Torex Gold Resources Inc. · TSX:TXG
Torex Gold Resources — Q3 2023 Earnings Presentation
32 slides from Torex Gold Resources's earnings presentation, Nov 15, 2023
Slide 1: Third Quarter 2023 Results Conference Call
TSX | TXG THIRD QUARTER 2023 RESULTS CONFERENCE CALL November 15, 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 U.S. 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 On track to meet full year production guidance with strong close to 2023 Achieved 10 million hours worked at ELG without a lost- time injury in October for third time since 2020 Gold production of 85,360 oz (YTD – 315,785 oz) Total cash costs1 of $1,086/oz gold sold during the quarter
Slide 6: Operational Performance
OPERATIONAL PERFORMANCE Production to rebound in Q4 with completion of low-grade/high-strip phase in open pit Q4 expected to be the strongest quarter of the year Stable mill performance expected to continue Grades expected to increase materially in Q4 Record underground mining rate of 2,321 tpd in Q
Slide 7: Consistent and Reliable Producer
CONSISTENT AND RELIABLE PRODUCER Production guidance reaffirmed; cost guidance revised higher1 In millions of U.S. dollars, unless otherwise noted FY 2023 FY 2023 YTD Q3 2023 Original Guidance Revised Guidance Performance Gold Production oz 440,000 to 470,000 No change 315,785 Total Cash Costs2 $/oz
Slide 8: Excellent Drilling Program Results to Date
EXCELLENT DRILLING PROGRAM RESULTS TO DATE ELG Underground remains a key focus given potential to fill the mill beyond 20261 Initial results from 2023 drilling demonstrated the potential to expand and upgrade resources El Limón Sur Deep: Extended higher-grade mineralization outside of current resour
Slide 9: Excellent Drilling Program Results to Date
EXCELLENT DRILLING PROGRAM RESULTS TO DATE Initial results from 2023 drilling at EPO indicate potential to upgrade/expand resources Resource categorization drilling Currently 671 koz AuEq Indicated, 732 koz AuEq Inferred Infill drilling along the southern portion of the deposit returned intercepts w
Slide 10: Financial Performance
FINANCIAL PERFORMANCE ANDREW SNOWDEN CFO
Slide 11: Financial Performance
FINANCIAL PERFORMANCE Increased production and higher margins to drive strong financial close to 2023 All-in sustaining margins expected to improve in Q4 EBITDA set to rebound in Q4 with strong production Media Luna capex anticipated to increase further in Q4 Quarterly free cash flow set to turn pos
Slide 12: Unit Cost Performance
UNIT COST PERFORMANCE1 Solid cost performance despite ongoing inflationary pressures2 Open pit mining costs tracking higher than budget given additional stockpile rehandling and contractor costs associated with period of higher waste stripping during Q2 and Q3 Economies of scale from higher undergro
Slide 13: Cash Flow Generation
CASH FLOW GENERATION Free cash flow during Q3 2023 reflects increasing Media Luna Project spend Total capital expenditures of $112M during the quarter including $99M on the Media Luna Project and capex working capital adjustment of positive $14M (timing of invoices paid) Pace of spending at Media Lu
Slide 14: Balance Sheet & Liquidity
BALANCE SHEET & LIQUIDITY1 Well positioned to fund strategic priorities Net cash2 of $188M at quarter-end Available liquidity of $501M as of September 30th $400 $300 $200 Balance (M$) $100 $0 ($100) ($200) Cash & ST Investments ($300) Debt & Lease-Related Obligations ($400) FY/18 FY/19 FY/20 FY/21 F
Slide 15: Well Positioned to Fund Media Luna Project
WELL POSITIONED TO FUND MEDIA LUNA PROJECT1 Solid balance sheet and strong cash flow generation from ELG Estimated internal funding requirement of $106M through year-end 2024 Free cash flow prior to spending on Media Luna Project was $184M over last 12 months2,3 Pro-rated for remaining project perio
Slide 16: Prudent Capital Allocation
PRUDENT CAPITAL ALLOCATION Managing gold price and currency risk during build-out of Media Luna1 All amounts in U.S. dollars 2023 2024 Total Q4 Q1 Q2 Q3 Q4 (Average) Gold Forward Contracts Gold Volumes koz 43.5 43.5 43.5 27.0 27.0 184.5 Gold Price $/oz $1,957 $1,966 $1,966 $1,939 $1,939 $1,956 MXN/U
Slide 17: Media Luna Project Update
MEDIA LUNA PROJECT UPDATE DAVE STEFANUTO EVP, TECHNICAL SERVICES & CAPITAL PROJECTS
Slide 18: Media Luna Progress Update (Q3 2023)
MEDIA LUNA PROGRESS UPDATE (Q3 2023) Development activities well advanced at midpoint of build period Completion Project To Date First concentrate production on track for late 2024 Q3 2023 Underground development 50% complete Procurement 52% Engineering 70% Guajes Tunnel breakthrough anticipated by
Slide 19: Guajes Tunnel Progress Update
GUAJES TUNNEL PROGRESS UPDATE Breakthrough of tunnel on south side of Balsas River anticipated by year-end1,2 Guajes Tunnel north access advanced ~5,395 m as at the end of October Average daily advance rate of 7.1 m year-to-date Advance from the south was ~2,455 m as at the end of October Average da
Slide 20: Media Luna Progress Update
MEDIA LUNA PROGRESS UPDATE Development activities advancing well; concentrate production on track for late 20241 Concrete footings for flotation Water Treatment Plant and Mass fill for Cu concentrate area recently poured 230 kV substation storage area Bridge construction ahead of Installation of com
Slide 21: Questions
Lo; Torex Gold RESOURCES INC. QUESTIONS
Slide 22: Operating Cash Flow Seasonality
OPERATING CASH FLOW SEASONALITY Operating cash flow tends to be weakest in H1 given timing of tax, royalty, and PTU payments Final payments related to royalties, profit sharing, and taxes are subject to movements in the Mexican peso relative to the U.S. dollar Cash flow from operations prior to chan
Slide 23: Robust Cash Flow Generation from ELG
ROBUST CASH FLOW GENERATION FROM ELG Funding position on solid footing given available liquidity and ongoing cash flow LTM Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2023 Net cash generated from operating activities (M$) $132.1 $47.0 $89.6 $44.2 $312.9 Free cash flow (M$)1 $40.5 ($54.0) ($37.4) ($69.7) ($12
Slide 24: Key Operational Metrics
KEY OPERATIONAL METRICS1 Consolidated Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021 2022 2022 2022 2022 2023 2023 2023 Mining - ELG Open Pit Ore mined (kt) 864 1,061 987 883 959 916 644 1,026 Ore mined (tpd) 9,392 11,789 10,846 9,598 10,420 10,182 7,074 11,153 Waste mined (kt) 8,972 8,958 7,960 9,097 8,546 8,437 11,
Slide 25: Key Financial Metrics
KEY FINANCIAL METRICS1 Consolidated All amounts in U.S. dollars Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021 2022 2022 2022 2022 2023 2023 2023 Key Metrics Gold sold (oz) 109,391 108,012 123,363 119,834 121,913 118,455 105,749 81,752 Realized gold price ($/oz) $1,798 $1,876 $1,865 $1,715 $1,784 $1,899 $1,960 $1,944
Slide 26: 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 27: 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 28: 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 - - - - - - - - - Probable 23,017 2.81 25.6 0.88 2,077 18,944 444 4.54 3,360 Proven & Probable 23,017 2.81 25.6 0.88 2,077 18,944 444 4.54 3,360 ELG O
Slide 29: Notes to Mineral Reserves
NOTES TO MINERAL RESERVES Morelos Complex Notes to accompany Mineral Reserve Table 13. ELG Low Grade Mineral Reserves are reported above an in-situ cut-off grade of 0.88 g/t Au. 1. Mineral Reserves were developed in accordance with CIM (2014) guidelines. 14. It is planned that ELG Low Grade Mineral
Slide 30: 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 1,823 5.29 42.0 1.38 310 2,460 55 8.06 473 Indicated 25,567 3.02 30.1 1.05 2,486 24,708 589 5.11 4,196 Measured & Indicated 27,390 3.17 30.9 1.07 2
Slide 31: Notes to Mineral Resources
NOTES TO MINERAL RESOURCES Morelos Complex Notes to accompany the Summary Mineral Resource Table Notes to accompany the ELG Open Pit Mineral Resources 1. CIM (2014) definitions were followed for Mineral Resources. 14. The effective date of the estimate is December 31, 2022. 2. Mineral Resources are
Slide 32: 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