Torex Gold’s Earnings Call: Achievements and Challenges

Torex Gold ((TSE:TXG)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Torex Gold reflected a balanced sentiment, highlighting significant achievements alongside challenges. The company celebrated milestones such as achieving commercial production at Media Luna and successful workforce transitions. However, these accomplishments were tempered by higher costs anticipated in Q2 and a substantial debt drawdown. Overall, the sentiment remains hopeful for improved performance in the latter half of 2025 as production stabilizes and costs decline.

Commercial Production Achieved at Media Luna

Torex Gold announced the successful achievement of commercial production at its Media Luna project. The construction was completed on schedule, and the mining and mill throughput exceeded the required thresholds, marking a significant milestone for the company.

Successful Workforce Transition

The company successfully transitioned or recruited nearly 500 employees for the Media Luna operations. This effort maintained a high level of local community recruitment, showcasing Torex Gold’s commitment to local employment and community engagement.

7% Reserve Growth

Torex Gold reported a 7% year-over-year growth in mineral reserves. This growth was primarily driven by the inclusion of EPO and the replacement of depletion from the ELG Underground, indicating a positive outlook for the company’s resource base.

Safety Program Enhancement

In response to a carbon monoxide incident, Torex Gold launched a next-level safety program. This initiative aims to re-establish the company as an industry leader in safety, underscoring its commitment to employee welfare and operational safety.

Strong Liquidity Position

The company ended the quarter with nearly $200 million in available liquidity and $107 million in cash. This strong liquidity position provides Torex Gold with the financial flexibility to manage its operations and strategic initiatives effectively.

Higher Costs Due to Commissioning Phase

Torex Gold anticipates higher costs in Q2 due to the commissioning phase of Media Luna. The all-in sustaining costs are expected to peak above the upper guidance range, reflecting the financial impact of this critical phase.

Debt Drawdown

The company drew down $113 million on its debt facility. This decision was influenced by lower production levels, Media Luna spending, and significant tax outflows, highlighting the financial pressures faced during the quarter.

Lower Production and Ore Grade

Torex Gold experienced lower production in Q1 due to a four-week processing plant tie-in period. Additionally, ore grades were lower as the open pits wind down, impacting the overall production output.

Forward-Looking Guidance

During the call, Torex Gold provided detailed guidance on its financial and operational metrics. The company anticipates an increase in production levels through Q2 as Media Luna ramps up, with production stabilizing in Q3. Torex expects to return to positive free cash flow by mid-2025 and plans to outline a return of capital policy to shareholders later this year. Additionally, a significant increase in exploration activities is planned, with a budget of $45 million for 2025.

In summary, Torex Gold’s earnings call highlighted a mix of achievements and challenges. While the company celebrated milestones such as commercial production at Media Luna and workforce transitions, it also acknowledged the impact of higher costs and debt drawdowns. Looking forward, Torex remains optimistic about stabilizing production and returning to positive cash flow, supported by a strong liquidity position and strategic exploration plans.