Torex chalks up another gold discovery with Media Luna

VANCOUVER — Not content to sit on its multi-million ounce, open-pit Morelos deposit, Toronto-based Torex Gold (TXG-T) has again struck gold on its 290-sq.km land concession 180-km-southwest of Mexico City, leading to speculation it may be sitting on a world-class discovery. The company already boasts a measured and indicated resource closing in on 5 million oz. of gold at average grades around 2.8 grams per tonne, while having explored roughly 10% of Morelos’ overall land parcel.

Torex is in the midst of an 84,000-metre exploration drill program — carrying a US$35 million price tag — aimed at expanding mineralization on the north side of the Balsas River, as well as targeting new zones to the south. Six drills are collared on the south side of the Balsas, with 35,000 metres planned on three new gold targets, namely: El Cristo, Naranjo, and Media Luna. Four drills remain focused on the Pacifico, Guajes South, and Limon Sur zones to the north, with an additional 35,000 metres in progress.

The company released initial assays from drilling collared at its Media Luna target on June 13. According to president and CEO Fred Stanford, Media Luna is part of a 3-km by 1-km magnetic anomaly, which Torex suspects is linked to a massive iron and sulphide skarn situated at depth at the main intrusive-sediment contact. The skarn reportedly carries mineralization between 4 metres and 21 metres thick, including higher-grade portions of gold, silver and copper between 4 metres and 7 metres width. As such, Media Luna is considered prospective for skarn-style gold mineralization where calcareous sedimentary rocks are in contact with the granodiorite intrusive.

The first five holes at Media Luna unveiled “consistent gold mineralization” over roughly 900 metres worth of strike length, with intervals that include: 4.8 metres grading 6.13 grams gold per tonne, and 2.4% copper starting from 408 metres depth in hole ML-01; 4.4 metres carrying 4.3 grams gold, and 0.78% copper from 500 metres depth in hole ML-02; 4 metres of 4.91 grams gold, and 1.38% copper starting from 334 metres in hole ML-07; and 7 metres grading 6.6 grams gold, and 1.15% copper from 515 metres in hole ML-08. All holes returned gold, silver, and copper mineralization with gold equivalent values in ML-01 totalling 10.81 grams gold.

“At this early stage of the discovery, it’s definitely encouraging to see the consistency of the gold mineralization, and the high silver and copper values over a significant strike length and thickness,” commented Stanford. “Given the size of this target, and the pervasive mineralization discovered to date, we intend to continue to aggressively push forward with exploration of this and other magnetic anomalies, both north and south of the Balsas River.”

Torex is banking on the Media Luna discovery being the first of many, as the company undertakes exploration on the remaining 90% of its landholdings along the Guerrero gold trend.

“The drill results appear to validate the model of targeting magnetic anomalies along the intrusive-sediment contact and support potential for significant longer-term resource additions,” writes Bank of Montreal Capital Markets analyst Andrew Breichmanas in a June 13 research update. “Morelos is already unique among the gold projects for its relatively high-grade open-pit potential, but the continued delineation of new resources could grow the scale to world-class proportions.”

Breichmanas maintains a speculative “Outperform” rating on the stock, noting that Torex management continues to demonstrate the ability to achieve significant milestones, and labelling Morelos a “quality development project in an established mining jurisdiction.” Company shares closed at $1.95 at presstime on above-average 2.8 million share trade volumes.

Torex remains in an enviable cash position with US$90 million and no debt to end May. The company has 413 million shares outstanding and maintains a US$806 million presstime market capitalization. 

The company intends to use roughly US$25 million of its cash on “mine building”, including: US$5 million dedicated to Morelos’ feasibility study, US$15 million on early-stage works, and US$5 million completing a series of outstanding land agreements required under current engineering specifications,

“We’re pretty much cashed up right through feasibility,” Stanford commented. “At some point we’ll need to build the thing, but we definitely won’t need to complete any additional financings before that, and we have excessive targets lined up for our drill programs.”