Today, Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX:
TXG) provides 2021 operational guidance.
2021 OPERATIONAL OUTLOOK
|
2021 Guidance |
2020 Guidance (Revised2) |
2020 Guidance (Original) |
Gold Production (guidance) |
oz |
430,000 to
470,000 |
390,000 to 420,000 |
420,000 to 480,000 |
|
|
|
2020 Actual = 430,480 |
Total Cash Costs1 |
$/oz
sold |
$680 to
$720 |
$695 to $740 |
$640 to $670 |
All-in Sustaining Costs1 |
$/oz
sold |
$920 to
$970 |
$965 to $1,025 |
$900 to $960 |
Capitalized Waste |
M$ |
$40 to
$45 |
$46 |
$51 |
Other Sustaining Expenditures |
M$ |
$30 to
$40 |
$37 |
$34 |
Sustaining Capital Expenditures |
M$ |
$70 to
$85 |
$83 |
$85 |
Non-Sustaining Capital Expenditures |
M$ |
$125 to
$150 |
$92 |
$82 |
1 Refer to “Non-IFRS Financial Performance
Measures” in the Company’s September 30, 2020 MD&A for further
information and a detailed reconciliation. 2 Operational
guidance for 2020 was revised on August 5, 2020 following the
impact of the mandated shutdown of operations by the Government of
Mexico to mitigate the risk of COVID-19 in the country.
Jody Kuzenko, President and CEO of Torex,
stated:
“As we continue our pattern of consistent and
reliable operational performance on the heels of a guidance beat in
2020, we expect another year of strong cash flow in 2021. The
strength of our underlying business will enable us to continue to
execute on our plan – fully repay project debt and continue to
strengthen our balance sheet, de-risk and advance Media Luna, and
invest in other value accretive opportunities.
“2021 is all about setting the foundation for
our future. As expected, our guidance for production, cash costs
and sustaining capital is similar to years prior. The guided
increase in non-sustaining capital expenditures year-over-year
reflects strategic investments, including Media Luna, expanded
development and exploration at ELG underground, a scoping-level
study for a layback within the El Limón open pit, and ongoing field
testing of Muckahi. Investment in Media Luna in 2021 is key to
de-risking and delivering on the project schedule, as the early
work of accessing the deposit, the feasibility study, and
permitting activities continue to advance.
“Exploration will also be a key focus this year.
At ELG underground, we are investing additional dollars to
accelerate exploration as we look to extend the life of the ELG
underground beyond the timeframe implied by current mineral
reserves. At Media Luna, the infill drill program has been expanded
with a view to increasing the proportion of mineral resources in
the measured and indicated categories. We will also test several
high priority targets within the broader Morelos land package as we
look to find our next mine.
“We are working the plan to optimize and extend
ELG into 2024 in order to create overlap with Media Luna coming
into production in Q1 2024. With momentum on production, robust
cashflow and an excellent plan for value creation in front of us,
2021 promises to be another exceptional year for Torex – both for
our Company and our shareholders.”
2021 PRODUCTION OUTLOOKGold
production in 2021 is expected to be between 430,000 ounces and
470,000 ounces, with the mid-point representing an increase over
the 430,480 ounces delivered in 2020, which included an
interruption in production in Q2 due to the COVID-19 pandemic. The
mid-point of 2021 guidance is in line with original 2020 guidance
and 2019 performance of 454,810 ounces.
The production outlook is provided in the
context of COVID-19 developments in Mexico. At the mine site, the
enhanced COVID-19 protocols that have been implemented and
multi-layered approach to screening has helped mitigate the impact
of COVID-19 on our operations, our workforce, and the surrounding
communities to date. The same protocols will remain in place until
the risks associated with the pandemic are fully resolved.
2021 COST OUTLOOKTotal cash
costs and all-in sustaining cash costs are expected to be in-line
with the levels delivered in 2020, with the difference relative to
original 2020 guidance reflecting the impact of the higher revenue
on employee profit sharing and government royalties, and the impact
of higher gold prices on established land use agreements.
Operational guidance in 2021 is predicated on an average gold price
of $1,700 per ounce while 2020 original guidance was predicated on
$1,400 per ounce. The assumption of a $300 per ounce higher gold
price impacts costs by approximately $35 per ounce in 2021.
The strip ratio for 2021 is expected to be 7.6:1
versus the 2020 actual result of 6.7:1. Of the amount of waste
mined during the year, approximately 35% will be capitalized with
the remainder expensed.
2021 CAPITAL EXPENDITURE
OUTLOOKSustaining capital expenditures are guided at $70
million to $85 million, of which $40 million to $45 million is
related to capitalized waste. The midpoint of sustaining capital
guidance for 2021 is relatively in line with the levels delivered
in 2020. Sustaining capital expenditures are related to ongoing
development of the ELG underground, rebuilding of the open pit
fleet, and other projects to maintain and improve the efficiency of
the processing plant.
Non-sustaining capital expenditures are guided
at $125 million to $150 million, with the year-over-year increase
primarily driven by additional investment in Media Luna. The
remainder of guided expenditures are earmarked for ELG, including
completion of Portal 3, ongoing development of the ELD deposit,
field testing Muckahi, and exploration.
Investment in Media Luna is guided between $90
million and $100 million. A majority of the guided spend ($60
million to $65 million) relates to a full year of development of
the 7 kilometre long Guajes tunnel (including development,
equipment purchases and other infrastructure) and commencement of
the South Portal, which allows for access to the upper portions of
the deposit from the south side. These two projects are key for
delivering first production in Q1 2024. An additional $14 million
will be invested in an expanded infill drill program and a further
$12 million to advance the feasibility study. The remaining spend
relates to environmental and permitting costs. Spending on Media
Luna will increase in 2022 and peak in 2023, with a moderate spend
in 2024 to finalize construction and commissioning.
Investment in Muckahi field testing is guided at
$8 million. Upon completion of testing, we expect to have
feasibility quality data relating to expected increased production
rates and reduced unit costs.
2021 CASH FLOW SEASONALITYThe
Company does not anticipate any significant seasonality in
production in 2021, with any minor quarter-over-quarter deviations
driven by the natural variability of skarn-hosted deposits.
However, given timing of payments, we expect
cash flow from operations to be weighted towards the second half of
the year as was the case in 2020. Cash flow from operations in Q1
will be impacted by payment of the Mexican based Mining Tax
(accrued throughout the year and paid out the following March) as
well as Corporate Income Tax owing at year-end, after accounting
for monthly installments made during 2020. Taxes paid will be
reflected in cash flow from operations prior to changes in non-cash
working capital. In Q2, we expect cash flow from operations after
changes in non-cash working capital to be impacted by payment of
our employee profit sharing, which is accrued through the year and
paid out in full by May the following year.
ABOUT TOREX GOLD RESOURCES
INC.Torex is an intermediate gold producer based in
Canada, engaged in the mining, developing and exploring 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 commenced commercial production 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. |
Jody Kuzenko |
Dan Rollins |
President and CEO |
Vice President, Corporate Development & Investor
Relations |
Direct: (647) 725-9982 |
Direct: (647) 260-1503 |
jody.kuzenko@torexgold.com |
dan.rollins@torexgold.com |
QUALIFIED
PERSONScientific and technical information
contained in this news release has been reviewed and approved by
Clifford Lafleur, P.Eng., Director, Resource Management and Mine
Engineering of Torex and a Qualified Person under
NI 43‑101.
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 yet been tested in an
operating mine. Since the date of the Technical Report, the
majority of the components of the Muckahi system have been tested
by Torex and their functionality demonstrated. Although, the
components have not yet been tested together as a system to
demonstrate the rates per day in which tunnels can be excavated and
material removed from long hole open stopes. This final stage
of testing is underway and will be completed in the coming
months. Drill and blast fundamentals, standards and best
practices for underground hard rock mining are applied in the
Muckahi system as described in of the Technical Report, 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 of Muckahi which is described in detail the Technical
Report. The mine design, equipment performance and cost estimations
involving Muckahi in the Technical Report are conceptual in nature,
and do not demonstrate technical or economic viability.
FORWARD LOOKING INFORMATIONThis news release
contains "forward-looking statements" and "forward-looking
information" within the meaning of applicable United States and
Canadian securities legislation. Forward-looking information also
includes, but is not limited to: expectation of a continued pattern
of consistent and reliable operational performance; expectation of
another year of strong cash flow in 2021; expectation that the
strength of the underlying business will enable the Company to
execute on its plan as set out in the news release; setting the
foundation for the Company’s future; guidance for 2021 production,
cash costs and sustaining capital; the guided increase in
non-sustaining capital expenditures year-over-year reflects
strategic investments as set out in the news release; expectation
that the investment in Media Luna in 2021 is key to de-risking and
delivering on the project schedule as the early work of accessing
the deposit, the feasibility study, and permitting activities
advance; plans for exploration will also be a key focus this year;
plans to invest additional dollars at the ELG underground to
accelerate exploration as we look to extend the life of the ELG
underground beyond the timeframe implied by current mineral
reserves; the planned expansion of the Media Luna the infill drill
program with a view to increasing the proportion of mineral
resources in the measured and indicated categories; plans to test a
number of high priority targets within the broader Morelos land
package as the Company looks to find the next mine; plans to
optimize and extend ELG into 2024 in order to create overlap with
Media Luna coming into production in Q1 2024; expectation of
momentum on production, robust cashflow and the plan for organic
value creation in front of the Company; expectation that 2021
promises to be another exceptional year for Torex and its
shareholders; gold production in 2021 is expected to be between
430,000 ounces and 470,000 ounces; plans to continue with the same
COVID-19 protocols, as described in the news release, until the
risks associated with the pandemic are fully resolved; total cash
costs and all-in sustaining cash costs are expected to be in-line
with the levels delivered in 2020, with the difference relative to
original 2020 guidance reflecting the impact of the higher revenue
on employee profit sharing, government royalties and land use
agreements; operational guidance in 2021 predicated on an average
gold price of $1,700; the strip ratio for 2021 is expected to be
7.6:1; expectation that approximately 35% of waste mined in 2021
will be expensed with the remainder capitalized; sustaining capital
expenditures are guided at $70 million to $85 million, of which $40
million to $45 million is related to capitalized waste; the
anticipated sustaining capital expenditures as described in the
news release; non-sustaining capital expenditures are guided at
$125 million to $150 million; expectation that the guided
non-sustaining capital expenditures will be spent as described in
the news release; investment in Media Luna is guided between $90
million and $100 million; the expectation that a such investment
will be spent as described in the news release; expectation that
spending on Media Luna will increase in 2022 and peak in 2023, with
a moderate spend in 2024 to finalize construction and
commissioning; investment in Muckahi field testing is guided at $8
million; the expectation that the Company will have feasibility
quality data on Muckahi relating to increased production rates and
reduced unit costs, upon completion of testing; and, no expectation
of any significant seasonality in production in 2021, with
quarter-over-quarter deviations driven by the natural variability
of skarn-hosted deposits; and, expectation that cashflow from
operations will be weighted towards the second half of 2021 and in
Q1 2021, will be impacted by the payments described in the news
release. Generally, forward-looking information can be
identified by the use of forward-looking terminology and phrases
such as "plans", "expects", "believes", “future”, “intends”, “look
to”, “view to”, “promises to be”, “guided”, “earmarked”,
“timeline”, “schedule” or variations of such words and phrases or
state that certain actions, events or results “will” or “will not”
occur. 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,
the inability of the Company’s mining and exploration operations to
operate as intended due to shortage of skilled employees, shortages
in supply chains, inability of employees to access sufficient
healthcare, significant social upheavals, government or regulatory
actions or inactions, and those risk factors identified in the
Technical Report and the Company’s annual information form and
management’s discussion and analysis or other unknown but
potentially significant impacts. Notwithstanding the Company's
efforts, there can be no guarantee that the Company’s measures to
protect employees and surrounding communities from COVID-19 during
this period will be effective. 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 information is 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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