Torex Gold ((TSE:TXG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During the latest earnings call, Torex Gold conveyed a mixed sentiment, highlighting both their impressive financial achievements and ongoing strategic projects, while addressing notable challenges. The company proudly showcased its financial success, including record revenues and progress with the Media Luna project, although serious safety concerns and increased costs were also discussed. The transition to Media Luna is anticipated to enhance future cash flows, providing a positive outlook despite the current hurdles.
Record Annual Revenue and Adjusted EBITDA
Torex Gold celebrated a milestone in 2024, achieving record annual revenue exceeding $1.1 billion and record adjusted EBITDA surpassing $540 million. This financial accomplishment underscores the company’s robust performance and its ability to capitalize on market opportunities.
Successful Production Guidance Achievement
For the sixth consecutive year, Torex Gold met its annual production guidance, maintaining strong margins of 49% throughout the year. This consistency in achieving production targets reflects the company’s operational efficiency and strategic planning.
Media Luna Project Progress
Significant advancements were made in the Media Luna project, with construction being 94% complete and underground development ahead of schedule. The first production of copper concentrate is anticipated by the end of March 2025, marking a pivotal step for Torex Gold’s future operations.
Exploration and Growth Initiatives
Looking ahead, Torex Gold has increased its exploration budget to a record $45 million for 2025, aiming to drill approximately 125,000 meters. This ambitious growth initiative nearly doubles the drilling activity from 2024, positioning the company for future resource expansion.
Strong Liquidity Position
Despite significant capital investment in the Media Luna project, Torex Gold maintains a strong liquidity position with over $330 million available. This financial stability ensures the company can continue its strategic investments and operations.
Fatal Safety Incident
A tragic safety incident on December 5, 2024, resulted in the loss of three lives due to carbon monoxide exposure at the ELG underground mine. Torex Gold is committed to addressing safety concerns and implementing measures to prevent such occurrences in the future.
Higher Operating Costs and AISC
Operating costs rose at the open pit and processing plant, driven by increased maintenance costs, higher cyanide consumption, and greater contractor utilization. These factors contributed to a challenging cost environment for the company.
Negative Free Cash Flow
The substantial investment of nearly $450 million in the Media Luna project led to Torex Gold reporting negative free cash flow for the year. This financial strain highlights the significant capital requirements associated with major project developments.
Temporary Production Suspension
A temporary suspension in December led to lower production and throughput in Q4, affecting the overall annual output. This disruption underscores the operational challenges faced by the company.
Tax and Royalty Payments Impact
Torex Gold anticipates significant tax and royalty payments in Q1 2025, which will impact cash flow. This includes a substantial $45 million tax true-up and a $35 million mining royalty payment, reflecting the financial obligations of the company.
Forward-Looking Guidance
Looking forward, Torex Gold remains optimistic, having provided guidance for the upcoming year. The company aims to achieve Media Luna’s design mining rate ahead of schedule by mid-2026. Although production for 2025 is expected to be lower due to a planned shutdown, the company remains committed to maintaining sustainable production levels and returning capital to shareholders post-construction.
In conclusion, Torex Gold’s earnings call reflected a balanced sentiment, showcasing impressive financial performance and strategic advancements alongside addressing safety concerns and increased costs. With a strong emphasis on future growth through the Media Luna project, the company is poised for enhanced cash flows despite current challenges.
