(All amounts expressed in
U.S. Dollars unless otherwise stated)
Torex Gold Resources Inc. (the "Company" or "Torex") (TSX:TXG)
reported today the Company’s financial results for the three and
six months ended June 30, 2018.
Fred Stanford, President & CEO of Torex
stated: “Having successfully emerged from the blockade, we are
pleased to announce solid second quarter results, from near-record
level gold production. These operational results reflect the
impressive success our team has had in dealing with the uncertainty
of a restart and ramp up.
Coming out of the blockade with minimal ore
stockpiles, mining was the priority issue. By June, we
had rehired a workforce and had the mine running at design
rates, with the mine exceeding design rates in July. In the
processing plant the focus has been on throughput rates, which rose
steadily through the quarter and met design levels in the latter
half of July. The team is well on track to completing the ramp-up
and being able to consistently produce at design rates by year end.
The SART plant construction was completed on schedule by the end of
the quarter, and we will continue to refine the plant's
operation through Q3, when it will deliver on cost
reduction. Sub-Sill mining rates have ramped up aggressively
during the quarter. Mining activity is still largely focused on
installing infrastructure in waste. In July, the second portal into
the underground mine was collared and the final mining permits were
received. Sub-Sill ore production will ramp up later in the
year.
There are many upcoming catalysts for an
exciting second half of 2018. At Media Luna, four diamond drills
are turning on a program to intersect 175 infill targets by late
2019. Nineteen targets have been intersected by the end of July,
and assays are pending. The comprehensive property-wide
Technical Report, which includes an updated PEA for Media Luna is
advancing well and is expected to be released in the next few
weeks. This Technical Report will also include an examination of
the potential of a new mining technology (Muckahi) that we are
developing. We look forward to a technical session in September to
share the potential of the technology with investors and analysts.
In conclusion, it promises to be a productive year, and we all look
forward to advancing the multiple ways that are available to
deliver value from this property."
This release should be read in conjunction with
the Company's June 30, 2018 Financial Statements and MD&A on
the Company's website or on SEDAR.
HIGHLIGHTS
- Gold produced in the quarter totalled 78,796
ounces in Dore, and an additional 1,300 ounces in carbon fines.
Gold produced for the six months totalled 145,963 ounces in Dore,
and an additional 10,187 ounces in carbon fines.
- Mine production in the quarter totalled 7,155
kt, averaged 78,629 tpd. For the six months, mine production
totalled 10,234 kt, averaged 61,652 tpd1.
- Mine ore production in the quarter totalled
1,278 kt, averaged 14,046 tpd. For the six months, mine ore
production totalled 1,849 kt, averaging 11,140 tpd.
- Average grade mined in the quarter was 2.45
gpt, and 2.71 gpt for the six months.
- Plant throughput in the quarter of 1,000 kt,
averaged 10,989 tpd. Plant throughput in the six months of 1,785
kt, averaged 10,753 tpd. Throughput in the month of June 2018 was
12,718 tpd and throughput in the month of July 2018 was 12,608
tpd, including 14,144 tpd in second half of July 2018.
- Average grade processed in the quarter of 2.86
gpt and 2.98 gpt for the six months.
- Gold recovery averaged 87% in the quarter and
87% in the six months, consistent with design expectations.
- SART plant construction is complete and has
been turned over to the operating team to continue the ramp up to
design capacity.
- Principal repayments of $12.9 million in the
quarter and $22.2 million in the six months were made to reduce the
Term Loan under the Debt Facility to $277.8 million.
The blockade ended and full access to
the ELG Mine Complex has been restored
- On April 6, 2018, after a negotiation with community leaders
that the Company was not a party to, the supporters of the Miners
Union (Los Mineros) ended the illegal blockade (the “Blockade”). On
April 10, 2018, the Company received notification from
the Federal Labour Board that the Miners Union had withdrawn their
application to challenge to become the legally constituted
incumbent union for the Company’s union-eligible employees. In
April 2018, plant throughput was constrained as mine production
transitioned to the El Limón Pit, which had been unavailable during
the Blockade. Ramp up to full production and throughput continued
throughout the quarter, ramping up to the declared objective in
June.
Grade and tonnage continue to reconcile
well to the reserve model for the ELG Open Pits
- Total ounce reconciliation of 103% to the
reserve model for the quarter, and 104% for the six months.
- Grade reconciliation of 93% to the reserve
model for both the quarter and for the six months.
Pursuing underground mining innovation
(Muckahi)
- In June 2018, the Company’s President and Chief Executive
Officer (“CEO”) sold, assigned and transferred to the Company (the
“Assignment”), with the exception of trademarks, his entire right,
title and interest in a proprietary mining system (the “Mining
System” which is sometimes referred to as “Muckahi”) for use in
underground mines for nominal consideration. The transaction is
accounted for at the exchange amount based on the consideration.
All subsequent improvements to this system will be owned by the
Company. The Company will grant an irrevocable license (the
“License” and together with the Assignment, the “IP Agreements”),
any intellectual property associated with the Mining System,
including any improvements, to Muckahi Inc., an entity controlled
by the Company’s CEO. During his tenure as CEO, Muckahi Inc. will
not be permitted to make use of the License. The Mining System is
currently in the evaluation stage and if determined viable, the
Company may use the system in current or future underground mining
operations or for commercial purposes. The board of directors of
the Corporation (the “Board”) appointed a committee of independent
directors (the “Independent Committee”) to negotiate the terms of
the IP Agreements and make a recommendation to the Board thereon.
The Board approved the IP Agreements, taking into consideration,
among other matters, the Independent Committee’s determination that
the terms of the IP Agreements are fair, reasonable and in the best
interests of the Corporation and their recommendation to approve
the IP Agreements.
Financial results
- Gold sold for the quarter totalled 77,646
ounces for total proceeds of $101.1 million at an
average realized gold price1 of $1,302 per ounce.
Gold sold for the six months ended June 30, 2018 totalled
140,552 ounces for total proceeds of $184.8 million at an
average realized gold price1 of $1,315 per ounce.
- Revenue totalled $101.8 million and
cost of sales totalled $78.3 million, or $1,008
per ounce of gold sold for the quarter. Revenue
totalled $185.8 million and cost of sales totalled
$143.5 million, or $1,021 per ounce of gold sold for the six months
ended June 30, 2018.
- Earnings from mine operations totalled $23.5
million for the quarter, and $42.3 million for the six months ended
June 30, 2018.
- Income before income tax totalled $5.4 million
for the quarter, and $11.6 million for the six months ended
June 30, 2018.
- Net loss after current and deferred income tax
expense totalled $12.3 million or $0.14 share, on a basic and
diluted basis for the quarter, and $2.1 million, or $0.03 per
share, on a basic and diluted basis for the six months ended
June 30, 2018. The weakening of the Peso had a significant
impact on the deferred tax expense calculated for the periods.
- Adjusted net earnings2, which excludes,
amongst other items, unrealized derivative and foreign exchange
gains and losses, totalled $10.6 million, or $0.13 per share on a
basic and diluted basis for the quarter, and adjusted net loss of
$1.5 million, or $0.02 per share on a basic and diluted basis for
the six months ended June 30, 2018.
- Cash flow from operations totalled
$37.2 million for the quarter, and $89.7 million for the
six months ended June 30, 2018.
- Cash balances as at June 30, 2018
totalled $117.9 million (including restricted cash of $26.5
million).
- Total cash costs1 of $680 per ounce of gold
sold for the quarter, and $702 per ounce of gold sold for the six
months ended June 30, 2018.
- All-in sustaining costs1 of $1,017 per ounce
of gold sold for the quarter, and $989 per ounce of gold sold for
the six months ended June 30, 2018.
- Ore in stockpile as at June 30, 2018 was
0.8 million tonnes at an average estimated grade of
1.48 gpt.
- Full year guidance is unchanged from initial
release.
Qualified Persons
Scientific and technical information contained
in this news release has been reviewed and approved by Dawson
Proudfoot, P.Eng., Vice President, Engineering 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 second
quarter of 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 a preliminary
economic assessment in 2015. 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 NOTE REGARDING 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. Forward-looking information also includes, but is not
limited to, the Company will achieve the full year guidance as
initially released, the expected successful completion of the
ramp-up, including, the ramp-up of the processing plant to
consistently produce at design rates by year-end and the ramp up of
Sub-Sill ore production, completing the commissioning and ramp up
of the SART plant and achieving the expected cost reductions, the
completion and timing of an updated Technical Report, including an
updated PEA for Media Luna, the completion and timing of the
drilling program on Media Luna, plans to further examine the
potential of the new mining technology (Muckahi) , and continued
safety and security. 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, those
risk factors identified in the Company's annual information form
and management's discussion and analysis. Forward-looking
information is based on the reasonable assumptions, estimates,
analysis and opinions of management, made in light of its
experience and its perception of trends, current conditions and
expected developments, as well as other factors that management
believes to be relevant and reasonable in the circumstances at the
date that such statements are made, but which may prove to be
incorrect. Although the Company believes that the assumptions and
expectations reflected in such forward-looking information are
reasonable, undue reliance should not be placed on forward-looking
information because the Company can give no assurance that such
expectations will prove to be correct. 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. The Company does not undertake to update any
forward-looking information, except in accordance with applicable
securities laws.
1 Due to the Blockade, there were only 75 days of partial
operations in the first quarter of 2018.
2 Refer to “Non-IFRS Financial Performance
Measures” in the Company’s Q2 2018 Management’s Discussion and
Analysis for further information and a detailed reconciliation.
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