Torex Gold Provides Q3 2024 Update on Media Luna Project and Increases 2024 Production Guidance Project 87% complete; plant tie-in schedule moves to February; first copper concentrate expected in Q1
Torex Gold Provides Q3 2024 Update on Media
Luna Project and Increases 2024 Production
Guidance
Project 87% complete; plant tie-in schedule moves to
February; first copper concentrate expected in Q1
(All amounts expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario--(Newsfile Corp. - October 30, 2024) - Torex Gold Resources Inc. (the "Company" or
"Torex") (TSX: TXG) provides a Q3 2024 update on the development of its Media Luna Project ("Media
Luna") and increases 2024 production guidance with a decision to undertake the tie-ins and upgrades to
the processing plant in February 2025. Unless otherwise stated, progress and milestones referenced in
this press release are as of September 30, 2024.
Jody Kuzenko, President & CEO of Torex, stated:
"Development and construction of Media Luna now stands at 87% complete and continues to progress
well - with engineering concluded, procurement down to final deliveries, underground development
ahead of schedule, and underground and surface construction advancing. Notably, installation of the
Guajes conveyor is almost complete, with commissioning expected imminently.
"With the overall project construction period nearing completion, our focus has shifted to refining the plan
and schedule for the plant tie-in period. As a result of modestly longer delivery windows for critical
electrical equipment (primarily switchgear) due in part to recent hurricane activity in the Gulf region, we
have rescheduled the start of the plant tie-in period from November 2024 to February 2025, with first
copper concentrate production expected in Q1 and commercial production shortly thereafter. With the
additional production associated with the pushback in the open pit, a clear contingency plan has long
been established for the possibility of a Q1 2025 tie-in period. The overriding business priority has
always been centered around readiness to execute the tie-in period and containing this period to no
longer than four weeks.
"The refined schedule comes with several benefits - most notably increased gold production in 2024 with
another four weeks of production. Importantly, the project team will have the opportunity to conduct
advance testing on key processing plant systems, thereby potentially reducing the time required to
complete the tie-ins and upgrades to less than four weeks as originally scheduled. Ore production from
the ELG Open Pits, ELG Underground, and Media Luna Underground will continue uninterrupted, with
ore from Media Luna stockpiled ahead of commissioning the flotation circuits.
"As at quarter end, $840 million of project period expenditures had been incurred on Media Luna
(including $114 million during Q3) with just over $110 million of expenditures remaining. The remaining
spend compares favourably to available liquidity of more than $345 million at quarter end, implying a
funding buffer of $235 million. The step-change improvement in the Company's funding buffer quarter-
over-quarter reflects the robust cash generation of the underlying business and places the Company in a
solid position to conclude Media Luna with only a modest level of debt."
INCREASED 2024 PRODUCTION GUIDANCE
With the tie-in period for the processing plant now scheduled to begin in February 2025, gold production
in 2024 is forecast to be 450,000 to 470,000 ounces versus original guidance of 400,000 to 450,000
ounces, given the benefit of an additional four weeks of production than was assumed within initial
guidance.
Table 1: Updated operational guidance for 2024
Initial 2024 Guidance
Updated 2024
Guidance
Production
Gold
oz
400,000 to 450,000
450,000 to 470,000
Gold equivalent
oz AuEq
410,000 to 460,000
460,000 to 480,000
Per the contingency plan established, the processing plant will continue to process ore from ELG Open
Pit and ELG Underground operations through to the tie-in period for the processing plant in February,
while the ramp-up of Media Luna Underground will continue unabated with ore stockpiled ahead of
commissioning the new copper ("Cu") and iron sulphide ("FeS") flotation circuits.
Total cash costs ($860 to $910 per ounce gold sold) and all-in sustaining costs ($1,100 to $1,160 per
ounce gold sold) guidance for 2024 remains unchanged and is still expected to be near the upper end of
the respective ranges, with the key pressure being the impact of the higher gold price on royalties and
profit sharing.
On a gold equivalent basis, full year production is now estimated at 460,000 to 480,000 ounces from
original guidance of 410,000 to 460,000 ounces. Gold equivalent total cash costs and all-in sustaining
costs guidance is unchanged.
CAPITAL EXPENDITURES
During Q3 2024, $114 million was spent on Media Luna, bringing the year-to-date total to $349 million.
The Company still expects full-year project spending to be within the guidance range of $430 to $450
million. Expenditures in Q4 2024 are expected to be lower than Q3 2024 and decline further in 2025 as
the project winds down, first copper concentrate production occurs in Q1, and commercial production is
declared shortly thereafter.
Table 2: Media Luna Project - Project Expenditures (April 1, 2022 through September 30, 2024)
Millions of U.S. dollars
Project To Date
Q3 2024
Project expenditures per 2022 Technical Report
$848.4
Adjustment for Q1 2022 underspend
$26.1
Total budgeted spend post March 31, 2022
$874.5
Final adjustments for stronger Mexican peso / out-of-scope items (June 30,
2024)
$75.5
Revised budgeted spend
$950.0
Expenditures incurred post March 31, 2022
($839.5)
Remaining spend
$110.5
Committed expenditures (inclusive of total project expenditures incurred to
date)
$950.0
Uncommitted expenditures
$0.0
Notes to Table
1)
Project period commenced on April 1, 2022; excludes capital expenditures incurred prior to Board approval on March 31, 2022.
2)
Project period is defined as April 1, 2022 through declaration of commercial production.
3)
Excludes borrowing costs capitalized.
The capital expenditure impact of the schedule adjustment is expected to be modest, with the project
team at site now looking at opportunities to offset the costs associated with the extended project period.
Of note, given the longer pre-commercial period with the rescheduled tie-ins, capital expenditures
related to accelerated underground development will be classified as non-sustaining for that period,
versus sustaining had the prior plant tie-in schedule been maintained.
PROJECT COMPLETION
As at quarter end, development of Media Luna was tracking largely to plan with the project 87%
complete, up from 78% at the start of the quarter. Detailed engineering is now complete, and
procurement is nearing completion at 97%. Underground development/construction and surface
construction are advancing, with completion levels at 77% and 70%, respectively.
Based on the current schedule related to critical electrical equipment delivery, the tie-in period for the
processing plant has been rescheduled to commence in February, with first copper concentrate
production in Q1. The updated schedule enables the project team to undertake advance testing on key
processing systems outside of the plant tie-in, with a view to potentially reducing the downtime period to
less than four weeks.
As previously guided, just in time deliveries of critical electrical equipment was anticipated to be a key
risk given little float in the schedule. After reviewing the risks around the tie-in period pushing into the
December holiday season, weighed against the existing contingency plan associated with the extension
of open pit production into Q2 2025 via the layback in the El Limón pit last year, the greater overall
benefit to the business mitigated in favour of rescheduling the processing plant tie-in schedule to
February 2025.
Table 3: Media Luna Project - Project Completion (April 1, 2022 through September 30, 2024)
Project To Date
Q3 2024
Procurement
97%
Engineering
100%
Underground development/construction
77%
Surface construction
70%
Total Project
87%
Notes to Table
1)
Physical progress measured starting as of April 1, 2022; excludes progress made prior to Board approval on March 31, 2022.
2)
Project period is defined as April 1, 2022 through declaration of commercial production.
3)
Total Project is weighted average based on activity levels.
It should be noted that the ramp-up of the Media Luna underground mine is separate from the completion
and commissioning of the processing plant. As such, the revised plant tie-in schedule will have no impact
on ore production from Media Luna, which will be stockpiled ahead of wet commissioning of the Cu and
FeS flotation circuits.
Engineering
Engineering over the quarter focused primarily on finalization of electrical deliverables and incorporation
of vendor information. Engineering work for the project is now complete and will continue to support in
the field as necessary to address any installation issues.
Procurement
Procurement for Media Luna is substantially complete, sitting at 97% as of the end of Q3 up from 89% at
the end of Q2. The level of procurement remaining represents final deliveries of equipment and materials
to site as purchase orders, contracts, and detailing are now more than 99% complete. Six of the eight
electrical houses ("e-houses") required for the project have now been delivered, with related switchgear
being the most critical delivery outstanding.
Notable orders completed during the quarter included electrical cable, network cabinets and LTE
infrastructure for the underground, flotation switchgear, water and slurry pumps, geotextiles for the
Guajes pit, fiber optic cable, and carbon steel pipe and fittings. Four battery electric loaders were also
delivered to site and have now been commissioned.
Underground Development and Construction
Steady progress was made underground at Media Luna during the quarter. Installation of the Guajes
conveyor is nearing completion and commissioning is expected imminently. The breakthrough between
Media Luna Upper and Media Luna Lower was achieved at the mine internal ramp, opening up access
to three additional mining blocks to support production. The feed chute and chute liner plates were
installed at ore pass #8 and tailings feed pipe installation continues to progress in anticipation of the
paste plant completion. Vibratory feeders and arch gates below both ore bins 1 and 2 at the 690 level
are also substantially complete and commissioning will take place in coordination with the Guajes
conveyor (Figure 1).
Following completion of definition drilling for the first seven stopes planned to be taken in the 2024 mine
plan, steady progress has been made on definition drilling of stopes in the 2025 mine plan. Drilling to
date has yielded positive results with tonnes and grade in line with expectations, aside from some minor
spatial variations as is typical with new underground areas. Underground development rates have been
strong, with monthly lateral development rates in excess of 1,300 metres over the last few months
(including over 1,400 metres in October) relative to the original budget of 1,200 metres per month. As a
result, underground development is now slightly ahead of plan.
The Company will continue with aggressive definition drilling and underground development programs in
2025 with the target of having all stopes to be mined in 2026 drilled off by the end of the year and the aim
of accelerating underground development. Both programs are expected to de-risk the ramp-up of
underground operations to the design rate of 7,500 tonnes per day.
Figure 1: Ore bins feed chutes have been assembled at the 690 level
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_ore%20bin.jpg
Surface Construction
Significant progress was made on surface construction, now at 70% complete up from 56% at the start
of the quarter. On the north side of the Balsas River, the two e-houses required for the flotation circuit
were delivered and installed during the quarter, with electrical cables being run in preparation for the
switchgear delivery (Figure 2). Assembly of the FeS regrind mill is now complete, as is the installation of
the Cu rougher flotation cells and the thickeners. Steel was erected for the Cu concentrate storage and
blending building (8 of 8 bays completed). At the water treatment plant, detox tanks for the first phase of
water testing were installed (Figure 3) and commissioning activities are expected to start early in Q4.
Progress was also made on the installation of power infrastructure. At the 230 kV switchyard,
transmission towers have been erected and the grounding grid has been installed (Figure 4). Block work
was also completed on the electrical building while electrical trenches and duct banks were put in place.
At the 230 kV substation, the two primary transformers have been installed (Figure 5). The transmission
line between the switchyard and substation was hung during the quarter with connection to the substation
now complete and switchyard expected to be completed in Q4 2024.
On the south side of the Balsas River, construction of the paste plant is also progressing well with
installation of the thickener, binder silo, and building steel all having noticeably advanced (Figure 6). The
paste plant remains on track to be completed in Q1 2025, with commissioning sequenced to occur after
the processing plant infrastructure is commissioned.
Figure 2: Construction of the flotation area is advancing, with both e-houses and associated cables now
installed. Progress was also made on the installation of the regrind mill and cleaner cells.
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_002full.jpg
Figure 3: Construction of the water treatment plant is ongoing, with detox tanks for the first phase of
water testing installed during the quarter
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_003full.jpg
Figure 4: Galvanized towers have been installed at the 230 kV switchyard to support the transmission
line between the yard and the substation
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_004full.jpg
Figure 5: The 230 kV substation is substantially complete with main transformers in place
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_005full.jpg
Figure 6: Construction of the binder silo, thickener, and building steel at the paste plant
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_006full.jpg
Operational Readiness
In parallel with development and construction activities, the surface and underground operational
readiness strategy continues to advance as planned. Operational readiness teams are accountable for
ensuring that processes and systems for all new work areas are established and ready in advance of the
handover from the project team to operations. This includes workforce transition planning and training,
developing the operating strategy (including all standard operating procedures) and maintenance plans
for all fixed and mobile equipment, blend and feed strategies, commissioning plans, first fills,
concentrate shipment logistics, and all other requirements for a smooth ramp up.
Recruitment of personnel for both the underground and new process areas is well advanced. Of the new
Media Luna recruits, 55% transferred from previous ELG operations. The transition training program
from open pit to underground operations is now 40% complete and is expected to ramp up as
production from the ELG Open Pits winds down. On surface, training for water treatment plant operators
began, marking a significant milestone in upskilling the workforce for the upcoming transition. In addition,
the operational readiness team continues to develop and advance Standard Operating and
Maintenance procedures for the new assets and is tracking to plan at over 70% complete. Spare parts
cataloging has been completed with the main original equipment manufacturers (FLSmidth, Metso,
Siemens, Sandvik, TAKRAF, and Tramac), which identified approximately 2,300 items deemed
necessary to have in stock for ongoing operations. Additionally, the readiness audit for the BEV fleet has
been completed ensuring all processes required for safe operation of the fleet are in place.
Negotiations with the various haulage companies for Cu concentrate transport to port distribution
facilities are complete and contracts are being finalized. The Company is also in the final stages of
settling contracts for the sale of Cu concentrate to a mix of traders and smelters. Metal payables are in
line with that which was incorporated into the most recent Technical Report dated effective March 16,
2022, and filed on March 31, 2022 ("Technical Report").
PROJECT EXECUTION PLAN
Based on the updated schedule for the tie-in and upgrades of the processing plant as well as other
deliverables, the project execution plan for Media Luna has been updated accordingly (Figure 7).
Figure 7: Project execution plan for the Media Luna Project
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/1863/228339_2b08b6a9f436099f_007full.jpg
More detail on the Media Luna Project, including the Feasibility Study results, can be found in the
Technical Report.
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 Property, an area of 29,000 hectares in the highly prospective
Guerrero Gold Belt located 180 kilometres southwest of Mexico City. The Company's principal asset is
the Morelos Complex, which includes the El Limón Guajes ("ELG") Mine Complex, the Media Luna
Project, a processing plant, and related infrastructure. Commercial production from the Morelos
Complex commenced on April 1, 2016 and an updated Technical Report for the Morelos Complex was
released in March 2022. Torex's key strategic objectives are: integrate and optimize the Morelos