Torex Gold begins copper production at Media Luna

Torex Gold begins copper concentrate production at Media LunaFlotation plant construction at Media Luna. Credit: Torex Gold

Canadian bullion producer Torex Gold Resources (TSX: TXG) has achieved first production of precious metal-rich copper concentrate at its Media Luna mine, part of the company’s Morelos Complex in Mexico’s southwestern Guerrero state. Shares gained 3.1%.

The achievement follows the completion of a four-week process to connect and integrate the processing plant at its $950 million project, which is expected to sustain annual production of at least 450,000 gold-equivalent oz. through 2030.

“Following almost three years to the day of the release of our feasibility study for the Media Luna project, we have achieved first production of copper concentrate,” president and CEO Jody Kuzenko said in a release on Monday. “This milestone represents substantial completion of the project and the beginning of the next chapter in the evolution and growth of Torex as we become a gold and copper producer.”

Torex shares traded for $37.00 apiece on Tuesday morning in Toronto, for a market capitalization of $3.18 billion. Its shares traded in a 52-week range of $17.96 to $38.25.

Mid-year free cash flow 

The production milestone marks the substantial completion of the Media Luna project, with Torex ready to return to positive free cash flow mid-year, BMO Capital Markets analyst Kevin O’Halloran said in a note on Tuesday. 
 
“Commercial production is expected in the coming weeks, and the company continues to ramp up underground mining rates,” he said. 
 
With capital spending at Media Luna mostly complete, O’Halloran said he forecasts full-year free cash flow of $230 million, including $169 million in the second half of the year.

Trucking of the copper concentrate at the mine is to begin shortly, with sales and logistics contracts already in place, Torex said. 

The Media Luna underground project contains significant gold, copper, and silver mineralization. Located just 7 km from the company’s El Limón Guajes Mine Complex on the south side of the Balsas River, Media Luna is expected to ramp up underground mining rates to 7,500 tonnes per day by next year. The mine is projected to produce 45 million lb. of copper annually, strengthening Torex’s long-term production outlook.

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