Torex Gold responds to TMAC speculation

Torex Gold's ELG Mine Complex in southwest Mexico. Source: Torex Gold Resources Inc.

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Torex Gold Resources Inc. [TXG-TSX; TORXF-OTC] has issued a statement saying it is not in dialogue with or considering a transaction with TMAC Resources Inc. [TMR-TSX].

In that statement, the company also reiterated its reported best practise governance policies in response to a letter from a significant shareholder, (Marlin Sams Fund) who had voiced concern over the three directors in common between Torex and TMAC. They include Terrance MasGibbon, who is Chairman of both companies. The letter also noted rumours related to Torex’s possible interest in TMAC.

TMAC is a gold producer with a 100% stake in the Hope Bay gold project in Nunavut. The Hope Bay property covers a greenstone belt, which is 80 kilometres long and 20 kilometres wide and includes three camps with significant infrastructure, including 2,000 tonne-per-day processing plant, and underground developments at the Doris and Boston mines.

The Doris mine reached the commercial production stage in June 2017, almost 30 years after initial discoveries that were made by BHP Billiton between 1988 and 1999. The Madrid and Boston properties are expected to achieve commercial production in 2020 and 2022 respectively. TMAC has said it expects Hope Bay to produce up to 170,000 ounces of the yellow metal this year.

TMAC shares rose 2.3% or 10 cents on Thursday October 10 to $4.40. The shares are currently trading in a 52-week range of $3.57 and $7.06.

Torex, a gold producer in Mexico, responded to the shareholder letter after recently establishing a new quarterly gold production record of 138,100 ounces in the third quarter of 2019.

Production from the Morelos Gold Property 180 km southwest of Mexico City surpassed the previous record, set in the second quarter of 2019, by 21%.

“With the strong year-to-date performance and expectations for production in the fourth quarter of 2019, the company is well on track to achieve full year guidance of 430,000 ounces sold (+/-7%),” the company said in a press release on October 3, 2019.

The Morelos Gold Property is an area of 29,000 hectares in the Guerrero Gold Belt.

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, with expected life-of-mine (LOM) annual production of 370,000 ounces of gold at a LOM all-in-sustaining cost of US$616 per ounce.

In addition, 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, as well as by delivering the full potential of its innovative Muckahi Mining System.

On Thursday, Torex shares rose 0.23% or $0.04 to $17.18. The shares are currently trading in a 52-week range of $9.83 and $21.91.

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