Torex Gold Resources Inc. press release

Torex Gold Reports Q1 2024 Results

2024-05-08

TSX - Toronto Stock Exchange · Gold · Silver · Copper · Canada · Corporate Finance

On track to deliver on full-year production and cost guidance with funding surplus in-hand to complete the Media Luna Project

(All amounts expressed in U.S. dollars unless otherwise stated)

Toronto, Ontario--(Newsfile Corp. - May 8, 2024) - Torex Gold Resources Inc. (the "Company" or "Torex") (TSX: TXG) reports the Company's financial and operational results for the three months ended March 31, 2024. Torex will host a conference call tomorrow morning at 9:00 AM (ET) to discuss the results.

Jody Kuzenko, President & CEO of Torex, stated:

"2024 is off to a solid start with production and costs tracking to full-year guidance. Operational results were in line with expectations, with quarterly gold production of 115,494 ounces ("oz") at all-in sustaining costs1of $1,202 per oz. Our cost performance, combined with a record quarterly average realized gold price1of $2,023 per oz, resulted in an impressive all-in sustaining costs margin1of 39%. With decreasing costs expected through 2024 as open pit stripping winds down, we are well-positioned to deliver even stronger margins should the gold price remain at current levels.

"The strong operational performance resulted in robust free cash flow1of $77 million prior to expenditures on the Media Luna Project ($126 million), which includes $44 million of annual tax and royalty payments related to fiscal 2023. We exited the quarter with $405 million in available liquidity1(including $113 million in cash), which more than covers the $257 million of upfront expenditures remaining on the Media Luna Project and our objective to maintain at least $100 million of liquidity on the balance sheet.

"Steady progress was made at Media Luna with the project close to 70% complete at quarter end. As of March 31, 95% of upfront costs had been committed including 71% incurred. Development and construction activities are tracking to plan with first concentrate production anticipated before year end and commercial production expected early next year. With this year expected to be the final year of elevated capital expenditures, we are well-positioned to return to positive free cash flow in mid-2025.

"With consistently solid operational results from ELG, Media Luna construction advancing as planned, and a funding surplus in-hand to complete Media Luna on time and on budget, our first quarter results have laid the foundation for what we expect will be a transformational year for the Company and our shareholders."

FIRST QUARTER 2024 HIGHLIGHTS

Strong safety performance continues:The Company exited the quarter with one lost-time ankle injury at the Media Luna Project and reached 14 million hours lost-time injury free at the El Limón Guajes ("ELG") Mine Complex. As at March 31, 2024, the lost-time injury frequency ("LTIF") for the Morelos Complex was 0.15 per million hours worked for both employees and contractors on a rolling 12-month basis.

Gold production:Delivered gold production of 115,494 oz for the quarter driven by a record average gold recovery of 90.7%, the highest level achieved to date. Throughput rates remained above 13,000 tonnes per day ("tpd") for the fifth consecutive quarter, averaging 13,118 tpd. With the solid start to the year, the Company is on track to achieve annual production guidance of 400,000 to 450,000 oz. On a gold equivalent ounce basis ("oz AuEq"), the Company produced 117,306 oz AuEq2and is on track to achieve guidance of 410,000 to 460,000 oz AuEq2.

Gold sold: Sold 111,642 oz of gold at an average realized gold price1of $2,023 per oz, contributing to revenue of $236.5 million. On a gold equivalent ounce basis, the Company sold 114,199 oz AuEq2.

Total cash costs1and all-in sustaining costs1:Total cash costs of $918 per oz sold and all-in sustaining costs of $1,202 per oz sold. All-in sustaining costs margin1of $821 per oz sold, implying an all-in sustaining costs margin1of 39%. Cost of sales was $157.4 million or $1,410 per oz sold in the quarter, primarily impacted by the appreciation of the Mexican peso. Costs are expected to decrease through 2024 as stripping requirements continue to decline with the wind down of the open pits and as such, the Company is on track to achieve full year total cash costs guidance of $860 to $910 per oz and all-in sustaining costs guidance of $1,100 to $1,160 per oz. On a gold equivalent ounce basis, total cash costs of $943 per oz AuEq sold2and all-in sustaining costs of $1,221 per oz AuEq sold2relative to guidance of $900 to $950 per oz AuEq sold2and $1,130 to $1,190 per oz AuEq sold2, respectively.

Net income and adjusted net earnings1:Reported net income of $43.1 million or earnings of $0.50 per share on both a basic and diluted basis. Adjusted net earnings of $35.9 million or $0.42 per share on both a basic and diluted basis. Net income includes a derivative loss of $16.2 million related to gold forward contracts and foreign exchange collar contracts entered into to mitigate downside price risk during the construction of the Media Luna Project.

EBITDA1and adjusted EBITDA1:Generated EBITDA of $98.0 million and adjusted EBITDA of $113.2 million.

Cash flow generation:Net cash generated from operating activities totalled $79.8 million and $72.5 million before changes in non-cash operating working capital, including income taxes paid of $43.9 million including the 7.5% Mexican mining royalty for 2023 of $24.8 million. Negative free cash flow1of $49.1 million is net of cash outlays for capital expenditures, lease payments and interest, including borrowing costs capitalized. Negative free cash flow was a direct result of $126.4 million invested in the Media Luna Project.

Strong financial liquidity:The quarter closed with net cash1of $69.2 million, including $113.2 million in cash and $44.0 million of lease-related obligations, no borrowings on the credit facilities of $300.0 million as at March 31, 2024 and letters of credit outstanding of $7.9 million, providing $405.3 million in available liquidity1.

Media Luna Project:During the quarter, Media Luna Project expenditures totalled $126.4 million, with a remaining project spend of $257.1 million. As of March 31, 2024, physical progress on the Project was approximately 69%, with detailed engineering, procurement activities, underground development, and surface construction advancing. With 95% of upfront expenditures committed as at March 31, 2024 (including 71% incurred), expenditures to date have tracked reasonably well to the initial budget of $874.5 million, noting the strength of the Mexican peso remains a headwind to contend with. Quarterly expenditures are expected to remain above $100 million through Q3 2024 before declining in Q4 2024 as Media Luna nears completion and commercial production is subsequently declared. There has been no change to full-year guidance of $350.0 to $400.0 million on project capital expenditures.

Year-end Mineral Reserves & Resources3: At ELG Underground, Proven and Probable reserves increased to 654 koz AuEq, extending the reserve life out to late 2028. Measured and Indicated resources expanded by 432 koz AuEq (570 koz AuEq prior to mined depletion), while Inferred resources increased by 119 koz AuEq. The resource growth was a direct result of the successful 2023 drilling program as well as the assumption of a lower cut-off grade, reflecting higher metal price assumptions and lower costs due to steady increases in underground mining rates. At EPO, infill drilling was successful in upgrading Inferred resources, while step-out drilling expanded the overall mineralized footprint. Indicated resources increased by 481 koz AuEq. The updated resource will form the basis of an internal prefeasibility study to be completed in the second half of 2024. The positive results from the 2023 drilling program support the Company's goal to maintain annual production of more than 450,000 oz AuEq beyond 2027 and extend the overall life of the Morelos Complex well beyond 2033.

ESG rating improvements: The Company's MSCI ESG rating improved from 'A' to 'AA', with governance practices noted as 'leading global peers' (96thpercentile). In addition, the Company's overall Sustainalytics ESG Risk Rating score improved from 31.5 for 2023 (classified as High risk) to 28.5 for 2024 (now categorized as Medium risk) and the CDP Climate Change Score improved from 'C' (Awareness level) in 2022 to 'B-' (Management level) in 2023.

1. These measures are Non-GAAP Financial Performance Measures or Non-GAAP ratios (collectively, "Non-GAAP Measures"). For a detailed reconciliation of each Non-GAAP Measure to its most directly comparable IFRS financial measure see Tables 2 to 11 of this press release. For additional information on these Non-GAAP Measures, please refer to the Company's management's discussion and analysis ("MD&A") for the three months ended March 31, 2024, dated May 7, 2024. The MD&A, and the Company's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024, are available on Torex's website (www.torexgold.com) and under the Company's SEDAR+ profile (www.sedarplus.ca). 2. Gold equivalent ounces produced and sold includes production of silver and copper converted to a gold equivalent based on a ratio of the average realized prices for each commodity sold in the period. Refer to "Gold Equivalent Reporting" on page 6 of the Company's MD&A for the three months ended March 31, 2024, dated May 7, 2024, for the relevant average realized prices by commodity and "Guidance" on page 7 of the Company's MD&A for 2024 guidance assumptions. 3. Mineral reserve and mineral resource estimates for the Morelos Complex can be found in tables 12 and 13, respectively, of this press release. AuEq values account for underlying metal prices and metallurgical recoveries used in reserve and resource estimates. For more information on the mineral reserve and mineral resource estimates for the Morelos Complex, please see the Company's annual information form for the year ended December 31, 2023, or the Company's news release titled "Torex Gold Reports Year-end 2023 Reserves & Resources" issued on March 26, 2024, and filed on SEDAR+ at www.sedarplus.caand on the Company's website at www.torexgold.com.

Table 1: Operating and Financial Highlights

| | | | | | | | Three Months Ended | | | | | | | | | | | | | | | Mar 31, | | | Dec 31, | | | Mar 31, | | | In millions of U.S. dollars, unless otherwise noted | | | 2024 | | | 2023 | | | 2023 | | | | | | Safety | | | | | | | | | | | | | | | Lost-time injury frequency1 | | | /million hours | | | 0.15 | | | 0.31 | | | 0.53 | | | Total recordable injury frequency1 | | | /million hours | | | 0.97 | | | 1.23 | | | 1.87 | | | Operating Results - Gold only basis | | | | | | | | | | | | | | | Gold produced | | | oz | | | 115,494 | | | 137,993 | | | 122,918 | | | Gold sold | | | oz | | | 111,642 | | | 138,794 | | | 118,455 | | | Total cash costs2 | | | $/oz | | | 918 | | | 885 | | | 709 | | | All-in sustaining costs2 | | | $/oz | | | 1,202 | | | 1,073 | | | 1,079 | | | Average realized gold price2 | | | $/oz | | | 2,023 | | | 1,995 | | | 1,899 | | | Operating Results - Gold Equivalent basis | | | | | | | | | | | | | | | Gold equivalent produced3 | | | oz AuEq | | | 117,306 | | | 139,418 | | | 124,871 | | | Gold equivalent sold3 | | | oz AuEq | | | 114,199 | | | 139,854 | | | 120,748 | | | Total cash costs2,3 | | | $/oz AuEq | | | 943 | | | 893 | | | 732 | | | All-in sustaining costs2,3 | | | $/oz AuEq | | | 1,221 | | | 1,080 | | | 1,095 | | | Financial Results | | | | | | | | | | | | | | | Revenue | | | $ | | | 236.5 | | | 282.4 | | | 228.8 | | | Cost of sales | | | $ | | | 157.4 | | | 191.6 | | | 137.4 | | | Earnings from mine operations | | | $ | | | 79.1 | | | 90.8 | | | 91.4 | | | Net income | | | $ | | | 43.1 | | | 50.4 | | | 68.2 | | | Per share - Basic | | | $/share | | | 0.50 | | | 0.59 | | | 0.79 | | | Per share - Diluted | | | $/share | | | 0.50 | | | 0.58 | | | 0.79 | | | Adjusted net earnings2 | | | $ | | | 35.9 | | | 49.1 | | | 50.3 | | | Per share - Basic2 | | | $/share | | | 0.42 | | | 0.57 | | | 0.59 | | | Per share - Diluted2 | | | $/share | | | 0.42 | | | 0.57 | | | 0.58 | | | EBITDA2 | | | $ | | | 98.0 | | | 115.4 | | | 102.5 | | | Adjusted EBITDA2 | | | $ | | | 113.2 | | | 142.6 | | | 132.7 | | | Cost of sales - gold only basis | | | $/oz | | | 1,410 | | | 1,380 | | | 1,160 | | | Net cash generated from operating activities | | | | | | 79.8 | | | 120.0 | | | 47.0 | | | Net cash generated from operating activities before changes in non-cash operating working capital | | | $ | | | 72.5 | | | 133.5 | | | 61.9 | | | Free cash flow2 | | | $ | | | (49.1) | | | (24.3) | | | (54.0) | | | Cash and cash equivalents | | | $ | | | 113.2 | | | 172.8 | | | 321.9 | | | Lease-related obligations | | | $ | | | 44.0 | | | 32.0 | | | 3.5 | | | Net cash2 | | | $ | | | 69.2 | | | 140.8 | | | 318.4 | | | Available liquidity2 | | | $ | | | 405.3 | | | 464.9 | | | 564.0 |

1. On a 12-month rolling basis, per million hours worked. 2. These measures are Non-GAAP Measures. For a detailed reconciliation of each Non-GAAP Measure to its most directly comparable measure in accordance with the IFRS as issued by the International Accounting Standards Board see Tables 2 to 11 of this press release. For additional information on these Non-GAAP Measures, please refer to the Company's MD&A for the three months ended March 31, 2024, dated May 7, 2024. The MD&A and the Company's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024, are available on Torex's website (www.torexgold.com) and under the Company's SEDAR+ profile (www.sedarplus.ca). 3. Gold equivalent ounces produced and sold includes production of silver and copper converted to a gold equivalent based on a ratio of the average realized prices for each commodity sold in the period. Refer to "Gold Equivalent Reporting" on page 6 of the Company's MD&A for the relevant average realized prices by commodity.

CONFERENCE CALL AND WEBCAST DETAILS

The Company will host a conference call tomorrow at 9:00 AM (ET) where senior management will discuss the first quarter operating and financial results. For expedited access to the conference call, registrationis open to obtain an access code in advance, which will allow participants to join the call directly at the scheduled time. Alternatively, dial-in details are as follows:

Toronto local or International: 1-647-484-8814 Toll-Free (North America): 1-844-763-8274

A live webcast of the conference call will be available on the Company's website at https://torexgold.com/investors/upcoming-events/. The webcast will be archived on the Company's website.

Table 2: Reconciliation of Total Cash Costs and All-in Sustaining Costs to Production Costs and Royalties

| | | | | | | | Three Months Ended | | | | | | | | | | | | | | | Mar 31, | | | Dec 31, | | | Mar 31, | | | In millions of U.S. dollars, unless otherwise noted | | | | | | 2024 | | | 2023 | | | 2023 | | | Gold sold | | | oz | | | 111,642 | | | 138,794 | | | 118,455 | | | | | | | | | | | | | | | | | | Total cash costs per oz sold | | | | | | | | | | | | | | | Production costs | | | $ | | | 100.8 | | | 116.5 | | | 81.5 | | | Royalties | | | $ | | | 6.9 | | | 8.4 | | | 6.9 | | | Less: Silver sales | | | $ | | | (1.5) | | | (0.9) | | | (1.5) | | | Less: Copper sales | | | $ | | | (3.7) | | | (1.2) | | | (2.9) | | | Total cash costs | | | $ | | | 102.5 | | | 122.8 | | | 84.0 | | | Total cash costs per oz sold | | | $/oz | | | 918 | | | 885 | | | 709 | | | | | | | | | | | | | | | | | | All-in sustaining costs per oz sold | | | | | | | | | | | | | | | Total cash costs | | | $ | | | 102.5 | | | 122.8 | | | 84.0 | | | General and administrative costs1 | | | $ | | | 8.0 | | | 7.3 | | | 6.6 | | | Reclamation and remediation costs | | | $ | | | 1.3 | | | 1.5 | | | 1.4 | | | Sustaining capital expenditure | | | $ | | | 22.4 | | | 17.3 | | | 35.8 | | | Total all-in sustaining costs | | | $ | | | 134.2 | | | 148.9 | | | 127.8 | | | Total all-in sustaining costs per oz sold | | | $/oz | | | 1,202 | | | 1,073 | | | 1,079 | | | | | | | | | | | | | | | | | | Gold equivalent sold2 | | | oz AuEq | | | 114,199 | | | 139,854 | | | 120,748 | | | | | | | | | | | | | | | | | | Total cash costs per oz AuEq sold | | | | | | | | | | | | | | | Production costs | | | $ | | | 100.8 | | | 116.5 | | | 81.5 | | | Royalties | | | $ | | | 6.9 | | | 8.4 | | | 6.9 | | | Total cash costs | | | $ | | | 107.7 | | | 124.9 | | | 88.4 | | | Total cash costs per oz AuEq sold2 | | | $/oz AuEq | | | 943 | | | 893 | | | 732 | | | | | | | | | | | | | | | | | | All-in sustaining costs per oz AuEq sold | | | | | | | | | | | | | | | Total cash costs | | | $ | | | 107.7 | | | 124.9 | | | 88.4 | | | General and administrative costs1 | | | $ | | | 8.0 | | | 7.3 | | | 6.6 | | | Reclamation and remediation costs | | | $ | | | 1.3 | | | 1.5 | | | 1.4 | | | Sustaining capital expenditure | | | $ | | | 22.4 | | | 17.3 | | | 35.8 | | | Total all-in sustaining costs | | | $ | | | 139.4 | | | 151.0 | | | 132.2 | | | Total all-in sustaining costs per oz AuEq sold2 | | | $/oz AuEq | | | 1,221 | | | 1,080 | | | 1,095 |

1. This amount excludes a loss of $4.2 million, gain of $0.5 million and loss of $3.6 million for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively, in relation to the remeasurement of share-based payments. This amount also excludes corporate depreciation and amortization expenses totalling $0.1 million, $nil and $0.1 million for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively, within general and administrative costs. Included in general and administrative costs is share-based compensation expense in the amount of $2.3 million or $21/oz for the three months ended March 31, 2024, $1.1 million or $8/oz for the three months ended December 31, 2023, $1.9 million or $16/oz for the three months ended March 31, 2023. This amount excludes other expenses totalling $1.2 million, $2.1 million and $0.6 million for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively. 2. Gold equivalent ounces produced and sold includes production of silver and copper converted to a gold equivalent based on a ratio of the average realized prices for each commodity sold in the period. Refer to "Gold Equivalent Reporting" on page 6 of the Company's MD&A for the relevant average realized prices by commodity.

Table 3: Reconciliation of Sustaining and Non-Sustaining Costs to Capital Expenditures

| | | | | Three Months Ended | | | | | | | | | | | | Mar 31, | | | Dec 31, | | | Mar 31, | | | In millions of U.S. dollars | | | 2024 | | | 2023 | | | 2023 | | | Sustaining | | $ | 21.6 | | | 17.3 | | | 14.6 | | | Capitalized Stripping (Sustaining) | | $ | 0.8 | | | - | | | 21.2 | | | Non-sustaining | | $ | - | | | 0.3 | | | 0.7 | | | Total ELG | | $ | 22.4 | | | 17.6 | | | 36.5 | | | Media Luna Project1 | | $ | 126.4 | | | 124.0 | | | 66.4 | | | Media Luna Cluster Drilling/Other | | $ | 1.3 | | | 3.8 | | | 3.1 | | | Working Capital Changes & Other | | $ | (24.0) | | | (4.0) | | | (6.3) | | | Capital expenditures2 | | $ | 126.1 | | | 141.4 | | | 99.7 |

1. This amount includes a realized gain (or a reduction in the capitalized expenditures) of $0.8 million, $0.3 million and $nil for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively, in relation to the settlement of foreign exchange zero cost collars that were entered into to manage the capital expenditure risk related to a further strengthening of the Mexican peso. 2. The amount of cash expended on additions to property, plant and equipment in the period as reported in the Condensed Consolidated Interim Statements of Cash Flows.

Table 4: Reconciliation of Average Realized Gold Price and Total Cash Costs Margin to Revenue

| | | | | | | | Three Months Ended | | | | | | | | | | | | | | | Mar 31, | | | Dec 31, | | | Mar 31, | | | In millions of U.S. dollars, unless otherwise noted | | | | | | 2024 | | | 2023 | | | 2023 | | | Gold sold | | | oz | | | 111,642 | | | 138,794 | | | 118,455 | | | | | | | | | | | | | | | | | | Revenue | | | $ | | | 236.5 | | | 282.4 | | | 228.8 | | | Less: Silver sales | | | $ | | | (1.5) | | | (0.9) | | | (1.5) | | | Less: Copper sales | | | $ | | | (3.7) | | | (1.2) | | | (2.9) | | | Less: Realized (loss) gain on gold contracts | | | $ | | | (5.4) | | | (3.4) | | | 0.5 | | | Total proceeds | | | $ | | | 225.9 | | | 276.9 | | | 224.9 | | | Total average realized gold price | | | $/oz | | | 2,023 | | | 1,995 | | | 1,899 | | | | | | | | | | | | | | | | | | Less: Total cash costs | | | $/oz | | | 918 | | | 885 | | | 709 | | | Total cash costs margin | | | $/oz | | | 1,105 | | | 1,110 | | | 1,190 | | | Total cash costs margin | | | % | | | 55 | | | 56 | | | 63 | | | | | | | | | | | | | | | | | | Gold equivalent sold1 | | | oz AuEq | | | 114,199 | | | 139,854 | | | 120,748 | | | | | | | | | | | | | | | | | | Revenue | | | $ | | | 236.5 | | | 282.4 | | | 228.8 | | | Less: Realized (loss) gain on gold contracts | | | $ | | | (5.4) | | | (3.4) | | | 0.5 | | | Total proceeds | | | $ | | | 231.1 | | | 279.0 | | | 229.3 | | | Total average realized gold price | | | $/oz | | | 2,023 | | | 1,995 | | | 1,899 | | | | | | | | | | | | | | | | | | Less: Total cash costs1 | | | $/oz AuEq | | | 943 | | | 893 | | | 732 | | | Total cash costs margin1 | | | $/oz AuEq | | | 1,080 | | | 1,102 | | | 1,167 | | | Total cash costs margin | | | % | | | 53 | | | 55 | | | 61 |