Torex Gold updates Morelos Complex plans

Torex Gold Resources (TXG.TO) has released an updated technical report for the Morelos gold complex in Mexico, including an integrated life of mine plan and economics for the El Limón Guajes mine and the Media Luna project.

The company outlined the Morelos complex’s net present value at US$458 million with a 16.1% internal tax return, based on a 5% discount rate.

Annual sales were estimated at 374,000 oz. of gold equivalent over an 11.75-year mine life, and capital expenditures were pegged at US$848 million.

“With tremendous future exploration potential, advancing this project is fundamental to setting up our wholly-owned flagship Morelos Complex for safe and reliable production, strong free cash flow post the construction period, and lasting economic prosperity for all of those who share stakes in Torex,” said president and CEO Jody Kuzenko in a news release. “With this investment, the foundation for the future growth plans of Torex will be firmly laid.”

A rope conveyor, which takes ore from El Limon down a 400-metre drop to the stockpile dome at Torex Gold Resources’ El Limon-Guajes gold mine Mexico’s Guerrero state. Photo by Gabriela Sanchez.

With board approval secured, Torex said it would invest US$220 to US$270 million for Media Luna, which is expected to produce 430,000 to 470,000 oz. of gold in 2022.

Notably, the Media Luna project opens up the opportunity for Torex to diversify into becoming a meaningful copper producer – an opportunity that could not have timed the market better. About 20% of the revenue of the Morelos Complex is forecast to be attributable to copper, with the percentage increasing as the project ramps up.

The company also updated its production guidance for the Morelos Complex to a range of 430,000 to 470,000 oz. of gold in 2022, 420,000 to 460,000 oz. of gold in 2023, 385,000 to 425,000 oz. of gold equivalent in 2024 and 415,000 to 455,000 oz. of gold equivalent in 2025.

Located in the Guerrero Gold Belt, 180 kilometres southwest of Mexico City, the El Limón Guajes mine started commercial production in 2016 and produced 468,203 oz. of gold in 2021. It also hosts our Media Luna deposit, an advanced stage development project located seven kilometres from El Limón.

Torex shares opened on Friday in the black following the overnight news release, gaining nearly 2%. However, by the closing bell Friday, shares were down 2.23% at 15.35 a share, giving the company a market capitalization of $1.31 billion.