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Torex Gold Closes 2020 With Record Financial Results

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Delivers $183 Million Increase in Net Cash Year Over Year

 

 

Torex Gold Resources Inc. (TSX: TXG) reports financial and operational results for the three months and year ended December 31, 2020.

 

Jody Kuzenko, President & CEO of Torex, stated:

 

“2020 was a record-breaking year for many aspects of our business despite the challenges associated with COVID-19. Gold sales of 437,310 ounces at a realized gold price of $1,771/oz resulted in revenue of $789 million, a 23% increase from last year and the highest in our history. Our strong operational performance, in combination with a resurgent gold price, underpinned our strongest annual financial performance ever, with record net income of $109 million, record adjusted EBITDA of $431 million and record operating cash flow of $342 million. Our ongoing focus on cost containment also paid off, with full year TCC1 and AISC1 coming in below the bottom end of revised guidance.

 

“Our balance sheet has never been stronger. We exited 2020 with net cash of $162 million, a $183 million increase in net cash year-over-year. As of year-end, total debt outstanding excluding finance leases stood at $40 million compared to $180 million at the end of 2019.

 

“With the Company forecast to be debt free in Q1 2021 and strong ongoing cash flow expected from ELG, Torex is well positioned to fully fund and bring Media Luna into production in early 2024. In doing so, we will deliver a smooth transition between the ramp down of the ELG open pits and Media Luna coming online, prove out the potential of Muckahi, and invest in exploration to further develop the ELG underground and find our next mine within the broader Morelos land package.

 

“As I reflect upon our 2020 results, I am most proud of our record-breaking safety performance, achieving 10 million hours worked without a lost-time injury from April 2019 to December 2020 and exiting the year with a lost-time injury frequency of 0.15 per million hours worked.

 

“Against the backdrop of COVID-19 and all the complexities that presented, our strong operational and financial performance is a direct result of the hard work and dedication of Torex’s employees and contractors as well as the strong relationships we have built with our host communities. We have created significant momentum in our ability as a team to deliver exceptional operational and financial results, and we are well-positioned to keep it up in 2021.”

 

FULL YEAR 2020 HIGHLIGHTS

 

  • Record safety performance: Exited the year with a lost-time injury frequency of 0.15 per million hours worked following a finger injury in December. Prior to the injury, the Company achieved more than 10 million hours worked without a lost time injury, with the last lost time injury recorded in April 2019. The total recordable injury frequency stood at 2.52 per million hours worked at year-end versus 4.05 at the end of 2019.
  • Gold production: Produced 430,484 ounces in 2020, surpassing the high end of revised guidance (390,000 to 420,000 ounces) issued following the COVID-19 shutdown and the low end of original guidance (420,000 to 480,000 ounces).
  • Gold sold: Full year sales of 437,310 ounces at an average realized gold price1 of $1,771/oz, which resulted in record total revenue of $789 million, a 23% increase year-over-year.
  • Total cash costs per ounce of gold sold1: Total cash costs (TCC) of $672/oz, better than the revised guidance range ($695/oz to $740/oz).
  • All-in sustaining costs per ounce of gold sold1: All-in sustaining costs (AISC) of $924/oz, better than the bottom end of revised guidance ($965/oz to $1,025/oz) and within the original guidance range ($900/oz to $960/oz).
  • Record net income and adjusted net earnings1: Reported record net income of $109.0 million or $1.27 per share on a basic basis and $1.25 per share on a diluted basis. Excluding, amongst other items, care and maintenance costs, unrealized gains and losses and non-cash foreign exchange adjustments, adjusted net income totalled a record $135.7 million, or $1.59 per share on a basic and $1.58 diluted basis.
  • Record EBITDA1 and adjusted EBITDA1Record EBITDA of $413.0 million and record adjusted EBITDA of $431.4 million.
  • Record cash flow from operations: Record cash flow from operations of $342.1 million ($328.8 million prior to changes in non-cash working capital). During the year, the Company paid $103.3 million in taxes (including the 7.5% mining tax) of which $38.9 million related to taxes outstanding at the end of 2019. The Company anticipates $53.6 million of taxes related to 2020 (including the 7.5% mining tax), in addition to monthly income tax installments for 2021, to be paid out in March 2021.
  • Free cash flow1: Free cash flow of $168.1 million ($253.4 million prior to non-sustaining capital expenditures).
  • Cash balance: Ended the year with cash and short-term investments of $206.2 million.
  • Total outstanding debt: As of year-end, total debt excluding finance leases stood at $40.0 million compared to $180.0 million at the end of 2019.
  • Net cash1: Exited 2020 with net cash of $161.6 million, reflecting a $183.3 million increase year-over-year. Over the last two years, net cash has improved $381.9 million.

 

FOURTH QUARTER 2020 HIGHLIGHTS

 

  • Gold production: Produced 130,649 ounces of gold, the third highest quarter of production on record.
  • Record gold sold: Record gold sold of 133,063 ounces of gold at an average realized price of $1,847/oz.
  • Total cash costs1 and All-in sustaining costs1: Total cash cost of $579/oz and all-in sustaining cost of $886/oz.
  • Record net income and adjusted net earnings1: Reported record net income of $91.9 million or $1.07 per share on a basic basis and $1.05 per share on a diluted basis. Record adjusted net income of $60.9 million, or $0.71 per share on a basic and diluted basis.
  • Record EBITDA1 and Adjusted EBITDA1: Generated record EBITDA of $165.9 million and record adjusted EBITDA of $158.5 million.
  • Cash flow from operations: Cash flow from operations totalled $137.1 million ($140.8 million prior to changes in non-cash working capital).
  • Free cash flow1: Generated $70.3 million in free cash flow ($104.1 million prior to non-sustaining capital expenditures).
  • Debt payments: Repaid $116.3 million ($116.9 including leases) of outstanding debt during the quarter.

1Refer to “Non-IFRS Financial Performance Measures” in the Company’s December 31, 2020 MD&A for further information and a detailed reconciliation.

 

 

TABLE 1: OPERATING & FINANCIAL RESULTS SUMMARY

 

                     
    Three Months Ended   Year Ended  
    Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,   Dec 31, Dec 31,  
In millions of U.S. dollars, unless otherwise noted 2020 2020 2020 2020 2019   2020 2019  
Operating Data                    
Mining                    
Ore tonnes mined kt 1,809   1,521   697   1,837   1,573   5,864   5,952  
Waste tonnes mined kt 10,399   10,097   4,435   11,726   10,795   36,657   46,449  
Total tonnes mined kt 12,208   11,618   5,132   13,563   12,368   42,521   52,401  
Strip ratio 1 waste:ore 6.2   7.2   6.7   6.8   7.3   6.7   8.4  
Average gold grade of ore mined 2 gpt 3.14   3.15   3.07   2.52   3.06   2.94   2.92  
Ore in stockpile 3 mt 4.1   3.4   3.1   3.1   2.4   4.1   2.4  
Processing                    
Total tonnes processed kt 1,156   1,184   688   1,134   1,116   4,162   4,393  
Average plant throughput 4 tpd 12,565   12,870   7,560   12,464   12,130   11,372   12,036  
Average gold recovery % 89   89   89   89   89   89   88  
Average gold grade of ore processed gpt 4.01   3.83   3.18   3.35   3.87   3.64   3.64  
Production and sales                    
Gold produced oz 130,649   131,790   59,508   108,537   125,151   430,484   454,811  
Gold sold oz 133,063   133,036   63,147   108,064   126,910   437,310   449,337  
Financial Data                    
Revenue $ 251.6   256.5   109.1   172.0   190.0   789.2   640.8  
Cost of sales $ 143.0   153.5   91.4   144.1   149.0   532.0   479.9  
Earnings from mine operations $ 108.6   103.0   17.7   27.9   41.0   257.2   160.9  
Net income (loss) $ 91.9   60.3   3.8   (47.0 ) 35.1   109.0   71.2  
Per share – Basic $/share 1.07   0.71   0.04   (0.55 ) 0.41   1.27   0.84  
Per share – Diluted $/share 1.05   0.69   0.04   (0.57 ) 0.41   1.25   0.83  
Adjusted net earnings 5 $ 60.9   51.3   3.6   19.9   34.0   135.7   67.8  
Per share – Basic 5 $/share 0.71   0.60   0.04   0.23   0.40   1.59   0.80  
Per share – Diluted 5 $/share 0.71   0.59   0.04   0.23   0.40   1.58   0.79  
EBITDA 5 $ 165.9   162.9   44.8   39.4   102.2   413.0   330.3  
Adjusted EBITDA 5 $ 158.5   156.2   49.3   67.4   105.1   431.4   332.9  
Cost of sales 6 $/oz 1,075   1,154   1,447   1,333   1,174   1,217   1,068  
Total cash costs 5 $/oz 579   633   740   794   617   672   619  
All-in sustaining costs 5 $/oz 886   877   1,015   975   767   924   805  
Average realized gold price 5 $/oz 1,847   1,884   1,712   1,571   1,481   1,771   1,408  
Cash from operating activities $ 137.1   173.3   2.2   29.5   97.9   342.1   301.3  
Cash from operating activities before changes in non-cash working capital $ 140.8   138.1   28.1   21.8   101.4   328.8   327.3  
Free cash flow (deficiency) 5 $ 70.3   124.2   (28.5 ) 2.1   71.6   168.1   181.2  
Net (cash) debt 5 $ (161.6 ) (77.1 ) 53.5   26.3   21.7   (161.6 ) 21.7  
Cash and cash equivalents and short-term investments $ 206.2   236.0   176.9   135.7   161.8   206.2   161.8  
Working capital (deficiency) $ 166.7   186.7   191.9   105.1   96.5   166.7   96.5  
Total debt $ 43.4   155.0   225.2   155.2   174.9   43.4   174.9  
Total assets $ 1,252.4   1,214.1   1,204.1   1,154.7   1,229.6   1,252.4   1,229.6  
Total liabilities $ 306.3   368.8   419.2   373.7   394.8   306.3   394.8  

 

  1. Ore mined from the ELG Underground (defined herein) of 120 kt and 366 kt is included in ore tonnes mined and excluded from the strip ratio in the three and twelve months ended December 31, 2020. For the three months ended September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, ore mined from the ELG Underground was 114 kt, 31 kt, 101 kt, and 98 kt, respectively.
  2. Included within average gold grade of ore mined is the mined long term, low grade inventory. Excluding the long term, low grade inventory, the average gold grade of ore mined is 3.62 gpt and 3.18 gpt for the three and twelve months ended December 31, 2020. For the three months ended September 30, June 30, 2020, March 31, 2020, and December 31, 2019, excluding the long term, low grade inventory, the average gold grade of ore mined is 3.25 gpt, 3.32 gpt, 2.62 gpt, and 3.23 gpt, respectively.
  3. Included within ore in stockpile is 1.4 mt of long term, low grade inventory, with a carrying value of nil at December 31, 2020. As at September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, the long term, low grade inventory was 1.0 mt, 1.0 mt, 0.9 mt, and 0.8 mt, respectively, with nil carrying value. As at December 31, 2020, the long term, low grade inventory has an average grade of 0.91 gpt.
  4. Tonnes per day for the three months ended June 30, 2020 and the twelve months ended December 31, 2020 are based on calendar days in the period of 91 and 366 days.
  5. Adjusted net earnings, total cash costs, all-in sustaining costs, average realized gold price, EBITDA, adjusted EBITDA, free cash flow (deficiency) and net (cash) debt are financial performance measures with no standard meaning under International Financial Reporting Standards (“IFRS”). Refer to “Non-IFRS Financial Performance Measures” in the MD&A for further information and a detailed reconciliation.
  6. Cost of sales for the three months ended June 30, 2020 and the year ended December 31, 2020 includes $11.1 million of care and maintenance costs incurred in the second quarter related to the COVID-19 suspension.
  7. Sum of quarters may not add to the year to date amounts due to rounding.

 

Posted February 24, 2021

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