Impact: Very Positive
Torex Gold reported Q2/24 production results from its ELG operations in Mexico, which were broadly in line with Q1 production but slightly missed consensus expectations. Torex produced 113,822 oz Au (-1% QoQ, -2% vs consensus of 116,570k oz Au) and sold 113,513 oz Au (+2% QoQ). Overall, production is benefitting from: 1) a well-performing processing plant that has resulted in +90% recoveries for Au and a +13,000 tpd throughput rate, 2) a decreasing strip ratio (4.3:1 vs 8.3:1 in Q1) that is expected to continue decreasing until the end of the mine life in H1/25, and 3) high mining rates at ELG underground (~2,145 tpd vs its steady-state level of 2,000 tpd). We view Q2 as a very solid quarter for Torex as production from ELG was in line with Q1 and gold sold saw a slight improvement. With H1 production sitting at ~229k oz Au, the company is on track to meet its Au production guidance of 400-450kz oz Au in 2024. If achieved, it would mark the sixth consecutive year of delivering on full production guidance. We note that the processing plant is scheduled to be down for four weeks in Q4 to allow for the Media Luna tie-ins. However, we believe Torex should be able to build up enough of a buffer in gold produced ahead of and after the shutdown period to enable it to cross the lower threshold of its guidance, all else being equal.
