Torex Resources Inc. · TSX:TXR
Torex Resources — Torex Gold Resources — Q4 2022 Earnings Presentation
34 slides from Torex Resources's earnings presentation, Feb 23, 2023
Slide 1: Fourth Quarter & Year-End Results Conference Call
TSX | TXG FOURTH QUARTER & YEAR-END RESULTS CONFERENCE CALL February 23, 2023
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: Key Highlights & Operational Performance
KEY HIGHLIGHTS & OPERATIONAL PERFORMANCE JODY KUZENKO PRESIDENT & CEO All values US dollars unless otherwise stated
Slide 4: Strategic Pillars
STRATEGIC PILLARS Executing on plan expected to continue to enhance shareholder returns1 OPTIMIZE & ADVANCE & GROW RESERVES & EXTEND ELG DE-RISK MEDIA LUNA RESOURCES PRUDENT CAPITAL BUILD ON ESG ALLOCATION EXCELLENCE 1) Please refer to Safe Harbor Statement on slide 2 4
Slide 5: Key Highlights
KEY HIGHLIGHTS Record gold production and strong financial performance delivered in 2022 Achieved production guidance for 4th year in a row, with record annual gold production of 474,035 oz Achieved full year cost guidance with total cash costs1 of $730/oz gold sold and all-in sustaining costs1 of $
Slide 6: Operational Performance
OPERATIONAL PERFORMANCE Strong results driven by record milling and underground mining rates Produced 474,035 ounces of gold in 2022 Record plant throughput of 12,600 tpd in the year Gold grade processed of 3.64 g/t for the year Record underground mining rate of 1,523 tpd in 2022 6
Slide 7: Consistent and Reliable Producer
CONSISTENT AND RELIABLE PRODUCER 2023 guidance points to another solid year of profitable production1 In millions of U.S. dollars, unless otherwise noted 2022 Guidance2 2022 Performance 2023 Guidance Gold Production oz 430,000 to 470,000 474,035 440,000 to 470,000 Total Cash Costs3 $/oz 695 to 735 7
Slide 8: Five-Year Production Outlook
FIVE-YEAR PRODUCTION OUTLOOK1,3 Optimization of ELG open pits and underground drive improved near-term outlook Production Outlook Outlook Outlook 2022 Technical Actual (koz) 2 2021 2022 2023 Report 2021 (Au) 468.2 430 to 470 2022 (Au) 474.0 430 to 470 430 to 470 2023 (Au) 400 to 450 420 to 460 440 t
Slide 9: Build on ESG Excellence
BUILD ON ESG EXCELLENCE Sustained performance & ongoing improvement on ESG disclosure a key focus Clear and credible GHG emissions targets set ESG Ratings Scope 1 and 2 greenhouse gas emission targets 1 MSCI: ‘A’ rating from ‘BBB’ 10% reduction on an absolute basis by 2030 Refinitiv: ‘B-’ rating fro
Slide 10: Financial Performance
FINANCIAL PERFORMANCE ANDREW SNOWDEN CFO
Slide 11: Financial Performance
FINANCIAL PERFORMANCE Solid financial result driven by record production and robust margins All-in sustaining margin1 of 44% achieved in the year Adjusted EBITDA1 of $479M generated in 2022 Total capital expenditures1 of $277M during 2022 Free cash flow1 of $130M generated in the year 1) For more in
Slide 12: Unit Cost Performance
UNIT COST PERFORMANCE1 Solid cost performance despite ongoing inflationary pressures3 Open pit mining costs impacted by additional rehandling costs associated with stockpile blending as well as equipment availability Record underground mining rates helped drive economies of scale in the underground
Slide 13: Cash Flow Generation
CASH FLOW GENERATION Cash position increased over $120M during 2022 Cash flow in 2023 is expected to be lower in H1 given year-end royalty and tax payments made during Q1 and mandated profit sharing payment in Q2 Free cash flow expected to be negative in 2023 based on $390M to $440M of guided Media
Slide 14: Balance Sheet & Liquidity
BALANCE SHEET & LIQUIDITY1 Exited 2022 with $376M in cash and $623M of liquidity Net cash2 of $372M at quarter-end Available liquidity of $623M as of December 31st Exited Q4 2022 with $376M of cash $100M available on term loan facility (undrawn) Debt free with just over $4M of lease obligations $147
Slide 15: Prudent Capital Allocation
PRUDENT CAPITAL ALLOCATION Managing gold price risk during build-out of Media Luna1 All amounts in U.S. dollars 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Forward Contracts Gold Volumes koz 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 Gold Price $/oz $1,924 $1,924 $1,924 $1,924 $1,939 $1,939 $1,939 $1,939 Hedged
Slide 16: Media Luna Project Update
MEDIA LUNA PROJECT UPDATE DAVE STEFANUTO EVP, TECHNICAL SERVICES & CAPITAL PROJECTS
Slide 17: Media Luna Update
MEDIA LUNA UPDATE Development activities continuing to ramp-up towards peak rates in 20231 Key Highlights Completion Project To Date Q4 2022 Capital expenditures on track with original budget Procurement 33.7% 26% of project expenditures committed including Engineering 24.9% 14% incurred at year-end
Slide 18: Media Luna Update
MEDIA LUNA UPDATE Breakthrough of Guajes Tunnel on track for Q1 20241,2 Guajes Tunnel advanced ~3,455 m as at the end of January Advance rate of 6.7 m/d over last 3 months (7.2 m/d in December) versus budgeted rate of 6 to 6.5 m/d Successfully crossed under the Balsas river South Portal Lower advanc
Slide 19: Media Luna Update
MEDIA LUNA UPDATE First production on track for Q4 2024 based on progress through Q4 20221 South Portal Lower Guajes Tunnel Portal Paste plant pad preparation South Portal Generator Upper Pad Paste Plant Pad Mazapa by-pass road Raise bore – GT vent raise 1) Please refer to Safe Harbor Statement on s
Slide 20: Drilling & Exploration Update
DRILLING & EXPLORATION UPDATE DAVE STEFANUTO EVP, TECHNICAL SERVICES & CAPITAL PROJECTS
Slide 21: 2022 ELG Drill Program
2022 ELG DRILL PROGRAM Two new underground mining fronts and incremental open pit feed identified at ELG1 Invested over $9M in drilling in 2022 Drilled over 50,000 metres2 Two new potential mining fronts identified within the ELG Underground Sub-Sill South which is located 120 m from existing infras
Slide 22: 2022 Media Luna Drill Program
2022 MEDIA LUNA DRILL PROGRAM Expect to upgrade and expand resources at Media Luna and EPO1 Invested over $19M in drilling in 2022 Drilled over 59,000 metres2 Infilling drilling successful in Upgrading Indicated resources to Measured within Media Luna Converting 50% of Inferred resources at EPO to t
Slide 23: 2023 Drill Program
2023 DRILL PROGRAM Looking to build upon success of 2022 program both north and south of Balsas River1 Drilling/exploration budget of $39M in 2023 Tecate $20M at Media Luna cluster (~55,000 m) Esperanza Querenque Infill and expansionary drilling at EPO Inaugural drill program at ML West $6M at ELG U
Slide 24: Questions?
QUESTIONS ?
Slide 25: Key Operational Metrics
KEY OPERATIONAL METRICS1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY 2021 2021 2021 2021 2022 2022 2022 2022 2021 2022 Mining - ELG Open Pit Ore mined (kt) 1,359 1,131 1,406 864 1,061 987 883 959 4,761 3,891 Waste mined (kt) 9,882 8,593 7,476 8,972 8,958 7,960 9,097 8,546 34,923 34,560 Strip ratio (waste:ore) 7.3
Slide 26: Key Financial Metrics – Consolidated
KEY FINANCIAL METRICS – CONSOLIDATED1 All amounts in U.S. dollars Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY 2021 2021 2021 2021 2022 2022 2022 2022 2021 2022 Key Metrics Gold sold (oz) 129,019 111,424 118,989 109,391 108,012 123,363 119,834 121,913 468,823 473,122 Realized gold price ($/oz) $1,778 $1,816 $1,786
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 US dollar Cash flow from operations prior to changes
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 – Morelos Complex
MINERAL RESERVES1 – 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) Proven 4,900 3.95 4.6 0.14 623 719 15 4.00 630 Probable 5,471 2.35 4.5 0.12 414 784 15 2.39 421 Proven & Probable 10,371 3.11 4.5 0.13 1,037 1,5
Slide 31: Notes to Mineral Reserves – Morelos Complex
NOTES TO MINERAL RESERVES – MORELOS COMPLEX Notes to accompany Mineral Reserve Table Notes to accompany the ELG Underground Mineral Reserves 1. Mineral Reserves were developed in accordance with CIM (2014) guidelines. 15. Mineral Reserves are founded on Measured and Indicated Mineral Resources, with
Slide 32: 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 33: 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 34: TSX | TXG 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