Technical Report Confirms Torex Status as a Producer IN the Lowest Cost Quartile
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260 1500 Fax (416) 640-2011
www.torexgold.com
TECHNICAL REPORT CONFIRMS TOREX STATUS
AS A PRODUCER IN THE LOWEST COST QUARTILE
TORONTO, Ontario, September 4, 2018 – Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX:TXG) announces completion of an
updated Technical Report (TR) including a life of mine plan (LOM) for its producing El Limon Guajes ( ELG) Mines, that has increased
average annual gold production to 430,000 ounces per year, from 2019 to 2023. The TR also contains an updated Media Luna Preliminary
Economic Assessment (PEA), with an after -tax NPV (5%) of $582M, and an after -tax IRR of 27%. For purposes of illustration, the TR
includes a Media Luna design utilizing a conceptual new underground mining tech nology that Torex is developing. The new technology,
called the Muckahi Mining System (Muckahi), shows the potential to increase the Media Luna Project, NPV by $197M. If proven, the Muckahi
technology could be applicable to many other underground deposits.
Fred Stanford, President and CEO of Torex stated: “With the ELG, ramp -up to steady state nearing completion, this TR incorporates the
ramp-up learnings and illustrates that ELG is an asset that produces in the lowest quartile of all in sustaining costs per ounce. The TR also
lays out the ground work for growth through the ELG Underground (ELG UG) mine and Media Luna deposit, and through the advancement
of the conceptual Muckahi technology.
The updated Media Luna PEA delivers a healthy after-tax IRR of 27%, and an NPV (5%) of $582M. The CAPEX estimate is similar to the
2015 estimate, with costs updated to reflect the changes in design and three years of inflation. Additional metallurgical test work is underway
with the intention of demonstrati ng that metal recoveries can be increased. Infill drilling is ongoing for this project , with the objective of
upgrading 1.85M of the 7.4M Inferred Au Eq. ounces (25%), to the Indicated confidence category. We look forward to the completion of this
infill drilling and the advancement to the next levels of technical studies.
As expected, the Muckahi Mining System illustrates a potential for material improvement over conventional mining technologies. Using
Media Luna as a demonstration example, the study indicates that utilizing Muckahi produces an improvement of 19% in after-tax IRR from
27% to 46 %. (30% less underground mining capital, 20% less mine operating cost, and 60% reduction in time to a chieve commercial
production.) After many years of thought and design effort, the Muckahi Mining System is now shifting to the underground testing phase.
Manufacturing of the first of the prototype machines is underway, testing underground is scheduled to commence in Q1/19. We look forward
to having a proof of concept before the Media Luna feasibility study work requires a commitment to mining method. A technical session to
review the technology is scheduled for September 17th, 2018, between 10 am and 2 pm (ET). Please contact Gabriela Sanchez for invitation
details.
In conclusion, producing the TR has been a significant undertaking for a dedicated team. I thank them for grinding through the details and
illustrating the potential of Torex through the ELG Open Pits, ELG Underground, Media Luna, the Muckahi technology, and other Morelos
Property exploration targets. We look forward to the resetting of financial models and having many more investors join us as we create
value from these assets.”
The supporting Technical Report for the Company’s 100% owne d Morelos Property in Southwest Mexico, entitled “NI 43-101 Technical
Report ELG Mine Complex Life of Mine Plan and Media Luna Preliminary Economic Assessment”, which has an effective date of March 31,
2018, has been filed with SEDAR and posted on the Company’s website.
A preliminary economic assessment should not be considered a prefeasibility study or feasibility study, as the economics and technical
viability of the Media Luna Project have not been demonstrated at this time. The Media Luna PEA is prelim inary in nature and includes
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. It cannot be assumed that all or any part of the inferred mineral resources will ever be
upgraded to a higher category. Furthermore, there is no certainty that the conclusions or results as reported in the Media Luna PEA will be
realized. Mineral resources that are not mineral reserves do not do not have demonstrated economic viability. The Media Luna PEA includes
information on Muckahi. It is important to note that Muckahi is experimental in nature and has not been tested in an operating mine. Many
aspects of the system are conceptual, and proof of concept has not been demonstrated.
Torex Gold Resources Inc. Page 2
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260 1500 Fax (416) 304-4000
www.torexgold.com
ELG Life of Mine Summary
1 Cash Flow in 2018 includes Financing proceeds of $48m. Revenue adjusted to actual price for H1
2 Metal Prices used $1,200/oz Au, $17.00/oz Ag, $3.00/lb Cu, USD:MXN 1:18, Reserves as of March 31, 2018
3 Lowest quartile producer per ELG LoM AISC per ounce sold v. Wood Mackenzie Cost Curve for 2018 and 2019
Unit Total 2018 2019 2020 2021 2022 2023 2024
Financial Outcomes
Total Au ounces sold Koz 2,737 348 467 428 400 456 401 236
Cash Flows and balances
Cash Flow before debt repayment $M 1,063 83 166 153 159 229 197 124
Debt Repayment $M (396) (56) (82) (165) (43) (51) - -
Debt remaining at year end $M 341 258 94 51 0 0 0
Cash on hand (excl. restricted cash) $M 73 156 144 261 439 635 759
EBITDA
EBITDA $M 1,767 206 323 303 265 320 269 80
Total Cash Cost (net of by-product)
Total Cash Cost M$ 1,518 212 237 211 215 227 213 203
Cash Cost per ounce Sold $/oz 554 608 508 492 537 498 530 862
AISC (net of by-product)
Total Sustaining Capex (including Deferred Stripping) M$ 253 100 59 66 20 6 2 0
Sustaining Capital M$ 104 38 32 24 6 2 2 0
Deferred Stripping M$ 150 62 27 43 15 4 - -
Other Cost (G&A, ARO, Exploration.) M$ 239 32 28 28 28 28 28 66
Total AISC M$ 2,010 344 324 305 263 261 242 270
AISC per ounce Sold $/oz 734 988 695 712 658 572 604 978
Development and Growth Investment
Muckahi M$ 5 5 - - - - - -
Media Luna M$ 28 10 14 4 - - - -
SART Plant and Sub-sill M$ 26 25 1 - - - - -
Operating Statistics
Open Pit ore tonnes mined Mt 33.4 4.9 5.9 6.1 5.5 5.8 4.7 0.5
Open Pit Waste tonnes mined Mt 191.5 30.8 44.2 42.0 35.7 26.3 11.8 0.8
Open Pit strip ratio W:O 5.8 6.3 7.5 6.9 6.5 4.5 2.5 1.6
Open Pit Au grade gpt 2.72 2.79 2.49 2.45 2.69 2.95 2.98 3.02
Underground ore tonnes mined Mt 0.53 0.07 0.30 0.16 0.00 0.00 0.00 0.00
Underground Au grade gpt 10.85 14.22 10.92 9.26 0.00 0.00 0.00 0.00
Process Plant production Mt 34.6 4.32 5.04 5.04 5.04 5.04 5.04 5.12
Feed head grade gpt 2.82 2.91 3.32 3.04 2.84 3.24 2.85 1.55
Gold recovery % 87% 86.4% 86.9% 86.9% 87.0% 87.0% 87.0% 87.0%
Stockpile at year end Mt 1.4 2.5 3.8 4.3 5.0 4.6 0.0
Stockpile grade at year end gpt 2.38 1.78 1.50 1.45 1.38 1.39 0.00
ELG LOM Plan
Torex Gold Resources Inc. Page 3
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260 1500 Fax (416) 304-4000
www.torexgold.com
The table below provides summary extracts from the Technical Report, PEA for the Media Luna project:
1) Metal Prices used $1,200/oz Au, $17.00/oz Ag, $3.00/lb Cu, USD:MXN 1:18
2) A preliminary economic assessment should not be considered a prefeasibility study or feasibility study, as the economics and technical viability of the Media Luna Project have not been
demonstrated at this time. The Media Luna PEA is preliminary in nature and includes 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 r eserves. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a
higher category. Furthermore, there is no certainty that the conclusions or results as reported in the Media Luna PEA will be realized. Mineral resources that are not mineral reserves do not do
not have demonstrated economic viability.
References to $ in this news release are USD unless stated otherwise.
The scientific and technical information contained in this news release pertaining to the:
ELG Mine Complex Life of Mine Plan has been reviewed and approved by the following Qualified Persons under National Instrument 43 -
101 (“NI 43-101”)who consent to the inclusion of their names in this release: Dan H. Neff, P.E. (Infrastructure and Economics); Paul Kaplan,
P.E. (Hydrology, Hydrogeology and Waste Disposal), Bert J. Huls, P.Eng. (Mineral Processing and Metallurgy); Mark Hertel, RM SME (ELG
Mines Mineral Resource Estimates), Michael Levy, MSc., P.E., P.G., P.Eng. (Open Pit Geotechnical), each of whom is independent of the
Company; and employees of the Company, Dawson Proudfoot, P.Eng., Vice President, Engineering (Open Pit Mine Planning, ELG Open
Pit Mineral Reserves and Environmental); Clifford Lafleur, P.Eng., Director of Technical Ser vices (Underground Mine Planning , ELG
Underground Mineral Reserves).
Media Luna Project, including the PEA and Muckahi, has been reviewed and approved by the following Qualified Persons under NI 43-101
who consent to the inclusion of their names in this r elease: Robert Davidson, P.E. (Infrastructure and Economics); Paul Kaplan, P.E.
(Hydrology, Hydrogeology and Waste Disposal), Ber t J. Huls, P.Eng. (Mineral Processing and Metallurgy); Mark Hertel, RM SME (Media
Luna Mineral Resource Estimate), each of whom is independent of the Company; and employees of the Company, Dawson Proudfoot,
P.Eng., Vice President, Engineering (Environmental); James Joseph Monaghan, P.Eng., a Principal Mining Engineer (Underground Mine
Planning and Muckahi).
About Torex
Torex is an intermediate gold producer based in Canada, engaged in the exploration, development and operation 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 Me xico City.
The Company’s principal assets are the El Limón Guajes mining complex (the “ELG Mine Complex”), comprised of the El Limón, Guajes
and El Limón Sur open pits, the El Limón Guajes underground mine including zones referred to as Sub -Sill and El Limón D eep, and the
processing plant and related infrastructure, which is in the commercial production stage as of April 1, 2016, and the Media L una deposit,
which is an early stage development project. The property remains 75% unexplored.
ML Conventional PEA Unit Total 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Financial Outcomes
Au Eq (kozs) Koz eq 3,911 - - - - 38 274 399 437 404 427 352 358 372 344 320 186
Total Au ounces sold (commercial phase) Koz 2,099 - - - - - 61 195 242 247 264 192 199 203 200 180 114
Cash Flow generated
Revenue M$ 4,516 - - - - - 197 478 524 484 513 423 429 447 413 384 223
Operating Cost M$ 2,243 - - - - - 96 213 221 220 230 235 225 228 219 217 139
Operating Cash Flow M$ 2,273 - - - - - 101 265 304 265 283 188 204 218 193 167 85
Capital
Project Capital M$ 496 - - 64 121 257 55 - - - - - - - - - -
Pre-Commercial Costs Capitalised (Cost - revenue) M$ (85) - - - - (18) (67) - - - - - - - - - -
Sustaining Capital M$ 109 - - - - - 13 17 20 12 17 10 10 7 3 - -
Total Cash Cost & AISC
Total Cash Cost (commercial phase) M$ 2,243 - - - - - 96 213 221 220 230 235 225 228 219 217 139
Cash cost per Au Eq $/oz eq 596 - - - - - 586 534 505 544 539 668 629 613 638 678 745
Total AISC M$ 2,331 - - - - - 109 230 241 232 247 246 235 236 222 217 117
AISC per Au Eq $/oz eq 619 - - - - - 663.24 578 552 574 578 697 656 633 646 678 627
Operating Statistics
Total Ore Mined Mt 30.9 - - - - 0.25 1.94 2.79 2.81 2.81 3.11 3.08 3.10 3.13 3.08 3.07 1.77
Au grade g/t 2.58 - - - - 1.17 1.96 2.60 3.21 3.26 3.15 2.32 2.38 2.42 2.42 2.18 2.39
Ag grade g/t 27.59 - - - - 52.65 39.73 35.82 39.06 28.84 22.24 23.64 24.76 26.94 20.92 22.15 21.09
Cu grade % 1.03% - - - - 2.27% 1.62% 1.31% 1.22% 1.00% 0.97% 0.95% 0.93% 0.97% 0.85% 0.82% 0.73%
Au Recovery % 85.10%
Ag Recovery % 75.00%
Cu Recovery % 88.80%
Au Sold Koz 2,148 - - - - 8 102 195 242 247 264 192 199 203 200 180 114
Ag Sold Koz 18,657 - - - - 287 1,684 2,186 2,395 1,772 1,512 1,591 1,680 1,841 1,406 1,487 817
Cu Sold Klbs 599,448 - - - - 10,605 59,143 68,894 64,243 52,751 56,809 55,013 54,031 57,050 49,391 47,340 24,177
Au Eq (kozs) Koz eq 3,911 - - - - 38 274 399 437 404 427 352 358 372 344 320 186
ML Conventional PEA
Torex Gold Resources Inc. Page 4
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260 1500 Fax (416) 304-4000
www.torexgold.com
For further information, please contact:
TOREX GOLD RESOURCES INC.
Fred Stanford Gabriela Sanchez
President and CEO Vice President Investor Relations
Tel. (647) 260-1502 Tel. (647) 260-1503
Email: [email protected] Email: [email protected]
CAUTIONARY NOTES
PRELIMINARY ECONOMIC ASSESSMENT
A preliminary economic assessment should not be considered a prefeasibility study or feasibility study, as the economics and technical viability of t he
Media Luna Project have not been demonstrated at this time. The Media Luna PEA is preliminary in nature and includes i nferred 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. It cannot be assumed that all or any part of the inferred mineral resources will ever be upgraded to a higher category. Furthermore, there is no
certainty that the conclusions or results as reported in the Media Luna PEA will be realized. Mineral resources that are not mineral reserves do not do not
have demonstrated economic viability.
The Media Luna PEA includes information on Muckahi. It is important to note that Muckahi is experimental in nature and has not been tested in an
operating mine. Many aspects of the system are conceptual, and proof of concept has not been demonstrated. Drill and blast fundamentals, standards
and best practices for underground hard rock mining are applied in the Muckahi, where applicable. The proposed application of a monorail system for
underground transportation for mine development and production mining is unique to underground hard rock mining. There are existing underground hard
rock mines that use a monorail system for transportation of materials and equipment, however not in the capacity described in the TR. Aspects of Muckahi
mining equipment are currently in the design stage. The mine design, equipment performance and cost estimations are conceptual in nature, and do not
demonstrate technical or economic viability. The approximate timeframe to develop and test the concept would be approximat ely two years for the mine
development activities and up to five years for the mine production activities. Further studies would be required to verify the viability of Muckahi. Muckahi
is not intended as a “trade off study” but is shown to merely demonst rate the potential benefits Muckahi may have using the Media Luna deposit as an
example. It includes 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 preliminary economic assessment will be realized. Mineral
resources that are not mineral reserves do not have demonstrated economic viability.
FORWARD LOOKING STATEMENTS
This press release contains “forward- looking information” and “forward- looking statements” within the meaning of applicable Canadian securities
legislation. Forward-looking information includes, without limitation, information with respect to proposed expl oration and development activities and their
timing, the results set out in the TR including the Media Luna PEA, including, as applicable, the resource estimates , reserve estimates and potential
mineralization, the estimates of capital and sustaining costs , projected revenues, projected future cash flows, anticipated internal rates of return, future
production, operating costs, total cash costs and AISC and other expenses and other economic parameters , estimated recoveries, expected mine life or
project life, estimated payback period, net present values, and earnings before interest, depreciation and amortization, the future price of gold, government
regulations and permitting timelines, requirements for additional capital, environmental risks, and general business and economic conditions, the expected
benefits and cost savings from the operation of the SART plan, the expected ramp- up of ELG to steady state full production, the potential growth of the
ELG UG mine, plans to complete additional metallurgical testing on the Media Luna mineralized material to demonstrate potential for improved recoveries,
plans to complete an infill drilling program and a feasibility study of the Media Luna Project, the potential to upgrade the mineral resources of the Media
Luna Project, the potential of the Muckahi mining system and possible application to other underground deposits, plans to com plete the manufacture of
prototypes for Muckahi and timing on the underground testing of the prototypes . Generally, forward- looking information can be identified by the use of
terminology such as “plans”, “expects”, “estimates”, “intends”, “potential”, or variations of such words, or statements that certain actions, events or results
“can”, “may”, “would”, “will”, 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 Company’s actual results, l evel of activity, performance or achievements to be materially different from those
expressed or implied by such forward- looking information, including, without limitation, forward- looking statements and assumptions pertaining to the
following: risks associated with completing the ramp up of the operations to steady -state, risk associated with skarn deposits including grade variability,
fluctuation in gold and other metal prices, commodity price risk, currency exchange rate fluctuations, risk that expected benefits of SART plant will not be
realized, risk of illegal blockades impacting access to the ELG Mine Complex and the Media Luna Project or to supplies and services , uncertainty as a
result of the preliminary nature of the PEA and the Company’s ability t o realize the results of the PEA , uncertainty regarding the inclusion of inferred
mineral resources in the mineral resource estimate and the Company’s ability to upgrade the inferred mineral resources to a higher category, uncertainty
regarding the ability to convert any part of the mineral resource into mineral reserves , uncertainty involving resource estimates and the ability to extract
those resources economically, or at all , uncertainty involving drilling programs and the Company’s ability to expand and upgrade existing resource
estimates, the regulatory process and actions, the success of the Muckahi mining system, ability to finance the Media Luna Project on reasonable terms,
and those risk factors identified in the TR and the Company’s annual information form and management’s discussion and analysis. Forward- looking
information are based on the assumptions discussed in the TR and such other reasonable assumptions, estimates, analysis and opinions of management
made in light of its experience and perception of trends, current conditions and expected developments, and other factors that management beli eves are
relevant and reasonable in the circumstances at the date such statements are made. Although the Company has attempted to i dentify important factors
Torex Gold Resources Inc. Page 5
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260 1500 Fax (416) 304-4000
www.torexgold.com
that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results
not to be as anticipated. 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. Accordingly, readers should not place undue reliance on forward-looking information. The Company
does not undertake to update any forward-looking information, whether as a result of new information or future events or otherwise, except as may be
required by applicable securities laws.
NON-IFRS MEASURES
This press release contains certain non-International Financial Reporting Standards measures. Such measures have non- standardized meaning under
International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures used by other issuers. Total cash costs and all-in
sustaining costs (“AISC”) are financial performance measures with no standard meaning under IFRS. Refer to “Non-IFRS Financial Performance
Measures” in Torex’s 2017 Management’s Discussion and Analysis for further information and a detailed reconciliation regarding historical performance
measures as updated in Torex’s continuous disclosure documents.