Torex Gold Resources Inc Q2 2023 Earnings Call Transcript

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

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Just a quick question at ELG on the underground mining rates. The prior commentary had mentioned exiting the year at 1,800 tonnes per day, implying that there was still a ramp-up period through the year. Obviously, you guys have well outperformed that. Given the 1,900 tonnes per day achieved in the quarter, I just wanted to clarify if we should be modeling 1,800 as an average for the full year or if that bar should now be set to exiting the year at the higher 2,000 tonne per day target that you guys had set for 2024? Jody Kuzenko Yes. That's a good question, Wayne. And the reality is that the performance you see in ELG underground shows our ability to flex plans from an execution perspective as the business needs require. So as the mining sequence shaped up in Q2 and in Q3, we're really pushing hard in the underground to beat that 1,800 tonnes per day. So, you can expect a performance in Q3 that's either similar or greater to that you saw in Q2. And then it will come off again in Q4. What we're doing, we don't want to push so hard that we deplete reserves so quickly. And so, we're trying to balance the push on the underground with what we're seeing in the pit to deliver on our overall commitments. And so, I think probably a safe modeling number in the 1,900 tonne per day range for the balance of this year, recognizing that Q3 will be high. And then we're looking to step that up one more step in the performance next year.

Question: Wayne Lam - RBC Capital Markets, Research Division - Analyst : Okay. Great. And then maybe just last one on the facility. How does the refinancing tie in with the sustainability linked loan? Just wonder if those are mixed together or if they're too completely separate. And then just given the lower spend anticipated this year and the strong cash balance you guys currently have, when do you guys anticipate the first drawdown on the facility? Is that kind of well into next year?

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : The last call, I talked about mining rates. I have a question about the throughput. I see congratulations on this record throughput in the quarter. Can you comment on the drivers of this? The trend seems to be upwards, and is it sustainable at the Q2 level? Or what should we expect going forward? Jody Kuzenko Thanks for the question, Don. The driver of this is really twofold: one, opening up more headings and have plenty of places to work in active mining fronts and 2, really working on utilization of the existing mining fleet. Some time ago, we took the scope on managing the mining fleet from our underground mining contractor and are doing that ourselves. 2 drivers there. One is efficiency and the other is cost. And so, I think those 2 things taken together really contributed to the increased mining rates.

Question: Don DeMarco - National Bank Financial, Inc., Research Division - Analyst : Okay. And as a final question. We know that Torex challenged the mining law reforms and challenged the unconstitutionality of it. And as I understand, there's no immediate or anticipated impact to Torex, but can you give us an update on this process and what the next steps and timing might be? Jody Kuzenko Sure, happy to. I'll give you just a brief overview. As you can imagine, there's lots of moving pieces here in quite a bit of detail. Torex did file something called an amparo to challenge the totality of the mining laws. And in Mexico, the way it works, if the view is that the laws are unconstitutional, there isn't a single challenge on those. They're done on an owner-by-owner or a company-by-company basis. Many of our peers in Mexico have also filed a similar challenge. The way the process works is that the case is adjudicated on the merits in terms of interim relief and then final release. We've now been granted some interim relief on the amparo. The state has appealed that. So that continues to wind its way through the court system. In the meantime, while this gets resolved and addressed through the judicial process, there's also a political process ongoing where the opposition parties have challenged the mining laws. So that's happening in a parallel path. In the meantime, Torex carries on business as usual. To date, we haven't seen any impact to the operations and quite frankly, with our relationships with the regulators and the maturity of our permitting and our operations, we don't expect to in the interim.