Torex Gold Initiates Gold Price Protection Program
August 22 2019 - 6:00AM
Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG)
announces the Company has entered into a series of zero-cost collar
hedges which are consistent with the policy approved by the Board
of Directors. A total of 96,000 ounces of gold sales have been
hedged evenly over the next 12 months. The floor price of the
monthly gold collars has been set at $1,400/oz with the ceiling
price of the collars ranging from $1,666/oz in September 2019 to
$1,768/oz in August 2020.
Fred Stanford, President and CEO of Torex,
stated:
“We are currently in a debt repayment phase and
after this is complete, we will be building cash to fund the
construction of Media Luna, and other initiatives. Given these uses
for near term cash flow, it is a prudent business decision to lock
in some price protection for our primary product. This is the first
decision under the policy that guides our price protection program.
We expect it will become normal course to evaluate the business
need for price protection and whether there are suitable products
available to provide it. Currently, the market conditions for
collar hedges are favorable, with the collar range skewed to the
upside. We have taken advantage of this opportunity.
“To update on other milestones – The Media Luna
infill diamond drill program is now complete. An updated resource
estimate is expected before year end. The Muckahi testing
progresses well. A team is pulling together designs to mine, with
Muckahi, the portions of ELD that are below current infrastructure.
Trade-off studies for mining Media Luna with Muckahi are also
advancing. Confidence is increasing.”
A total of 96,000 ounces of gold sales have been
hedged between September 2019 and August 2020 at an average floor
price of $1,400/oz and an average ceiling price of $1,720/oz. The
difference between the average floor price and average ceiling
price over the term of the collars offers a favourable spread
around the spot price of gold, which is currently trading slightly
above $1,500/oz. Recall, 2019 sales guidance is 430,000 ounces (+/-
7%).
Summary of
gold price collars (September 2019 through August
2020) |
Period |
Gold Sales |
Floor Price |
Ceiling Price |
(ounces) |
($ per ounce) |
($ per ounce) |
September 2019 |
8,000 |
$1,400 |
$1,666 |
October 2019 |
8,000 |
$1,400 |
$1,682 |
November 2019 |
8,000 |
$1,400 |
$1,688 |
December 2019 |
8,000 |
$1,400 |
$1,696 |
January 2020 |
8,000 |
$1,400 |
$1,703 |
February 2020 |
8,000 |
$1,400 |
$1,717 |
March 2020 |
8,000 |
$1,400 |
$1,728 |
April 2020 |
8,000 |
$1,400 |
$1,739 |
May 2020 |
8,000 |
$1,400 |
$1,745 |
June 2020 |
8,000 |
$1,400 |
$1,752 |
July 2020 |
8,000 |
$1,400 |
$1,758 |
August 2020 |
8,000 |
$1,400 |
$1,768 |
Total (1) |
96,000 |
$1,400 |
$1,720 |
(1) Represents total gold sales hedged to date as well as
weighted average floor and ceiling gold prices
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 “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 System The
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 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
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 Company’s ability to repay debt and thereafter
build cash to fund the construction of the Media Luna project and
other initiatives, future transactions under the price protection
program, the sales guidance for 2019, the expectation that an
updated mineral resources estimate for the Media Luna project will
be completed by year-end, plans to further examine the potential of
the new mining technology (Muckahi), and the intention to mine the
El Limon Deep deposit using Muckahi. 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 production forecasts, the success of the
Muckahi mining system, the ability to fund the development and
testing of Muckahi, 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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