Torex Gold posts ‘extraordinary’ Q3 results

Mexico-focused Torex Gold Resources (TSX: TGX) is the latest gold miner to report surging profits on the back of a strong gold price.

For its third quarter, Torex poured 131,790 oz. gold at all-in sustaining costs (AISCs) of US$877 per oz. at its El Limon Guajes mine in Guerrero state. At the same time, it sold over 133,000 oz. gold at US$1,884 per oz. – making for a stellar quarter.

The company posted record net earnings of US$60.3 million (US$51.3 million adjusted) on revenues of US$256.5 million. That compares to US$17.1 million in net income on revenues of US$198.2 in the third quarter last year.

“Q3 was simply extraordinary — a record-breaking quarter across many facets of the business,” Jody Kuzenko, Torex’s president and chief executive, said in a statement. “Gold sales of 133,036 ounces were the highest in our history, as was the realized gold price of $1,884 per ounce. The record realized margin of $1,250 per ounce generated during the quarter underpins our best quarterly financial performance ever, including $163 million of EBITDA, $173 million of operating cash flow ($138 million before changes in working capital) and $124 million of free cash flow.”

The company ended the quarter with a net cash position for the first time since beginning commercial production at El Limon Guajes in 2016. The US$77.1 million in net cash represented a US$174 million improvement year-over-year.

“During Q3, we paid down $72 million of debt, bringing outstanding debt down to $155 million,” Kuzenko said. “Post quarter-end, we paid down an additional $50 million against our revolver, which deleverages our balance sheet even further.”

Torex posted revised guidance for the year in August of 390,000-420,000 oz. gold production at all-in sustaining costs of US$965-$1,025 per oz. sold. The new figures account for a temporary suspension of operations in the second quarter due to the coronavirus pandemic.

The company’s El Limon Guajes mining complex is located on the 290-sq.-km Morelos property, in the Guerrero gold belt, 180 km southwest of Mexico City. The operation includes three open pits and an underground mine.

Morelos also hosts the Media Luna underground project, which Torex is advancing toward first production in early 2024. A feasibility study is due out in the first quarter of 2021, which follows-up on a 2018 preliminary economic assessment that estimates the project would cost US$497 million to build.

Shares of Torex in mid-morning trading were up $1.39 (7.4%) to $20.20. Over the last year, the intermediate gold producer’s shares have traded in a range of $8.79 and $25.52 per share. The company has 86 million common shares outstanding for a $1.73-billion market capitalization.

— This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.