TOREX GOLD REPORTS SOLID Q3 2022 FINANCIAL RESULTS On track to achieve operational guidance for the fourth year in a row
For Immediate Release
TOREX GOLD REPORTS SOLID Q3 2022 FINANCIAL RESULTS
On track to achieve operational guidance for the fourth year in a row
(All amounts expressed in U.S. Dollars unless otherwise stated)
TORONTO, Ontario, November 9, 2022 – Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG)
reports the Company’s financial and operational results for the three and nine months ended September 30,
2022. The Company will host a conference call tomorrow morning at 9:00 AM (ET) to discuss the results.
Jody Kuzenko, President & CEO of Torex, stated:
“Our well-established track record of delivering safe and reliable production at El Limón Guajes (“ELG”)
continues, with 122,208 ounces produced this quarter . With a sharp focus on cost management, we also
generated healthy margins this quarter, resulting in adjusted EBITDA of $ 107.8 million and free cash flow of
$33.5 million, including $ 68.6 million of capital expenditures. Given the year-to-date production and cost
performance, we are well positioned to deliver on operational guidance for the fourth straight year.
“De-risking our Media Luna Project continues to be central to our strategy. During the quarter, a major permitting
milestone was achieved with the granting of the MIA Integral from the environmental regulator , which is the
permit that will allow for operations to begin at Media Luna. Additionally, we secured approval from the utility
authorities to increase our power draw to 45 megawatts, to accommodate activities on both the north and south
sides of the Balsas River.
“Procurement on the project continues to ramp up responsibly, with a focus on key, long-lead packages that are
schedule critical – including the Guajes conveyor, flotation circuits, re-grind mills, mine ventilation fans and the
battery electric vehicle fleet . On the high volume, non-schedule critical procurement packages, we are seei ng
a rescheduling of cost flow estimates assumed in the 2022 Technical Report for several reasons, including extra
time to expand the pool of vendors , extra time for the vendors to provide bids , as well as timing and quantum
of staged payments that vary from the allocations initially assumed. Although timing of non-schedule critical
procurement and cost flow estimates differ from those originally assumed, the overall lead times and upfront
costs of purchase orders executed to date are substantially in line with the Technical Report.
“As a result of the lower pr ocurement spend to date, there will be an underrun in capital expenditures on the
project for 2022, and guided annual spend is no w in the range of $120 to $150 million . While these spend
patterns have impacted the level invested to date , the pace of investment is expected to accelerate over the
coming quarters, and the overall project schedule remains on track at this early stage.
“Beyond procurement, we continued to make steady progress on project engineering and construction in Q3 .
At quarter end, total physical completion stood at 9%, with steady momentum on engineering, surface
construction and underground development activities. At the end of October, the Guajes Tunnel had advanced
approximately 2,835 metres and South Portal Lower had advanced approximately 1,175 metres, meaning that
projected breakthrough continues to track well for Q1 2024.
“Our strategy at Morelos continues to be executed per plan – with $339 million of cash on hand at quarter end,
$250 million of available credit, and strong and consistent forecast cash flow from ELG, we are well positioned
to fund the development of Media Luna , continue to invest in value enhancing exploration and drilling, and
maintain minimum balance sheet liquidity of $100 million.”
THIRD QUARTER 2022 HIGHLIGHTS
• Strong safety performance continues: One lost-time injury in the quarter related to a finger pinch
sustained by a contractor working on the Media Luna Project. The Company exited the quarter with a
lost-time injury frequency (“LTIF”) rate of 0.10 per million hours worked on a rolling 12 -month basis.
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Torex Gold Resources Inc.
• Gold production: Produced 122,208 ounces of gold during the quarter . Gold production is tracking
towards the upper end of the full year guided range of 430,000 to 470,000 ounces.
• Gold sold: Sold 119,834 ounces of gold at an average realized gold price 1 of $ 1,715 per ounce ,
contributing to revenue of $209.3 million. The realized gold price was slightly lower than the benchmark
price for the quarter given a higher portion of gold produced and sold in September.
• Total cash costs 1 and all-in sustaining costs 1: Total cash cost s of $760 per ounce sold and all-in
sustaining costs of $1,059 per ounce sold. The Company anticipates exiting the year at the high end of
the guided range for total cash costs ($695 to $735 per ounce) and towards the mid-point of the guided
range for all-in sustaining costs ($980 to $1,030 per ounce).
• Net income and adjusted net earnings1: Reported net income of $43.9 million or earnings of $0.51
per share on a basic and diluted basis. Adjusted net earnings of $34.6 million or $0.40 per share on a
basic and diluted basis . Net income includes an unrealized derivative gain of $20.0 million related to
gold forward contracts entered into during Q1 2022 to reduce downside price risk during the construction
of the Media Luna Project.
• EBITDA1 and adjusted EBITDA1: Generated EBITDA of $127.8 million and adjusted EBITDA of $107.8
million.
• Cash flow from operations: Cash flow from operations totalled $102.4 million and $91.3 million prior
to changes in non-cash operating working capital. Cash flow from operations includes $19.2 million of
income taxes paid.
• Free cash flow1: Free cash flow of $33.5 million including total capital expenditures of $68.6 million.
• Net cash1 and financial liquidity: Net cash of $336.1 million, including $339.2 million in cash and $3.1
million of lease obligations, with no debt and $250.0 million of credit available on undrawn facilities,
providing $589 million in available liquidity.
• Media Luna Project: Media Luna Project expenditures totalled $32.5 million during the quarter, with a
remaining project spend of $812.4 million. Expenditures in the quarter were primarily focused on
continued development of the Guajes Tunnel and South Portals, with development of the Guajes Tunnel
reaching 2,659 metres and the South Portal Lower reaching 1,056 metres by the end of September. At
the end of the quarter, ph ysical progress on the Project was approximately 9% , with engineering,
surface construction and underground development steadily progressing . Procurement activities are
ramping up responsibly, with the focus being on key, long lead packages that are schedule critical . To
date, lead times and costs of executed purchase orders are substantially in line with the assumptions
made in the 2022 Technical Report . As a result of the lower procurement spend to date, there will be
an underrun in capital expenditures on the Project for 2022, and full -year non -sustaining capital
expenditure guidance for the Media Luna Project has been lowered to $120 million to $150 million.
• Receipt of Key Media Luna Environmental Permit: Late in the third quarter, the Company received
approval from Mexico’s Secretariat of Environmental and Natural Resources (“SEMARNAT”) on the
key, culminating environmental permit for the Project (the “MIA Integral”), which allows for operations
to begin at Media Luna.
1. These measures are Non-GAAP Financial Performance Measures or Non -GAAP ratios (collectively, “Non-GAAP Measures”). For a detailed reconciliation of each
Non-GAAP Measure to its most directly comparable IFRS financial measure see Tables 2 to 10 of this press release. For additional information on these Non-GAAP
Measures, please refer to the Company’s management’s discussion and analys is (“MD&A”) for the quarter ended September 30, 2022, dated November 8, 2022.
The MD&A, and the Company’s unaudited condensed consolidated interim financial statements for the quarter ended September 30, 2022, are available on Torex’s
website (www.torexgold.com) and under the Company’s SEDAR profile (www.sedar.com).
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Torex Gold Resources Inc.
Table 1: Operating and Financial Highlights
1. On a 12-month rolling basis, per million hours worked
2. Total cash costs, total cash costs margin, all-in sustaining costs, all-in sustaining costs margin, average realized gold price, adjusted net earnings, EBITDA, adjusted
EBITDA, free cash flow and net cash are non-GAAP financial measures with no standard meaning under International Financial Reporting Standards (“IFRS”). Refer to
“Non-GAAP Financial Performance Measures” for further information and a detailed reconciliation to the comparable IFRS measures in the Company’s MD&A for the
quarter ended September 30, 2022, dated November 8, 2022, available on Torex Gold’s website (www.torexgold.com) and under the Company’s SEDAR profile
(www.sedar.com).
CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call tomorrow at 9:00 AM (ET) where senior management will discuss the
third quarter operating and financial results. Please dial in or access the webcast approximately ten minutes
prior to the start of the call:
• Toronto local or International: 1-416-915-3239
• Toll-Free (North America): 1-800-319-4610
A live webcast of the conference call will be available on the Company’s website at
https://torexgold.com/investors/upcoming-events/. The webcast will be archived on the Company’s website.
Three Months Ended Nine Months Ended
Sep 30, Jun 30, Sep 30, Sep 30, Sep 30,
In millions of U.S. dollars, unless otherwise noted 2022 2022 2021 2022 2021
Operating Results
Lost-time injury frequency1 /million hours 0.10 0.00 0.26 0.10 0.26
Total recordable injury frequency1 /million hours 1.69 1.32 2.44 1.69 2.44
Gold produced oz 122,208 123,185 111,229 357,839 358,792
Gold sold oz 119,834 123,363 118,989 351,209 359,432
Total cash costs2 $/oz 760 703 727 736 646
Total cash costs margin2 $/oz 955 1,162 1,059 1,081 1,146
All-in sustaining costs2 $/oz 1,059 911 900 999 883
All-in sustaining costs margin2 $/oz 656 954 886 818 909
Average realized gold price2 $/oz 1,715 1,865 1,786 1,817 1,792
Financial Results
Revenue $ 209.3 235.0 216.7 652.0 653.8
Cost of sales $ 146.2 139.6 142.6 418.0 394.2
Earnings from mine operations $ 63.1 95.4 74.1 234.0 259.6
Net income $ 43.9 70.3 36.5 154.2 152.2
Per share - Basic $/share 0.51 0.82 0.43 1.80 1.78
Per share - Diluted $/share 0.51 0.80 0.41 1.77 1.72
Adjusted net earnings2 $ 34.6 57.0 42.9 128.8 147.6
Per share - Basic2 $/share 0.40 0.66 0.50 1.50 1.72
Per share - Diluted2 $/share 0.40 0.66 0.50 1.50 1.72
EBITDA2 $ 127.8 155.9 119.7 386.8 399.3
Adjusted EBITDA2 $ 107.8 137.1 119.3 355.6 386.3
Cost of sales $/oz 1,220 1,132 1,198 1,190 1,097
Net cash generated from
operating activities $ 102.4 126.9 87.8 276.0 235.4
Net cash generated from
operating activities before
changes in non-cash
operating working capital
$ 91.3 120.6 100.2 271.5 277.8
Free cash flow2 $ 33.5 74.0 29.4 88.4 60.6
Cash and cash equivalents $ 339.2 310.7 221.6 339.2 221.6
Net cash2 $ 336.1 306.3 217.8 336.1 217.8
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Torex Gold Resources Inc.
Table 2: Reconciliation of Total Cash Costs and All-in Sustaining Costs to Cost of Sales
1. This amount excludes a gain of $0.3 million, $2.2 million and $1.7 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021,
respectively, and a gain of $2.1 million and gain of $6.0 million for the nine months ended September 30, 2022 and September 30, 2021, respectively, in relation to
the remeasurement of share -based payments. This amount also excludes corporate depreciation and amortization expenses totalling $ 0.1, nil and $0.2 million for
the three months ended September 30, 2022 , June 30, 2022 , and September 30, 2021 , respectively, $ 0.2 million and $0.5 million for the nine months ended
September 30, 2022 and September 30, 2021, respectively, recorded within general and administrative costs. Included in general and administrative costs is share-
based compensation expense in the amount of $ 0.8 million or $ 7/oz for the three months ended September 30, 2022, $0.8 million or $6/oz for the three months
ended June 30, 2022, $0.9 million or $8/oz for the three months en ded September 30, 2021, $3.4 million or $10/oz for the nine months ended September 30, 2022
and $4.5 million or $13/oz for the nine months ended September 30, 2021.
2. Before changes in net working capital and other, capital expenditures for the three and nine months ended September 30, 2022 totalled $71.6 million and $183.4
million, respectively, excluding lease payments of $1.5 million and $3.0 million, respectively. Sustaining capital expenditures of $29.4 million and $70.6 million in the
three and nine months ended September 30, 2022, respectively, are related to $ 16.6 million and $40.6 million, respectively, for the cash component of capitalized
stripping activities, and $12.8 million and $30.0 million, respectively, for sustaining equipment and infrastructure expenditures. Non -sustaining capital expenditures
of $42.2 million and $112.8 million for the three and nine months ended September 30, 2022, respectively, relating to ELG Underground and the Media Luna Project,
have been excluded from AISC.
Table 3: Reconciliation of Sustaining and Non-Sustaining Costs to Capital Expenditures
1. The amount of cash expended on additions to property, plant and equipment in the period as reported in the consolidated statements of cash flows.
Three Months Ended Nine Months Ended
In millions of U.S. dollars, unless otherwise noted Sep 30,
2022 Jun 30,
2022 Sep 30,
2021 Sep 30,
2022 Sep 30,
2021
Gold sold oz 119,834 123,363 118,989 351,209 359,432
Total cash costs per oz sold
Production costs and royalties $ 94.9 91.6 90.7 272.3 241.7
Less: Silver sales $ (0.6 ) (0.7 ) (0.6 ) (2.0 ) (1.7 )
Less: Copper sales $ (3.2 ) (4.2 ) (3.6 ) (11.7 ) (7.7 )
Total cash costs $ 91.1 86.7 86.5 258.6 232.3
Total cash costs per oz sold $/oz 760 703 727 736 646
All-in sustaining costs per oz sold
Total cash costs $ 91.1 86.7 86.5 258.6 232.3
General and administrative costs1 $ 5.0 5.0 4.9 17.8 19.4
Reclamation and remediation costs $ 1.4 1.2 1.1 4.0 3.4
Sustaining exploration costs expensed $ - - 0.9 - 2.9
Sustaining capital expenditure2 $ 29.4 19.5 13.7 70.6 59.2
Total all-in sustaining costs $ 126.9 112.4 107.1 351.0 317.2
Total all-in sustaining costs per oz sold $/oz 1,059 911 900 999 883
Three Months Ended Nine Months Ended
Sep 30, Jun 30, Sep 30, Sep 30, Sep 30,
In millions of U.S. dollars 2022 2022 2021 2022 2021
Sustaining $ 12.8 11.6 10.3 30.0 25.3
Capitalized Stripping $ 16.6 7.9 3.4 40.6 33.9
Non-sustaining $ 4.3 5.0 15.8 15.0 31.1
Total ELG $ 33.7 24.5 29.5 85.6 90.3
Media Luna Project $ 32.5 29.6 25.3 80.6 61.3
Media Luna Infill Drilling/Other $ 5.4 5.9 6.8 17.2 19.1
Working Capital Changes & Other $ (3.0 ) (7.5 ) (3.6 ) 3.0 2.8
Capital expenditures1 $ 68.6 52.5 58.0 186.4 173.5
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Torex Gold Resources Inc.
Table 4: Reconciliation of Average Realized Gold Price and Total Cash Costs Margin to Revenue
Table 5: Reconciliation of All-in Sustaining Costs Margin to Revenue
Three Months Ended Nine Months Ended
In millions of U.S. dollars, unless otherwise noted
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Gold sold oz 119,834 123,363 118,989 351,209 359,432
Revenue $ 209.3 235.0 216.7 652.0 653.8
Less: Silver sales $ (0.6 ) (0.7 ) (0.6 ) (2.0 ) (1.7 )
Less: Copper sales $ (3.2 ) (4.2 ) (3.6 ) (11.7 ) (7.7 )
Less: Realized loss on Gold Contracts $ - - - - (0.2 )
Total proceeds $ 205.5 230.1 212.5 638.3 644.2
Total average realized gold price $/oz 1,715 1,865 1,786 1,817 1,792
Less: Total cash costs $/oz 760 703 727 736 646
Total cash costs margin $/oz 955 1,162 1,059 1,081 1,146
Total cash costs margin % 56 62 59 59 64
Three Months Ended Nine Months Ended
In millions of U.S. dollars, unless otherwise noted
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Gold sold oz 119,834 123,363 118,989 351,209 359,432
Revenue $ 209.3 235.0 216.7 652.0 653.8
Less: Silver sales $ (0.6 ) (0.7 ) (0.6 ) (2.0 ) (1.7 )
Less: Copper sales $ (3.2 ) (4.2 ) (3.6 ) (11.7 ) (7.7 )
Less: Realized loss on Gold Contracts $ - - - - (0.2 )
Less: All-in sustaining costs $ (126.9 ) (112.4 ) (107.1 ) (351.0 ) (317.2 )
All-in sustaining costs margin $ 78.6 117.7 105.4 287.3 327.0
Total all-in sustaining costs margin $/oz 656 954 886 818 909
Total all-in sustaining costs margin % 38 50 49 44 50
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Torex Gold Resources Inc.
Table 6: Reconciliation of Adjusted Net Earnings to Net Income
Table 7: Reconciliation of EBITDA and Adjusted EBITDA to Net Income
1. Includes depreciation and amortization included in cost of sales, general and administrative expenses and exploration and evaluation expenses.
Three Months Ended Nine Months Ended
In millions of U.S. dollars, unless
otherwise noted
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Basic weighted average
shares outstanding shares 85,843,808 85,840,954 85,748,013 85,827,656 85,703,270
Diluted weighted average
shares outstanding shares 86,039,606 86,115,071 86,020,975 86,059,576 86,034,295
Net income $ 43.9 70.3 36.5 154.2 152.2
Adjustments:
Unrealized foreign
exchange loss (gain) $ 0.3 0.4 1.3 (0.3 ) (1.6 )
Change in unrealized gains
and losses on derivative
contracts
$ (20.0 ) (17.0 ) - (28.8 ) (5.4 )
Remeasurement of
share-based payments $ (0.3 ) (2.2 ) (1.7 ) (2.1 ) (6.0 )
Tax effect of above
adjustments $ 6.0 5.7 0.1 9.4 3.9
Tax effect of currency
translation on tax base $ 4.7 (0.2 ) 6.7 (3.6 ) 4.5
Adjusted net earnings $ 34.6 57.0 42.9 128.8 147.6
Per share - Basic $/share 0.40 0.66 0.50 1.50 1.72
Per share - Diluted $/share 0.40 0.66 0.50 1.50 1.72
Three Months Ended Nine Months Ended
In millions of U.S. dollars
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Net income $ 43.9 70.3 36.5 154.2 152.2
Finance (income) costs, net $ (0.8 ) (0.3 ) 0.3 (0.7 ) 0.1
Depreciation and amortization1 $ 51.4 48.1 52.1 145.9 153.1
Current income tax expense $ 32.3 37.0 34.6 93.9 102.6
Deferred income tax expense (recovery) $ 1.0 0.8 (3.8 ) (6.5 ) (8.7 )
EBITDA $ 127.8 155.9 119.7 386.8 399.3
Adjustments:
Change in unrealized gains and losses on
derivative contracts $ (20.0 ) (17.0 ) - (28.8 ) (5.4 )
Unrealized foreign exchange loss (gain) $ 0.3 0.4 1.3 (0.3 ) (1.6 )
Remeasurement of share-based
payments $ (0.3 ) (2.2 ) (1.7 ) (2.1 ) (6.0 )
Adjusted EBITDA $ 107.8 137.1 119.3 355.6 386.3
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Torex Gold Resources Inc.
Table 8: Free Cash Flow
1. The amount of cash expended on additions to property, plant and equipment in the year as reported on the consolidated statements of cash flows.
Table 9: Net Cash
Table 10: Unit Cost Measures
Three Months Ended Nine Months Ended
In millions of U.S. dollars
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Net cash generated from operating
activities $ 102.4 126.9 87.8 276.0 235.4
Less:
Additions to property, plant and
equipment1 $ (68.6 ) (52.5 ) (58.0 ) (186.4 ) (173.5 )
Interest paid $ (0.3 ) (0.4 ) (0.4 ) (1.2 ) (1.3 )
Free cash flow $ 33.5 74.0 29.4 88.4 60.6
Sep 30, Jun 30, Sep 30,
In millions of U.S. dollars 2022 2022 2021
Cash and cash equivalents $ 339.2 310.7 221.6
Less: Lease obligations $ (3.1 ) (4.4 ) (3.8 )
Net cash $ 336.1 306.3 217.8
Three Months Ended Nine Months Ended
In millions of U.S. dollars, unless
otherwise noted
Sep 30,
2022
Jun 30,
2022
Sep 30,
2021
Sep 30,
2022
Sep 30,
2021
Gold sold (oz) 119,834 123,363 118,989 351,209 359,432
Tonnes mined - open pit
(kt) 9,980 8,947 8,882 28,946 29,847
Tonnes mined -
underground (kt) 143 144 113 401 366
Tonnes processed (kt) 1,199 1,124 1,150 3,457 3,352
Total cash costs:
Total cash costs ($) 91.1 86.7 86.5 258.6 232.3
Total cash costs per
oz sold ($) 760 703 727 736 646
Breakdown of
production costs
$ $/t $ $/t $ $/t $ $/t $ $/t
Mining - open pit 28.6 2.87 27.4 3.06 26.1 2.94 81.8 2.82 76.9 2.58
Mining - underground 13.2 91.89 12.0 83.64 9.7 86.24 35.0 87.30 29.6 80.75
Plant 38.2 31.82 38.2 33.95 40.7 35.41 113.5 32.82 117.8 35.14
Site support 12.8 10.64 12.4 11.02 11.4 9.88 36.1 10.44 33.8 10.09
Mexican profit sharing
(PTU) 5.9 4.96 5.7 5.08 4.0 3.48 19.8 5.72 11.7 3.50
Capitalized stripping (16.6 ) (7.9 ) (3.4 ) (40.6 ) (33.9 )
Inventory movement 5.2 (4.6 ) (4.9 ) 3.3 (15.3 )
Other 1.4 1.3 0.6 3.9 1.5
Production costs 88.7 84.5 84.3 252.8 222.1
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Torex Gold Resources Inc.
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 M exico City. The Company’s principal asset is the Morelos
Complex, which includes the El Limón Guajes (“ELG”) Mining Complex, the Media Luna Project, and the
processing plant and related infrastructure. Commercial production from the Morelos Complex commenc ed on
April 1, 2016 and an updated Technical Report for the Morelos Complex was released in March 2022. Torex’s
key strategic objectives are to extend and optimize production from the ELG Mining Complex, de -risk and
advance Media Luna to commercial product ion, build on ESG excellence, and to grow through ongoing
exploration across the entire Morelos Property.
For further information, please contact:
TOREX GOLD RESOURCES INC.
Jody Kuzenko Dan Rollins
President and CEO Senior Vice President, Corporate Development & Investor Relations
Direct: (647) 725-9982 Direct: (647) 260-1503
[email protected] [email protected]
CAUTIONARY NOTE
Forward Looking Information
This press release contains "forward -looking statements" and "fo rward-looking information" within the meaning of applicable Canadian securities legislation.
Forward-looking information also includes, but is not limited to, statements that: the Company is well positioned to deliver on operational guidance for the fourth
straight year; the overall cost of purchase orders executed to date are in line with the feasibility study estimates, as are lead times ; there will be an underrun
in capital expenditures on the project in the year, and guided annual spend is now in the r ange of $120 to $150 million ; the pace of investment is expected to
accelerate over the coming quarters, and the overall project schedule remains well on track ; projected breakthrough of the Guajes tunnel continues to track
well for Q1 2024; the Company’s strategy at the Morelos Complex continues to be executed per plan -- with $339 million of cash on hand at quarter end, $250
million of available credit, and strong forecast cash flow from ELG, the Company is well positioned to fund the development of Media Luna, continue to invest
in value enhancing exploration/drilling, and maintain minimum balance sheet liquidity of $100 million ; gold production is tracking towards the upper end of the
full year guided range; the Company anticipates exiting the year at the high end of the guided range for total cash costs ($695 to $735 per oz) and towards the
mid-point of the guided range for all-in sustaining costs; the available liquidity as at September 30, 2022; and Torex’s key strategic objectives are to extend and
optimize production from the ELG Mining Complex, de-risk and advance Media Luna to commercial production, build on ESG excellence, and to grow through
ongoing exploration across the entire Morelos Property. Generally, forward-looking information and statements can be identified by the use of forward-looking
terminology such as “forecast,” “plans,” “expects,” or “does not expect,” “is expected,” “strategic” or variations of such words and phrases or statements that
certain actions, events or results “will”, “may,” “could,” “would,” “might,” or “on track,” , or “well positioned to” occur. 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, without limitation, risks and uncertainties identified in the
technical report (the “Technical Report”) released on March 31, 2022, entitled “NI 43 -101 Technical Report ELG Mine Complex Life of Mine Plan and Media
Luna Feasibility Study”, which has an effective date of March 16, 2022, and the Company’s annual information form (“AIF”) and management’s discussion and
analysis (“MD&A”) or other unknown but potentially significant impacts. Forward-looking information and statements are based on the assumptions discussed
in the Technical Report, AIF and MD&A 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 believes are releva nt and reasonable 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
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 informat ion.
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 se curities laws.