Torex Gold Resources Inc. · TSX:TXG
Torex Gold Resources — Q2 2022 Earnings Presentation
30 slides from Torex Gold Resources's earnings presentation, Aug 4, 2022
Slide 1: Second Quarter 2022 Results Conference Call
TSX | TXG SECOND QUARTER 2022 RESULTS CONFERENCE CALL August 4, 2022
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT TOTAL CASH COSTS PER OUNCE OF GOLD SOLD (“TCC”), ALL-IN SUSTAINING COSTS (“AISC”), SUSTAINING AND NON-SUSTAINING COSTS, AVERAGE REALIZED PRICE, TOTAL CASH COST MARGIN, AISC MARGIN, AISC MARGIN PER OUNCE OF GOLD SOLD, ADJUSTED NET EARNINGS, ADJUSTED NET EARNINGS PER SHARE, EARNI
Slide 3: Overview & Key Highlights
OVERVIEW & KEY HIGHLIGHTS JODY KUZENKO PRESIDENT & CEO All values US dollars unless otherwise stated
Slide 4: Strategic Pillars
STRATEGIC PILLARS Executing on plan expected to significantly enhance shareholder returns OPTIMIZE & ADVANCE & GROW RESERVES & EXTEND ELG DE-RISK MEDIA LUNA RESOURCES PRUDENT CAPITAL BUILD ON ESG LEVERAGE ALLOCATION EXCELLENCE INNOVATION 4
Slide 5: Key Highlights
KEY HIGHLIGHTS Operational consistency continues Produced 123,185 oz of gold (YTD - 235,631 oz) Total cash costs1 of $703/oz gold sold during the quarter (YTD - $724/oz) and all-in sustaining costs1 of $911/oz gold sold (YTD - $969/oz) Generated revenue of $235M (YTD - $443M) and adjusted EBITDA1 of
Slide 6: On Track to Achieve Full Year Guidance
ON TRACK TO ACHIEVE FULL YEAR GUIDANCE1 Solid start to 2022 following a strong result in Q2 In millions of U.S. dollars, unless otherwise noted Initial Revised Q2 2022 YTD 2022 Guidance 2022 Guidance Progress Gold Production oz 430,000 to 470,000 No change 235,631 Total Cash Costs 2 $/oz 695 to 735
Slide 7: ESG Excellence as a Foundation
ESG EXCELLENCE AS A FOUNDATION Sustained performance & ongoing improvement on ESG disclosure a key focus Remaining vigilant against COVID-19 ESG Ratings 99.7% of employees and 99.6% of contractors MSCI: ‘A’ rating from ‘BBB’ vaccinated against COVID-19 Refinitiv: ‘B-’ rating from ‘C+’ Boosters now b
Slide 8: Operational Performance
OPERATIONAL PERFORMANCE JODY KUZENKO PRESIDENT & CEO
Slide 9: Solid Operational Performance
SOLID OPERATIONAL PERFORMANCE1 Q2 production strong on the back of higher processed grades Produced 123,185 ounces delivered in Q2 Average plant throughput of 12,352 tpd in Q2 Gold grade processed of 3.97 g/t during Q2 Record underground mining rate of 1,582 tpd in Q2 9
Slide 10: Unit Cost Performance
UNIT COST PERFORMANCE1,2 Year-to-date costs through Q2 2022 tracking well against full year 2021 results Open pit mining costs impacted by additional rehandling costs associated with wet season and stockpile blending as well as equipment availability Underground mining rates consistent with 2021 Low
Slide 11: Financial Performance
FINANCIAL PERFORMANCE ANDREW SNOWDEN CFO
Slide 12: Solid Financial Performance
SOLID FINANCIAL PERFORMANCE1 Improvement quarter-over-quarter driven by higher output All-in sustaining margin of 50% delivered in Q2 Adjusted EBITDA2 of $137M in Q2 Total capital expenditure of $53M in Q2 Free cash flow of $74M in Q2 1) For more information on operational and financial results, inc
Slide 13: Cash Flow Generation
CASH FLOW GENERATION Cash position increased over $73M during the quarter Annual payment of mandated profit sharing (PTU) more than offset by other non-cash working capital inflows Free cash flow expected to be lower in H2 as higher anticipated capital spend will more than offset seasonality of oper
Slide 14: Balance Sheet & Liquidity
BALANCE SHEET & LIQUIDITY1 Financial health of business remains strong Net cash2 of $306M at quarter-end Available liquidity of $461M as of June 30th Exited Q2 2022 with $311M of cash Expect to finalize terms for $250M in debt facilities Debt free with just over $4M of lease obligations maturing in
Slide 15: Forward Price Contracts
FORWARD PRICE CONTRACTS Managing gold price risk during build-out of Media Luna All amounts in U.S. dollars 2022 2023 Q4 Q1 Q2 Q3 Q4 Forward Contracts Gold Volumes koz 30.0 27.0 27.0 27.0 27.0 Gold Price $/oz $1,910 $1,924 $1,924 $1,924 $1,924 Hedged approximately 25% of gold production between Octo
Slide 16: Project & Exploration Update
PROJECT & EXPLORATION UPDATE DAVE STEFANUTO EVP, TECHNICAL SERVICES & CAPITAL PROJECTS
Slide 17: Media Luna Update
MEDIA LUNA UPDATE Development activities to ramp-up over next several quarters Key highlights during the quarter Media Luna Project – Physical Progress at ~5% Project To Date Project approval on March 31st Q2 2022 Project controls environment established Engineering 15% Procurement 12% Key earthwork
Slide 18: Media Luna Update
MEDIA LUNA UPDATE Underground and surface works on southside well underway Tunnelling in South Earthworks on southside progressing with completion of portal Canopy completion Portal Lower canopies; preparation of paste plant pad commenced (South Portal Lower) Paste Plant South Portal Pad Prep Upper
Slide 19: Media Luna Project – Tunnel Development
MEDIA LUNA PROJECT – TUNNEL DEVELOPMENT1,2 Advancing from both sides of Balsas River expected to mitigate schedule risk Guajes Tunnel expected advanced ~2,290 m at the end of July Year-to-date advance rate of 5.9 m/d budgeted rate of 6 to 6.5 m/d Average advance rate of 6.3 m/d over last 3 months in
Slide 20: Morelos Property Offers Significant Resource Potential
MORELOS PROPERTY OFFERS SIGNIFICANT RESOURCE POTENTIAL1 75% of the broader property remains largely unexplored Drilling/exploration budget of $39M in 2022 Tecate $19M at Media Luna cluster (~64,000 m) Esperanza $6M at ELG Underground (~27,000 m) Querenque $9M on near-mine drilling (~28,500 m) and re
Slide 21: EPO – Expansion and Infill Drill Programs
EPO – EXPANSION AND INFILL DRILL PROGRAMS1 28,000 m of drilling planned in 2022 Infill program focused on upgrading a portion of 8 Mt Inferred Resources to the Indicated category2 EPO has potential to provide incremental feed to the processing plant Expansion drilling targeting to grow Inferred reso
Slide 22: Questions?
QUESTIONS ?
Slide 23: Key Operational Metrics
KEY OPERATIONAL METRICS1 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2020 2021 2021 2021 2021 2022 2022 Mining - ELG Open Pit Ore mined (kt) 1,407 1,689 1,359 1,131 1,406 864 1,061 987 Waste mined (kt) 10,097 10,399 9,882 8,593 7,476 8,972 8,958 7,960 Strip ratio (waste:ore) 7.2 6.2 7.3 7.6 5.3 10.4 8.4 8.1 Gold g
Slide 24: Key Financial Metrics – Consolidated
KEY FINANCIAL METRICS – CONSOLIDATED1 All amounts in U.S. dollars Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2020 2021 2021 2021 2021 2022 2022 Key Metrics Gold sold (oz) 133,036 133,063 129,019 111,424 118,989 109,391 108,012 123,363 Realized gold price ($/oz) $1,884 $1,847 $1,778 $1,816 $1,786 $1,798 $1,876 $1,
Slide 25: Operating Cash Flow Seasonality
OPERATING CASH FLOW SEASONALITY Operating cash flow tends to be weakest in H1 given timing of tax, royalty and PTU payments Final payments related to royalties, profit sharing, and taxes are subject to movements in the Mexican peso relative to the US dollar Cash flow from operations prior to changes
Slide 26: Cash Flow Seasonality – Royalties & Profit Sharing
CASH FLOW SEASONALITY Timing Differences – Royalties & Profit Sharing Royalty – Mexican Geological Survey Profit Sharing – Employees 2.5% of gross revenue Mandated by Government of Mexico Accrued quarterly and paid the following quarter Accrued quarterly and paid annually in Q2 of the Recognized in
Slide 27: Cash Flow Seasonality – Mining Royalty & Corporate Income Tax
CASH FLOW SEASONALITY Timing Differences – Mining Royalty & Corporate Income Tax Mining Royalty – Government of Mexico Corporate Income Tax – Government of Mexico 7.5% of mine level EBITDA plus allowable 30% of taxable income in Mexico deductions Accrued quarterly and paid monthly via Accrued quarte
Slide 28: Mineral Resources – Morelos Complex
MINERAL RESOURCES1 – MORELOS COMPLEX Tonnes Au Ag Cu Au Ag Cu AuEq AuEq (kt) (g/t) (g/t) (%) (koz) (koz) (Mlb) (g/t) (koz) El Limón Guajes Open Pit (ELG OP) Measured 5,727 3.89 5.0 0.13 716 919 17 3.93 724 Indicated 11,027 2.37 4.7 0.12 842 1,660 28 2.41 856 Measured & Indicated 16,754 2.89 4.8 0.12
Slide 29: Notes to Mineral Resources – Morelos Complex
NOTES TO MINERAL RESOURCES – MORELOS COMPLEX Notes to accompany the Summary Mineral Resource Table Notes to accompany ELG Underground Mineral Resources 1. CIM (2014) definitions were followed for Mineral Resources. 14. Mineral Resources are reported above a cut-off grade of 2.6 g/t Au. 2. Mineral Re
Slide 30: www.torexgold.com
TSX | TXG www.torexgold.com Dan Rollins, CFA Senior Vice President, Corporate Development and Investor Relations Email: dan.rollins@torexgold.com | Direct: 1-647-260-1503