Torex GOLD Announces Year-End 2019 Financial Results
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 YEAR-END 2019 FINANCIAL RESULTS
(All amounts expressed in U.S. Dollars unless otherwise stated)
TORONTO, Ontario, February 19 , 20 20 – Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG) reports the
Company’s financial and operating results for the three months and year ended December 31, 2019.
Fred Stanford, President & CEO of Torex, stated:
“The record operational and safety performance in 2019 was equally matched by the strong financial performance, with the
Company generating record EBITDA and record free cash flow. Balance sheet strength materially improved year-over-year, as
evident in the almost $200 million decline in net debt. With the price of gold remaining buoyant, and production guided to be in
a similar range as last year, 2020 holds the potential to be another excellent year for Torex. We exited the year with a Lost Time
Injury rate of 0.63 over the trailing 12 months and in February surpassed 5 million hours lost time injury free, an amazing
accomplishment.
“Advancing Media Luna was a priority in 2019 and it will continue to be a key focus in the next few years. The infill drill program
that was concluded in 2019 had a 100% success rate in upgrading targeted Inferred tonnes to the Indicated confidence category.
This is an excellent indicator of the robustness of the geological model. The 2020 infill drill program is anticipated to be completed
in time to incorporate the results into the upcoming feasibility study, which is expected to be concluded in Q1 2021. One of the
trade-off studies completed in 2019 resulted in a decision as to how to access the Media Luna deposit. Tunneling u nder the
Balsas River to reach the deposit reduces the social complexity, minimizes surface disturbance, reduces costs, and in our view,
reduces permitting risk. This 7 km tunnel will take longer to excavate than the other options. An early start is essential to minimize
schedule risk, hence some of the Media Luna build capital has been advanced to 2020 to facilitate getting started with the
excavation of this tunnel in the second half of this year.
“On the Muckahi front, we successfully demonstrated the viability of the most innovative aspects of the mining system in 2019.
We are now excavating our second 30 -degree down ramp and are continuously improving the technique. Incorporating
30-degree ramps into mine designs will be a game chang er for the industry. Moving beyond tunneling to ore production , we
demonstrated we could achieve ‘conveyable fragmentation’ when blasting a long hole open stope. The team then demonstrated
they could completely ‘muck out’ the long hole open stope with a lo w cost electric slusher. With the major innovations
demonstrated as viable in 2019, 2020 will focus on optimizing the processes tested in 2019, and initiating testing of the various
conveyor applications in the Muckahi Mining System. A conveyor for the 30 -degree ramp has been designed, manufactured ,
and is currently in tran sit to the mine. It will be installed in the ELD deposit in Q2. We all look forward to getting the conveyor
installed and demonstrating the potential of a mine that can eliminate diesel trucks and transport ore up and out of the mine with
an electrically powered conveyor.
“The coming year promises to be one of solid cash flow, advancement of our Media Luna growth project, and pushing forward
with our proprietary Muckahi Mining System to fuel future growth. Exciting times for Torex.”
This release should be read in conjunction with the Company’s December 31, 2019 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 1.
Full Year 2019 Highlights
• Safety milestone: 5 million hours worked with no lost time injury reached in February 2020.
• Gold production: Produced 454,811 ounces of gold in 2019, surpassing the previous annual production record of
353,947 ounces established in 2018 by 28%.
• Gold sold: Record full year sales of 449,337 ounces at an average realized gold price 1 of $1,408/oz, towards the upper
end of the full year guidance of 400,000 to 460,000 ounces.
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
• Total cash costs per ounce of gold sold1: Total cash costs of $619/oz, at the upper end of the guided range of $540/oz
to $620/oz.
• All-in sustaining costs per ounce of gold sold1: All-in sustaining costs of $805/oz, above the midpoint of full year guided
range of $735/oz to $845/oz.
• Net income and Adjusted net income1: Reported net income of $ 71.2 million or $0.84 per share on a basic basis and
$0.83 per share on a diluted basis. Excluding, amongst other items, certain impairment provisions and unrealized gains and
losses, adjusted net income totalled $67.8 million, or $0.80 per share on a basic and $0.79 diluted basis.
• EBITDA1 and Adjusted EBITDA1: Record EBITDA of $330.3 million and record adjusted EBITDA of $332.9 million.
• Cash flow from operations: Cash flow from operations totalled $301.3 million ($327.3 million prior to changes in non-cash
working capital). Cash flow from operations includes $ 64.5 million of current income tax accrued but expected to be paid
out in Q1 2020, noting a modest tax installment made in December 2019.
• Free cash flow1: Free cash flow of $181.2 million ($223.7 million prior to non-sustaining capital expenditures). Free cash
flow includes interest paid and changes in non-cash working capital.
• Cash balance: Ended the year with cash of $ 161.8 million compared with $122.2 million the end of 2018 ($149.0 million
including $26.8 million of restricted cash).
• Total outstanding debt: Following $164.4 million of debt repayments in 2019, total debt (excluding $8.6 million of deferred
financing charges) stood at $174.9 million at year-end compared with $333.5 million at the end of 2018.
• Net debt1: Exited 2019 with net debt of $21.7 million, reflecting a $198.6 million decline year-over-year.
• Updated Media Luna resource estimate2: Upgraded approximately 25% of the Inferred resource at Media Luna following
completion of a 175-hole infill drill program. The National Instrument 43 -101 compliant resource estimate includes
2.24 million gold equivalent ounces at a gold equivalent grade of 5.55 g/t in the Indicated category and 4.23 million gold
equivalent ounces at a gold equivalent grade of 4.23 g/t in the Inferred category.
• Achieved key deliverables set out for Muckahi: In 2019, demonstrated the ability to drill on the level and at a 30-degree
down angle using a jumbo mounted from a monorail. Achieved desired fragmentation within first long-hole open stope and
mucked out the stope using a slusher. The Company plans to pilot the individual components of Muckahi as an integrated
system in ELD in 2020, with the goal of proving out the key aspects of Muckahi by year-end.
Fourth Quarter 2019 Highlights
• Gold production: Produced 121,151 ounces of gold, the second highest quarter of production on record.
• Gold sold: Sold 126,910 ounces of gold at an average realized price of $1,481/oz.
• Total cash costs1 and All-in sustaining costs1: Total cash cost of $617/oz and all-in sustaining cost of $767/oz.
• Net income and Adjusted net income 1: Reported net income of $35.1 million or $0.41 per share on a basic and diluted
basis. Adjusted net income of $34.0 million, or $0.40 per share on a basic and diluted basis.
• EBITDA1 and Adjusted EBITDA1: Generated EBITDA of $102.2 million and adjusted EBITDA of $105.1 million.
• Cash flow from operations: Cash flow from operations totalled $97.9 million ($101.4 million prior to changes in non-cash
working capital).
• Free cash flow1: Generated $71.6 million in free cash flow ($82.5 million prior to non-sustaining capital expenditures).
• Debt payments: Repaid $82.5 million of outstanding debt during the quarter.
Conference Call and Webcast Details
The Company will host a conference call today at 9:00 AM (ET) where senior management will discuss the fourth quarter and
year end 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
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
• 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.
1 Refer to “Non-IFRS Financial Performance Measures” in the Company’s December 31, 2019 MD&A for further information and
a detailed reconciliation.
2 For more information on the updated Mineral Resource estimate for the Media Luna project see news re lease issued on
January 13, 2020, and filed on SEDAR at www.sedar.com and on the Company’s website at www.torexgold.com.
About Torex Gold Resources Inc.
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 Mexico City. The Company’s principal assets are the El Limón Guajes mining complex (“ELG” or 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 Deep (“ELD”), and the processing plant and related infrastructure, which is in the
commercial production stage as of April 1, 2016, and the Media Luna deposit, which is an early stage development project, and
for which the Company issued 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.
Fred Stanford
President and CEO
Direct: (647) 260-1502
Email: [email protected]
Dan Rollins
Vice President, Corporate Development & Investor Relations
Direct: (647) 260-1503
Email: [email protected]
CAUTIONARY NOTES
Muckahi Mining System
The Technical Report 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 b last
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 tra nsportation of materials and equipment,
however not in the capacity described in the Technical Report. Aspects of Muckahi mining equipment are currently in the desig n and test
stage. The mine design, equipment performance and cost estimations are conceptua l in nature, and do not demonstrate technical or
economic viability. The Company has completed the development and the first phase of testing the concept for the mine development and
production activities and will move to optimization in 2020 to further verify the viability of Muckahi.
Forward-Looking Statements
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, information with respect to the future exploratio n,
development and exploitation plans concerning the Morelos Gold Property; the adequacy of the Company’s financial resources; t he
Company’s business plans and strategy, including without limitation, the strategy to grow production from high quality conven tional mining
assets, or those with the potential to achieve high value through the deployment of Muckahi, if proven, and other events or c onditions that
may occur in the future; the results set out in the Technical Report including the PEA including with respect to mineral resource and mineral
reserve estimates, the ability to exploit estimated mineral reserves, the Company’s expectation that the ELG Mine Complex will be profitable
with positive economics from mining, expected recoveries, grades, annual pr oduction, receipt of all necessary approvals and permits, the
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
parameters and assumptions underlying the mineral resource and mineral reserve estimates and the financial analysis, and expe cted gold
prices; the potential for 2020 to be another excellent year for Torex; the indication from the success of the infill drill program that was
concluded in 2019 of the robustness of the geological model ; expectation that the t unnel under the Balsas River to reach the Media Luna
deposit reduces the social complexity, minimizes surface disturbance, reduces costs, and reduces permitting risk ; expectation that
incorporating 30-degree ramps into mine designs will be a game changer for the industry; planned installation of the 30-degree ramp conveyor
and expectation of demonstrating the potential of a mine that can eliminate diesel trucks and transport ore up and out of the mine with an
electrically powered conveyor; the expectation that 2020 to be a year of solid cash flow, advancement of the Media Luna growth project, and
pushing forward with the proprietary Muckahi Mining System to fuel future growth; the expectation that the Company will be able to generate
sufficient cash flow to satisfy the financial covenants under the Debt Facility and service its indebted ness on a timely basis; the expected
successful completion of the ramp-up of the processing plant and achieving a steady state throughput rate of 13,000 tpd; near term growth
opportunities in both the Sub -Sill and El Limón Deep zone and mid -term growth pot ential of Media Luna; plans to seek opportunities to
acquire assets in the Americas that enable profitable and effective geographic diversification; achieving guidance and other objectives for
2020; expected metal recoveries; expected gold production, tota l cash costs per ounce of gold sold, AISC per ounce of gold sold and
revenues from operations, and capital costs; goals of the Muckahi test program to successfully demonstrate the ability to load a conveyor on
a 30-degree ramp and convey up that ramp, demo nstrate the functionality of the tramming conveyor, demonstrate the ability to achieve the
required fragmentation across multiple long hole open stopes, and demonstrate ability to remove muck completely with a slushe r across
multiple long hole open stopes; expectation the second stope to test Muckahi will further validate the fragmentation results of the blasting
and the mucking rates of the slusher; expected timing of installing the 30 -degree conveyor and the delivery of the tramming conveyor; the
ability to mine and process estimated mineral reserves; expectation that depreciation in 2020 will range between $250 to $300 million
reflecting in part an increase in depreciation of previously capitalized deferred stripping; the expectation for 2020 that th e diesel credit in
Mexico will no longer be available and the effective tax rate for the Company will be 45% to 50%; plans to continue with gold hedging
arrangements beyond the current 12-month hedge; expected recovery and timing of receipt of value-added tax; further advances of funds if
required, pursuant to the Debt Facility (which is subject to certain customary conditions precedent); continued unimpeded ope rations;
expectation that the Debt Facility will provide greater flexibility and permit the developme nt of Media Luna, the Muckahi mining system and
other existing and future projects of the Company; plans to continue testing the Muckahi mining system, including without lim itation, the
testing of the tramming conveyor, fragmentation and mucking with a slu sher; expected continued mining of the ELD using Muckahi;
expectation of achieving goal of demonstrating the effectiveness of the Muckahi mining system; plan to advance the Media Lun a Project
from early stage development to production; plans to complete t he infill drilling programs on Media Luna and related budgets; expectation
that the infill drill program in 2020 at Media Luna will upgrade a greater proportion of mineral resources to indicated confidence category and
in time to incorporate into the feasi bility study; expectation that additional infill drill programs will be completed at Media Luna and that the
programs will be successful in upgrading inferred tonnes to indicated confidence category; plans to complete key trade off st udies; plans to
complete early field survey and technical study work in support of the permitting and approval process for Media Luna; plans to sta rt the
tunnel from the ELG to Media Luna in Q3 2020 and expectation that this early start to the tunnel will de-risk this component of the development
schedule; expectation that the Company will be able to secure required permits in order to commence commercial production; pl an and
timeline to complete a feasibility study and subject to the outcome of the feasibility study, among othe r things, projected timeline for
commencement of production; plans to fund expenditures to construct Media Luna from cash flows from the ELG Open Pits and ELG
Underground; the estimate of Media Luna’s precommercial expenditures, net of precommercial revenu es; plans to diversify the Company’s
single asset risk; the focus of exploration programs on advancing known mineralization and mineral resources to production, and remediation
plans and estimated associated costs; status of the patent application for Muc kahi as patent pending; and plans to advance known
mineralization and resources to production, including, infill drilling programs on Sub -Sill and El Limon Deep to with a purpose of upgrading
resource confidence class. 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,” “anticipa tes,” or “does not
anticipate,” “believes” or “poten tial” 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 b e
materially different from those expressed or implied by such forward -looking information, including risks associated with the ram p-up of the
processing plant to steady state production of 13,000 tpd; predictability of the grade; ability to achieve design gold recovery levels; fluctuation
in gold and other metal prices; commodity price risk; currency exchange rate fluctuations; capi tal and operational cost estimates; satisfying
financial covenants under the Debt Facility; illegal blockades; dependence on good relationships with employees and contractors and labour
unions; dependence on key executives and employees; limited operating history; generating positive cash flow; the ability of the Company
to secure additional financing if required; the safety and security of the Company properties; servicing of the indebtedness of the Company;
the ability to secure necessary permits and lice nses, title to the land on which the Company operates, including surface and access rights;
foreign operations and political and country risk; the uncertainty of diversifying the Company’s single asset risk; governmen t policies and
practices in respect of the administration of recovery of VAT funds and recovery of VAT funds; exploration, development, exploitation and
the mining industry generally; environmental risks and hazards; decommissioning and reclamation costs; parameters and assumpt ions
underlying m ineral resource and mineral reserve estimates and financial analyses being incorrect; actual results of current exploration,
development and exploitation activities not being consistent with expectation;, risks associated with skarn deposits; potential litigation; hiring
the required personnel and maintaining personnel relations; future commodity prices; infrastructure; single property focus; u se and reliance
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
of experts outside Canada; competition; hedging contracts; interest rate risk; price and volatility of public stock; conflicts of interest of certain
personnel; credit and liquidity risk; compliance with anti-corruption laws; enforcement of legal rights; accounting policies and internal controls
as well as those risk factors included herein and elsewhere in the Company’s public disclosure.
Torex Gold Resources Inc. Page 6
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 1: Operating and financial results summary
Three Months Ended Year Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
In millions of U.S. dollars, unless otherwise noted 2019 2019 2019 2019 2018 2019 2018
Operating Data
Mining
Ore tonnes mined kt 1,573 1,416 1,810 1,153 1,234 5,952 4,329
Waste tonnes mined kt 10,795 11,923 11,450 12,281 10,065 46,449 28,296
Total tonnes mined kt 12,368 13,339 13,260 13,434 11,299 52,401 32,625
Strip ratio 2 waste:ore 7.3 9.1 6.8 11.5 8.6 8.4 6.7
Average gold grade of ore mined 4 gpt 3.06 3.19 2.91 2.45 2.76 2.92 2.69
Ore in stockpile 5 mt 2.4 1.9 1.7 0.9 0.8 2.4 0.8
Processing
Total tonnes processed kt 1,116 1,139 1,062 1,076 1,197 4,393 4,152
Average plant throughput tpd 12,130 12,380 11,670 11,956 13,011 12,036 11,863
Average gold recovery % 89 89 88 88 85 88 87
Average gold grade of ore processed gpt 3.87 4.11 3.92 2.62 2.93 3.64 2.97
Production and sales
Gold produced oz 125,151 138,145 113,645 77,870 96,316 454,811 353,947
Gold sold oz 126,910 132,535 113,419 76,473 104,169 449,337 347,640
Financial Data
Revenue $ 190.0 198.2 150.7 101.9 130.7 640.8 442.9
Cost of sales $ 149.0 130.1 115.7 85.1 96.5 479.9 334.7
Earnings from mine operations $ 41.0 68.1 35.0 16.8 34.2 160.9 108.2
Net income (loss) $ 35.1 27.4 10.0 (1.3 ) 1.4 71.2 23.2
Per share - Basic $/share 0.41 0.32 0.12 (0.02 ) 0.02 0.84 0.27
Per share - Diluted $/share 0.41 0.32 0.12 (0.02 ) 0.02 0.83 0.27
Adjusted net earnings (loss) 1 $ 34.0 30.8 8.8 (5.7 ) 13.9 67.8 19.7
Per share - Basic 1 $/share 0.40 0.36 0.10 (0.07 ) 0.16 0.80 0.23
Per share - Diluted 1 $/share 0.40 0.36 0.10 (0.07 ) 0.16 0.79 0.23
EBITDA 1 $ 102.2 116.6 74.3 37.2 56.1 330.3 185.7
Adjusted EBITDA 1 $ 105.1 115.1 76.5 36.2 57.5 332.9 181.9
Cost of sales $/oz 1,174 982 1,020 1,113 926 1,068 963
Total cash costs 1 $/oz 617 561 606 745 627 619 646
All-in sustaining costs 1 $/oz 767 675 760 1,161 926 805 964
Average realized gold price 1 $/oz 1,481 1,478 1,314 1,302 1,235 1,408 1,261
Cash from operating activities $ 97.9 122.5 48.6 32.3 59.3 301.3 226.8
Cash from operating activities before
changes in non-cash working capital 6 $ 101.4 116.9 72.6 36.4 61.2 327.3 185.5
Free cash flow 1 $ 71.6 96.4 20.6 (7.4 ) 18.8 181.2 85.9
Net debt 1 $ 21.7 97.2 221.2 234.4 220.3 21.7 220.3
Cash and cash equivalents $ 161.8 168.0 83.5 91.6 122.2 161.8 122.2
Restricted cash $ - - 32.3 26.9 26.8 - 26.8
Working capital (deficiency) 3 $ 96.5 116.7 (27.4 ) 18.1 41.6 96.5 41.6
Total debt $ 174.9 255.7 298.2 318.3 333.5 174.9 333.5
Total assets $ 1,229.6 1,263.1 1,230.2 1,251.7 1,271.4 1,229.6 1,271.4
Total liabilities $ 394.8 464.6 461.0 493.8 511.8 394.8 511.8
1. Adjusted net earnings (loss), total cash costs, all-in sustaining costs, average realized gold price, EBITDA, adjusted EBITDA, free cash flow and net debt are financial performance
measures with no standard meaning under International Financial Reporting Standards (“IFRS”). Refer to “Non-IFRS Financial Performance Measures” for further information
and a detailed reconciliation.
2. Ore mined from the ELG Underground of 98 kt and 400 kt is included in ore tonnes mined and excluded from the strip ratio in the three and twelve months ended December 31,
2019, respectively. For the three months ended September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, ore mined from the ELG Underground was 102 kt,
117 kt, 83 kt and 67 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 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 3.23 gpt and 3.18 gpt for the three and twelve months ended December 31, 2019. For the three months ended September 30, 2019, June 30, 2019, March 31, 2019 and
December 31, 2018, the average gold grade of ore mined is 3.37 gpt, 3.33 gpt, 2.66 gpt and 2.92 gpt, respectively.
5. Included within ore in stockpile is 0.8 mt of long term, low grade inventory, with a carrying value of nil at December 31, 2019. As at September 30, 2019, June 30, 2019,
March 31, 2019, and December 31, 2018, the long term, low grade inventory was 0.6 mt, 0.5 mt, 0.2 mt and 0.1 mt, respectively, with nil carrying value. As at
December 31, 2019 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. Sum of the quarters may not add to the year to date amounts due to rounding. 2018 represents 350 days of operations due to the illegal ‘Blockade’.