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Torex Gold Resources Inc. released the Company’s financial results for the three and six months ended June 30, 2020 as well as its updated operational outlook for 2020.<\/p>\n
Due to the COVID-19 decree issued by the Government of Mexico, production at El Limón Guajes (ELG) was temporarily suspended for the month of April and partially resumed in May with the processing of lower grade stockpiled material. Following the designation of mining as an essential activity in Mexico, full production resumed at the beginning of June.<\/p>\n
Jody Kuzenko, President & CEO of Torex, stated:<\/p>\n
“While this quarter was far from business as usual, we delivered solid operational performance and demonstrated the financial strength of our business even in these most challenging times. Despite the mandated suspension of our operations due to COVID-19, we produced 59,500 ounces of gold, delivered $49.3 million in adjusted EBITDA and $28.1 million in operating cash flow (prior to non-cash working capital). With operations back on track, $176.9 million in the bank and a robust gold price at hand, we plan to direct our cash flow to further reducing debt during the second half of 2020.<\/p>\n
“With the steady state production run rate reestablished in June, we are well positioned to deliver a solid second half of the year, and are off to a strong start with 42,630 ounces of gold produced in July, following 38,890 ounces produced in June. Our expectations are reflected in the revised production guidance of between 390,000 and 420,000 ounces of gold in 2020.<\/p>\n
“During the quarter, we also kept pace on planned investment associated with our future. The modest increase in our capital expenditure forecast for the remainder of 2020 relative to original guidance reflects our decision to advance projects which we believe will add incremental value for shareholders. We are increasing exploration investment in ELG underground and building a third portal to access our underground deposits there, which we expect will cut the current haulage distance in half thereby reducing operating costs. Additionally, we have added a south portal to the Media Luna design in order to mitigate any schedule risk associated with the 7 km long access tunnel.<\/p>\n
“I’m particularly proud that we continued to demonstrate our industry leadership in safety this quarter, with more than seven million hours now worked without a single lost time injury. Our strong culture of safety has served us well as we continue to keep our operations running safely by continuously enhancing our controls to prevent the spread of COVID-19 among our employees and local communities.<\/p>\n
“With a solid balance sheet, strong momentum on production, gold prices reaching record highs and most importantly, an exceptional team delivering exceptional operational performance, we are poised to deliver very strong results in H2 2020, into 2021 and beyond.”<\/p>\n
This release should be read in conjunction with the Company’s June 30, 2020 Financial Statements and MD&A on the Company’s website or on SEDAR. A summary of Torex’s operating and financial results can be found in Table 2.<\/p>\n
Q2 2020 Highlights<\/strong><\/p>\n 1<\/sup> Based on 91 calendar days for the three months ended June 30, 2020. Guidance Update<\/strong> The increase in guidance on non-sustaining capital expenditures includes a $7.0 million increase in investment in the Media Luna project for the ‘South Portal’ and additional equipment, to ensure that the project stays on schedule; and $3.5 million to develop ‘Portal 3’ in order to mine the Sub-Sill Extension area and the El Limón Deep Extension in an efficient and cost-effective manner.<\/p>\n Enhanced Balance Sheet Liquidity<\/strong> COVID-19 Update<\/strong> Continued support has been provided for COVID-19 management in neighbouring communities, including the implementation of infection prevention education campaigns for adults and children, the delivery of medical equipment for local health centres, and the donation of hand sanitizer and medical masks.<\/p>\n Conference Call and Webcast Details<\/strong> A live audio webcast of the conference call will be available on the Company’s website at www.torexgold.com. The webcast will be archived on the Company’s website.<\/p>\n About Torex Gold Resources Inc.<\/strong> For further information, please contact:<\/p>\n\n
2<\/sup> Refer to “Non-IFRS Financial Performance Measures” within the MD&A for further information and a detailed reconciliation.<\/p>\n
With the resumption of full operations at ELG in June 2020, the Company has revised its operational outlook for 2020. The lower guided output and higher costs primarily reflect the impact the COVID-19 related suspension had on operations in Q2. As with everywhere else in the world, uncertainty still exists over the extent and duration of the impacts that COVID-19 could have on operations, and as such, may impact our ability to achieve the revised outlook outlined in Table 1. There are no changes to the safety and environmental objectives.<\/p>\n\n\n
\n Table 1: Revised 2020 Operational Outlook<\/strong><\/td>\n<\/tr>\n \n <\/em><\/td>\n Original Outlook<\/strong><\/td>\n Revised Outlook<\/strong><\/td>\n<\/tr>\n \n Gold production<\/td>\n 420,000 to 480,000 ounces<\/td>\n 390,000 to 420,000 ounces<\/td>\n<\/tr>\n \n Total cash costs per ounce of gold sold<\/td>\n $640 to $670<\/td>\n $695 to $740<\/td>\n<\/tr>\n \n All-in sustaining costs per ounce of gold sold<\/td>\n $900 to $960<\/td>\n $965 to $1,025<\/td>\n<\/tr>\n \n Capitalized waste stripping<\/em><\/td>\n $51 million<\/em><\/td>\n $46 million<\/em><\/td>\n<\/tr>\n \n Other sustaining investment<\/em><\/td>\n $34 million<\/em><\/td>\n $37 million<\/em><\/td>\n<\/tr>\n \n Sustaining capital expenditures<\/td>\n $85 million<\/td>\n $83 million<\/td>\n<\/tr>\n \n Non-sustaining capital expenditures<\/td>\n $82 million<\/td>\n $92 million<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
During the quarter, we drew down $90.0 million on our revolving credit facility to enhance balance sheet liquidity. With strong cash flow projected for the remainder of the year, we expect to be in a net cash position before year-end, having exited June 2020 with net debt of $53.5 million from $26.3 million at the end of Q1.<\/p>\n
The enhanced COVID-19 control measures put in place in March remain in place today, and screening measures continue to be effective. To date, there have been four confirmed cases of COVID-19 within our workforce. Three of those individuals displayed symptoms and tested positive at home while away from site and are now fully recovered. The fourth individual tested positive at site and was quarantined as outlined in our COVID-19 protocols.<\/p>\n
The Company will host a conference call today at 9:00 AM (ET) where senior management will discuss the second quarter operating and financial results. Please call the below numbers approximately 10 minutes prior to the start of the call:<\/p>\n\n
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.<\/p>\n