Torex Gold Resources Inc (TORXF) Q4 2024 Earnings Call Highlights: Record Revenue and Strategic ...

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Fri, Feb 21, 2025, 12:09 AM 4 min read

Revenue: Record annual revenue of over USD1.1 billion for 2024.
Adjusted EBITDA: Record annual adjusted EBITDA of over USD540 million.
Margins: Robust margins at 49% for the full year.
Free Cash Flow: Negative for the year due to significant spending on Media Luna, but ELG operations generated USD326 million in free cash flow excluding Media Luna investments.
Capital Expenditure: USD450 million invested in Media Luna in 2024; non-sustaining CapEx forecasted to be USD90 million to USD100 million in 2025.
Cash Position: Over USD330 million of available liquidity at year-end 2024.
Debt: Expected net debt position of USD50 million to USD100 million by end of Q1 2025.
Production Guidance: 2025 production expected to be lower due to a 4-week shutdown for Media Luna tie-ins.
All-in Sustaining Costs (AISC): Expected to be higher in 2025, guided at USD1,400 to USD1,600 per ounce.
Exploration Budget: Increased to USD45 million for 2025, up from USD30 million in 2024.
Underground Development: Monthly development rates at Media Luna tracking at 1,300 meters per month.
Gold Price Assumptions: 2025 guidance based on USD2,500 per ounce gold.

Warning! GuruFocus has detected 6 Warning Signs with MD.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Torex Gold Resources Inc (TORXF) achieved its annual production guidance for the sixth consecutive year, demonstrating consistent operational performance.
The company generated record annual revenue of over USD1.1 billion and record annual adjusted EBITDA of over USD540 million in 2024.
Media Luna construction is nearing completion, with the project 94% complete and expected to reach commercial production by mid-2026, six months ahead of schedule.
Torex Gold Resources Inc (TORXF) has a strong balance sheet with over USD330 million of available liquidity, positioning it well for future growth and capital returns.
The company has increased its exploration budget to a record USD45 million for 2025, aiming to consistently replace reserves and resources while testing high-priority targets.

Negative Points

A tragic safety incident occurred in December 2024, resulting in the loss of three lives due to carbon monoxide exposure, highlighting the inherent hazards in mining.
Production in 2025 is expected to be lower than in 2024 due to a planned four-week shutdown for Media Luna tie-ins, with Q1 being the weakest quarter.
All-in sustaining costs are expected to be higher in 2025, reflecting lower production and the ramp-up of Media Luna, with costs trending above the guided range in Q1.
The company anticipates being free cash flow negative in Q1 2025 due to the final stages of Media Luna construction and seasonal cash flow impacts.
Torex Gold Resources Inc (TORXF) faces potential impacts from tariffs on imports into Mexico, which could affect its supply chain and increase costs.

Q & A Highlights

Q: What is Torex Gold's definition of commercial production for Media Luna, and when can we expect depreciation on Media Luna assets to begin? A: Andrew Snowden, CFO, explained that commercial production is determined by metrics such as underground mining rates, development rates, plant throughput, and recovery rates. They expect to declare commercial production around the end of April 2025, with depreciation on Media Luna assets starting from May 1, 2025.

Q: How will the CapEx for Media Luna impact taxes, and when will the tax benefits be realized? A: Andrew Snowden, CFO, noted that the tax benefits from Media Luna's CapEx will align with the declaration of commercial production. The tax deductions will start to be realized later in 2025, impacting installment payments and tax returns in 2026.

Q: What kind of updates can be expected during the 28-day tie-in period for Media Luna? A: Jody Kuzenko, CEO, stated that while there won't be regular updates during the tie-in period, they plan to announce the mill's restart on March 18, 2025, and expect to report first copper concentrate production by the end of March.

Q: How is Torex Gold managing potential impacts from tariffs on imports into Mexico? A: Jody Kuzenko, CEO, mentioned that while the placement of gold and copper won't be affected, they are monitoring potential impacts on the supply chain. Key reagents like cyanide are not expected to be impacted by tariffs. They estimate a potential cost impact of about USD10 million if tariffs are fully implemented.

Q: What is the status of exploration targets like El Durango and Todos Santos, and how will they be prioritized? A: Dan Rollins, Senior VP, Corporate Development & Investor Relations, explained that Todos Santos is currently being drilled, with results expected to guide future drilling plans. Initial drilling programs for other targets will be completed, and decisions on further exploration will be made based on these results.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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