Torex Gold Sees Bright Future With Media Luna Project Development
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Torex Gold Sees Bright Future With Media Luna Project Development

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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Thu, 06/09/2022 - 12:14

In an updated Technical Report  on its Morelos Complex, Torex Gold outlined the development of its Media Luna Project. With tremendous future exploration potential, advancing the Media Luna Project is fundamental to setting up the Morelos Complex for safe and reliable production and strong free cash flow post the construction period, which will lay the foundation for the company’s future growth.

In a press release, Torex Gold said that with the Media Luna development, the Company has entered a new stage in relation to its operational capabilities, with its current mine life more than tripled. Torex explained that although it is a challenging project due to the distance from the company's current infrastructure and its metallurgical complexity, its development was approved because of its high potential to enhance the overall return of the project and extend the overall mine life beyond what is implied by current reserves.

Torex Gold highlighted that the ML Project will allow the company to diversify its metal production toward copper, a great opportunity considering the current market environment for this resource. The company expects 20 percent of the Morelos Complex's total revenue to come from copper, a figure that could grow over time.

In addition, Torex Gold announced it expects to finance the development of the Media Luna Project with its strong balance sheet and cash flow, as well as maintaining a careful level of debt.  “There is no doubt that we are well positioned financially, socially and technically to advance the development of the Media Luna Project while continuing to invest in value accretive exploration that will both extend the life of the mine and continue to further enhance the overall return of the Morelos Complex. The future is here and it’s clear and in true Torex form, we will now turn our focus to delivering,” said Jody Kuzenko, President  and CEO of Torex in a press release.

Torex Gold highlighted that it is important for the company to have solid finances since capital expenditures are estimated at US$848 million to develop and bring the Media Luna Project into commercial production. Moreover, the ML Project requires a high investment to develop the Guajes Tunnel, the Upper South Portal, the Lower South Portal and a surface paste plant, which will allow the company to access the deposit and develop it.

The company explained that the Guajes Tunnel, which will have a length of 6.5km, will be the main duct for the transport of minerals, materials, supplies and workers between the southern side of the Balsas River where Media Luna is located and the processing plant that is located on the North side. The tunnel has an investment of US$76 million, higher than that foreseen in the PEA 2018. However, Torex Gold emphasized that this additional investment will avoid access restrictions on the southern zone of the Morelos property.

The US$40 million development of the South Portal Upper and South Portal Lower will also allow access for workers, materials and supplies, but from the south side. The company explained that the development of these portals will allow the development of the Media Luna project while the Guajes Tunnel is completed. In addition, the South Portal Lower will allow the company to start the development of the Guajes Tunnel from the south side of the Balsas River, which will optimize the overall progress of tunelling.

Finally, the company explained that the US$78 million paste plant and associated tailings pipeline is also an upgrade from the 2018 PEA, because it  is a more suitable option for longhole stoping, average size of stopes, the scale of the underground operation, and is more economically attractive.

The company announced that it expects to generate an average annual cash flow of US$190 million through year-end 2024, prior to capital expenditures in the ML Project. The after tax NPV of the Morelos Complex is forecast at US$1.04 billion assuming long-term metal prices of  US$1,600 per ounce of gold, US$21 per ounce of silver and US$3.50 per pound of copper. At spot metal prices as of March 25, 2022, the Morelos Complex has an estimated after-tax NPV of US$1.751M.

Additionally, Torex Gold it is working to leverage its economics by increasing its mineral reserves within existing deposits, adding new deposits to reserves, and identifying new ore sources. Kuzenko recently told MBN that another Torex goal is to grow by becoming a million-ounce-plus producer on an aggressive schedule. Consequently, the company is evaluating mergers and acquisitions to find great opportunities. “Because our business is well-structured, we can be prudent, patient and opportunistic in these transactions until we find something that truly creates value for our shareholders and the business,” said Kuzenko.

Photo by:   Torex Gold

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