Projects Summary

EL LIMON-GUAJES: BUILDING OUR FIRST MINE

MEDIA LUNA: DEFINING THE SECOND ONE


The Morelos Gold Property, is an area of 29,000 hectares in the highly prospective Guerrero Gold Belt, located 180 kilometres southwest of Mexico City, in the state of Guerrero. The Property is only a four hour drive from Mexico City on paved roads. It is easily accessible and located near established centres of supply for materials and workers. Power for any mining operation would be available from a 115kV line that crosses over the Project and water for process and exploration is sourced from nearby wells.

Within this Property, the El Limon-Guajes Project, located north of the Balsas River, constitutes one of the richest open pit gold deposits at a resource grade of 2.79 g/t. The Project is fully permitted and construction started on November 1st, 2013. Construction of this mine is expected to be finalized in 21 months and, once completed, it will be amongst the largest and lowest cost gold mines in the world. This skarn deposit has measured and indicated resources of 4.8 million ounces of gold at a grade of 2.79 g/t plus 620,000 ounces of gold at a grade of 2.0 g/t in the inferred category. Proven and Probable Reserves, included in the resources, stand at 4.1 million ounces of gold at a grade of 2.61g/t.

The Media Luna Project is located south of the Balsas River and is comprised of three main magnetic anomalies covering an area of approximately 630 hectares. It was discovered in March of 2012 and, after an aggressive 18-month drilling program, the maiden inferred resource was completed in September of 2013. The deposit has current inferred resources of 5.8 million gold equivalent ounces at a grade of 4.55 g/t. This resource is contained in less than 25% of the area of the targeted magnetic anomalies.

The qualified person for the Media Luna Mineral Resource Estimate is Mark Hertel, RM SME, P.Geo, Principal Geologist, and John Rust, RM SMF, Senior Metallurgist of AMEC E&C Services Inc. who are independent of the company for the purposes of NI 43-101. For additional details with respect to the Media Luna Mineral Resource Estimate, refer to the Technical Report entitled "Media Luna Gold-Copper Project, Guerrero State, Mexico, NI 43-101 Technical Report" effectively dated September 13, 2013 and available at www.sedar.com.

map
Torex Property: 29,000 hectares in the heart of the Guerrero Gold Belt

map
Location of El Limon-Guajes Project (north of the Balsas River) and the Media Luna Project (south of the Balsas River)


MINERAL RESOURCE ESTIMATE AT A 0.5 G/T AU CUTOFF GRADE. EFFECTIVE DATE IS 4 MAY, 2012.
E. ORBOCK, RM SME, AND M. HERTEL, RM SME, QUALIFIED PERSONS

Deposit
Resource
Category
Tonnes
(Mt)
Gold Grade
(g/t)
Gold Ounces
(000’s)
Silver Grade
(g/t)
Silver Ounces
(000’s)
El Limon  Measured
6.1
3.29
643
4.07
795
Indicated
26.0
2.98
2,492
6.35
5,313
Sub Total M&I
32.1
3.04
3,135
5.92
6,108
Guajes
Measured
4.3
3.11
431
3.86
535
Indicated
17.4
2.25
1,258
3.11
1,736
Sub-total M&I
21.7
2.42
1,689
3.26
2,270
    Total M&I
53.8
2.79
4,824
4.84
8,379
El Limon Inferred
8.3
2.0
543
4.7
1,255
Guajes Inferred
2.5
1.0
77
1.7
135
     Total Inferred
10.7
2.0
620
4.0
1,390

Notes to accompany Mineral Resource table:
  1. Mineral Resources are not Mineral Reserves until they have demonstrated economic viability
  2. Mineral Resources are reported above a 0.5 g/t Au cut-off grade
  3. Mineral Resources are reported as undiluted; gold grades are contained grades
  4. Mineral Resources are reported within a conceptual open pit shell
  5. Mineral Resources were developed in accordence with CIM (2010) guidelines
  6. Mineral Resources are reported using a long-term gold price of US$1400/oz and silver price of US$26/oz
  7. Mining costs used is US$1.65 per tonne and processing costs at US$11.51 per tonne. General and administrative costs were estimated at US0.98$ per tonne.
  8. Gold recoveries are dependent on grade and rock type and range from 38% to 93%.
  9. Silver metallurgical recoveries by rock type range from 21% to 47%.
  10. Assumed pit slope angles range from 32 to 51º


EL LIMON-GUAJES MINERAL RESERVE STATEMENT - EFFECTIVE DATE 28 AUGUST 2012

Deposit
Reserve Category
Tonnes
Gold grade
Contained Gold
Silver grade
Contained Silver
 
(millions)
(g/t)
(millions oz)
(g/t)
(millions oz)
El Limón Proven
6.3
2.94
0.59
3.67
0.74
  Probable
23.6
2.66
2.01
5.39
4.09
  Sub-total P&P
29.8
2.72
2.61
5.03
4.83
Guajes Proven
4.3
2.93
0.40
3.68
0.50
  Probable
14.7
2.29
1.08
3.14
1.48
  Sub-total P&P
18.9
2.44
1.48
3.27
1.99
Total Proven
10.5
2.93
0.99
3.67
1.24
  Probable
38.2
2.52
3.10
4.53
5.57
  Total P&P
48.8
2.61
4.09
4.35
6.81

Notes to accompany Mineral Reserve Table
  1. Mineral reserves are reported based on open pit mining within designed pits above a 0.5 g/t recovered Au cut-off grade, and incorporate estimates of dilution and mining losses. The cut-off grade on an in-situ grade basis varies by ore type and averages approximately 0.60 g/t Au. The cut-off grade and pit designs are considered appropriate for long term metal prices of US$1250/oz gold and US$22/oz silver.
  2. Mineral reserves are founded on, and are included within, Morelos mineral resource estimates with an effective date of 11 June 2012.
  3. A legal opinion states that Minera Media Luna, S.A. de C.V. (a wholly owned subsidiary of Torex) has mineral rights to the concessions encompassing the El Limon and Guajes deposits, however surface rights within the project area have not yet all been secured.
  4. Mineral reserves were developed in accordance with CIM (2010) guidelines.
  5. Numbers may not add due to rounding.
  6. QP for mineral reserve estimate is Brian Connolly, P.Eng.

    HIGHLIGHTS OF THE BFS (BASE CASE USING $1,276 / OZ LOM AVERAGE GOLD PRICE)

    Commercial Production Declaration October 1, 2015
    First Year of Full Production 2017
    Proven and Probable Mineral Reserves 48.8 mt @ 2.61g/t
    LOM Strip Ratio (Waste:Ore) 5.6:1
    Mill gold head grade 2.61 g/t
    Mill gold recovery 87.4%
    Mill silver head grade 4.35 g/t
    Mill silver recovery 32.7%
    Mine Life excluding production tail 10.5 years
    Annual Production 2015 128 koz Au
    Annual Production 2016 246 koz Au
    Average Annual Production 2017 to 2024 375 koz Au
    Peak annual production 494 koz Au
    Cash Costs net of Ag revenue excluding production tail US $421/oz
    Capex up to commercial production (without revenue credits) US $675 M
    Capex up to commercial production (including revenue credits) US $552 M
    Capex after commercial production US $86 M

    For additional information with respect to the mineral resource and mineral reserve estimates, refer to the technical report entitled "Morelos Gold Project, NI 43-101 Technical Report Feasibility Study, Guerrero, Mexico", dated October 1, 2012 and available at www.sedar.com.

    PRODUCTION PROFILE, CASH COST AND ASSUMED GOLD PRICE

    Graph


    PROJECT ECONOMICS

     
    US$ 1276 / oz(1)
    Base Case(2)
    US$ 1500 / oz
    US$ 1750 / oz
    US$ 2000 / oz
    Cumulative Cash Flow   (US$M)
    $1,558
    $2,121
    $2,747
    $3,374
    After Tax NPV @ 5% (US$ M)
    $900
    $1,262
    $1,679
    $2,096
    After Tax IRR (%)
    24.2%
    28.9%
    34.6%
    39.8%
    Capex Payback (Years)
    3.6
    3.2
    2.8
    2.5
    2017 EBITDA (US$ M)(3)
    $276
    $336
    $417
    $497

    (1) Average gold price LOM
     
    (2) Base case assumed metal prices in US$:
    Gold: 2015 - $1,500/oz, 2016 - $1,407/oz, 2017 - $1,315/oz, 2018 and beyond - $1,250/oz
    Silver: 2015 - $27.75/oz, 2016 - $25.00/oz, 2017 - $25.00/oz, 2018 and beyond - $22.00/oz
    (3) First year of commercial production  


    KEY EXPENDITURES BEFORE AND AFTER COMMERCIAL PRODUCTION

     
    Capex required up to
    Commercial Production
    US$
    Capex required after
    commercial production
    US$
    Expenditures (With Contingency)
        Plant & Infrastructure
    452 M
    15 M
        Mine Access Roads
    27 M
    2 M
        Initial Mine Equipment Fleet
    48 M
    46 M
        Mining Ore & Waste
    65 M
        Processing Ore includes G&A
    38M
        Royalties, and Treatment
    3 M
        Owner’s Cost
    42 M
    Sub-total
    675 M
    63 M
    Credits
        Metal Value Produced
        (includes 81,000 oz Au)
    (123 M)
    Total net of revenue credits
    552 M
        Sustaining Capex
    23 M
    Total Capex after commercial production
    86 M


    SUMMARY OF THE ANNUAL MINE PRODUCTION PLAN

    Years
    Ore
    mined
    Ore
    milled
    Head
    Grade
    Gold
    Production
    Head
    Grade
    Silver
    Production
    Waste
    Strip
    ratio
    (Mt)
    (Mt)
    (Au g/t)
    (k oz)
    (Ag g/t)
    (k oz)
    (Mt)
    2013
    4.53
    NA
    2014
    0.26
    1.431
    2.501
    11.00
    41.9
    2015
    2.13
    2.28
    2.01
    128
    4.58
    110
    13.01
    6.1
    2016
    3.66
    3.75
    2.32
    246
    6.63
    267
    25.57
    7
    2017
    5.19
    5.04
    2.36
    333
    6.3
    345
    29.07
    5.6
    2018
    4.88
    5.04
    2.22
    316
    5.54
    293
    32.46
    6.7
    2019
    5.20
    5.04
    2.33
    324
    3.69
    185
    31.33
    6
    2020
    5.06
    5.04
    2.43
    345
    3.48
    183
    31.06
    6.1
    2021
    5.04
    5.04
    2.34
    332
    3.08
    163
    31.14
    6.2
    2022
    4.94
    5.04
    3.07
    434
    3.74
    191
    26.50
    5.4
    2023
    5.12
    5.04
    3.47
    494
    3.96
    204
    19.51
    3.8
    2024
    4.97
    5.04
    2.97
    424
    3.23
    168
    12.99
    2.6
    20252
    1.22
    1.31
    2.9
    107
    2.79
    38
    2.07
    1.7
    20262
    0.12
    -
    -
    -
    -
    -
    0.71
    6.1
    20272
    0.41
    0.52
    3.68
    54
    7.64
    49
    0.88
    2.1
    20282
    0.57
    0.58
    2.44
    39
    4.35
    30
    0.59
    1
    Total
    48.77
    48.77
    2.61
    3,573
    4.35
    2,227
    272.40
    5.6

    (1) Mining grade
    (2) Denotes the years described as the 'production tail'


    OPERATING CASH COSTS

    Cash costs net of silver revenue
    (After the declaration of commercial production and without the production tail at the end of mine life)
    (Includes 2.5% royalty to the government)
    US$421 / oz
    Mining cost per tonne
    (After the declaration of commercial production and without the production tail at the end of mine life)
    US$1.90 / tonne
    Mining cost per tonne to the Mill
    (((Strip ratio 5.4 avg.) + 1) X $1.90)  (After the declaration of commercial production and without the production tail at the end of mine life)
    US$12.16 / tonne
    Milling cost per tonne 
    (After the declaration of commercial production and without the production tail at the end of mine life)
    US$14.19 / tonne
    G&A per tonne
    (After the declaration of commercial production and without the production tail at the end of mine life)
    (Includes land lease payments)
    US$2.92 / tonne




    Related News

    January 26, 2011   Morelos Gold Project NI 43-101 Technical Report - Underground and Open Pit Resources

    October 28, 2009   Morelos Gold Project NI 43-101 Technical Report  
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