September 4, 2012

Torex Completes Bankable Feasibility Study for its Morelos Project

TORONTO, Ontario, September 4, 2012 - Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX:TXG) is pleased to report that its Board of Directors has accepted the Morelos Gold Project’s bankable feasibility study (“BFS”) dated August 30, 2012, and has instructed management to initiate procedures that will, pending the arrangement of acceptable project financing, lead to the implementation of BFS recommendations to develop and bring the Morelos Gold Project (the “Project”) to commercial production.

The Project consists of a proposed open pit mine and cyanide leach/carbon in pulp (“CIP”) mill, approximately 180 km southwest of Mexico City. The BFS was authored by M3 Engineering & Technology Corporation of Tucson, Arizona, who has extensive experience with successful projects in Mexico.

“This high grade project is near to infrastructure, located in a supportive jurisdiction, and is expected to have high margins and reasonable capital costs,” said Fred Stanford, President & CEO of Torex. “Our senior team is now expanding as we prepare for the construction and operation phases. We all look forward to getting the financing and permitting completed so we can get started on building the world class mine that we anticipate to be our entry into the ranks of the intermediate gold producers,” he added.

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

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

A decision was made to end the development capital expenditure phase of the project when the mill achieves commercial production throughput rates. This is defined as 60% of nameplate throughput for one month and it is expected to be achieved at the end of Q3, 2015. All expenditures and net proceeds prior to the commercial production declaration are assigned to development Capex, (described in the table below as ‘Capex required up to commercial production). All expenditures starting at the beginning of Q4, 2015 are assigned to operating costs or capital costs, as appropriate, (these capital costs are described in the table below as ‘Capex required after commercial production’).

The production ramp up time for the mine is longer than for the mill and it is the mine schedule that determines when the mill will achieve commercial production. In the BFS schedule, the mill will have been operating at a reduced rate for nine months before commercial production is declared. For those nine months the costs to operate the mill are included in the ‘Capex required up to commercial production’. At the time that commercial production is declared there is still mine equipment and associated infrastructure that is not yet required at the planned stage of mine development. The costs for this equipment and infrastructure are shown in the table below as ‘Capex required after commercial production’.

The following table identifies key expenditures before and after commercial production.

Capex required up to Commercial Production
Capex required after commercial production
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
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

The BFS models a high grade open pit mine with a proven and probable mineral reserve estimate containing 4.1 million ounces of gold, representing an 85% conversion ratio relative to the 4.8 million ounce measured and indicated mineral resource estimate effective date June 11, 2012 (published June 18, 2012).

Morelos Mineral Reserve Statement - effective date 28 August 2012

Deposit Reserve Category Tonnes
Gold grade
Contained Gold
(millions oz)
Silver grade
Contained Silver
(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.

The BFS calls for the development of two independent open pits to mine the skarn hosted gold and silver mineralization. The pits will feed a centrally located cyanide leach / CIP process plant, with dry stack tailings deposited just to the west of the plant. The process plant has been designed for a throughput rate of 14,000 tonnes per day. There will be a two year ramp up period before the pits can deliver the full 14,000 tonnes per day. This will be followed by 8.5 years of full production with production falling off sharply over the remaining four years (this four-year period at the end of mine life is referred to as the ‘production tail). The production, in doré bars, for the first ten years of mine life is projected to average 337,000 oz/yr of gold, and 211,000 oz/yr of silver. For the period beyond the first ten years, efforts will be made to extend production through exploration activities by potentially upgrading ounces currently categorized as inferred mineral reserves, and to make new discoveries on a highly prospective land package.

Summary of the annual mine production plan

Years Ore mined Ore milled Head Grade Gold
Head Grade Silver
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

Financing and cash resources

The Company is financed to continue development and exploration work. In order to finance the construction of the Project, discussions have been underway for some time with project debt providers and requests for proposals will go out to them within the next month. A full range of financing options is being explored and decisions will be taken once the debt opportunities have been clarified.

Environmental Impact Assessment and Permits

Water usage permits have been secured and the finishing touches are being applied to the environmental impact assessment. The permit applications to allow construction to start are planned for early September 2012, with an anticipated six to nine month review period.

Qualified Persons

The scientific and technical data contained in this news release pertaining to the Project has been reviewed and approved by the following Qualified Persons under NI 43-101 who consent to the inclusion of their names in this release: Daniel H. Neff, P.E. (Infrastructure); Thomas L. Drielick, P.E. (Metallurgical Process Design); Edward J.C. Orbock III, RM SME (El Limon Resources); Mark Hertel, RM SME (Guajes Resources); Brian Connolly, P.Eng. (Reserves); Benny Susi, P.E. (Environmental); Michael Levy, P.E., P.G. (Mining Geotech); Prabhat Habbu, P.Eng. (Hydrology and Waste Disposal); Vladimir Ugorets, MMSAQP (Hydrogeology), each of whom is independent of the Company; and Dawson Proudfoot P.Eng. (Torex Budgeting).

Detailed Report

A NI 43-101 Technical Report will be filed within 45 days on SEDAR and will be available at that time on the corporate website. Additional technical information on the Project can be found in the technical report entitled “Guajes and El Limon Open Pit Deposits Updated Mineral Resource Statement Form 43-101 Technical Report, Guerrero, Mexico” officially dated June 13, 2012.

Conference Call

Torex will host a conference call on Wednesday, September 5, 2012 at 11:00 a.m. EST where senior management will discuss the BFS and will be available to respond to questions from analysts and investors. Those interested in participating in the conference call should dial in at (toll free North America) 877-407-8031 or (international) 201-689-8031. To listen to the audio webcast online go to and click on Conference Call Audio Webcast.

The conference call will be recorded and playback of the call will be available after the event by dialing (toll free North America) 877-660-6853 or (international) 201-612-7415. Replay pass code account #: 286, Conference ID#:399812. This replay will be available for one month.

Torex Gold Resources Inc. is a growth-oriented, Canadian mining company engaged in the exploration and development of precious metal resources with a focus on gold. It owns 100% of the Morelos Gold Project, a development stage gold property, located 180km southwest of Mexico City in the highly prospective Guerrero Gold Belt. Torex is aggressively exploring within its property to identify a pipeline of additional future economic deposits. The Project covers an area of 29,000ha of which more than 75% still remains unexplored.

For further information, please contact:
Fred Stanford
President and CEO
Tel. (647) 260-1502

Gabriela Sanchez
Vice President Investor Relations
Tel. (647) 260-1503


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, information with respect to the Company’s feasibility study, including with respect to mineral resource and mineral reserve estimates; the ability to realize estimated mineral reserves; the Company’s expectation that the Morelos Gold Project will be profitable with positive economics from mining; recoveries, grades and annual production; receipt of all necessary approvals; the parameters and assumptions underlying the mineral resource and mineral reserve estimates and the financial analysis; and gold prices. 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 based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that it believes to be relevant and reasonable in the circumstances, at the date that such statements are made. 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 those expressed or implied by such forward-looking information, including those risk factors identified in the Company’s annual information form, which is available at 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 as actual results and future events could differ materially from those anticipated in such information. The forward-looking information contained herein is presented for the purposes of assisting investors in understanding the Company’s exploration results and the Company’s plans and objectives and may not be appropriate for other purposes. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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