What have been the operational highlights from the El Limón Guajes (ELG) mining complex in 2020?

2020 has been an exceptional year at ELG, and Q3 results can only be described as extraordinary: it was a record-breaking period across many facets of the business. In addition to having TXG’s 2^nd highest quarter of production ever, producing over 130,000 oz Au, we had our best financial quarter to date, generating US$124 million in free cash flow (FCF). The records achieved in Q3 include all-time highs for gold sales, realized margin, EBITDA, operating cash flow and – importantly in today’s market environment – record FCF. Finally, for the first time since commercial production, we achieved a net cash position, hitting US$77 million, a US$130 million-dollar improvement from Q2 and an impressive US$174 improvement year over year. We also paid back US$72 million of debt in Q3, and an additional US$50 million post-quarter end, which deleverages our balance sheet even further.

Our proudest record at Torex Gold is in safety – in November, we crossed the threshold of 10 million hours worked without lost time injury. We strongly believe that if we have a safe operation, productivity and performance follows, and we’ve seen this reflected in our positive results this year.

What is timeline for the development of Media Luna?

The project is on track and, based on the PEA concluded in 2018, promises to provide our operations in Mexico with an additional  decade of mine life – notably we have only drilled a third of the magnetic anomaly. The feasibility study is scheduled to be concluded in mid 2021 and first production is scheduled for Q1 2024. The work at Media Luna has been progressing in three key areas: the feasibility study, infill drilling that will convert 7 to 9 million tonnes from the inferred to indicated category, and early works.  In 2020, early works consisted of a focus on accessing the ore body through both the construction of a tunnel from the north side under the Balsas River, as well as the construction of a portal on the south side of the river. In terms of financing for the project, the significant cash flow we are generating from ELG will fully fund the project even at a conservative gold price of US$1,400/oz, as well as service any outstanding debt.

What progress has been made with Muckahi technology, including results from the pilot, implementation in operations and potential for wider dissemination throughout the industry?

In 2019, our test objectives focused on breaking rock – including testing the monorail system on the level. There are strong indicators that the technology is effective in reducing capex and improving productivity, and we were encouraged by the 2019 and 2020 testing results. This year’s testing has been on rock transportation and on the efficiency of the integrated system as a whole. Looking forward, we are working to establish a plan for the commercialization of Muckahi, as we are convinced in the widespread applicability of the technology across mining operations globally.

How has the company dealt with the Covid-19 pandemic?

The long-standing tradition in mining of focusing on safety over health has been turned on its head in 2020.  Since the onset of the pandemic, our goals have been to prevent the infection of COVID-19 among employees, contractors and local communities at our work site, and to continue to maintain production. We have been impressed by the resilience of our workforce; our strong culture of health and safety and multiple layers of protection approach we have always taken have served us well through the pandemic. Some of the measures we have in place are a three-stage screening process, an in-location testing site and an effective rapid response contact tracing system. In recognition of our safety standards, TXG was recognized by the National Mexican Institute of Social Security for our leadership on the development of COVID-19 precautionary measures.

What is Torex Gold’s strategy for growth in 2021, and does the company intend to expand through M&A in the coming years?

We are actively seeking growth opportunities that enable value accretive geographic diversification. TXG’s goal is to become a 1 million oz to 1.5 million oz producer. We are constantly scanning the horizon for appropriate opportunities but given the health and cash flow generated from our flagship asset, we are well positioned to be patient on M&A activity.

Our primary focus is to deliver reliable and consistent cash flow from ELG, pay down debt and internally fund and bring Media Luna into production by early 2024 – while continuing to leverage potential opportunities to extend the current production profile of ELG through 2023 and into 2024. Additionally, since 75% of the Morello gold property is unexplored, we plan to invest in exploration on the broader land package in 2021. We have a winning combination consisting of a great asset, a great team, industry disruptive technology and momentum, and each of those will support continued value generation and a very bright future for Torex.