Torex Gold Resources Inc.

View Company Profile

April 14, 2021 at 9:00 AM (EDT)|Virtual Event - Online Only

---

SAFE HARBOR STATEMENT

THE PRELIMINARY ECONOMIC ASSESSMENT (THE “MEDIA LUNA PEA” OR “PEA”) IS BASED ON THE TECHNICAL REPORT ENTITLED “MORELOS PROPERTY, NI 43-101 TECHNICAL REPORT, ELG MINE COMPLEX LIFE OF MINE PLAN AND MEDIA LUNA PRELIMINARY ECONOMIC ASSESSMENT, GUERRERO STATE, MEXICO” DATED EFFECTIVE MARCH 31, 2018, AND FILED ON SEPTEMBER 4, 2018 (THE “TECHNICAL REPORT”). THE PEA IS A CONCEPTUAL STUDY OF THE POTENTIAL VIABILITY OF MINERAL RESOURCES OF THE MEDIA LUNA PROJECT. THE PEA IS NOT A PREFEASIBILITY STUDY OR FEASIBILITY STUDY, AS THE ECONOMICS AND TECHNICAL VIABILITY OF THE MEDIA LUNA PROJECT HAVE NOT BEEN DEMONSTRATED AT THIS TIME. IT IS IMPORTANT TO NOTE THAT MUCKAHI IS EXPERIMENTAL IN NATURE AND TESTING IN AN OPERATING MINE IS ONGOING. SINCE THE DATE OF THE TECHNICAL REPORT, THE MAJORITY OF THE COMPONENTS OF THE MUCKAHI MINING SYSTEM HAVE BEEN TESTED BY TOREX AND THEIR FUNCTIONALITY DEMONSTRATED. HOWEVER, THE COMPONENTS HAVE NOT YET BEEN TESTED TOGETHER AS A SYSTEM TO DEMONSTRATE THE RATES PER DAY IN WHICH TUNNELS CAN BE EXCAVATED AND MATERIAL REMOVED FROM LONG HOLE OPEN STOPES. TESTING OF THE INTEGRATED SYSTEM WILL CONTINUE AND IS EXPECTED TO BE COMPLETED IN THE SECOND QUARTER OF 2021. DRILL AND BLAST FUNDAMENTALS, STANDARDS AND BEST PRACTICES FOR UNDERGROUND HARD ROCK MINING ARE APPLIED IN THE MUCKAHI MINING SYSTEM AS DESCRIBED IN THE TECHNICAL REPORT, WHERE APPLICABLE. THE PROPOSED APPLICATION OF A MONORAIL SYSTEM FOR UNDERGROUND TRANSPORTATION FOR MINE DEVELOPMENT AND PRODUCTION MINING IS UNIQUE TO UNDERGROUND MINING. THERE ARE EXISTING UNDERGROUND MINES THAT USE A MONORAIL SYSTEM FOR TRANSPORTATION OF MATERIALS AND EQUIPMENT, HOWEVER NOT IN THE CAPACITY OF MUCKAHI WHICH IS DESCRIBED IN DETAIL IN THE TECHNICAL REPORT. THE MINE DESIGN, EQUIPMENT PERFORMANCE AND COST ESTIMATIONS INVOLVING MUCKAHI IN THE TECHNICAL REPORT ARE CONCEPTUAL IN NATURE, AND DO NOT YET DEMONSTRATE TECHNICAL OR ECONOMIC VIABILITY. THE PEA IS PRELIMINARY IN NATURE, AND IN EACH CASE, CONVENTIONAL METHODS AND THE MUCKAHI SYSTEM, THE PEA INCLUDES INFERRED MINERAL RESOURCES THAT ARE CONSIDERED TOO SPECULATIVE GEOLOGICALLY TO HAVE THE ECONOMIC CONSIDERATIONS APPLIED TO THEM THAT WOULD ENABLE THEM TO BE CATEGORIZED AS MINERAL RESERVES, AND THERE IS NO CERTAINTY THAT THE PRELIMINARY ECONOMIC ASSESSMENT WILL BE REALIZED. MINERAL RESOURCES THAT ARE NOT MINERAL RESERVES DO NOT HAVE DEMONSTRATED ECONOMIC VIABILITY. ADDITIONAL INFORMATION ON THE MINERAL RESOURCES AND MINERAL RESERVES CONTAINED IN THIS PRESENTATION ARE INCLUDED IN THE APPENDIX (SLIDES 31 TO 34).
Total cash costs per ounce of gold sold (“TCC”), all-in sustaining costs per ounce of gold sold (“AISC”), realized gold price, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted net earnings, free cash flow, and net (cash) debt are financial performance measures with no standard meaning under International Financial Reporting Standards (“IFRS”). The net debt to EBITDA ratio is a financial performance measure with no standard meaning under IFRS. The net debt to EBITDA ratio is a measure of financial leverage and is presented to provide readers with a gauge of the Company’s financial positioning relative to level of debt and cash on hand at the end of the period. Readers should be aware the measure is a backward-looking measure. It is determined by presenting net debt next to EBITDA (as previously mentioned, each a non-IFRS financial performance measure). Please refer to the “Non-IFRS Financial Performance Measures” section in the Company’s management’s discussion and analysis (the “MD&A”) for the year ended December 31, 2020, dated February 23, 2021, available on the Company’s SEDAR profile at www.sedar.com for further information with respect to TCC, AISC, EBITDA, adjusted EBITDA, free cash flow and net (cash) debt and a detailed reconciliation of each of these non-IFRS financial performance measures to the most directly comparable measures under IFRS.
This presentation contains “forward-looking statements” and “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, information with respect to the future exploration, development and exploitation plans concerning the Morelos Gold Property (as defined in the MD&A); the adequacy of the Company’s financial resources to fund such plans; business plans and strategy and other events or conditions that may occur in the future; the results set out in the Technical Report including the PEA including with respect to mineral resource and mineral reserve estimates; the ability to exploit estimated mineral reserves; the Company’s expectation that the ELG Mine Complex (as defined in the MD&A) will continue to be profitable with positive economics from mining; expected recoveries, grades, annual production; the parameters and assumptions underlying the mineral resource and mineral reserve estimates and the financial analysis. Forward-looking statements include but are not limited to: the Company is well positioned to deliver increasing value; the future underpinned by solid fundamentals; expected long life potential via Media Luna project; expectation that the discount to peers to narrow as the Company executes on its strategic plan as described in the presentation; the Company is well positioned to deliver strong cash flow in 2021; production and cost guidance as described in the presentation; total cash costs and all-in sustaining costs expected to be in line with 2020, with the difference relative to the original 2020 guidance reflecting the impact of higher gold price on profit sharing and government royalties; future being supported by robust cash flow form ELG; guidance points to a stronger year in 2021 and more of the same expected in 2022; expectation of relatively consistent production from ELG through 2023 including expectations for 2023 as described in the presentation; scheduled first production from Media Luna in Q1 2024; plans to evaluate the potential to increase the life of mine and extend the production profile of ELG into 2024; maximizing free cash flow from ELG being a key focus, including the evaluation of opportunities to optimize the mine plan and extend reserve life as described in the presentation; expectation that Company will be able to fully fund the development of Media Luna at $1,400/oz gold; projected cash flow from ELG expected to be more than sufficient to fund development of Media Luna without requiring external sources of financing based on the gold price assumptions set out in the presentation; the estimated cash balances for years 2021 to 2024; Media Luna is expected to extend cash flow beyond ELG; implied mine life in years based on mineral reserves and resources and assumed plant throughput; Media Luna on track for first production in Q1 2024 and expected to deliver strong cash flow well beyond ELG; Media Luna to leverage existing ELG infrastructure as described in the presentation; Media Luna feasibility study expected in Q1 2022; 7 km long access tunnel starting north of Balsas River expected to get to bottom of Media Luna deposit by early 2023, targeting 10m/day at steady state using Muckahi and conventional equipment; plans to complete the South Portal and expected benefits described in the presentation; potential of the Muckahi mining system to be a game changer for underground mining including up to a 30% reduction in underground capital expenditures, up to 30% decrease in underground mining cost, up to a 80% decrease in time between investment and revenue and up to a 95% decline in underground greenhouse gas emissions; the test objectives for Muckahi in 2021; looking to the future focussed on fundamentals and allocating capital to deliver maximum value including being well positioned to be patient around M&A, maximizing the free cash flow of ELG, extending the cashflow profile by bringing Media Luna into production in Q1 2024, opportunities to enhance return to shareholders through mergers and acquisitions and deploying Muckahi technology beyond the current asset base, and managing capital to repay debt, fully fund Media Luna and potentially for share buyback/dividends; significant exploration potential remains across the broader Morelos property; study to implement solar power plant at ELG currently underway; expectation that executing strategic plan will enhance shareholder returns; plans to optimize and extend ELG, advance and de-risk Media Luna, continue the Muckahi testing and commercialization, build on ESG excellence, and close the valuation gap, each as described in the presentation; tendency of cash flow to be weakest in the first half of the year given the timing of payments related to government royalties, profit sharing and taxes; to date, magnetic anomalies have been a strong indicator of potential mineralization; regional targets are being prioritized for future drilling and commitments to invest $2.5 million on regional exploration; expected recoveries, grades, annual production; the parameters and assumptions underlying the mineral resource and mineral reserve estimates and the financial analysis; and plans to advance key value accretive projects, as described in the presentation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “strategy”, “plans,” “expects,” or “does not expect,” “is expected,” “potential”, “risk”, “guidance”, “opportunities”, “target”, “envisioned”, “objective”, “focus”, “budget,” “scheduled,” “goal,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does not anticipate,” “believes”, “tends” or variations of such words and phrases or statements that certain actions, events or results “may,” “could,” “would,” “might,” “will” or “will be taken,” “to be,” “be achieved,” or “on track 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 risks associated with: ability to conclude a feasibility study demonstrating within a reasonable confidence that the Media Luna project can be constructed and operated in an economically viable manner; skarn deposits; with achieving planned gold production; fluctuation in gold and other metal prices; commodity price risk; currency exchange rate fluctuations; capital and operational cost estimates; the assumptions underlying the production estimates not being realized; cost of labor, supplies, fuel and equipment rising; the assumptions underlying the estimated year-end cash balances not being realized; the assumptions underlying the cash flow projections from ELG to fully fund the development of Media Luna, without external sources of financing, not being realized; assumptions underlying the projected implied mine life based on mineral reserves and resources not being realized; actual results of current exploration, development and exploitation activities not being consistent with expectations; changes in project parameters; delays and costs inherent to consulting and accommodating rights of local communities; hiring and training the required personnel and maintaining personnel relations; the feasibility of bringing the Media Luna deposit into production; the feasibility of the Muckahi system; the assumptions underlying the expected reduction in in capital and operating expenditures, time between investment and revenue, and green house gas emissions in a Muckahi mine; as well as those risk factors included in the MD&A, the Annual Information Form (“AIF”) the Technical Report and the Company’s other public disclosure which are available on www.sedar.com and www.torexgold.com. Certain material assumptions regarding such forward-looking information and forward-looking statements are discussed in this presentation, the MD&A, the AIF, the Technical Report and elsewhere in the Company’s public disclosure. Readers are cautioned that the foregoing, together with the risks and assumptions set out in the MD&A, the AIF, the Technical Report and elsewhere in the Company’s public disclosure, is not exhaustive of all factors and assumptions which may have been used. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information or statements 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 forward-looking information and forward-looking statements contained herein are presented for the purposes of assisting investors in understanding the Company’s expected financial and operating performance and the Company’s plans and objectives and may not be appropriate for other purposes. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities law.
The scientific and technical data contained in this presentation have been reviewed and approved by Dr. Lars Weiershäuser, P.Geo., an employee of the Company. Dr. Lars Weiershäuser is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Properties. Additional technical information is contained in the Technical Report. The technical information contained in this presentation is based upon the information contained in the Technical Report, which is available on SEDAR as www.sedar.com and the Company’s website at www.torexgold.com and as updated in the Company’s continuous disclosure documents also available on www.sedar.com and www.torexgold.com.
Inclusion of estimates published by S&P Capital IQ in this presentation is not an endorsement by the Company of such estimates.
Torex Gold and the Bull/Moon logo are registered trademarks of the Company.

NOTICE

The Denver Gold Group does not make any express or implied condition, representation, warranty or other term as to the accuracy, validity, reliability, timeliness or completeness of any information or materials in general or in connection with any particular use or purpose presented at the Gold Forum. Denver Gold Group cannot accept responsibility for sourcing variances, mistakes, errors or omissions or for any action taken in reliance thereon. Use of this data is governed by Denver Gold Group's Terms of Use.

The Denver Gold Group does not represent or endorse the accuracy or reliability of any third party advice, opinion, statement, information or materials received during the Gold Forum.

INVESTMENT ADVICE - NO OFFER OR RECOMMENDATION

The Gold Forum and the information and materials presented at the Gold Forum do not, and shall not be construed as, making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of any regulated gold related products or any other regulated products, securities or investments, including, without limitation, any advice to the effect that any gold related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated gold related products or any other regulated products, securities or investments should not be made in reliance on any of the information or materials presented or obtained during the Gold Forum. Before making any investment decision, prospective investors should seek advice from their financial, legal, tax and accounting advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.