Le Lézard
Classified in: Mining industry, Business
Subject: EARNINGS

Torex Gold Reports Solid Q3 2022 Financial Results


(All amounts expressed in U.S. Dollars unless otherwise stated)

TORONTO, Nov. 09, 2022 (GLOBE NEWSWIRE) -- Torex Gold Resources Inc. (the "Company" or "Torex") (TSX: TXG)
reports the Company's financial and operational results for the three and nine months ended September 30, 2022. The Company will host a conference call tomorrow morning at 9:00 AM (ET) to discuss the results.

Jody Kuzenko, President & CEO of Torex, stated:

"Our well-established track record of delivering safe and reliable production at El Limón Guajes ("ELG") continues, with 122,208 ounces produced this quarter. With a sharp focus on cost management, we also generated healthy margins this quarter, resulting in adjusted EBITDA of $107.8 million and free cash flow of $33.5 million, including $68.6 million of capital expenditures. Given the year-to-date production and cost performance, we are well positioned to deliver on operational guidance for the fourth straight year.

"De-risking our Media Luna Project continues to be central to our strategy. During the quarter, a major permitting milestone was achieved with the granting of the MIA Integral from the environmental regulator, which is the permit that will allow for operations to begin at Media Luna. Additionally, we secured approval from the utility authorities to increase our power draw to 45 megawatts, to accommodate activities on both the north and south sides of the Balsas River.  

"Procurement on the project continues to ramp up responsibly, with a focus on key, long-lead packages that are schedule critical ? including the Guajes conveyor, flotation circuits, re-grind mills, mine ventilation fans and the battery electric vehicle fleet. On the high volume, non-schedule critical procurement packages, we are seeing a rescheduling of cost flow estimates assumed in the 2022 Technical Report for several reasons, including extra time to expand the pool of vendors, extra time for the vendors to provide bids, as well as timing and quantum of staged payments that vary from the allocations initially assumed. Although timing of non-schedule critical procurement and cost flow estimates differ from those originally assumed, the overall lead times and upfront costs of purchase orders executed to date are substantially in line with the Technical Report.

"As a result of the lower procurement spend to date, there will be an underrun in capital expenditures on the project for 2022, and guided annual spend is now in the range of $120 to $150 million. While these spend patterns have impacted the level invested to date, the pace of investment is expected to accelerate over the coming quarters, and the overall project schedule remains on track at this early stage.   

"Beyond procurement, we continued to make steady progress on project engineering and construction in Q3. At quarter end, total physical completion stood at 9%, with steady momentum on engineering, surface construction and underground development activities. At the end of October, the Guajes Tunnel had advanced approximately 2,835 metres and South Portal Lower had advanced approximately 1,175 metres, meaning that projected breakthrough continues to track well for Q1 2024.
  
"Our strategy at Morelos continues to be executed per plan ? with $339 million of cash on hand at quarter end, $250 million of available credit, and strong and consistent forecast cash flow from ELG, we are well positioned to fund the development of Media Luna, continue to invest in value enhancing exploration and drilling, and maintain minimum balance sheet liquidity of $100 million."

THIRD QUARTER 2022 HIGHLIGHTS

  1. These measures are Non-GAAP Financial Performance Measures or Non-GAAP ratios (collectively, "Non-GAAP Measures"). For a detailed reconciliation of each Non-GAAP Measure to its most directly comparable IFRS financial measure see Tables 2 to 10 of this press release. For additional information on these Non-GAAP Measures, please refer to the Company's management's discussion and analysis ("MD&A") for the quarter ended September 30, 2022, dated November 8, 2022. The MD&A, and the Company's unaudited condensed consolidated interim financial statements for the quarter ended September 30, 2022, are available on Torex's website (www.torexgold.com) and under the Company's SEDAR profile (www.sedar.com).


Table 1: Operating and Financial Highlights

            
   Three Months Ended Nine Months Ended
   Sep 30, Jun 30, Sep 30, Sep 30, Sep 30,
In millions of U.S. dollars, unless otherwise noted  2022 2022 2021 2022 2021
Operating Results           
Lost-time injury frequency1/million hours 0.10 0.00 0.26 0.10 0.26
Total recordable injury frequency1/million hours 1.69 1.32 2.44 1.69 2.44
Gold producedoz 122,208 123,185 111,229 357,839 358,792
Gold soldoz 119,834 123,363 118,989 351,209 359,432
Total cash costs2$/oz 760 703 727 736 646
Total cash costs margin2$/oz 955 1,16201,059 1,081 1,146
All-in sustaining costs2$/oz 1,059 911 900 999 883
All-in sustaining costs margin2$/oz 656 954 886 818 909
Average realized gold price2$/oz 1,715 1,865 1,786 1,817 1,792
Financial Results           
Revenue$ 209.3 235.0 216.7 652.0 653.8
Cost of sales$ 146.2 139.6 142.6 418.0 394.2
Earnings from mine operations$ 63.1 95.4 74.1 234.0 259.6
Net income$ 43.9 70.3 36.5 154.2 152.2
Per share - Basic$/share 0.51 0.82 0.43 1.80 1.78
Per share - Diluted$/share 0.51 0.80 0.41 1.77 1.72
Adjusted net earnings2$ 34.6 57.0 42.9 128.8 147.6
Per share - Basic2$/share 0.40 0.66 0.50 1.50 1.72
Per share - Diluted2$/share 0.40 0.66 0.50 1.50 1.72
EBITDA2$ 127.8 155.9 119.7 386.8 399.3
Adjusted EBITDA2$ 107.8 137.1 119.3 355.6 386.3
Cost of sales$/oz 1,220 1,132 1,198 1,190 1,097
Net cash generated from operating activities$ 102.4 126.9 87.8 276.0 235.4
Net cash generated from operating activities before changes in non-cash operating working capital$ 91.3 120.6 100.2 271.5 277.8
Free cash flow2$ 33.5 74.0 29.4 88.4 60.6
Cash and cash equivalents$ 339.2 310.7 221.6 339.2 221.6
Net cash2$ 336.1 306.3 217.8 336.1 217.8
            
  1. On a 12-month rolling basis, per million hours worked
  2. Total cash costs, total cash costs margin, all-in sustaining costs, all-in sustaining costs margin, average realized gold price, adjusted net earnings, EBITDA, adjusted EBITDA, free cash flow and net cash are non-GAAP financial measures with no standard meaning under International Financial Reporting Standards ("IFRS"). Refer to "Non-GAAP Financial Performance Measures" for further information and a detailed reconciliation to the comparable IFRS measures in the Company's MD&A for the quarter ended September 30, 2022, dated November 8, 2022, available on Torex Gold's website (www.torexgold.com) and under the Company's SEDAR profile (www.sedar.com).

CONFERENCE CALL AND WEBCAST DETAILS

The Company will host a conference call tomorrow at 9:00 AM (ET) where senior management will discuss the third quarter operating and financial results. Please dial in or access the webcast approximately ten minutes prior to the start of the call:

A live webcast of the conference call will be available on the Company's website at https://torexgold.com/investors/upcoming-events/. The webcast will be archived on the Company's website.


Table 2: Reconciliation of Total Cash Costs and All-in Sustaining Costs to Cost of Sales

            
   Three Months Ended Nine Months Ended
   Sep 30,  Jun 30,  Sep 30,  Sep 30,  Sep 30, 
In millions of U.S. dollars, unless otherwise noted  2022  2022  2021  2022  2021 
Gold soldoz 119,834  123,363  118,989  351,209  359,432 
            
Total cash costs per oz sold           
Production costs and royalties$ 94.9  91.6  90.7  272.3  241.7 
Less: Silver sales$ (0.6) (0.7) (0.6) (2.0) (1.7)
Less: Copper sales$ (3.2) (4.2) (3.6) (11.7) (7.7)
Total cash costs$ 91.1  86.7  86.5  258.6  232.3 
Total cash costs per oz sold$/oz 760  703  727  736  646 
            
All-in sustaining costs per oz sold           
Total cash costs$ 91.1  86.7  86.5  258.6  232.3 
General and administrative costs1$ 5.0  5.0  4.9  17.8  19.4 
Reclamation and remediation costs$ 1.4  1.2  1.1  4.0  3.4 
Sustaining exploration costs expensed$ -  -  0.9  -  2.9 
Sustaining capital expenditure2$ 29.4  19.5  13.7  70.6  59.2 
Total all-in sustaining costs$ 126.9  112.4  107.1  351.0  317.2 
Total all-in sustaining costs per oz sold$/oz 1,059  911  900  999  883 
            
  1. This amount excludes a gain of $0.3 million, $2.2 million and $1.7 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively, and a gain of $2.1 million and gain of $6.0 million for the nine months ended September 30, 2022 and September 30, 2021, respectively, in relation to the remeasurement of share-based payments. This amount also excludes corporate depreciation and amortization expenses totalling $0.1, nil and $0.2 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively, $0.2 million and $0.5 million for the nine months ended September 30, 2022 and September 30, 2021, respectively, recorded within general and administrative costs. Included in general and administrative costs is share-based compensation expense in the amount of $0.8 million or $7/oz for the three months ended September 30, 2022, $0.8 million or $6/oz for the three months ended June 30, 2022, $0.9 million or $8/oz for the three months ended September 30, 2021, $3.4 million or $10/oz for the nine months ended September 30, 2022 and $4.5 million or $13/oz for the nine months ended September 30, 2021.
  2. Before changes in net working capital and other, capital expenditures for the three and nine months ended September 30, 2022 totalled $71.6 million and $183.4 million, respectively, excluding lease payments of $1.5 million and $3.0 million, respectively. Sustaining capital expenditures of $29.4 million and $70.6 million in the three and nine months ended September 30, 2022, respectively, are related to $16.6 million and $40.6 million, respectively, for the cash component of capitalized stripping activities, and $12.8 million and $30.0 million, respectively, for sustaining equipment and infrastructure expenditures. Non-sustaining capital expenditures of $42.2 million and $112.8 million for the three and nine months ended September 30, 2022, respectively, relating to ELG Underground and the Media Luna Project, have been excluded from AISC.

Table 3: Reconciliation of Sustaining and Non-Sustaining Costs to Capital Expenditures

           
  Three Months Ended Nine Months Ended
  Sep 30,  Jun 30,  Sep 30,  Sep 30, Sep 30,
In millions of U.S. dollars 2022  2022  2021  2022 2021
Sustaining$12.8  11.6  10.3  30.0 25.3
Capitalized Stripping$16.6  7.9  3.4  40.6 33.9
Non-sustaining$4.3  5.0  15.8  15.0 31.1
Total ELG$33.7  24.5  29.5  85.6 90.3
Media Luna Project$32.5  29.6  25.3  80.6 61.3
Media Luna Infill Drilling/Other$5.4  5.9  6.8  17.2 19.1
Other & Working Capital Changes$(3.0) (7.5) (3.6) 3.0 2.8
Capital expenditures1$68.6  52.5  58.0  186.4 173.5
           
  1. The amount of cash expended on additions to property, plant and equipment in the period as reported in the consolidated statements of cash flows.

Table 4: Reconciliation of Average Realized Gold Price and Total Cash Costs Margin to Revenue

            
   Three Months Ended Nine Months Ended
   Sep 30,  Jun 30,  Sep 30,  Sep 30,  Sep 30, 
In millions of U.S. dollars, unless otherwise noted  2022  2022  2021  2022  2021 
Gold soldoz 119,834  123,363  118,989  351,209  359,432 
            
Revenue$ 209.3  235.0  216.7  652.0  653.8 
Less: Silver sales$ (0.6) (0.7) (0.6) (2.0) (1.7)
Less: Copper sales$ (3.2) (4.2) (3.6) (11.7) (7.7)
Less: Realized loss on Gold Contracts$ -  -  -  -  (0.2)
Total proceeds$ 205.5  230.1  212.5  638.3  644.2 
Total average realized gold price$/oz 1,715  1,865  1,786  1,817  1,792 
            
Less: Total cash costs$/oz 760  703  727  736  646 
Total cash costs margin$/oz 955  1,162  1,059  1,081  1,146 
Total cash costs margin% 56  62  59  59  64 
            

Table 5: Reconciliation of All-in Sustaining Costs Margin to Revenue

            
   Three Months Ended Nine Months Ended
   Sep 30,  Jun 30,  Sep 30,  Sep 30,  Sep 30, 
In millions of U.S. dollars, unless otherwise noted  2022  2022  2021  2022  2021 
Gold soldoz 119,834  123,363  118,989  351,209  359,432 
            
Revenue$ 209.3  235.0  216.7  652.0  653.8 
Less: Silver sales$ (0.6) (0.7) (0.6) (2.0) (1.7)
Less: Copper sales$ (3.2) (4.2) (3.6) (11.7) (7.7)
Less: Realized loss on Gold Contracts$ -  -  -  -  (0.2)
Less: All-in sustaining costs$ (126.9) (112.4) (107.1) (351.0) (317.2)
All-in sustaining costs margin$ 78.6  117.7  105.4  287.3  327.0 
Total all-in sustaining costs margin$/oz 656  954  886  818  909 
Total all-in sustaining costs margin% 38  50  49  44  50 
            

Table 6: Reconciliation of Adjusted Net Earnings to Net Income

            
   Three Months Ended Nine Months Ended
   Sep 30,  Jun 30,  Sep 30,  Sep 30,  Sep 30, 
In millions of U.S. dollars, unless otherwise noted  2022  2022  2021  2022  2021 
Basic weighted average shares outstandingshares 85,843,808  85,840,954  85,748,013  85,827,656  85,703,270 
Diluted weighted average shares outstandingshares 86,039,606  86,115,071  86,020,975  86,059,576  86,034,295 
            
Net income$ 43.9  70.3  36.5  154.2  152.2 
            
Adjustments:           
Unrealized foreign exchange loss (gain)$ 0.3  0.4  1.3  (0.3) (1.6)
Change in unrealized gains and losses on derivative contracts$ (20.0) (17.0) -  (28.8) (5.4)
Remeasurement of share-based payments$ (0.3) (2.2) (1.7) (2.1) (6.0)
Tax effect of above adjustments$ 6.0  5.7  0.1  9.4  3.9 
Tax effect of currency translation on tax base$ 4.7  (0.2) 6.7  (3.6) 4.5 
Adjusted net earnings$ 34.6  57.0  42.9  128.8  147.6 
Per share - Basic$/share 0.40  0.66  0.50  1.50  1.72 
Per share - Diluted$/share 0.40  0.66  0.50  1.50  1.72 
            

Table 7: Reconciliation of EBITDA and Adjusted EBITDA to Net Income

           
  Three Months Ended Nine Months Ended
  Sep 30, Jun 30, Sep 30, Sep 30, Sep 30,
In millions of U.S. dollars 2022  2022  2021  2022  2021 
Net income$43.9  70.3  36.5  154.2  152.2 
           
Finance (income) costs, net$(0.8) (0.3) 0.3  (0.7) 0.1 
Depreciation and amortization1$51.4  48.1  52.1  145.9  153.1 
Current income tax expense$32.3  37.0  34.6  93.9  102.6 
Deferred income tax expense (recovery)$1.0  0.8  (3.8) (6.5) (8.7)
EBITDA$127.8  155.9  119.7  386.8  399.3 
           
Adjustments:          
Change in unrealized gains and losses on derivative contracts$(20.0) (17.0) -  (28.8) (5.4)
Unrealized foreign exchange loss (gain)$0.3  0.4  1.3  (0.3) (1.6)
Remeasurement of share-based payments$(0.3) (2.2) (1.7) (2.1) (6.0)
Adjusted EBITDA$107.8  137.1  119.3  355.6  386.3 
           
  1. Includes depreciation and amortization included in cost of sales, general and administrative expenses and exploration and evaluation expenses.

Table 8: Free Cash Flow

           
  Three Months Ended Nine Months Ended
  Sep 30,  Jun 30,  Sep 30,  Sep 30,  Sep 30, 
In millions of U.S. dollars 2022  2022  2021  2022  2021 
Net cash generated from operating activities$102.4  126.9  87.8  276.0  235.4 
Less:          
Additions to property, plant and equipment1$(68.6) (52.5) (58.0) (186.4) (173.5)
Interest paid$(0.3) (0.4) (0.4) (1.2) (1.3)
Free cash flow$33.5  74.0  29.4  88.4  60.6 
           
  1. The amount of cash expended on additions to property, plant and equipment in the year as reported on the consolidated statements of cash flows.

Table 9: Net Cash

       
  Sep 30,  Jun 30,  Sep 30, 
In millions of U.S. dollars 2022  2022  2021 
Cash and cash equivalents$339.2  310.7  221.6 
Less: Lease obligations$(3.1) (4.4) (3.8)
Net cash$336.1  306.3  217.8 
       

Table 10: Unit Cost Measures

               
 Three Months Ended Nine Months Ended
 Sep 30,   Jun 30,   Sep 30,   Sep 30,   Sep 30,  
In millions of U.S. dollars, unless otherwise noted2022   2022   2021   2022   2021  
Gold sold (oz)119,834   123,363   118,989   351,209   359,432  
Tonnes mined - open pit (kt)9,980   8,947   8,882   28,946   29,847  
Tonnes mined - underground (kt)143   144   113   401   366  
Tonnes processed (kt)1,199   1,124   1,150   3,457   3,352  
Total cash costs:              
Total cash costs ($)91.1   86.7   86.5   258.6   232.3  
Total cash costs per oz sold ($)760   703   727   736   646  
Breakdown of production costs$$/t $$/t $$/t $$/t $$/t
Mining - open pit28.6 2.87 27.4 3.06 26.1 2.94 81.8 2.82 76.9 2.58
Mining - underground13.2 91.89 12.0 83.64 9.7 86.24 35.0 87.30 29.6 80.75
Plant38.2 31.82 38.2 33.95 40.7 35.41 113.5 32.82 117.8 35.14
Site support12.8 10.64 12.4 11.02 11.4 9.88 36.1 10.44 33.8 10.09
Mexican profit sharing (PTU)5.9 4.96 5.7 5.08 4.0 3.48 19.8 5.72 11.7 3.50
Capitalized stripping(16.6)  (7.9)  (3.4)  (40.6)  (33.9) 
Inventory movement5.2   (4.6)  (4.9)  3.3   (15.3) 
Other1.4   1.3   0.6   3.9   1.5  
Production costs88.7   84.5   84.3   252.8   222.1  
               

ABOUT TOREX GOLD RESOURCES INC.
Torex is an intermediate gold producer based in Canada, engaged in the exploration, development, and operation of its 100% owned Morelos Property, an area of 29,000 hectares in the highly prospective Guerrero Gold Belt located 180 kilometres southwest of Mexico City. The Company's principal asset is the Morelos Complex, which includes the El Limón Guajes ("ELG") Mining Complex, the Media Luna Project, and the processing plant and related infrastructure. Commercial production from the Morelos Complex commenced on April 1, 2016 and an updated Technical Report for the Morelos Complex was released in March 2022. Torex's key strategic objectives are to extend and optimize production from the ELG Mining Complex, de-risk and advance Media Luna to commercial production, build on ESG excellence, and to grow through ongoing exploration across the entire Morelos Property.

For further information, please contact:

TOREX GOLD RESOURCES INC. 
Jody KuzenkoDan Rollins
President and CEOSenior Vice President, Corporate Development & Investor Relations
Direct: (647) 725-9982Direct: (647) 260-1503
jody.kuzenko@torexgold.comdan.rollins@torexgold.com

CAUTIONARY NOTE

Forward Looking Information

This press release contains "forward-looking statements" and "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information also includes, but is not limited to, statements that: the Company is well positioned to deliver on operational guidance for the fourth straight year; the overall cost of purchase orders executed to date are in line with the feasibility study estimates, as are lead times; there will be an underrun in capital expenditures on the project in the year, and guided annual spend is now in the range of $120 to $150 million; the pace of investment is expected to accelerate over the coming quarters, and the overall project schedule remains well on track; projected breakthrough of the Guajes tunnel continues to track well for Q1 2024; the Company's strategy at the Morelos Complex continues to be executed per plan -- with $339 million of cash on hand at quarter end, $250 million of available credit, and strong forecast cash flow from ELG, the Company is well positioned to fund the development of Media Luna, continue to invest in value enhancing exploration/drilling, and maintain minimum balance sheet liquidity of $100 million; gold production is tracking towards the upper end of the full year guided range; the Company anticipates exiting the year at the high end of the guided range for total cash costs ($695 to $735 per oz) and towards the mid-point of the guided range for all-in sustaining costs; the available liquidity as at September 30, 2022; and Torex's key strategic objectives are to extend and optimize production from the ELG Mining Complex, de-risk and advance Media Luna to commercial production, build on ESG excellence, and to grow through ongoing exploration across the entire Morelos Property. Generally, forward-looking information and statements can be identified by the use of forward-looking terminology such as "forecast," "plans," "expects," or "does not expect," "is expected," "strategic" or variations of such words and phrases or statements that certain actions, events or results "will", "may," "could," "would," "might," or "on track,", or "well positioned to" occur. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including, without limitation, risks and uncertainties identified in the technical report (the "Technical Report") released on March 31, 2022, entitled "NI 43-101 Technical Report ELG Mine Complex Life of Mine Plan and Media Luna Feasibility Study", which has an effective date of March 16, 2022, and the Company's annual information form ("AIF") and management's discussion and analysis ("MD&A") or other unknown but potentially significant impacts. Forward-looking information and statements are based on the assumptions discussed in the Technical Report, AIF and MD&A and such other reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, and other factors that management believes are relevant and reasonable in the circumstances at the date such statements are made. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, whether as a result of new information or future events or otherwise, except as may be required by applicable securities laws.



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