Intermediate miner Torex Gold (TSX: TXG) has released its 2020 operating highlights – last year, the company produced 430,480 gold oz., 130,640 of which were generated in the fourth quarter. The company’s EL Limon Guajes mining complex in Mexico beat the revised production guidance of 390,000 to 420,000 gold oz. for 2020.
“We delivered another solid operational result to close out 2020, a guidance beat which follows a strong pattern of delivering on our commitments,” Jody Kuzenko, Torex’s president and CEO, said in a news release. “We expect this operational consistency to continue, which, combined with robust margins, positions us well to continue to generate strong operating cash flow. During Q4 2020, we reduced debt by a further US$116 million dollars, exiting the year with debt of US$40 million and a strong cash balance.”
In the fourth quarter, Torex sold 133,060 gold oz. at an average realized price of US$1,845 per oz., bringing its 2020 gold sales to 437,310 oz. at an average price of US$1,770 per ounce.
Additional details on gold grades mined and processed will be provided with the company’s full-year financial results; 2021 production and cost guidance is expected in the next week.
Torex holds the El Limon Guajes mining complex in Mexico’s Guerrero gold belt, which lies within the 290-sq.-km Morelos gold property. The mining site includes a central 13,000 tonne per day processing facility as well as an open pit and underground mine.
Ryan Thompson, a precious metals analyst at BMO, raised his target price on the company to $36 per share from $35, noting that Torex’s fourth quarter production beat his forecast by about 5%. (At presstime in Toronto Torex was trading at $19 per share within a 52-week range of $8.79 and $25.52.)
Thompson also pointed out that the company had strengthened its balance sheet, repaying $116 million of debt in the final quarter of 2020, leaving $40 million outstanding. He also noted that investors shouldn’t forget that the company has exposure to copper, too. “With copper prices up ~32% in the past year, we flag that Media Luna has ~322 million lbs. of copper in the measured and indicated category plus an additional ~686 million lbs. of copper in the inferred category,” he wrote in a research note. “At the BMO price deck, we value Media Luna at $785 million, however at spot prices, we value it at $1.4 billion.”
Kevin MacKenzie and Michael Pettingell of Canaccord Geunity have a target price of $34.50 per share, and noted that Torex “currently trades at 0.56 times P/NAV, a discount to that of covered Junior/Intermediate producers at 0.86 times.”