Torex Gold Resources Inc. · TSX:TXG
Torex Gold Resources — Q2 2024 Earnings Presentation
34 slides from Torex Gold Resources's earnings presentation, Aug 8, 2024
Slide 1: Q2 2024 Results Conference Call
TSX | TXG Q2 2024 RESULTS CONFERENCE CALL August 8, 2024 All amounts expressed in U.S. dollars unless otherwise stated
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT TOTAL CASH COSTS PER OUNCE SOLD (“TCC”), ALL-IN SUSTAINING COSTS PER OUNCE SOLD (“AISC”), SUSTAINING AND NON-SUSTAINING CAPITAL EXPENDITURES, AVERAGE REALIZED GOLD PRICE, TOTAL CASH COSTS MARGIN, ALL-IN SUSTAINING COSTS MARGIN (“AISC MARGIN”), AISC MARGIN PER OUNCE SOLD, ADJUST
Slide 3: Key Highlights & Operational Performance
KEY HIGHLIGHTS & OPERATIONAL PERFORMANCE JODY KUZENKO PRESIDENT & CEO All values U.S. dollars unless otherwise stated
Slide 4: Strategic Pillars
STRATEGIC PILLARS Executing on plan expected to continue to enhance shareholder returns1 DELIVER MEDIA LUNA TO INTEGRATE & OPTIMIZE DISCIPLINED GROWTH & FULL PRODUCTION MORELOS CAPITAL ALLOCATION GROW RESERVES & RETAIN & ATTRACT BEST BUILD ON ESG RESOURCES INDUSTRY TALENT EXCELLENCE 1) Please refer
Slide 5: Key Highlights
KEY HIGHLIGHTS On track to achieve full-year production guidance for the sixth consecutive year Strong safety record continues with lost-time injury frequency of 0.22 per million hours worked Tracking to full-year guidance with gold production of 229,316 oz in the first half of 2024 Q2 total cash co
Slide 6: Operational Performance
OPERATIONAL PERFORMANCE ELG continues to deliver strong results Gold recovery of 90.5% in Q2 in line with record Q1 Sixth consecutive quarter processing above 13 ktpd Processed grade in line with expectations UG mining rates returned to above 2 ktpd in Q2 6
Slide 7: Consistent and Reliable Producer
CONSISTENT AND RELIABLE PRODUCER 2024 Media Luna capital expenditures guidance revised to reflect final project budget In millions of U.S. dollars, unless otherwise noted Initial 2024 Revised 2024 Q2 2024 YTD Guidance1 Guidance Performance Production Gold oz 400,000 to 450,000 No change 229,316 Gold
Slide 8: Financial Performance
FINANCIAL PERFORMANCE ANDREW SNOWDEN CFO
Slide 9: Financial Performance
FINANCIAL PERFORMANCE Strong margins achieved in Q2; set to return to positive free cash flow in 2025 Average AISC margin of 44% achieved in Q21 Generated $121M in adjusted EBITDA in Q21 Similar spend on Media Luna anticipated in H21 Free cash flow reflects investment in Media Luna1 1) For more info
Slide 10: Unit Cost Performance
UNIT COST PERFORMANCE1 Strength of Mexican peso through Q2 continued to pressure unit costs2 Overall costs impacted by strong Mexican peso (MXN) as ~50% of costs are denominated in MXN H1 2024 MXN averaged 17.1 against the USD compared with 17.7 during FY 2023 Open pit mining costs reflect increased
Slide 11: Cash Flow Generation
CASH FLOW GENERATION Strong cash flow generation from ELG continues to support Media Luna funding Cash balance includes draw down on revolving credit facility of $55 million in Q2 to support strategic objective of maintaining $100 million of cash on the balance sheet through Media Luna build Expect
Slide 12: Balance Sheet & Liquidity
BALANCE SHEET & LIQUIDITY Well-positioned to fund strategic priorities1 Net (debt) cash2 of $5M at the end of Q2 2024 Available liquidity2 of $346M as of June 30th $55M drawn on revolving credit facility during Q2 Credit facility amended in July; repayment date to support cash balance through Media
Slide 13: Well-Positioned to Fund Media Luna Project
WELL-POSITIONED TO FUND MEDIA LUNA PROJECT More than sufficient funding in hand to support strategic objectives1 Available liquidity2 results in a funding surplus of $21M while maintaining strategic objective of preserving $100M of liquidity after accounting for $224M of expenditures remaining on Me
Slide 14: Prudent Capital Allocation
PRUDENT CAPITAL ALLOCATION Managing gold price and currency risk during build-out of Media Luna Hedged gold production covers the development phase of the Media Luna Project Hedged amount follows trend of capital spending on the Project; no plans to hedge metal prices in 2025 Several foreign exchang
Slide 15: Media Luna Project Update
MEDIA LUNA PROJECT UPDATE DAVE STEFANUTO EVP, TECHNICAL SERVICES & CAPITAL PROJECTS
Slide 16: Media Luna Capital Expenditures Update
MEDIA LUNA CAPITAL EXPENDITURES UPDATE Project expenditures finalized at $950 million primarily due to strength of MXN Final budget calculated as engineering and procurement activities near completion and strength of Mexican peso (MXN) through the build period was incorporated into capital estimates
Slide 17: Media Luna Progress Update
MEDIA LUNA PROGRESS UPDATE First concentrate production remains on track by year-end 20241 Majority of Guajes conveyor belt tables installed and Completion Project To Date aligned Q2 2024 Procurement 89% Belt has begun to be fed onto the conveyor Engineering 96% Underground development/construction
Slide 18: Media Luna Progress Update
MEDIA LUNA PROGRESS UPDATE Development activities advancing well; conveyor commissioning on track for late Q3 Conveyor belt installation Readying conveyor drive ahead of belt installation Steel erection and assembly for paste plant 1) Please refer to Safe Harbor Statement on slide 2. 18
Slide 19: Exploration Update
EXPLORATION UPDATE JODY KUZENKO PRESIDENT & CEO
Slide 20: Grow Reserves & Resources
GROW RESERVES & RESOURCES Multi-year exploration strategy focused on achieving key business objectives Exploration strategy supports key business objectives of: Maintaining more than 450 koz of production annually beyond 2027 Making at least one new discovery at Morelos in the coming years Explorati
Slide 21: Grow Reserves & Resources
GROW RESERVES & RESOURCES Key strategic focus and investment in exploration and drilling Drilling/exploration budget of $30M in 2024 $15M at Media Luna Cluster (33,500 m forecast) Infill and expansionary drilling at EPO Advanced exploration at Media Luna West Inaugural drill program at Todos Santos
Slide 22: Grow Reserves & Resources
GROW RESERVES & RESOURCES ELG Underground – Successful history of reserve growth since 2019 Drilling continues to validate ability to replace reserves and grow resources at ELG Underground. In 2023: Proven & Probable reserves increased to 654 koz AuEq1, extending mine life by more than two years thr
Slide 23: Questions?
eo; Torex Gold RESOURCES INC. QUESTIONS ?
Slide 24: Robust Cash Flow Generation from ELG
ROBUST CASH FLOW GENERATION FROM ELG Funding position on solid footing given available liquidity and ongoing cash flow LTM Q3 2023 Q4 2023 Q1 2024 Q2 2024 (Q2 2024) Net cash generated from operating activities (M$) $44.2 $120.0 $79.8 $97.4 $341.4 1 Free cash flow (M$) ($69.7) ($24.3) ($49.1) ($62.3)
Slide 25: Key Operational Metrics
KEY OPERATIONAL METRICS1 Consolidated Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2022 2022 2023 2023 2023 2023 2024 2024 Mining - ELG Open Pit Ore mined (kt) 883 959 916 644 1,026 1,785 969 1,622 Ore mined (tpd) 9,598 10,420 10,182 7,074 11,153 19,404 10,651 17,822 Waste mined (kt) 9,097 8,546 8,437 11,124 10,131 7,84
Slide 26: Key Financial Metrics
KEY FINANCIAL METRICS1 Consolidated All amounts in U.S. dollars Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2022 2022 2023 2023 2023 2023 2024 2024 Key Metrics Gold sold (oz) 119,834 121,913 118,455 105,749 81,752 138,794 111,642 113,513 Gold equivalent sold (oz AuEq) -- -- -- -- -- -- 114,106 115,890 Average realized
Slide 27: 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 U.S. dollar Cash flow from operations prior to chan
Slide 28: Cash Flow Seasonality
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 29: Cash Flow Seasonality
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 30: Mineral Reserves
MINERAL RESERVES1 Morelos Complex Tonnes Au Ag Cu Au Ag Cu AuEq AuEq (kt) (gpt) (gpt) (%) (koz) (koz) (Mlb) (gpt) (koz) Media Luna Underground Proven 2,001 4.28 33.1 1.09 276 2,129 48 6.48 417 Probable 21,568 2.56 24.2 0.84 1,775 16,749 401 4.24 2,943 Proven & Probable 23,569 2.71 24.9 0.86 2,050 18
Slide 31: Notes to Mineral Reserves
NOTES TO MINERAL RESERVES Morelos Complex Notes to accompany the mineral reserve table 3. Cut-off grades and mining shapes are considered appropriate for a metal price of US$1,500/oz Au, US$19/oz Ag and US$3.50/lb Cu and metal recoveries of 90% Au, 1. Mineral reserves were developed in accordance wi
Slide 32: Mineral Resources
MINERAL RESOURCES1 Morelos Complex Tonnes Au Ag Cu Au Ag Cu AuEq AuEq (kt) (gpt) (gpt) (%) (koz) (koz) (Mlb) (gpt) (koz) Media Luna Underground Measured 1,835 5.26 41.7 1.37 310 2,463 55 8.00 472 Indicated 25,616 2.99 29.5 1.04 2,463 24,328 585 5.03 4,146 Measured & Indicated 27,451 3.14 30.4 1.06 2
Slide 33: Notes to Mineral Resources
NOTES TO MINERAL RESOURCES Morelos Complex Notes to accompany the mineral resource table Notes to accompany ELG Underground mineral resources 1. CIM (2014) definitions were followed for mineral resources. 1. The effective date of the estimate is December 31, 2023. 2. Mineral resources are depleted a
Slide 34: Contact
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