Previously, I had noted that Torex was up against tough comps because of rising operating costs in 2023, and while it had put together phenomenal 2022 results, we were likely to see margin compression this year.
Recent DevelopmentsĪs for recent developments, the first positive one is the gold price, which continues to make higher lows, with the potential for it to average $1,900/oz this year, a ~6% increase from its average price in 2022. And while the operational performance has certainly been impressive, Torex has been regularly topping the charts from an exploration standpoint, releasing some of the best drill results sector-wide with gram-meter intercepts that rival even some of the largest producers. its current ELG Mine is critical to the investment thesis here, with this mine expected to make up the bulk of mill feed once the ELG Open Pits are exhausted by 2026. This is because the successful transition of mining at Media Luna vs. While the successful execution to date here isn't surprising given Torex's excellence in other areas of its business (operational performance, safety performance), it's certainly encouraging to see the company continuing to track to plan.
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As for the South Portal Lower on the Media Luna side, the company's most recent update noted that the company is currently developing the main spiral ramp and there are eight active headings in development between South Portal Upper and South Portal Lower. As it stands, Torex hopes to achieve the breakthrough of the Guajes Tunnel in Q1 2024, with the company successfully crossing under the Balsas River that separates its ELG Mine and its future Media Luna operations, and the tunnel advanced to ~3,900 meters as of the end of Q1. Just as importantly, while operations continue to perform well at ELG, Torex reaffirmed that Media Luna remains on schedule and tracking to budget. And while the results from ELG Underground are very encouraging with yet another new quarterly record (previous record of 1,685 tonnes per day set in Q4 2022), the company remains confident to achieve 1,800 tonne per day underground mining rates by year-end, providing an increasing feed of high-grade ore to the plant.Įl Limon Guajes Underground - Mine Production & Grades (Company Filings, Author's Chart) This was up over 35% from the year-ago period, which should translate to a robust Q1 report for Torex given the combination of ~10% higher ounces sold (~118,500 ounces) and a slightly higher average realized gold price. Torex - Quarterly & Annual Gold Production (Company Filings, Author's Chart)ĭigging into the results a little closer, we can see that El Limon Guajes Underground was the star performer yet again, enjoying record mining rates of 1,738 tonnes per day, translating to ~160,000 tonnes for the quarter. In fact, processed grades were up 17% year-over-year to 3.50 grams per tonne of gold, which combined with record throughput has left Torex tracking at ~27.3% of its annual guidance midpoint, continuing the company's track record of under-promising and over-delivering. This solid performance was driven by record underground mining rates, record throughput which beat the prior record set in Q2 2017 by a hair, and significantly higher grades. Torex Gold released its Q1 results last month, reporting quarterly gold production of ~122,900 ounces, a 9% increase from the year-ago period. In addition, it's the most overbought it's been in years. However, while this outperformance has been a welcome change of character after two years of sluggish returns, Torex is no longer cheap. This turned out to be a very poor call, with the stock defying gravity, marching another 20% higher and settling above the US$15.00 level on the back of a strong bid under the gold price.
Just over three months ago, I wrote on Torex Gold ( OTCPK:TORXF), noting that the stock's rally above US$13.70 looked to be providing an opportunity to take some profits with the stock the most extended it had been in years and massively outperforming its peer group.
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