Torex Gold releases Media Luna resource estimate

Open pit mining operations at Torex Gold’s El Limon-Guajes Mine in Guerrero State, Mexico. Source: Torex Gold Resources Inc.

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Torex Gold Resources Inc. [TXG-TSX, OTC-TORXF] has released an updated resource estimate for the Media Luna Project on its Morelos Gold Property in Mexico.

The Morelos Gold Property is an area of 29,000 hectares in the Guerrero Gold Belt, about 180 km southwest of Mexico City.

Within the Morelos Gold Property, the company’s principal assets are the El Limon Guajes (ELG) Mining Complex, which consists of the El Limon, Guajes and El Limon Sur open pits (the ELG Open Pits), the El Limon Guajes underground mine, including zones referred to a Sub-Sill and El Limon Deep (ELD) and the processing plant and related infrastructure.

These operations reached in the commercial production stage in April 1, 2016.

At full production, the mine ranks amongst the largest and lowest cost gold operations in the world. Last year, Torex achieved gold production of 454,810 ounces. The full year result in 2019 established a new annual production record at El Limon Guajes, surpassing a prior record achieved in 2018 by 28%.

On Tuesday, Torex said it expects to produce in the range of 420,000 to 480,000 ounces of gold this year at an all-in-sustaining cost of US$900 to US$960/oz.

The Media Luna deposit is an early stage development project that is located on the same concession as The Guajes, El Limon and Sub-Sill deposits.

Torex said its long-term strategy is to develop a sustainable multi-asset mining business by executing operationally in order to generate strong free cash flow from El Limon Guajes, and by advancing, de-risking and bringing Media Luna successfully into production.

In a news release that came after the close of trading on January 13, 2019, Torex announced in-fill drilling on the first portion of Media Luna’s Inferred Resource, resulted in essentially a 100% conversion to Indicated Resources.

A second phase of in-fill drilling is planned to further upgrade remaining Inferred Resources with the second update to also be included in the feasibility study that the company aims to complete by late this year or 2021.

The company said the updated resource estimate for the Media Luna Project includes an Indicated Resource of 2.24 million gold equivalent ounces at a gold equivalent grade of 5.55 g/t and an Inferred Resource of 4.56 million gold equivalent ounces at a gold equivalent grade of 4.23 g/t.

Of the gold equivalent metal inventory (comprising the Indicated and Inferred Resource categories) 58% of the contained metal value is attributable to gold, 34% to copper and 8% to silver.

On Tuesday, Torex shares eased 4.9% or 96 cents to $18.37 and trade in a 52-week range of $11.41 and $21.91.

“The purpose of the planned 175-hole infill drill program was to upgrade approximately 13 million tonnes (25%) of the Inferred Resource to the Indicated Resource category,” said Torex President and CEO Fred Stanford. “The program was successful, 166 holes were drilled, 12.6 million tonnes were upgraded, and there was a modest increase in the gold equivalent grade,” he said.

Stanford went on to say that learnings from the infill program, and other analyses, have led to an updated geological model, which has been applied to the area of the Inferred resource as well.

As of December 31, 2019, the mineral resource estimate for Media Luna stands at 12.6 million tonnes of 5.55 g/t gold equivalent or 2.24 million gold equivalent ounces. On top of that is an Inferred Resource of 33.5 million tonnes of 4.23 g/t or 4.56 million gold equivalent ounces.

The updated estimate is compliant with NI 43-101 standards of disclosure and is based on 393 drill holes (approximately 194,000 metres), of which 166 holes (approximately 70,000 metres) were drilled as part of the recent infill drill program, which cost approximately $15 million to complete.

“With the confidence provided by the success of the infill drill program, part of the de-risking of the Media Luna Project will be an early stage works program to start excavating the access tunnel to the deposit. This is a long tunnel,” Stanford said.

He said excavation work is expected to start in the second half of 2020. “We expect to fund development of Media Luna via cash flow from El Limon Guajes,” Stanford said. The company hopes to complete this work in time to meet the schedule of commissioning of Media Luna in 2024.

Torex is also on the planning stage of an additional infill drill program with a purpose of increasing the tonnes in the Indicated confidence class, so as to increase the mine life in an upcoming feasibility study.


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