Torex Gold has announced its financial and operating results for 3Q22, reporting a robust quarter with very healthy margins. Company officials noted that in light of the results, Torex is on track to achieve its 2022 operating and production targets.
Torex’s 3Q22 results mention the production of 122,208oz of gold, the sale of 119,834oz of gold at an average realized gold price of US$1,715/oz, net income of US$43.9 million on a basic and diluted basis and an adjusted net earnings totaling US$34.6 million on a basic and diluted basis. In addition, the company reported cash flow from operations of US$102.4 million, free cash flow of US$33.5 million and net cash of US$336.1 million.
“Our well-established track record of delivering safe and reliable production at El Limón Guajes (“ELG”) continues. With a sharp focus on cost management, we also generated healthy margins this quarter, resulting in adjusted EBITDA of US$107.8 million and free cash flow of US$33.5 million, including US$68.6 million of capital expenditures. Given the year-to-date production and cost performance, we are well positioned to deliver on operational guidance for the fourth straight year,” said Jody Kuzenko, President & CEO of Torex.
During this quarter, an important milestone was reached in Torex's Media Luna strategy, resulting in the approval of its key environmental permit (MIA Integral). Torex emphasized that the approval has de-risked the project, and now the Company has all the major environmental authorizations to develop and operate Media Luna.
Additionally, the company has secured the approval to increase the power draw to 45MW to boost activities at both its ELG and Media Luna projects. Moreover, Torex is in discussion with Mexican authorities to increase the power draw to 65MW, which is required for full-scale production at Media Luna.
For 3Q22, Media Luna project expenditures amounted to US$32.5 million, with a remaining project spending of US$812.4 million. The investment was mainly allocated for the development of the Guajes Tunnel and the South Portals. The company reported that by the end of October, the Guajes Tunnel development reached 2,835m, while the South Portal Lower reached 1,175m. In addition, Torex reported the project is 9 percent physically complete, with engineering, surface construction and underground development progressing at a steady pace. Torex noted that these advances demonstrate that the project is on track.
“Our strategy at Morelos continues to be executed per plan – with US$339 million of cash on hand at quarter end, US$250 million of available credit, and strong and consistent forecast cash flow from ELG, we are well positioned to fund the development of Media Luna, continue to invest in value enhancing exploration and drilling, and maintain minimum balance sheet liquidity of US$100 million,” said Kuzenko.
“Procurement on the project continues to ramp up responsibly, with a focus on key, long-lead packages that are schedule critical – including the Guajes conveyor, flotation circuits, re-grind mills, mine ventilation fans and the battery electric vehicle fleet. On the high volume, non-schedule critical procurement packages, we are seeing a rescheduling of cost flow estimates assumed in the 2022 Technical Report. Although timing of non-schedule critical procurement and cost flow estimates differ from those originally assumed, the overall lead times and upfront costs of purchase orders executed to date are substantially in line with the Technical Report. As a result of the lower procurement spend to date, there will be an underrun in capital expenditures on the project for 2022, and guided annual spend is now in the range of US$120 to US$150 million,” said Kuzenko.
Torex is the second-largest gold producer in the country and owns 29,000ha at the Morelos Gold Property in the Guerrero Gold Belt. Its assets include the ELG, which began commercial production in 2016, and the Media Luna deposit, currently in an advanced stage of development. The company has significant opportunities in Mexico, having only explored 25 percent of its highly prospective Morelos property.
Regarding social matters, the company exited the quarter with industry-leading safety performance with a lost-time injury frequency (LTIF) of 0.10 per million hours worked. In addition, earlier this year for the fourth consecutive time, Torex received the ESR 2022 distinction from the Mexican Center for Philanthropy and the Alliance for Corporate Social Responsibility in Mexico, and the Company was also the recipient of the 2021 Safety Award from Mining Magazine.