
On track to meet full year production and cost guidance
Torex Gold Resources Inc. (TSX: TXG) reports the Company’s financial and operational results for the three- and six-month periods ended June 30, 2023.
Jody Kuzenko, President & CEO of Torex, stated:
“2023 is proving to be another excellent year for Torex. We continued to successfully execute on our strategic priorities through the first half of 2023, with production tracking toward the midpoint of annual guidance, development of the Media Luna Project on budget and on schedule, and positive drill results recently released for our ELG Underground.
“The second quarter was delivered to plan, with new quarterly throughput records set at both the mill and ELG Underground. As previously disclosed and as we planned, production was lower and costs were higher relative to the first quarter. This was due to an increased proportion of stockpiled material processed during Q2 as a result of the depletion of reserves at the Guajes pit and the ongoing focus on waste stripping at the El Limón pit with a view to extending pit life through to mid-2025. Given the continued focus on waste stripping through Q3 and ongoing strength of the Mexican peso, we are currently tracking toward the upper end of annual total cash costs and all-in sustaining costs guidance.
“We are also in the final stages of amending our credit agreement, which will extend the term of both the revolving and term loan facilities by one year to 2026 and increase the capacity of the revolving facility by $50 million, bringing the total capacity of the revolving and term loan facilities to $300 million from $250 million. The additional credit capacity reflects the strength of the underlying business and provides additional financial flexibility to support our strategic priorities. The increased credit capacity, combined with available liquidity of more than $527 million at quarter-end and ongoing strong cash flow from ELG, puts us on solid footing to fund the $606 million of remaining project expenditures for Media Luna, while continuing to invest in value-enhancing exploration and drilling, and maintaining at least $100 million of cash on the balance sheet.
“All in all, 2023 is shaping up exactly as we planned. We expect the ongoing strength of our business to lead to a further re-rating as we bring Media Luna into production in late-2024, maintain strong production from ELG, deliver ongoing reserve and resource growth on both sides of the Balsas River, and maintain a healthy and flexible balance sheet.”
SECOND QUARTER 2023 HIGHLIGHTS
Table 1: Operating & Financial Highlights
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars, | Jun 30, | Mar 31, | Jun 30, | Jun 30, | Jun 30, | ||||||||||||
unless otherwise noted | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Operating Results | |||||||||||||||||
Lost-time injury frequency1 | /million hours | 0.58 | 0.53 | 0.00 | 0.58 | 0.00 | |||||||||||
Total recordable injury frequency1 | /million hours | 1.66 | 1.87 | 1.32 | 1.66 | 1.32 | |||||||||||
Gold produced | oz | 107,507 | 122,918 | 123,185 | 230,425 | 235,631 | |||||||||||
Gold sold | oz | 105,749 | 118,455 | 123,363 | 224,204 | 231,375 | |||||||||||
Total cash costs2 | $/oz | 848 | 709 | 703 | 775 | 724 | |||||||||||
Total cash costs margin2 | $/oz | 1,112 | 1,190 | 1,162 | 1,153 | 1,147 | |||||||||||
All-in sustaining costs2 | $/oz | 1,308 | 1,079 | 911 | 1,187 | 969 | |||||||||||
All-in sustaining costs margin2 | $/oz | 652 | 820 | 954 | 741 | 902 | |||||||||||
Average realized gold price2 | $/oz | 1,960 | 1,899 | 1,865 | 1,928 | 1,871 | |||||||||||
Financial Results | |||||||||||||||||
Revenue | $ | 211.3 | 228.8 | 235.0 | 440.1 | 442.7 | |||||||||||
Cost of sales | $ | 138.1 | 137.4 | 139.6 | 275.5 | 271.8 | |||||||||||
Earnings from mine operations | $ | 73.2 | 91.4 | 95.4 | 164.6 | 170.9 | |||||||||||
Net income | $ | 75.3 | 68.2 | 70.3 | 143.5 | 110.3 | |||||||||||
Per share – Basic | $/share | 0.88 | 0.79 | 0.82 | 1.67 | 1.29 | |||||||||||
Per share – Diluted | $/share | 0.85 | 0.79 | 0.80 | 1.66 | 1.27 | |||||||||||
Adjusted net earnings2 | $ | 37.9 | 50.3 | 57.0 | 88.2 | 94.2 | |||||||||||
Per share – Basic2 | $/share | 0.44 | 0.59 | 0.66 | 1.03 | 1.10 | |||||||||||
Per share – Diluted2 | $/share | 0.44 | 0.58 | 0.66 | 1.02 | 1.09 | |||||||||||
EBITDA2 | $ | 125.3 | 102.5 | 155.9 | 227.8 | 259.0 | |||||||||||
Adjusted EBITDA2 | $ | 105.7 | 132.7 | 137.1 | 238.4 | 247.8 | |||||||||||
Cost of sales | $/oz | 1,306 | 1,160 | 1,132 | 1,229 | 1,175 | |||||||||||
Net cash generated from operating activities | $ | 89.6 | 47.0 | 126.9 | 136.6 | 173.6 | |||||||||||
Net cash generated from operating activities before changes in non-cash operating working capital | $ | 92.8 | 61.9 | 120.6 | 154.7 | 180.2 | |||||||||||
Free cash flow2 | $ | (37.4 | ) | (54.0 | ) | 73.1 | (91.4 | ) | 53.4 | ||||||||
Cash and cash equivalents | $ | 285.3 | 321.9 | 310.7 | 285.3 | 310.7 | |||||||||||
Net cash2 | $ | 273.8 | 318.4 | 306.3 | 273.8 | 306.3 | |||||||||||
Table 2: Reconciliation of Total Cash Costs and All-in Sustaining Costs to Cost of Sales
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars, unless otherwise noted | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Gold sold | oz | 105,749 | 118,455 | 123,363 | 224,204 | 231,375 | |||||||||||
Total cash costs per oz sold | |||||||||||||||||
Production costs and royalties | $ | 93.1 | 88.4 | 91.6 | 181.5 | 177.4 | |||||||||||
Less: Silver sales | $ | (1.3 | ) | (1.5 | ) | (0.7 | ) | (2.8 | ) | (1.4 | ) | ||||||
Less: Copper sales | $ | (2.1 | ) | (2.9 | ) | (4.2 | ) | (5.0 | ) | (8.5 | ) | ||||||
Total cash costs | $ | 89.7 | 84.0 | 86.7 | 173.7 | 167.5 | |||||||||||
Total cash costs per oz sold | $/oz | 848 | 709 | 703 | 775 | 724 | |||||||||||
All-in sustaining costs per oz sold | |||||||||||||||||
Total cash costs | $ | 89.7 | 84.0 | 86.7 | 173.7 | 167.5 | |||||||||||
General and administrative costs1 | $ | 5.9 | 6.6 | 5.0 | 12.5 | 12.8 | |||||||||||
Reclamation and remediation costs | $ | 1.3 | 1.4 | 1.2 | 2.7 | 2.6 | |||||||||||
Sustaining capital expenditure | $ | 41.4 | 35.8 | 19.5 | 77.2 | 41.2 | |||||||||||
Total all-in sustaining costs | $ | 138.3 | 127.8 | 112.4 | 266.1 | 224.1 | |||||||||||
Total all-in sustaining costs per oz sold | $/oz | 1,308 | 1,079 | 911 | 1,187 | 969 | |||||||||||
Table 3: Reconciliation of Sustaining and Non-Sustaining Costs to Capital Expenditures
Three Months Ended | Six Months Ended | ||||||||||||||||
Jun 30, | Mar 31, | Jun 30, | Jun 30, | Jun 30, | |||||||||||||
In millions of U.S. dollars | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Sustaining | $ | 19.5 | 14.6 | 11.6 | 34.1 | 17.2 | |||||||||||
Capitalized Stripping (Sustaining) | $ | 21.9 | 21.2 | 7.9 | 43.1 | 24.0 | |||||||||||
Non-sustaining | $ | 0.4 | 0.7 | 5.0 | 1.1 | 10.7 | |||||||||||
Total ELG | $ | 41.8 | 36.5 | 24.5 | 78.3 | 51.9 | |||||||||||
Media Luna Project | $ | 77.2 | 66.4 | 29.6 | 143.6 | 48.1 | |||||||||||
Media Luna Infill Drilling/Other | $ | 4.9 | 3.1 | 5.9 | 8.0 | 11.8 | |||||||||||
Working Capital Changes & Other | $ | 0.6 | (6.3 | ) | (7.5 | ) | (5.7 | ) | 6.0 | ||||||||
Capital expenditures1 | $ | 124.5 | 99.7 | 52.5 | 224.2 | 117.8 | |||||||||||
Table 4: Reconciliation of Average Realized Price and Total Cash Costs Margin Per Ounce of Gold Sold to Revenue
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars, unless otherwise noted | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Gold sold | oz | 105,749 | 118,455 | 123,363 | 224,204 | 231,375 | |||||||||||
Revenue | $ | 211.3 | 228.8 | 235.0 | 440.1 | 442.7 | |||||||||||
Less: Silver sales | $ | (1.3 | ) | (1.5 | ) | (0.7 | ) | (2.8 | ) | (1.4 | ) | ||||||
Less: Copper sales | $ | (2.1 | ) | (2.9 | ) | (4.2 | ) | (5.0 | ) | (8.5 | ) | ||||||
Less: Realized (loss) gain on gold contracts | $ | (0.6 | ) | 0.5 | – | (0.1 | ) | – | |||||||||
Total proceeds | $ | 207.3 | 224.9 | 230.1 | 432.2 | 432.8 | |||||||||||
Total average realized gold price | $/oz | 1,960 | 1,899 | 1,865 | 1,928 | 1,871 | |||||||||||
Less: Total cash costs | $/oz | 848 | 709 | 703 | 775 | 724 | |||||||||||
Total cash costs margin | $/oz | 1,112 | 1,190 | 1,162 | 1,153 | 1,147 | |||||||||||
Total cash costs margin | % | 57 | 63 | 62 | 60 | 61 | |||||||||||
Table 5: Reconciliation of All-in Sustaining Costs Margin to Revenue
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars, unless otherwise noted | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Gold sold | oz | 105,749 | 118,455 | 123,363 | 224,204 | 231,375 | |||||||||||
Revenue | $ | 211.3 | 228.8 | 235.0 | 440.1 | 442.7 | |||||||||||
Less: Silver sales | $ | (1.3 | ) | (1.5 | ) | (0.7 | ) | (2.8 | ) | (1.4 | ) | ||||||
Less: Copper sales | $ | (2.1 | ) | (2.9 | ) | (4.2 | ) | (5.0 | ) | (8.5 | ) | ||||||
Less: Realized (loss) gain on gold contracts | $ | (0.6 | ) | 0.5 | – | (0.1 | ) | – | |||||||||
Less: All-in sustaining costs | $ | (138.3 | ) | (127.8 | ) | (112.4 | ) | (266.1 | ) | (224.1 | ) | ||||||
All-in sustaining costs margin | $ | 69.0 | 97.1 | 117.7 | 166.1 | 208.7 | |||||||||||
Total all-in sustaining costs margin | $/oz | 652 | 820 | 954 | 741 | 902 | |||||||||||
Total all-in sustaining costs margin | % | 33 | 42 | 50 | 38 | 47 | |||||||||||
Table 6: Reconciliation of Adjusted Net Earnings to Net Income
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars, unless otherwise noted | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Basic weighted average shares outstanding | shares | 85,884,895 | 85,869,276 | 85,840,954 | 85,877,128 | 85,819,446 | |||||||||||
Diluted weighted average shares outstanding | shares | 86,565,950 | 86,398,732 | 86,115,071 | 86,464,387 | 86,095,060 | |||||||||||
Net income | $ | 75.3 | 68.2 | 70.3 | 143.5 | 110.3 | |||||||||||
Adjustments: | |||||||||||||||||
Unrealized foreign exchange (gain) loss | $ | (2.5 | ) | (0.5 | ) | 0.4 | (3.0 | ) | (0.6 | ) | |||||||
Unrealized (gain) loss on derivative contracts | $ | (15.3 | ) | 27.1 | (17.0 | ) | 11.8 | (8.8 | ) | ||||||||
Remeasurement of share-based payments | $ | (1.8 | ) | 3.6 | (2.2 | ) | 1.8 | (1.8 | ) | ||||||||
Derecognition of provisions for uncertain tax provisions | $ | – | (15.2 | ) | – | (15.2 | ) | – | |||||||||
Tax effect of above adjustments | $ | 5.9 | (9.0 | ) | 5.7 | (3.1 | ) | 3.4 | |||||||||
Tax effect of currency translation on tax base | $ | (23.7 | ) | (23.9 | ) | (0.2 | ) | (47.6 | ) | (8.3 | ) | ||||||
Adjusted net earnings | $ | 37.9 | 50.3 | 57.0 | 88.2 | 94.2 | |||||||||||
Per share – Basic | $/share | 0.44 | 0.59 | 0.66 | 1.03 | 1.10 | |||||||||||
Per share – Diluted | $/share | 0.44 | 0.58 | 0.66 | 1.02 | 1.09 | |||||||||||
Table 7: Reconciliation of EBITDA and Adjusted EBITDA to Net Income
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Net income | $ | 75.3 | 68.2 | 70.3 | 143.5 | 110.3 | |||||||||||
Finance (income) costs, net | $ | (3.2 | ) | (3.0 | ) | (0.3 | ) | (6.2 | ) | 0.1 | |||||||
Depreciation and amortization1 | $ | 45.0 | 49.1 | 48.1 | 94.1 | 94.5 | |||||||||||
Current income tax expense | $ | 18.6 | 16.8 | 37.0 | 35.4 | 61.6 | |||||||||||
Deferred income tax (recovery) expense | $ | (10.4 | ) | (28.6 | ) | 0.8 | (39.0 | ) | (7.5 | ) | |||||||
EBITDA | $ | 125.3 | 102.5 | 155.9 | 227.8 | 259.0 | |||||||||||
Adjustments: | |||||||||||||||||
Unrealized (gain) loss on derivative contracts | $ | (15.3 | ) | 27.1 | (17.0 | ) | 11.8 | (8.8 | ) | ||||||||
Unrealized foreign exchange (gain) loss | $ | (2.5 | ) | (0.5 | ) | 0.4 | (3.0 | ) | (0.6 | ) | |||||||
Remeasurement of share-based payments | $ | (1.8 | ) | 3.6 | (2.2 | ) | 1.8 | (1.8 | ) | ||||||||
Adjusted EBITDA | $ | 105.7 | 132.7 | 137.1 | 238.4 | 247.8 | |||||||||||
Table 8: Free Cash Flow
Three Months Ended | Six Months Ended | ||||||||||||||||
In millions of U.S. dollars | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
||||||||||||
Net cash generated from operating activities | $ | 89.6 | 47.0 | 126.9 | 136.6 | 173.6 | |||||||||||
Less: | |||||||||||||||||
Additions to property, plant and equipment1 | $ | (124.5 | ) | (99.7 | ) | (52.5 | ) | (224.2 | ) | (117.8 | ) | ||||||
Lease payments | $ | (1.4 | ) | (0.8 | ) | (0.9 | ) | (2.2 | ) | (1.5 | ) | ||||||
Interest paid2 | $ | (1.1 | ) | (0.5 | ) | (0.4 | ) | (1.6 | ) | (0.9 | ) | ||||||
Free cash flow | $ | (37.4 | ) | (54.0 | ) | 73.1 | (91.4 | ) | 53.4 | ||||||||
Table 9: Net Cash
Jun 30, | Mar 31, | Jun 30, | |||||||||
In millions of U.S. dollars | 2023 | 2023 | 2022 | ||||||||
Cash and cash equivalents | $ | 285.3 | 321.9 | 310.7 | |||||||
Less: Lease-related obligations | $ | (11.5 | ) | (3.5 | ) | (4.4 | ) | ||||
Net cash | $ | 273.8 | 318.4 | 306.3 | |||||||
Table 10: Unit Cost Measures
Three Months Ended | Six Months Ended | |||||||||||||||||||
In millions of U.S. dollars, unless otherwise noted | Jun 30, 2023 |
Mar 31, 2023 |
Jun 30, 2022 |
Jun 30, 2023 |
Jun 30, 2022 |
|||||||||||||||
Gold sold (oz) | 105,749 | 118,455 | 123,363 | 224,204 | 231,375 | |||||||||||||||
Tonnes mined – open pit (kt) | 11,768 | 9,354 | 8,947 | 21,121 | 18,966 | |||||||||||||||
Tonnes mined – underground (kt) | 174 | 156 | 144 | 330 | 258 | |||||||||||||||
Tonnes processed (kt) | 1,210 | 1,177 | 1,124 | 2,386 | 2,258 | |||||||||||||||
Total cash costs: | ||||||||||||||||||||
Total cash costs ($) | 89.7 | 84.0 | 86.7 | 173.7 | 167.5 | |||||||||||||||
Total cash costs per oz sold ($) | 848 | 709 | 703 | 775 | 724 | |||||||||||||||
Breakdown of production costs | $ | $/t | $ | $/t | $ | $/t | $ | $/t | $ | $/t | ||||||||||
Mining – open pit | 32.1 | 2.73 | 28.4 | 3.03 | 27.4 | 3.06 | 60.5 | 2.87 | 53.1 | 2.80 | ||||||||||
Mining – underground | 14.3 | 82.29 | 12.6 | 80.42 | 12.0 | 83.64 | 26.9 | 81.41 | 21.8 | 84.74 | ||||||||||
Processing | 43.0 | 35.60 | 39.7 | 33.72 | 38.2 | 33.95 | 82.7 | 34.68 | 75.3 | 33.35 | ||||||||||
Site support | 14.3 | 11.84 | 12.1 | 10.25 | 12.4 | 11.02 | 26.4 | 11.05 | 23.3 | 10.34 | ||||||||||
Mexican profit sharing (PTU) | 5.3 | 4.38 | 5.5 | 4.64 | 5.7 | 5.08 | 10.8 | 4.52 | 13.8 | 6.13 | ||||||||||
Capitalized stripping | (21.9 | ) | (21.2 | ) | (7.9 | ) | (43.1 | ) | (24.0 | ) | ||||||||||
Inventory movement | (0.9 | ) | 3.5 | (4.6 | ) | 2.6 | (1.9 | ) | ||||||||||||
Other | 0.5 | 0.9 | 1.3 | 1.4 | 2.5 | |||||||||||||||
Production costs | 86.7 | 81.5 | 84.5 | 168.2 | 164.1 | |||||||||||||||
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 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 asset is the Morelos Complex, which includes the El Limón Guajes Mine Complex, the Media Luna Project, a processing plant, and related infrastructure. Commercial production from the Morelos Complex commenced on April 1, 2016 and an updated Technical Report for the Morelos Complex was released in March 2022. Torex’s key strategic objectives are to optimize and extend production from the ELG Mine Complex, de-risk and advance Media Luna to commercial production, build on ESG excellence, and to grow through ongoing exploration across the entire Morelos Property.
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