TORONTO, Ontario, July 31, 2015 - Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX:TXG) announced today its financial results for the three and six months ended June 30, 2015.
Fred Stanford, President and CEO of Torex said: “With construction currently 80% completed, and with mining ahead of schedule with over one million tonnes of ore in stock pile, we are well on track for our first gold pour by the end of this year. Engineering and procurement are effectively completed and a workforce of over 3000 is rapidly turning that engineering and material into a productive asset. The processing buildings have been erected and the major pieces of equipment have been placed within the buildings. From a construction perspective the focus has now shifted to connecting the pieces of equipment with pipes and wires. From an operations perspective the focus is squarely on hiring and training the workforce and in preparing for commissioning and ramp up. Specialists have been contracted to guide the commissioning process and the hiring of a skilled workforce has been aided by the recent closure of processing capacity elsewhere in the country.” He added, “the site and nearby communities have been quiet from a security perspective and significant progress is being achieved in the preparations for the village relocation.”
Second Quarter 2015 Highlights
The Company continued the development of the El Limón-Guajes Mine (“ELG Mine”):
- Overall construction progress was 73% at the end of the second quarter of 2015 and has since achieved 80%.
- Construction at the Guajes primary crusher was substantially complete at the end of the second quarter of 2015 and commissioning has been started in July with ore being crushed and conveyed to the live stockpile.
- Mining of the Guajes and North Nose pits is ahead of schedule through the second quarter of 2015, with approximately 650,000 tonnes of Guajes ore and 400,000 tonnes of North Nose ore stockpiled as of June 30, 2015.
- Construction of the processing plant and associated infrastructure was advanced on all fronts during the second quarter of 2015. A notable infrastructure milestone was the connection to the national electricity grid, which was achieved just after the quarter ended.
- The development of commissioning plans, training material, and operating and maintenance procedures were all advanced during the second quarter of 2015. In preparation for a start of the processing plant in the fourth quarter of 2015, hiring and training of the processing plant work force has started so that people are available to learn from the processing plant commissioning. Most of the mining workforce is already in place.
- Work on the infrastructure to get the El Limón pit ready for pre-production waste stripping is advancing ahead of schedule. Preparation for installation of the Rope Conveyor by Doppelmayr Transport Technology GmbH has begun in the second quarter of 2015.
- The construction for the resettlement of the La Fundición village is substantially complete and resettlement is expected to be completed in the third quarter of 2015. Resettlement of the Real Del Limón village is expected to be completed in the fourth quarter of 2015.
- Since the conclusion of the security incident reported on February 7, 2015, the area has been quiet. The access points to the nearby communities and the Morelos Gold Property are secured by the military on one end and the state police on the other.
- As at June 30, 2015, 8,782,091 hours had been worked on the ELG Mine with four lost time accidents.
Estimated Expenditures for the ELG Mine
The ELG project cost is budgeted at $800 million (excluding capitalized interest costs and fees associated with funding the ELG Mine). During the second quarter of 2015, an additional $6 million was drawn from contingency, bringing the remaining contingency available to $37 million. With the advances on the construction during the quarter, the Company has identified areas where $12 million of the remaining $37 million may be required. This leaves $25 million of the budgeted contingency unallocated as of the end of June 2015, when construction of the project was 73% complete.
As at June 30, 2015, the total amount spent on the development of the ELG Mine was $527 million with a current estimated amount to complete of an additional $273 million. Further details by development area as at June 30, 2015 are outlined below:
- $105 million had been spent on Mine Capital, which includes costs for the acquisition of mining equipment, the development of haul roads and pre-production stripping of the open pits. It is estimated that a further $52 million will be spent on Mine Capital before reaching commercial production.
- $361 million had been spent on Process Plant Capital, which includes costs in connection with the acquisition of process plant equipment, materials and labour to erect the process plant and related infrastructure, engineering, procurement, and construction management (“EPCM”) fees to oversee the construction period, and the resettlement of two villages. It is estimated that a further $204 million of Process Plant Capital will be spent before reaching commercial production.
- $61 million had been spent on Owner’s Costs, which includes costs in connection with the Company’s project team, insurance, and certain land lease costs. It is estimated that an additional $17 million of Owner’s Costs will be spent before reaching commercial production.
- Approximately 83% of the budget had been committed and 70% had been invoiced.
Updated Mine Plan for the ELG Mine
On July 21, 2015, the Company announced an updated mine plan for the ELG Mine. As the ELG Mine and Media Luna Project are on the same property, the Company updated the El Limón-Guajes Mine mine plan as part of its preparation of the Media Lune Project PEA, to ensure that the technical report for the Morelos Gold Property is current and complete.
Refer to the news release titled “Torex Announces Updated Mine Plan for its Fully Funded El Limón-Guajes Gold Mine” dated July 21, 2015, available on SEDAR at www.sedar.com.
Exploring the Morelos Gold Property
- A 10,300-metre diamond drill program to the north west of the current Media Luna resource area was completed during the second quarter of 2015, the results of which were included in the updated inferred resource estimate for the Media Luna Project.
- A 2,000 metre in-fill drilling program in the El Limón East area within the El Limón resource was completed in June 2015. This program will collect additional geological information to assist mine planning at El Limón.
Continued Evaluation of the Media Luna Project
On July 21, 2015, the Company announced a positive PEA for the Media Luna Project, as well as a new inferred mineral resource estimate, prepared in accordance with NI 43-101, of 7.2 million gold equivalent ounces, including 3.98 million ounces of gold, at a cut-off grade of 2 g/t gold equivalent. Refer to the news release titled “Torex Announces a Positive “PEA” for its Media Luna Project Including a New Inferred Resource Estimate of 7.4 Million Gold Equivalent Ounces” dated July 21, 2015, available on SEDAR at www.sedar.com.
The PEA is preliminary in nature, and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
During the second quarter of 2015, the Company received two additional draws from its $375 million 8-year senior secured project finance facility (the “Loan Facility”) in the amounts of $50 million and $30 million, respectively. The total amount drawn to date on the Loan Facility is $235 million.
The Company’s cash position as at June 30, 2015 ended at $83.2 million.
Torex is a growth-oriented, Canadian-based resource company engaged in the exploration and development of its 100% owned Morelos Gold Property, an area of 29,000 hectares in the highly prospective Guerrero Gold Belt located 180 kilometers southwest of Mexico City. Within this property, Torex has two projects: the ELG Mine, currently under development, and the Media Luna Project, at an advanced stage of exploration. Torex intends to identify a pipeline of future economic deposits within its property, which remains 75% unexplored.
For further information, please contact:
TOREX GOLD RESOURCES INC.
President and CEO
Tel.: (647) 260-1502
Vice President Investor Relations
Tel.: (647) 260-1503
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the capital cost estimate, the availability and performance of construction contractors, suppliers and consultants, the expected completion, commissioning and start-up of the mine and processing facilities of the ELG Mine, and expected revenues from operations, the further advances of funds pursuant to the loan facility (which are subject to certain customary conditions precedent), safety and security, and access to the ELG Mine, the PEA, and the mineral resource estimate for the Media Luna Project. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, “estimates”, “intends”, “anticipates” or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur”, or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from thoseexpressed or implied by such forward-looking information, including those risk factors identified in the Company’s annual information form and management’s discussion and analysis. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.