Impact: Neutral
Torex Gold provided a Q3/24 update on the development of its Media Luna Au-Cu project at its flagship Morelos complex in Mexico. The one-month downtime required for tie-ins and upgrades to the process plant has been rescheduled from November to February, because of delays in deliveries of critical electrical equipment. As a result, the 2024 production guidance has been revised upward to 450-470k oz Au (from 400-450k oz Au). Concurrently, we estimate the 2025 production to decrease to ~418k oz AuEq (from 465k oz AuEq). The cash cost and AISC guidance remain at $860-960/oz and $1,100-$1,160/oz, respectively, but we anticipate costs to be at the high end of guidance. With an additional US$114M Capex spent in Q3/24, development and construction at Media Luna is now 87% complete. We believe this rescheduling was not completely unexpected as management had already hinted at the possibility of this happening. Management believes it would allow the project team more time to test systems and stockpile ML ore, potentially reducing the downtime to less than a month. In our view, this does not change the larger proposition of Torex being a low-cost intermediate gold producer, providing significant leverage to the rising gold price (read our initiation report).
