Mexico-focused producer Torex Gold Resources (TSX: TXG) released its second quarter financial results and updated production guidance for the year: with 59,508 oz. gold generated in the quarter, the company now expects to produce 390,000-420,000 oz. gold this year.
Torex’s original guidance was for 420,000 oz. to 480,000 oz. gold; however, based on a Covid-19-related decree from the Mexican government, production at its El Limon Guajes complex was suspended in April. Processing resumed in May and full production restarted in June.
The company recorded all-in sustaining costs (AISCs) of US$1,015 per oz. in the quarter – excluding US$8 million of costs related to the Covid-19 suspension – and expects AISCs for the year to come in between US$965-$1,025 per ounce. This compares with prior AISCs guidance of US$900-$960 per ounce.
“While this quarter was far from business as usual, we delivered solid operational performance and demonstrated the financial strength of our business even in these most challenging times,” Jody Kuzenko, the company’s president and CEO, said in a press release. “With operations back on track, US$176.9 million in the bank and a robust gold price at hand, we plan to direct our cash flow to further reducing debt during the second half of 2020.”
Kuzenko added that in the second quarter, the company generated US$28.1 million in operating cash flow (before changes in working capital) and produced 42,630 gold oz. in July, compared with 38,890 oz. in June.
Adjusted net earnings for the quarter were US$3.6 million, based on an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of US$49.3 million.
Torex closed out the quarter with US$176.9 million of unrestricted cash. The company repaid US$21.7 million of debt in the second quarter and drew down US$90 million from its revolving credit facility, for a total debt position of US$225.2 million at the end of June. It expects to be in a net cash position before year-end.
In the news release, Torex also stated that enhanced Covid-19 measures remain in place at El Limon Guajes. To date, it has recorded four cases of the virus among its workforce. This includes three employees who displayed symptoms and tested positive away from the mine site and are now recovered, as well as one individual who tested positive at the site and is now quarantined, based on the company’s Covid-19 protocols.
Torex Gold’s Morelos property in the Guerrero gold belt hosts the El Limon Guajes complex, which includes a 13,000-tonne per day processing facility, an open pit and underground mine, as well as the Media Luna underground deposit, 7 km from the El Limon Guajes plant.
— This article first appeared in our sister publication, the Canadian Mining Journal.