Despite a blockade of its El Limon-Guajes gold mine complex in southwestern Mexico from November 2017 until early April 2018, Torex Gold Resources (TSX: TXG) put out solid results over the last six months.
The company reported 75 days of partial operations in the first quarter due to the blockade and challenging operating conditions, and yet produced 67,000 oz. gold in doré in the three months ended March 31. Another 8,000 oz. gold were shipped in carbon fines.
In the second quarter ended June 30, Torex produced 78,796 oz. gold in doré and another 1,300 oz. in carbon fines.
The blockade began on Nov. 3, 2017, when a group of 20 unionized workers demanded a change in labour union. Torex told the workers earlier that day that it did not have the authority to change the union and that any changes had to go through the government. The blockade ended on April 6.
Processing operations have continued uninterrupted since their restart in January and mining in the El Limon pit resumed on April 6.
The El Limon-Guajes complex consists of the El Limon, Guajes and El Limon Sur open pits, the El Limon-Guajes underground mine (including development zones referred to as Sub-Sill and El Limon Deep), and a processing plant. It also includes the Media Luna deposit, an early-stage project.
Earnings from mine operations totalled US$23.5 million for the second quarter and US$42.3 million for the first six months of the year.
The company posted a second-quarter net loss of US$12.3 million, or 14¢ per share, and a net loss for the first six months of US$2.1 million, or 3¢ per share.
Total cash costs came in at US$680 per oz. gold sold in the second quarter and US$702 per oz. sold in the six months ended June 30.
All-in sustaining costs reached US$1,017 per oz. gold sold in the second half, and US$989 per oz. gold sold in the first half of the year.
“The restart has gone very well across the board,” Fred Stanford, the company’s president and CEO, told analysts and investors on an Aug. 9 conference call about Torex’s three- and six-month results ended June 30. “The employee turnover as a result of the blockade has been managed, and recruitment of local employees has progressed well.”
The company also finished building the SART plant in June, which Torex says should deliver cost reductions.
During the second quarter, the processing plant hit a record-breaking day of 16,500 tonnes processed. In the latter half of July it was running at 14,000 tonnes per day, and management says it expects to meet its goal of consistent production of 14,000 tonnes per day by year-end.
Turning to the SART plant, it produced the first copper precipitate late in the second quarter. By the end of July the next quarter, the plant had shipped an excess of 24 tonnes of copper off-site.
“This is copper that we’re very, very happy not to have circulating through our plants,” Stanford said on the second-quarter conference call. “We’re seeing meaningful reductions in reagent usage … by the end of the third quarter, we should have a good sense of the cost reduction performance, and can report it on then.”
The company’s 290 sq. km Morelos property lies in the Guerrero gold belt, 180 km southwest of Mexico City.
The El Limon-Guajes mine started commercial production in March 2016.
The property is 75% unexplored.
Torex says four diamond drills are turning at Media Luna to intersect 175 infill targets by late 2019, and more drills will be added as water supply becomes available, Standord says.
By the end of July the company had drilled 19 targets, and assays are pending.
The goal of the infill drill program is to update 25% of the current inferred resource to the measured and indicated category.
“It is good to be back working on this project as a platform for our next stage of growth,” Stanford said.