cash flow from the open pits, and continue to develop the safety
culture. These are interesting and exciting times at
Torex/MML.”
This release should be read in conjunction with
the Company's December 31, 2018 Financial Statements and MD&A
on the Company's website or on SEDAR.
HIGHLIGHTS
- Record gold production at the top end of
guidance of 353,947 ounces. Gold production in the quarter
totalled 96,316 ounces.
- Mine production in the quarter totalled 11,299
kt, averaged 122,815 tpd. Mine production for the year totalled
32,625 kt, averaged 93,214 tpd.
- Mine ore production in the quarter totalled
1,234 kt, averaged 13,413 tpd. Mine ore production for the year
totalled 4,329 kt, averaged 12,368 tpd.
- Grade mined in the quarter averaged 2.76 gpt,
and 2.69 gpt for the year.
- Plant throughput continued to accelerate in
the quarter achieving 1,197 kt, averaged 13,011 tpd. Plant
throughput in the year of 4,152 kt, averaged 11,863 tpd.
- Grade processed in the quarter averaged 2.93
gpt and 2.97 gpt for the year.
- Gold recovery averaged 85% in the quarter and
87% in the year, consistent with design expectations.
Initial results from the Media Luna
in-fill diamond drilling program1
- Highlighted intercepts from the first 23 holes 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.
- There are currently 6 drills active on the Media Luna Project.
On average each drill completes two holes per month, which
indicates completion of the program by the end of 2019.
Continued exploration success in the
Sub-Sill zone2
- The Company announced the results from 57 holes, from its
in-fill and step-out drilling programs in the Sub-Sill zone.
Highlighted intercepts include 30.2g/t Au over 8.1m in borehole
SST-101, 48.9g/t Au over 3.6m in borehole SST-118 and 34.4g/t Au
over 4.6m in borehole SSUG-059. The deposit remains open in several
directions.
Muckahi3
- Initial components have arrived on site and significant testing
of the Muckahi Mining System (“Muckahi”) is expected to be
completed by the end of 2019.
Financial results
- Record gold sold for the year was 347,640
ounces for total proceeds of $438.3 million at an
average realized gold price4 of $1,261 per ounce.
Gold sold for the quarter was 104,169 ounces for proceeds of
$128.6 million at an average realized gold price4 of $1,235
per ounce.
- Revenue was $130.7 million and cost of
sales was $96.5 million, or $926 per ounce of gold sold
for the quarter. Revenue was $442.9 million and cost of sales was
$334.7 million, or $963 per ounce of gold sold for the year.
- Earnings from mine operations were $34.2
million for the quarter, and $108.2 million for the year.
- Income before income tax was $20.4 million for
the quarter, and $60.4 million for the year.
- Net income after current and deferred income
tax expense was $1.4 million or $0.02 per share on a basic and
diluted basis for the quarter, and $23.2 million, or $0.27 per
share on a basic and diluted basis for the year. The weakening of
the peso adversely impacted deferred tax expense for the
quarter.
- Adjusted net earnings4, which excludes,
amongst other items, foreign exchange gains and losses, totalled
$13.9 million, or $0.16 per share on a basic and diluted basis
for the quarter, and $19.7 million, or $0.23 per share on a basic
and diluted basis for the year.
- Cash flow from operations totalled
$59.3 million for the quarter, and $226.8 million for the
year.
- Cash balances as at December 31, 2018
totalled $149.0 million (including restricted cash of $26.8
million).
- Total cash costs4 per ounce of gold sold of
$627 for the quarter, and $646 for the year ended
December 31, 2018.
- All-in sustaining costs4 per ounce of gold
sold of $926 for the quarter, and $964 for the year ended
December 31, 2018.
- Principal repayments of $15.0 million in the
quarter and $56.3 million in the year were made to reduce the Debt
Facility to $333.5 million.
- Passed the operating covenants for the six
months ended December 31, 2018. There are no further operating
covenants under the Debt Facility, which makes it less constricted,
and provides the Company with alternatives for redirecting the
restricted cash balance.
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.
Conference Call
The Company will host a conference call today at
9:00 am (ET) where senior management will discuss the 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
The Company prepared a technical report (the
“Technical Report”) on Morelos Property 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.
The Technical Report includes a preliminary
economic assessment (“PEA”) on the Media Luna Project. 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 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 Technical Report. 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 Company expects to complete the development and test
the concept by the end of 2019 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 in the PEA 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
including without limitation, delays caused by blockades limiting
access to the ELG Mine Complex and the Media Luna Project or by
blockades or trespassers impacting the Company’s ability to
operate. Forward-looking information also includes, but is not
limited to, the expected successful completion of the ramp-up of
the processing plant, the completion and timing of the drilling
program on Media Luna, 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, the expectation that Muckahi, if
proven, will be game changing technology and will reduce the costs
of future underground mining on the Morelos Property and will
provide the Company with a competitive advantage when bidding on
potential acquisitions and pursuing other options for commercial
deployment, and plans to continue in the interim to continue to add
value with drilling programs optimizing processes, generating free
cash flow from the open pits, and continued development of the
safety culture, the exploration potential of the Morelos Property,
plans to conduct brownfields exploration and expectation any new
deposits could utilize the current infrastructure at the ELG Mine
Complex and continued safety and security, plans to diversify the
Company’s single asset risk, and the Company’s alternatives for
redirecting restricted cash balance under the Debt Facility.
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 the regulatory process and actions, the success of the
Muckahi mining system, the ability to fund the development and
testing of Muckahi, the ability to finance the Media Luna Project
on reasonable terms, the uncertainty of diversifying the Company’s
single asset risk, the possibility of amendments to the
restrictions in the Debt Facility, 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.
_________
1 For more information on the drill
results, see the Company’s news release titled “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.
2 For more information on the drill results, see
the Company’s news release titled “Torex Reports Continued
Exploration Success In the Sub-Sill Zone” issued on November
20, 2018, and filed on SEDAR at www.sedar.com and on the
Company’s website at www.torexgold.com.
3 The Media Luna PEA (as defined below) 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. The Media Luna PEA includes
information on Muckahi (as defined below). The PEA economics for
the Media Luna Project in the Technical Report (as defined below)
are based on conventional mining methods. In addition, Muckahi, a
Torex proprietary mining method, is introduced and described in the
Technical Report. The Technical Report uses the Media Luna Project
as a platform for comparison to demonstrate the potential benefits
that could be possible if the Muckahi method is proven and
ultimately applied to the Media Luna Project, or any other deposit
that does not employ caving methods. 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.
4 Refer to “Non-IFRS Financial Performance
Measures” in the Company’s December 31, 2018 Management’s
Discussion and Analysis for further information and a detailed
reconciliation.
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