Torex Gold Resources Inc Q2 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Trevor Turnbull - Scotiabank Global Banking and Markets, Research Division - Analyst : Yes. Clearly, the cost discipline is helping to offset inflation. And I see that stood at -- it's been -- it sounds like it's been looking for efficiencies, reducing consumption of where you can. I just wondered if some of that is also due to existing lower-cost inventories. And as you get deeper into the year, if you're starting to see inflation catch up as you replenish those supplies?

Question: Trevor Turnbull - Scotiabank Global Banking and Markets, Research Division - Analyst : That sounds really good. So leaving the sustaining capital of stripping aside, like the total cash cost, that number or the cash cost ex the royalties should be fairly steady then as we move through the rest of the year?

Question: Trevor Turnbull - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then I had one other question, and that's more on the Media Luna development. I saw there's some metrics on the 2 self-portal access ways. Can you just remind me kind of what the total distance that you're looking for in each of those? And once you do get those completed and REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 04, 2022 / 1:00PM, TXG.TO - Q2 2022 Torex Gold Resources Inc Earnings Call where they need to be and they get tied in, then where does underground development shift? Do you start to work on developing working levels for ore access or for underground drilling? Kind of what happens after the portals are done?

Question: Trevor Turnbull - Scotiabank Global Banking and Markets, Research Division - Analyst : And do you have kind of a rough time line of whether you expect that they will kind of make that transition?

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Just wondering on the permitting. Can you remind us between the MIA modification that was received and the permitting from CONAGUA? Are all the permits in hand for full completion of the tunnel, including beneath the river? And then it just seems like it's taking a little bit longer than anticipated for the MIA Integral. Is that permitting just needed ahead of the operations in 2024? And do you have any updated guidance on the timing for that?

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Okay. Perfect. That's good to hear. And then just wondering for the increase in the power draw, what's the guided timing on that? And what are the implications if that isn't received? Is it just greater diesel usage? Or would there be other operational implications? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 04, 2022 / 1:00PM, TXG.TO - Q2 2022 Torex Gold Resources Inc Earnings Call

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Okay. Perfect. And then I saw the commentary on the ramp-up or the targeted ramp-up of the underground at ELG to 2,000 tonnes per day, which I don't think I'd seen before. I think prior guidance was more -- much more conservative at about 1,200, 1,300 and the fees was about 1,400. Just wondering what's driving that and kind of what's helping to -- where you see the ramp up on the underground and getting to those levels?

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Okay. Great. That's good color. And then maybe just last one for me. I was just wondering what percentage of the operating costs would you estimate are attributed to fuel? And can you give us an idea of the impact on costs due to fuel subsidies in Mexico? And do you see any risk of the government removing those given the higher prices?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Congratulations on a strong quarter. Just continuing with another question to Andrew. So Andrew, looking at Media Luna CapEx, whatever is remaining, just over $800 million, I guess, how much is set in fixed-price contracts versus that might be -- that which might be prone to cost escalation?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Okay. Understood. Yes, still early in the process. So for my next question to the team, so the grades in the open pit and the underground in Q2 were above reserve grade. So are you finding that you're just finding better-than-expected reconciliation? Or are you just working through a high-grade zone right now? And if the latter, I guess, that might imply the grades could be lower in, say, 2023 under reversion to reserve levels?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Okay. So that high-grade zone that you've hit was maybe a bit unexpected? Or was it -- do you think it was in the mine plan or...?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Okay. That's good. So looking at -- well, cost on a per ounce basis were lower and they look great. But on a per tonne basis, I see they're edging higher. We see grades are up 14% quarter-over-quarter. So is it fair to say that the uptick in grade is providing an offset to whatever inflationary pressures are so prevalent in the sector right now?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Okay. And so is that high-grade zone that you encountered in Q2, are you still working through that? Do you think -- will the grade in the balance of the year be comparable? Or do you expect those to ease a little bit?