Torex GOLD Announces Strong Q2 2020 Financial Results and Updated Guidance
Corporate Office: 130 King St. West, Suite 740, Toronto, ON M5X 2A2, Canada – Tel. (647) 260-1500 Fax (416) 304-4000
www.torexgold.com
TOREX GOLD ANNOUNCES STRONG Q2 2020 FINANCIAL RESULTS
AND UPDATED GUIDANCE
(All amounts expressed in U.S. Dollars unless otherwise stated)
TORONTO, Ontario, August 5, 2020 – Today, Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG) released
the Company’s financial results for the three and six months ended June 30, 2020 as well as its updated operational outlook
for 2020.
Due to the COVID -19 decree issued by the Government of Mexico, production at El Limón Guajes (ELG) was temporarily
suspended for the month of April and partially resumed in May with the processing of lower grade stockpiled material. Following
the designation of mining as an essential activity in Mexico, full production resumed at the beginning of June.
Jody Kuzenko, President & CEO of Torex, stated:
“While this quarter was far from business as usual, we delivered solid operational performance and demonstrated the financial
strength of our business even in these most challenging times. Despite the mandated suspension of our operations due to
COVID-19, we produced 59,500 ounces of gold, delivered $49.3 million in adjusted EBITDA and $28.1 million in operating cash
flow (prior to non-cash working capital). With operations back on track , $176.9 million in the bank and a robust gold price at
hand, we plan to direct our cash flow to further reducing debt during the second half of 2020.
“With the steady state production run rate reestablished in June, we are well positioned to deliver a solid second half of the year,
and are off to a strong start with 42,630 ounces of gold produced in July , following 38,890 ounces produced in June . Our
expectations are reflected in the revised production guidance of between 390,000 and 420,000 ounces of gold in 2020.
“During the quarter, we also kept pace on planned investment associated with our future. The modest increase in our capital
expenditure forecast for the remainder of 2020 relative to original guidance reflects our decision to advance projects which we
believe will add incremental value for shareholders. We are increasing exploration investment in ELG underground and building
a third portal to access our underground deposits there, which we expect will cut the current haulage distance in half thereby
reducing operating costs. Additionally, we have added a south portal to the Media Luna design in order to mitigate any schedule
risk associated with the 7 km long access tunnel.
“I’m particularly proud that we continued to demonstrate our industry leadership in safety this quarter, with more than seven
million hours now worked without a single lost time injury. Our strong culture of safety has served us well as we continue to keep
our operations running safely by continuously enhancing our controls to prevent the spread of COVID-19 among our employees
and local communities.
“With a solid balance sheet, strong momentum on production, gold prices reaching record highs and most importantly, an
exceptional team delivering exceptional operational performance, we are poised to deliver very strong results in H2 2020, into
2021 and beyond.”
This release should be read in conjunction with the Company’s June 30 , 2020 Financial Statements and MD&A on the
Company’s website or on SEDAR. A summary of Torex’s operating and financial results can be found in Table 2.
Q2 2020 Highlights
• Safety: Zero lost time injuries in the quarter and more than 7 million hours worked since the last lost time injury more
than a year ago.
• ESG (Environment, Social, Governance): – On August 4th, the Company issued its 2019 Responsible Gold Mining Report,
which is available on our website (www.torexgold.com).
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
• Gold production: Produced 59,508 ounces of gold including 38,892 ounces in June.
• Plant throughput and availability: Plant throughput averaged 7,560 tonnes per day1 for the quarter , including
11,873 tonnes per day processed in June.
• Gold sold: 63,147 ounces of gold sold at an average realized gold price2 of $1,712 per ounce.
• Care and maintenance costs of $11.1 million related to the COVID -19 suspension of operations have been excluded ,
$8.0 million from production costs and $3.1 million from depreciation.
• Total cash costs2 and all-in sustaining costs2: Total cash costs of $740 per ounce and all-in sustaining costs of $1,015
per ounce, which exclude $8.0 million of production costs related to the COVID-19 suspension of operations.
• Net income: Net income of $3.8 million, or $0.04 per share on a basic and diluted basis.
• Adjusted net earnings2: Adjusted net earnings of $3.6 million, or $0.04 per share on a basic and diluted basis. Adjusted
net earnings for the quarter excludes $11.1 million of care and maintenance costs related to the COVID-19 suspension of
operations ($7.8 million or $0.09 per share on a tax adjusted basis).
• EBITDA2 and Adjusted EBITDA 2: Generated EBITDA of $ 44.8 million and adjusted EBITDA of $ 49.3 million. Adjusted
EBITDA excludes $8.0 million of production costs related to the COVID-19 suspension of operations.
• Cash flow from operations: Cash flow from operations totaled $2.2 million ($28.1 million prior to changes in non-cash
working capital), including income taxes paid of $14.8 million.
• Free cash flow2: Deficiency of $28.5 million after taking into account changes in non-cash working capital.
• Cash balance: As at June 30, 2020 totaled $176.9 million, all unrestricted.
• Debt: Repaid $21.7 million of outstanding debt during the quarter. Drew $90.0 million on the Revolving Facility during the
quarter. Total debt stood at $225.2 million as of June 30, 2020.
• Losses on derivative contracts: $2.7 million in losses on derivative contracts this quarter, primarily due to a marked
increase in gold price.
1 Based on 91 calendar days for the three months ended June 30, 2020.
2 Refer to “Non-IFRS Financial Performance Measures” within the MD&A for further information and a detailed reconciliation.
Guidance Update
With the resumption of full operations at ELG in June 2020, the Company has revised its operational outlook for 2020. The lower
guided output and higher costs primarily reflect the impact the COVID-19 related suspension had on operations in Q2. As with
everywhere else in the world, uncertainty still exists over the extent and duration of the impacts that COVID -19 could have on
operations, and as such, may impact our ability to achieve the revised outlook outlined in Table 1. There are no changes to the
safety and environmental objectives.
Table 1: Revised 2020 Operational Outlook
Original Outlook Revised Outlook
Gold production 420,000 to 480,000 ounces 390,000 to 420,000 ounces
Total cash costs per ounce of gold sold $640 to $670 $695 to $740
All-in sustaining costs per ounce of gold sold $900 to $960 $965 to $1,025
Capitalized waste stripping $51 million $46 million
Other sustaining investment $34 million $37 million
Sustaining capital expenditures $85 million $83 million
Non-sustaining capital expenditures $82 million $92 million
The increase in guidance on non -sustaining capital expenditures includes a $7.0 million increase in investment in the Media
Luna project for the ‘South Portal’ and additional equipment, to ensure that the project stays on schedule; and $3.5 million to
develop ‘Portal 3’ in order to mine the Sub-Sill Extension area and the El Limón Deep Extension in an efficient and cost-effective
manner.
Enhanced Balance Sheet Liquidity
During the quarter, we drew down $90 .0 million on our revolving credit facility to enhance balance sheet liquidity. With strong
cash flow projected for the remainder of the year, we expect to be in a net cash position before year -end, having exited June
2020 with net debt of $53.5 million from $26.3 million at the end of Q1.
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
COVID-19 Update
The enhanced COVID-19 control measures put in place in March remain in place today, and screening measures continue to
be effective. To date, there have been four confirmed cases of COVID -19 within our workf orce. Three of those individuals
displayed symptoms and tested positive at home while away from site and are now fully recovered. The fourth individual tested
positive at site and was quarantined as outlined in our COVID-19 protocols.
Continued support has been provided for COVID-19 management in neighbouring communities, including the implementation
of infection prevention education campaigns for adults and children, the delivery of medical equipment for local health centres,
and the donation of hand sanitizer and medical masks.
Conference Call and Webcast Details
The Company will host a conference call today at 9:00 AM (ET) where senior management will discuss the second quarter
operating and financial results. Please call the below numbers approximately 10 minutes prior to the start of the call:
• Toronto local or international: 1-416-915-3239
• Toll-Free (North America): 1-800-319-4610
• Toll-Free (France): 0800-900-351
• Toll-Free (Switzerland): 0800-802-457
• Toll-Free (United Kingdom): 0808-101-2791
A live audio webcast of the conference call will be available on the Company’s website at www.torexgold.com. The webcast will
be archived on the Company’s website.
About Torex Gold Resources Inc.
Torex is an intermediate gold producer based in Canada, engaged in the mining, developing and exploring of its 100% owned
Morelos Gold Property, an area of 29,000 hectares in the highly prospective Guerrero Gold Belt loca ted 180 kilometr es
southwest of Mexico City. The Company’s principal assets are the El Limón Guajes mining complex (“ELG” or the “ELG Mine
Complex”), comprising the El Limón, Guajes and El Limón Sur open pits, the El Limón Guajes underground mine including
zones referred to as Sub -Sill and ELD, and the processing plant and related infrastructure, which commenced commercial
production as of April 1, 2016, and the Media Luna deposit, which is an early stage development project, and for which the
Company issue d an updated preliminary economic assessment in September 2018 (the “Technical Report”). The property
remains 75% unexplored.
For further information, please contact:
TOREX GOLD RESOURCES INC.
Jody Kuzenko
President and CEO
Direct: (647) 725-9982
Email: [email protected]
Dan Rollins
Vice President, Corporate Development & Investor Relations
Direct: (647) 260-1503
Email: [email protected]
CAUTIONARY NOTES
This news 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 Company’s operations are back on track; the Company’s
plan to direct its growing cash position to reducing debt during the second half of 2020; with the normal production run rate reestablished in
June, the Company is well positioned to deliver a solid second half of the year; the Company’s revised production guidance for 2020 of
between 390,000 and 420,000 ounces of gold sold; the modest increase in the Company’s capital expenditure forecast for the remainder of
2020 relative to original guidance reflects the Company’s decision to advance p rojects which it believes will add incremental value for
shareholders; plans to increase exploration investment in ELG underground and building a third portal to access its undergro und deposits
there, which is expected cut the current haulage distance in half thereby reducing operating costs; the addition of a south portal to the Media
Luna design in order to mitigate any schedule risk associated with the 7 km long access tunnel; plans to continuously enhanci ng controls to
prevent the spread of COVID-19 among the Company’s employees and local communities; expectation of operations continuing to run safely
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
due the strong safety culture, including the continued enhancements control the spread of COVID -19; with a solid balance sheet, strong
momentum on production, gold prices reaching record highs and most importantly, an exceptional team delivering exceptional operational
performance, the Company is poised to deliver very strong results in H2 2020 and into 2021 and beyond; the COVID -19 disruption to the
ELG operations will materially affect the Company’s performance for 2020; the Company revised its operational outlook for 2020 as outlined
in the news release; the planned increase investment in the Media Luna project for the ‘South Portal’ and additional equip ment, to ensure
that the project stays on schedule; the plan to invest $3.5 million to develop ‘Portal 3’ in order to mine the Sub-Sill Extension area and the El
Limón Deep Extension in an efficient and cost-effective manner; with strong cash flow projected for the remainder of the year, the Company
expects to be in a net cash position before year-end; and the expected effectiveness of the enhanced COVID-19 control measures. Generally,
forward-looking information can be identified by the use of forward -looking terminology such as “plans,” “expects,” or “does not expect,” “is
expected,” “budget,” “scheduled,” “goal,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does not anticipate,” “beli eves” or “potential” or
variations of such words and phrases or statements 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 those expressed or implied
by such forward-looking information, including risks associated with the impacts of COVID-19 on the mining, development an d exploration
operations; and the Company’s ability to achieve the revised 2020 operational outlook ; predictability of the grade; fluctuation in gold and
other metal prices; currency exchange rate fluctuations; capital and operational cost estimates; sat isfying financial covenants under the
Company’s debt facility; illegal blockades; dependence on good relationships with employees and contractors and labour unions; the ability
to secure necessary permits and licenses ; foreign operations and political and country risk; risks associated with skarn deposits; hedging
contracts; interest rate risk; as well as those risk factors included herein and elsewhere in the Company’s public disclosure. Notwithstanding
the Company's efforts, there can be no guarantee that the Company does not have employees who have the COVID-19 infection or that the
Company’s measures to protect employees and surrounding communities from COVID-19 during this period will be effective. Forward-looking
information are based on the assumption s discussed in the Company’s annual information form and such other reasonable assumptions,
estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions a nd expected
developments, and other factors that management believes are relevant and reaso nable in the circumstances at the date such statements
are made. Although the Company has attempted to identify important factors that could cause actual results to differ material ly from those
contained in the forward -looking information, there may be oth er 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 t hose 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.
.
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
Table 2: Operating and Financial Results Summary
Three Months Ended Six Months Ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30,
In millions of U.S. dollars, unless otherwise noted 2020 2020 2019 2019 2019 2020 2019
Operating Data
Mining
Ore tonnes mined kt 697 1,837 1,573 1,416 1,810 2,534 2,963
Waste tonnes mined kt 4,435 11,726 10,795 11,923 11,450 16,161 23,731
Total tonnes mined kt 5,132 13,563 12,368 13,339 13,260 18,695 26,694
Strip ratio 2 waste:ore 6.7 6.8 7.3 9.1 6.8 6.7 8.6
Average gold grade of ore mined 4 gpt 3.07 2.52 3.06 3.19 2.91 2.67 2.73
Ore in stockpile 5 mt 3.1 3.1 2.4 1.9 1.7 3.1 1.7
Processing
Total tonnes processed kt 688 1,134 1,116 1,139 1,062 1,822 2,138
Average plant throughput 8 tpd 7,560 12,464 12,130 12,380 11,670 10,011 11,812
Average gold recovery % 89 89 89 89 88 89 88
Average gold grade of ore processed gpt 3.18 3.35 3.87 4.11 3.92 3.29 3.27
Production and sales
Gold produced oz 59,508 108,537 125,151 138,145 113,645 168,045 191,515
Gold sold oz 63,147 108,064 126,910 132,535 113,419 171,211 189,892
Financial Data
Revenue $ 109.1 172.0 190.0 198.2 150.7 281.1 252.6
Cost of sales $ 91.4 144.1 149.0 130.1 115.7 235.5 200.8
Earnings from mine operations $ 17.7 27.9 41.0 68.1 35.0 45.6 51.8
Net income (loss) $ 3.8 (47.0 ) 35.1 27.4 10.0 (43.2 ) 8.7
Per share - Basic $/share 0.04 (0.55 ) 0.41 0.32 0.12 (0.51 ) 0.10
Per share - Diluted $/share 0.04 (0.57 ) 0.41 0.32 0.12 (0.51 ) 0.10
Adjusted net earnings 1 $ 3.6 19.9 34.0 30.8 8.8 23.5 3.0
Per share - Basic 1 $/share 0.04 0.23 0.40 0.36 0.10 0.28 0.04
Per share - Diluted 1 $/share 0.04 0.23 0.40 0.36 0.10 0.28 0.04
EBITDA 1 $ 44.8 39.4 102.2 116.6 74.3 84.2 111.5
Adjusted EBITDA 1 $ 49.3 67.4 105.1 115.1 76.5 116.7 112.7
Cost of sales 7 $/oz 1,447 1,333 1,174 982 1,020 1,375 1,057
Total cash costs 1 $/oz 740 794 617 561 606 774 662
All-in sustaining costs 1 $/oz 1,015 975 767 675 760 990 922
Average realized gold price 1 $/oz 1,712 1,571 1,481 1,478 1,314 1,623 1,309
Cash from operating activities $ 2.2 29.5 97.9 122.5 48.6 31.7 80.9
Cash from operating activities before
changes in non-cash working capital 6 $ 28.1 21.8 101.4 116.9 72.6 49.9 109.0
Free cash flow (deficiency) 1 $ (28.5 ) 2.1 71.6 96.4 20.6 (26.4 ) 13.2
Net debt 1 $ 53.5 26.3 21.7 97.2 221.2 53.5 221.2
Cash and cash equivalents $ 176.9 135.7 161.8 168.0 83.5 176.9 83.5
Restricted cash $ - - - - 32.3 - 32.3
Working capital (deficiency) 3 $ 191.9 105.1 96.5 116.7 (27.4 ) 191.9 (27.4 )
Total debt $ 225.2 155.2 174.9 255.7 298.2 225.2 298.2
Total assets $ 1,204.1 1,154.7 1,229.6 1,263.1 1,230.2 1,204.1 1,230.2
Total liabilities $ 419.2 373.7 394.8 464.6 461.0 419.2 461.0
1. Adjusted net earnings, total cash costs, all-in sustaining costs, average realized gold price, EBITDA, adjusted EBITDA, free cash flow (deficiency) and net debt are financial
performance measures with no standard meaning under International Financial Reporting Standards (“IFRS”). Refer to “Non-IFRS Financial Performance Measures” within
the Q2 2020 MD&A for further information and a detailed reconciliation.
2. Ore mined from the ELG Underground of 31 kt and 132 kt is included in ore tonnes mined and excluded from the strip ratio in the three and six months ended June 30, 2020.
For the three months ended March 31, 2020, December 31, 2019, September 30, 2019, and June 30, 2019, ore mined from the ELG Underground was 101 kt, 98 kt, 102 kt
and 117 kt, respectively.
3. Current liabilities at June 30, 2019 included a scheduled repayment of $75.0 million in June 2020 under the 2017 revolving facility. As a result of the subsequent refinancing,
the $75.0 million due under the 2017 revolving facility was deferred.
4. Included within average gold grade of ore mined is the mined long term, low grade inventory. Excluding the long term, low grade inventory, the average gold grade of ore mined
is 3.32 gpt and 2.86 gpt for the three and six months ended June 30, 2020. For the three months ended March 31, 2020, December 31, 2019, September 30, 2019, and
June 30, 2019, excluding the long term, low grade inventory, the average gold grade of ore mined is 2.62 gpt, 3.23 gpt, 3.37 gpt and 3.33 gpt, respectively.
5. Included within ore in stockpile is 1.0 mt of long term, low grade inventory, with a carrying value of nil at June 30, 2020. As at March 31, 2020, December 31, 2019,
September 30, 2019, and June 30, 2019, the long term, low grade inventory was 0.9 mt, 0.8 mt, 0.6 mt and 0.5 mt, respectively, with nil carrying value. As at June 30,
2020 the long term, low grade inventory has an average grade of 0.87 gpt.
6. Cash generated from operating activities before changes in non-cash working capital was amended to exclude current income tax expense in order to align with changes
in presentation of the Company’s Statement of Cash Flows.
7. Cost of sales for the three and six months ended June 30, 2020 includes $11.1 million of care and maintenance costs related to the COVID-19 suspension.
8. Based on calendar days in the period of 91 and 182 days for the three and six months ended June 30, 2020.
9. Sum of quarters may not add to the year to date amounts due to rounding.