Torex Gold Resources (TXG) Q2 2024 earnings summary

Executive summary

• Achieved strong operational results in Q2 2024, with gold production of 229,316 oz in H1, maintaining production guidance for the sixth consecutive year and delivering record realized gold prices, resulting in robust margins and cash generation from ELG operations fueling the Media Luna project build.

• Media Luna Project is 78% complete as of June, with engineering and procurement nearly finished; first concentrate production expected by year-end 2024 and commercial production anticipated in mid-Q1 2025.

• Maintained a strategic cash balance above $100 million, with $346 million in available liquidity and minimal drawdown on the revolving credit facility, ensuring full funding for the remaining Media Luna project spend.

• Released a multi-year exploration strategy for the Morelos land package, aiming to sustain over 450,000 oz AuEq annual production beyond 2027, with $30 million allocated for 2024 drilling and exploration.

• ESG initiatives advanced, highlighted by the release of the 2023 Responsible Gold Mining Report and a strong safety record with a lost-time injury frequency of 0.22 per million hours worked.

Financial highlights

• Q2 2024 revenue was $270.3 million, with adjusted EBITDA of $121.2 million and net cash from operations of $97.4 million.

• Gold production reached 229,316 ounces in H1 2024, with Q2 production at 113,822 ounces and gold sold totaling 113,513 ounces at an average realized price of $2,193/oz.

• By-product all-in sustaining cost (AISC) margin increased to 44% in Q2, with AISC at $1,239/oz and total cash costs at $1,014/oz.

• Generated $46 million in cash before Media Luna spend; after $108 million Media Luna investment, free cash flow was negative $62 million for the quarter.

• Processing rates exceeded 13,000 tons per day for the sixth consecutive quarter, with gold recoveries above 90%.

Outlook and guidance

• 2024 gold production guidance maintained at 410,000–460,000 oz AuEq, with full-year AISC expected at the upper end of $1,100–$1,160/oz due to higher gold prices and a strong Mexican peso.

• Media Luna capital expenditures finalized at $950 million, up from $874.5 million, mainly due to peso strength and out-of-scope power upgrades.

• Commercial production at Media Luna expected in mid-Q1 2025, with positive free cash flow anticipated by mid-2025 and a step change expected in Q3 2025.

• Costs anticipated to decrease in H2 2024 as open pit stripping requirements decline.

• Goal to maintain a minimum cash balance of $100 million through Media Luna build.