El Limon-Guajes

El Limon-Guajes: Our First Mine

The El Limon-Guajes Mine (ELG)t, located north of the Balsas River, constitutes one of the richest open pit gold deposits at a resource grade of 2.65 g/t. The Mine started gold production in December of 2015 and announced commercial production on March 30, 2016. Once in full production, this mine will be amongst the largest and lowest cost gold mines in the world with expected LOM average annual production of 370,000 ounces of gold at a LOM AISC of US$616/oz.

This skarn deposit has measured and indicated resources of 4.12 million ounces of gold at a grade of 2.65 g/t plus 360,000 ounces of gold at a grade of 1.86 g/t in the inferred category. Proven and Probable Reserves, included in the resources, stand at 3.63 million ounces of gold at a grade of 2.62g/t.

ELG MINE 2016 LIFE OF MINE PLAN

In May 2016, the Company completed a Life of Mine (“LOM”) plan update for ELG on a standalone basis. As previously reported, the Company was investigating the location of post-mineralization dike intrusions, and the potential effect of these intrusions on the resource estimate. The updated LOM plan incorporates the results of this recent work. The LOM is now projected to be 8.5 years, a decrease from the previous estimate of 10 years, and the projected gold production for the first 7 years of the LOM is expected to be comparable to the first 7 years of the previous standalone life of mine plan.

Estimated Gold Sales by Year

2015 Life of Mine vs. 2016 Life of Mine1

2015 Life of Mine
(thousands oz Gold)
2016 Life of Mine
(thousands oz Gold)
2016 275 275
2017 384 383
2018 323 352
2019 312 366
2020 334 323
2021 339 357
2022 387 367
2023 538 393
2024 410 352
2025 297
Total 3,600 3,167

Notes to accompany the “Estimated Gold Sales by Year” table

  1. Processing volumes remain constant at 14,000 tpd or 5 million tonnes per year.
  2. Rounding, as required by reporting guidelines, may result in apparent summation differences.

The 2016 LOM is based on the resource outlined in the following table:

Mineral Resource Estimate El Limón Guajes Mine – Effective December 31, 2015

Tonnes (millions) Au Grade (g/t) Ag Grade (g/t) Contained Au (millions oz) Contained Ag (millions oz)
El Limón (including El Limón Sur)
Measured 7.45 2.56 3.80 0.61 0.91
Indicated 25.17 2.57 5.09 2.08 4.12
Measured and Indicated 32.62 2.57 4.80 2.69 5.03
Inferred 5.44 1.91 3.53 0.33 0.62
Guajes
Measured 3.65 3.02 3.94 0.35 0.46
Indicated 12.07 2.77 3.34 1.08 1.30
Measured and Indicated 15.72 2.83 3.48 1.43 1.76
Inferred 0.52 1.38 2.55 0.02 0.04
Total El Limón and Guajes
Measured 11.10 2.71 3.85 0.97 1.37
Indicated 37.24 2.64 4.53 3.16 5.42
Measured and Indicated 48.35 2.65 4.37 4.12 6.79
Inferred 5.96 1.86 3.45 0.36 0.66

Notes to accompany the “Mineral Resource Estimate, El Limón Guajes Mine - Effective December 31, 2015” table

  1. The qualified person for the Guajes estimate is Mark Hertel, RM SME, an employee of MPH Consulting. The estimate has an effective date of December 31, 2015. The December 16, 2014 estimate was left unchanged except for depletion through mining and a small area referred to as the GE test area where additional diamond drill information was available.
  2. The qualified person for the El Limón estimate is Edward J. C. Orbock III, RM SME, an Amec Foster Wheeler employee. The estimate has an effective date of December 31, 2015.
  3. The qualified person for the El Limón Sur area within the El Limón estimate is Mark Hertel, RM SME, an employee of MPH Consulting. The estimate for the El Limón Sur area has an effective date of August 6, 2014.
  4. Mineral Resources are reported above a 0.5 g/t Au cut-off grade.
  5. Mineral Resources are reported as undiluted; grades are contained grades. 
  6. Mineral Resources are reported within a conceptual open pit shell.
  7. Mineral Resources are reported using a long-term gold price of $1,380/oz, silver price of $21.00/oz.
  8. The metal prices used for the Mineral Resources estimates are based on Amec Foster Wheeler’s internal guidelines which are based on long-term consensus prices. The assumed mining method is open pit, mining costs used are $2.60 per tonne, processing costs at $16.90 per tonne. General and administrative costs are estimated at $6.20 per tonne processed.
  9. Metallurgical recoveries average 87% for gold and 32% for silver.
  10. Assumed pit slopes range from 33 to 49 degrees.
  11. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade, and contained metal content.
  12. Mineral Resources are reported using topography with mining progress as of December 31, 2015. Mining progress applies to both El Limón and Guajes Mineral Resources.
  13. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Mineral Reserves, with the exclusion of stockpiled ore which is not included within the Mineral Resource table above.
  14. Mineral Resources were developed in accordance with CIM (2014) guidelines.

Based on the LOM, the mineral reserve estimates for the ELG Mine at the end of 2015 were as follows:

Mineral Reserve Estimate, El Limón Guajes Mine – Effective December 31, 2015

Reserve Category Tonnes (millions) Au Grade (g/t) Ag Grade (g/t) Contained Au (millions oz) Contained Ag (millions oz)
El Limón (including El Limón Sur)
Proven 6.33 2.65 3.50 0.54 0.71
Probable 20.33 2.60 4.58 1.70 2.99
Proven and Probable 26.66 2.61 4.32 2.24 3.71
Guajes
Proven 3.56 2.85 3.75 0.33 0.43
Probable 11.72 2.60 3.15 0.98 1.19
Proven and Probable 15.28 2.66 3.29 1.31 1.62
Mine stockpiles
Proven 1.17 2.17 3.37 0.08 0.13
Total El Limón and Guajes
Proven 11.07 2.66 3.57 0.95 1.27
Probable 32.05 2.60 4.06 2.68 4.18
Total 43.11 2.62 3.93 3.63 5.45

Notes to accompany the “Mineral Reserve Estimate, El Limón Guajes Mine - Effective December 31, 2015” table

  1. The qualified person for the El Limón and Guajes mineral reserve estimate is Victor Barua, AUSIMM member, Manager, Technical Services of Torex Gold Resources Inc. 
  2. Mineral Reserves are reported based on open pit mining within designed pits above in situ cut-off grades that are 0.80 g/t Au to 1.30 g/t Au for all ore types excluding Breccia ore. Breccia ore cut-off is set at 1.30 g/t Au. Mineral Reserves incorporate an estimate for dilution and mining losses. The cut-off grades and pit designs are considered for the metal price $ 1,200/oz gold and $15/oz silver.
  3. The table above includes stockpiled ore as at December 31, 2015.
  4. Mineral Reserves were developed in accordance with CIM (2014) guidelines.
  5. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade, and contained metal content.

Qualified Persons

The qualified person for the Guajes estimate is Mark Hertel, RM SME, an employee of MPH Consulting. The estimate has an effective date of December 31, 2015.

The qualified person for the El Limón (excluding El Limón Sur) estimate is Edward J. C. Orbock III, RM SME, an Amec Foster Wheeler employee. The estimate has an effective date of December 31, 2015.

The qualified person for the El Limón Sur area within El Limón estimate is Mark Hertel, RM SME, an employee of MPH Consulting. The estimate for the El Limón Sur area has an effective date of August 6, 2014.

The qualified person for the El Limón and Guajes mineral reserve estimate and estimated gold sales by year is Victor Barua, AUSIMM member, Manager, Technical Services of Torex Gold Resources Inc. The estimate for the El Limón and Guajes mineral reserve estimate and estimated gold sales by year have an effective date of December 31, 2015.

Other scientific and technical information contained in this news release has been reviewed and approved by Dawson Proudfoot, P.Eng., Vice President, Engineering of Torex Gold Resources Inc. and a Qualified Person under NI 43-101.

For further details regarding the El Limón-Guajes Mine, please refer to the technical report entitled “Morelos Gold Property, NI 43-101 Technical Report, El Limón Guajes Mine Plan and Media Luna Preliminary Economic Assessment, Guerrero State, Mexico” dated effective August 17, 2015, and filed on September 3, 2015 (the “Technical Report”). The technical information contained in this presentation is based upon the information contained in the Technical Report which is available on SEDAR as www.sedar.com

HIGHLIGHTS
MARCH 31, 2016

ELG Mine Achieved Commercial Production

  • On March 30, 2016, the Company announced that the ELG Mine had achieved commercial production ahead of schedule and under budget, reaching an average of more than 60% of design throughput of 14,000 tonnes per day (“tpd”) for 30 days. For accounting purposes, the transition to the production phase will be reflected commencing April 1, 2016.
  • The plant produced 38,161 ounces of gold during the first quarter and produced 19,900 ounces of gold in April 2016.
  • Plant throughput was ahead of plan, averaging 9,100 tpd during the first quarter. In the latter half of April, throughput averaged more than 12,800 tpd, or 91% of design capacity, at an average gold recovery of 85%.
  • The current record daily production level of 16,300 tpd was achieved on May 9, 2016, and again on May 10. This exceeded nameplate design capacity of 14,000 tpd by 16%.
  • Gold recovery levels during the first quarter ranged from 63.0% to 90.7%, averaging above 80% for March 2016, compared to life of mine design levels of 87.4%.
  • The tailings filtration plant is delivering the expected product for dry stack disposal, and throughput has been steadily increasing to match the cadence set by the grinding circuit.

Mining

  • At the end of the first quarter, the Company had approximately 1.0 million tonnes of ore stockpiled.
  • Commissioning of both the El Limón crusher and RopeCon commenced in March 2016 and was completed in April.
  • The resettlement of the Real del Limón village was started during the first quarter and was completed in April 2016.

Technical Reports