Torex Gold Resources Inc TSX:TXG announced its financial results for the three and six months ended April 30, 2012. Net losses for the three and six months were $15.5 million and $28.9 million, respectively, compared to $9.7 million and $17.1 million, respectively, for these periods in 2011. Exploration and evaluation expenditures were $13 million and $23.4 million, respectively. At April 30, 2012, the company had $308.6 million in assets, including $79.4 million cash and working capital of $85 million, compared to $36.2 million cash and working capital of $36.3 million as of October 31, 2011.
Torex released June 18 a NI 43-101 technical report on its Morelos Gold Project in Mexico in support of its May 4, 2012 press release, which included an updated mineral resource estimate at its Morelos Gold Project in Mexico. The resource now contains 4.82 million ounces gold and 8.38 million ounces silver measured and indicated, and 620,000 ounces gold and 1.39 million ounces silver inferred. Long-term land-lease agreements with the Rio Balsas Ejido and Real Del Limon Ejido were signed December 2011 and March 2012, respectively. The company announced that the initial drill program at its Media Luna target at Morelos discovered consistent gold mineralization over a 900-meter strike length. Exploration drilling commenced at the Naranjo, Media Luna, El Limon Deep, El Cristo, and Guajes South target areas. Torex was added to the S&P/TSX Composite Index March 19, 2012.
President/CEO Fred Stanford tells ResourceClips.com, “More than 75% of Morelos remains unexplored. We’re actively exploring, and we have targets across the entire 29,000 hectares. We’re targeting the magnetic anomalies at the moment as the highest priority targets. We generally target as close to the mill as we can get. So deposits and proximities of the deposits we have are attractive. In the years to come, we’ll continue to move out in ever-larger concentric circles hitting the targets that are further away. This year we’ll spend about $30 million on exploration, and we anticipate aggressively exploring for many years to come.
“We don’t use the monikers of Guajes East and West anymore; we just call it Guajes because they’re connected. El Limon connects as well through most of the mine life. It will be two different open pits, and at the very end of the mine life the strip that connects the two will be mined. The significance of this is that a bigger pit is a more efficient pit to mine. The larger issue is more for exploration. Those projects kind of wrap right around the northern nose of the intrusive, and so the question is, ‘Do the deposits continue around the edge of the intrusive?’ That is the bigger thing—how much larger could this thing get?”
In June 2011, Stanford told ResourceClips.com that a decision on Morelos production was a year away. He comments, “That was delayed. We had a security event back there a year ago in March, and that effectively gave us about a six-month delay as we slowed down the drilling and everything else. So now a feasibility study will be out probably towards August (and it could be late August), which will then set up the financing conversation with banks. We’ll apply for the permits at the end of this month, which should take us out towards the end of the year, 1Q 2013 before we can make that decision.
“There was an absence of authority in the area. We took our people out for a couple of months while the government put some security infrastructure in, and we’ve been back since May of last year with no further incidents. Most of the violence we see on the news is directed by one criminal organization against another. That tends to happen where the drugs come into the country and where they leave the country. We’re on neither of those; we’re kind of on a nice quiet road at the end of a street, and there is nothing strategic to anybody. So we’re dealing more with opportunistic crime, the same as you would deal with anywhere else. I do believe the government will get this under control.
“There was a blockade on this property when we first bought it, and that was solved shortly thereafter. In March, we concluded the final deal to lease the land for 30 years, to build the mine. And both the Ejidos voted unanimously in support of the land-lease agreement, so we’re very excited about that. You don’t think you get 100% with just money; it takes good relationships.”
Stanford reports a cash position of about $80 million and a burn rate of about $4 million a month. He comments, “We’re in very good shape financially. We can continue to explore as aggressively as we have. We have the money up to after the feasibility comes out in order to put down secure positions in manufacturing lines for long-lead-time items, and we can get started on early work as soon as the permitting allows.”
“Morelos has the benefit of being a very high-grade deposit. It’s not a massive-volume, high-CAPEX operation. It does require a mill, but it has the high grades and the high recoveries to cover off that. Most investors are attracted to high grade these days: high grade, open pit. [Morelos is] in a very good mining jurisdiction in Mexico, and it’s got excellent infrastructure close by. It’s not complex. It’s got an experienced management team, and so I think a lot of the fundamentals that investors are looking for in difficult times are there.”
Stanford concludes, “In two years, I see us getting very excited about commissioning the mill.”
VP Investor Relations
by Kevin Michael Grace