Torex Gold Resources Inc. press release
Torex Gold Reports Q3 2024 Results
TSX - Toronto Stock Exchange · Gold · Silver · Copper · Canada
Solid financial performance and robust cash generation driven by an all-in sustaining costs margin of 52%
(All amounts expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario--(Newsfile Corp. - November 6, 2024) - Torex Gold Resources Inc. (the "Company" or "Torex") (TSX: TXG) reports the Company's financial and operational results for the three and nine months ended September 30, 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:
"Torex delivered a strong financial result during Q3 2024 with an all-in sustaining costs margin1of 52%, driven by a record quarterly average realized gold price1of $2,313 per ounce and all-in sustaining costs1of $1,101 per ounce of gold sold. The robust margins combined with the strong operational performance resulted in $113 million of cash generation prior to spending $114 million on the Media Luna Project. As a result, we exited the quarter with available liquidity1of $347 million (including $115 million cash), consistent with the previous quarter, which positions us comfortably to cover the $111 million remaining to be spent on the Project.
"The Media Luna Project is nearing completion, with tie-ins and upgrades to the processing plant now scheduled for February 2025. The new schedule will allow us to deliver increased production in 2024, potentially reduce the planned tie-in period to less than four weeks and support de-risking of the plant commissioning and ramp-up. With underground development ahead of plan and commissioning of the Guajes conveyor imminent, the Company will continue with an aggressive underground development program in 2025, with the intent of de-risking and accelerating the ramp-up of underground mining.
"Overall, we are well on track to pivot back to positive free cash flow in mid-2025. The strong financial footing will allow Torex to invest more in exploration and drilling in 2025, commence development of EPO, repay the modest level of debt taken on to fund Media Luna, consider avenues to return capital to shareholders, and pursue our disciplined growth strategy."
1. These measures are non-GAAP financial measures. Refer to footnote 2 under the section "Third Quarter 2024 Highlights" and Tables 2 to 11 of this press release for further information and a detailed reconciliation to the comparable measures in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board.
THIRD QUARTER 2024 HIGHLIGHTS
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Safety performance: In August, a fatal injury occurred involving a contractor worker within the Guajes Tunnel while conducting work on the overhead conveyor associated with the Media Luna Project. The Company completed an investigation and is taking actions to prevent a similar incident from ever occurring in the future. There were no other lost-time injuries in the quarter and as at September 30, 2024, the lost-time injury frequency ("LTIF") for the Morelos Complex was 0.28 per million hours worked for both employees and contractors on a rolling 12-month basis.
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Gold production:Delivered gold production of 119,412 ounces ("oz") for the quarter (YTD - 348,728 oz), benefiting from the impact of higher average gold grade of ore processed of 3.47 grams per tonne ("gpt") (YTD - 3.32 gpt), with an average gold recovery of 90.7% (YTD - 90.6%), and throughput averaging 12,889 tpd (YTD - 13,073 tpd). On a gold equivalent ounce basis ("oz AuEq"), the Company produced 122,525 oz AuEq1for the quarter (YTD - 356,115 oz AuEq1). With the plant tie-in as part of the Media Luna Project rescheduled from the fourth quarter of 2024 to the first quarter of 2025, 2024 production guidance has been updated to 450,000 to 470,000 oz (460,000 to 480,000 oz AuEq), from 400,000 to 450,000 oz (410,000 to 460,000 oz AuEq) previously.
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Gold sold: Sold 122,130 oz of gold (YTD - 347,285 oz) at a record quarterly average realized gold price2of $2,313 per oz (YTD - $2,181 per oz), contributing to record quarterly revenue of $313.7 million (YTD - $820.5 million). On a gold equivalent ounce basis, the Company sold 125,414 oz AuEq1for the quarter (YTD - 355,410 oz AuEq1). The average realized gold price in the third quarter of 2024 includes a realized loss of $22.8 million or $187 per oz (YTD - $44.2 million or $127 per oz) on gold forward contracts.
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Total cash costs2and all-in sustaining costs2: Total cash costs were $926 per oz sold (YTD - $952 per oz sold) and all-in sustaining costs were $1,101 per oz sold (YTD - $1,179 per oz sold). All-in sustaining costs margin2were $1,212 per oz sold (YTD - $1,002 per oz sold), implying an all-in sustaining costs margin2of 52% (YTD - 46%). Cost of sales was $170.1 million (YTD - $493.8 million) or $1,393 per oz sold in the quarter (YTD - $1,422 per oz sold). The Company expects to be near the upper end of full year total cash costs guidance of $860 to $910 per oz sold and all-in sustaining costs guidance of $1,100 to $1,160 per oz sold primarily due to higher gold prices given the $281 per oz increase in average realized gold price relative to guidance (assumed a gold price of $1,900 per oz) resulting in increased Mexican profit sharing (year-to-date 2024 impact of $28 per oz) and royalties (year-to-date 2024 impact of $12 per oz), as well as higher consumption of cyanide within the process plant. On a gold equivalent ounce basis, total cash costs were $969 per oz AuEq sold1(YTD - $984 per oz AuEq sold1) and all-in sustaining costs were $1,139 per oz AuEq sold1(YTD - $1,205 per oz AuEq sold1) relative to guidance of $900 to $950 per oz AuEq sold1and $1,130 to $1,190 per oz AuEq sold1, respectively.
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Net income and adjusted net earnings2: Reported net income of $29.2 million or earnings of $0.34 per share on both a basic and diluted basis (YTD - $74.2 million, or $0.86 per share on both a basic and diluted basis). Adjusted net earnings of $65.5 million or $0.76 per share on a basic basis and $0.75 per share on a diluted basis (YTD - $153.8 million, or $1.79 per share on a basic basis and $1.77 per share on a diluted basis). Net income includes a net derivative loss of $16.2 million (YTD - $42.5 million loss) related to gold forward contracts and foreign exchange collars entered into to mitigate downside price risk during the construction of the Media Luna Project. In the third quarter of 2024, the Company entered into an additional series of zero-cost collars to hedge against changes in foreign exchange rates of the Mexican peso between January 2025 and December 2025 for a total notional value of $72.0 million. Subsequent to September 30, 2024, the Company entered into an additional series of zero-cost collars to hedge against the impact of changes in foreign exchange rates of the Mexican peso on production costs between January 2025 and December 2025 for a total notional value of $12.0 million.
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EBITDA2and adjusted EBITDA2: Generated EBITDA of $155.3 million (YTD - $376.6 million) and adjusted EBITDA of $152.4 million (YTD - $386.8 million).
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Cash flow generation: Net cash generated from operating activities totalled $149.5 million (YTD - $326.7 million) and $137.6 million (YTD - $322.6 million) before changes in non-cash operating working capital, including income taxes paid of $17.6 million (YTD - $71.7 million). Negative free cash flow2of $0.7 million (YTD - $112.1 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 $113.9 million (YTD - $348.5 million) invested in the Media Luna Project.
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Strong financial liquidity: As previously announced, in July the Company amended the credit facilities with a syndicate of international banks, replacing the Term Loan Facility (previously $100.0 million available through to the end of 2024), with an increase in the Revolving Credit Facility to $300.0 million (an increase from $200.0 million), with a maturity date in December 2027 (extended from the 2026 maturity), and added a $150.0 million accordion feature which is available at the discretion of the lenders. The quarter closed with $346.6 million in available liquidity2, including $114.5 million in cash and $232.1 million available on the credit facilities of $300.0 million, net of borrowings of $60.0 million and letters of credit outstanding of $7.9 million.
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Media Luna Project: As of September 30, 2024, physical progress on the Project was approximately 87%, with engineering now concluded, procurement down to final deliveries, underground development ahead of schedule, and underground and surface construction advancing. Installation of the Guajes conveyor is almost complete, with commissioning expected imminently. Based on the current schedule related to critical electrical equipment delivery, the tie-in period for the processing plant has been rescheduled to commence in February 2025, with first copper concentrate production in the first quarter of 2025. The updated schedule enables the project team to undertake advance testing on key processing systems outside of the plant tie-in, with a view to potentially reducing the downtime period to less than four weeks. During the quarter, Media Luna Project expenditures totalled $113.9 million (YTD - $348.5 million), with remaining project spend of $110.5 million. For the full year, Media Luna Project spend is expected to be within the guidance range of $430.0 and $450.0 million.
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EPO Underground Mineral Reserves3,4: In September, the Company reported an updated life-of-mine plan for the Morelos Complex, which incorporates the EPO underground deposit following completion of an internal pre-feasibility study. The EPO deposit hosts a probable reserve of 5,029 thousand tonnes ("kt") at an average AuEq grade of 4.83 grams per tonne ("gpt") for a total of 781 koz AuEq5. Mineral reserves include 367 koz Au (2.27 gpt), 4,820 koz Ag (29.8 gpt), and 143 Mlb Cu (1.29%). Mineral reserves for EPO are based on year-end 2023 indicated resources of 1,153 koz AuEq6(6,979 kt at 5.14 gpt AuEq).
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Appointment of New Director: The Company announced the appointment of Caroline Donally CA(SA) to the Board of Directors effective October 1, 2024. Ms. Donally is an experienced executive and director with a proven track record of value creation in the mining sector. She brings highly specialized commercial and financial skills to the Board, having gained more than 25 years of experience in commerce and finance including areas of private equity, financing, accounting, M&A, tax, and treasury.
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ESG Performance, Disclosure and Reporting Standards: The Company received full certification from the International Cyanide Management Institute (ICMI) in October following the completion of an audit for the International Cyanide Management Code (ICMC) during the second quarter of 2024 confirming full compliance. The Company also published its Year 3 Conformance Report outlining compliance with the World Gold Council Responsible Gold Mining Principles (RGMPs).
1. Gold equivalent ounces produced and sold include production of silver and copper converted to a gold equivalent based on a ratio of the average market prices for each commodity sold in the period. Refer to "Gold Equivalent Reporting" on page 6 of the Company' s management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2024, dated November 5, 2024, for the relevant average market prices by commodity and "Guidance" on page 7 of the Company's MD&A for 2024 guidance assumptions. 2. These measures are non-GAAP financial measures ("Non-GAAP Measures") which are not standardized financial measures under IFRS, the framework used to prepare the financial statements of the Company, and might not be comparable to similar financial measures used by other companies. For a detailed reconciliation of each Non-GAAP Measure to its most directly comparable measure in accordance with the IFRS, 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 and nine months ended September 30, 2024, dated November 5, 2024. The MD&A and the Company's unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2024, are available on Torex's website (www.torexgold.com) and under the Company's SEDAR+ profile (www.sedarplus.ca). 3.For more information on EPO Underground mineral reserves, see the Company's news release titled "Torex Gold Integrates EPO Deposit Into Morelos Mine Plan" issued on September 4, 2024, and filed on SEDAR+ at www.sedarplus.caand on the Company's website at www.torexgold.com. 4. Mineral reserve and mineral resource estimates for the Morelos Complex can be found in tables 12 and 13, respectively, of this news release. AuEq values account for underlying metal prices and metallurgical recoveries used in reserve and resource estimates. For additional information on the mineral reserve and mineral resource estimates for the Morelos Complex, please see the Company's news release titled "Torex Gold Integrates EPO Deposit Into Morelos Mine Plan" issued on September 4, 2024, and filed on SEDAR+ at www.sedarplus.caand on the Company's website at www.torexgold.com. 5.The gold equivalent grade calculation used is as follows: AuEq (gpt) = Au (gpt) + Ag (gpt) (0.0124) + Cu (%) (1.6920) and uses the metal prices ($1,500/ oz gold ("Au"), $19/oz silver ("Ag") and $3.50/lb copper ("Cu")) and the metallurgical recoveries (87% Au, 85% Ag, and 92% Cu) as reported for EPO Underground mineral reserves effective June 30, 2024. 6.The gold equivalent grade calculation used is as follows: AuEq (gpt) = Au (gpt) + (Ag (gpt) 0.0130) + (Cu (%) 1.6480) and uses the same metal prices ($1,650/oz gold ("Au"), $22/oz silver ("Ag") and $3.75/lb copper ("Cu")) and the metallurgical recoveries (87% Au, 85% Ag, and 92% Cu) as reported for EPO Underground mineral resources effective December 31, 2023.
CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call tomorrow at 9:00 AM (ET) where senior management will discuss the third 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 1: Operating and Financial Highlights
| | | | | Three Months Ended | | | Nine Months Ended | | | | | | | | | | | | | | | | Sep 30, | | | Jun 30, | | | Sep 30, | | | Sep 30, | | | Sep 30, | | | In millions of U.S. dollars, unless otherwise noted | | | 2024 | | | 2024 | | | 2023 | | | 2024 | | | 2023 | | | | Safety | | | | | | | | | | | | | | | | | | | Lost-time injury frequency1 | /million hours | | | 0.28 | | | 0.22 | | | 0.47 | | | 0.28 | | | 0.47 | | | Total recordable injury frequency1 | /million hours | | | 1.46 | | | 1.44 | | | 1.24 | | | 1.46 | | | 1.24 | | | Operating Results - Gold only basis | | | | | | | | | | | | | | | | | | | Gold produced | oz | | | 119,412 | | | 113,822 | | | 85,360 | | | 348,728 | | | 315,785 | | | Gold sold | oz | | | 122,130 | | | 113,513 | | | 81,752 | | | 347,285 | | | 305,956 | | | Total cash costs2 | $/oz | | | 926 | | | 1,014 | | | 1,086 | | | 952 | | | 858 | | | All-in sustaining costs2 | $/oz | | | 1,101 | | | 1,239 | | | 1,450 | | | 1,179 | | | 1,257 | | | Average realized gold price2 | $/oz | | | 2,313 | | | 2,193 | | | 1,944 | | | 2,181 | | | 1,932 | | | Operating Results - Gold Equivalent basis | | | | | | | | | | | | | | | | | | | Gold equivalent produced3 | oz AuEq | | | 122,525 | | | 116,350 | | | 86,318 | | | 356,115 | | | 319,987 | | | Gold equivalent sold3 | oz AuEq | | | 125,414 | | | 115,890 | | | 83,297 | | | 355,410 | | | 311,393 | | | Total cash costs2,3 | $/oz AuEq | | | 969 | | | 1,040 | | | 1,100 | | | 984 | | | 877 | | | All-in sustaining costs2,3 | $/oz AuEq | | | 1,139 | | | 1,260 | | | 1,456 | | | 1,205 | | | 1,269 | | | Financial Results | | | | | | | | | | | | | | | | | | | Revenue | $ | | | 313.7 | | | 270.3 | | | 160.1 | | | 820.5 | | | 600.2 | | | Cost of sales | $ | | | 170.1 | | | 166.3 | | | 133.0 | | | 493.8 | | | 408.5 | | | Earnings from mine operations | $ | | | 143.6 | | | 104.0 | | | 27.1 | | | 326.7 | | | 191.7 | | | Net income | $ | | | 29.2 | | | 1.9 | | | 10.5 | | | 74.2 | | | 154.0 | | | Per share - Basic | $/share | | | 0.34 | | | 0.02 | | | 0.12 | | | 0.86 | | | 1.79 | | | Per share - Diluted | $/share | | | 0.34 | | | 0.02 | | | 0.09 | | | 0.86 | | | 1.77 | | | Adjusted net earnings2 | $ | | | 65.5 | | | 52.4 | | | 11.1 | | | 153.8 | | | 99.3 | | | Per share - Basic2 | $/share | | | 0.76 | | | 0.61 | | | 0.13 | | | 1.79 | | | 1.16 | | | Per share - Diluted2 | $/share | | | 0.75 | | | 0.60 | | | 0.13 | | | 1.77 | | | 1.15 | | | EBITDA2 | $ | | | 155.3 | | | 123.3 | | | 79.4 | | | 376.6 | | | 307.2 | | | Adjusted EBITDA2 | $ | | | 152.4 | | | 121.2 | | | 61.2 | | | 386.8 | | | 299.6 | | | Cost of sales - gold only basis | $/oz | | | 1,393 | | | 1,465 | | | 1,627 | | | 1,422 | | | 1,335 | | | Net cash generated from operating activities | $ | | | 149.5 | | | 97.4 | | | 44.2 | | | 326.7 | | | 180.8 | | | Net cash generated from operating activities before changes in non-cash operating working capital | $ | | | 137.6 | | | 112.5 | | | 52.6 | | | 322.6 | | | 207.3 | | | Free cash flow2 | $ | | | (0.7 | ) | | (62.3 | ) | | (69.7 | ) | | (112.1 | ) | | (161.1 | ) | | Cash and cash equivalents | $ | | | 114.5 | | | 108.7 | | | 209.4 | | | 114.5 | | | 209.4 | | | Debt, net of deferred finance charges | $ | | | 57.7 | | | 53.9 | | | - | | | 57.7 | | | - | | | Lease-related obligations | $ | | | 69.4 | | | 59.0 | | | 21.1 | | | 69.4 | | | 21.1 | | | Net (debt) cash2 | $ | | | (14.9 | ) | | (5.3 | ) | | 188.3 | | | (14.9 | ) | | 188.3 | | | Available liquidity2 | $ | | | 346.6 | | | 345.8 | | | 501.5 | | | 346.6 | | | 501.5 | |
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 and nine months ended September 30, 2024, dated November 5, 2024. The MD&A and the Company's unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 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 include production of silver and copper converted to a gold equivalent based on a ratio of the average market 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 market prices by commodity.
Table 2: Reconciliation of Total Cash Costs and All-in Sustaining Costs to Production Costs and Royalties
| | | | Three Months Ended | | | Nine Months Ended | | | | | | | | | | | | | | | Sep 30, | | | Jun 30, | | | Sep 30, | | | Sep 30, | | | Sep 30, | | | In millions of U.S. dollars, unless otherwise noted | | | 2024 | | | 2024 | | | 2023 | | | 2024 | | | 2023 | | | Gold sold | oz | | 122,130 | | | 113,513 | | | 81,752 | | | 347,285 | | | 305,956 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total cash costs per oz sold | | | | | | | | | | | | | | | | | | Production costs | $ | | 112.9 | | | 113.0 | | | 86.8 | | | 326.7 | | | 255.0 | | | Royalties | $ | | 8.6 | | | 7.5 | | | 4.8 | | | 23.0 | | | 18.1 | | | Less: Silver sales | $ | | (2.2 | ) | | (1.6 | ) | | (1.0 | ) | | (5.3 | ) | | (3.8 | ) | | Less: Copper sales | $ | | (6.2 | ) | | (3.8 | ) | | (1.8 | ) | | (13.7 | ) | | (6.8 | ) | | Total cash costs | $ | | 113.1 | | | 115.1 | | | 88.8 | | | 330.7 | | | 262.5 | | | Total cash costs per oz sold | $/oz | | 926 | | | 1,014 | | | 1,086 | | | 952 | | | 858 | | | | | | | | | | | | | | | | | | | | | All-in sustaining costs per oz sold | | | | | | | | | | | | | | | | | | Total cash costs | $ | | 113.1 | | | 115.1 | | | 88.8 | | | 330.7 | | | 262.5 | | | General and administrative costs1 | $ | | 8.8 | | | 7.3 | | | 6.2 | | | 24.1 | | | 18.7 | | | Reclamation and remediation costs | $ | | 1.0 | | | 1.2 | | | 1.1 | | | 3.5 | | | 3.8 | | | Sustaining capital expenditure | $ | | 11.6 | | | 17.0 | | | 22.4 | | | 51.0 | | | 99.6 | | | Total all-in sustaining costs | $ | | 134.5 | | | 140.6 | | | 118.5 | | | 409.3 | | | 384.6 | | | Total all-in sustaining costs per oz sold | $/oz | | 1,101 | | | 1,239 | | | 1,450 | | | 1,179 | | | 1,257 | | | | | | | | | | | | | | | | | | | | | Gold equivalent sold2 | oz AuEq | | 125,414 | | | 115,890 | | | 83,297 | | | 355,410 | | | 311,393 | | | | | | | | | | | | | | | | | | | | | Total cash costs per oz AuEq sold | | | | | | | | | | | | | | | | | | Production costs | $ | | 112.9 | | | 113.0 | | | 86.8 | | | 326.7 | | | 255.0 | | | Royalties | $ | | 8.6 | | | 7.5 | | | 4.8 | | | 23.0 | | | 18.1 | | | Total cash costs | $ | | 121.5 | | | 120.5 | | | 91.6 | | | 349.7 | | | 273.1 | | | Total cash costs per oz AuEq sold2 | $/oz AuEq | | 969 | | | 1,040 | | | 1,100 | | | 984 | | | 877 | | | | | | | | | | | | | | | | | | | | | All-in sustaining costs per oz AuEq sold | | | | | | | | | | | | | | | | | | Total cash costs | $ | | 121.5 | | | 120.5 | | | 91.6 | | | 349.7 | | | 273.1 | | | General and administrative costs1 | $ | | 8.8 | | | 7.3 | | | 6.2 | | | 24.1 | | | 18.7 | | | Reclamation and remediation costs | $ | | 1.0 | | | 1.2 | | | 1.1 | | | 3.5 | | | 3.8 | | | Sustaining capital expenditure | $ | | 11.6 | | | 17.0 | | | 22.4 | | | 51.0 | | | 99.6 | | | Total all-in sustaining costs | $ | | 142.9 | | | 146.0 | | | 121.3 | | | 428.3 | | | 395.2 | | | Total all-in sustaining costs per oz AuEq sold2 | $/oz AuEq | | 1,139 | | | 1,260 | | | 1,456 | | | 1,205 | | | 1,269 | |