Torex Gold shines in innovation, growth and diversity

Having been promoted to president and CEO of Torex Gold in June 2020, Jody Kuzenko faced the immediate challenge of dealing with the COVID-19 situation and rebuilding momentum following the April-May government-mandated shutdown. Her efforts resulted in the best second half-year in the company’s history as it beat its revised guidance, maintained cost containment with an all-in sustaining cost of US$924 per ounce, and slashed debt to $40 million as its 2020 net cash position jumped $183 million year-on-year to $162 million.

Torex Gold's El Limon Guajales (ELG) operation in Guerrero, Mexico

Torex Gold's El Limon Guajales (ELG) operation in Guerrero, Mexico

Kuzenko is keen for Torex to be a leader in diversity, ESG and innovation as the company faces some key decisions about its future growth path.

They include whether or not it will deploy its proprietary Muckahi technology in the development of the Media Luna project in Guerrero, Mexico.

"2020 was one for the history books and we delivered a really solid operating result in back half of year following the government mandated shutdown," Kuzenko told Mining Journal.

"Watching the team rise up to the COVID-19 challenge and face it head-on, to innovate on the fly, to be agile in the extreme to those challenges, was a pleasure to watch. But what impressed me most was that we passed 10 million hours without a lost time accident.

"I hire leaders that share my passion to run mines without hurting or killing people and achieving that in the midst of the global pandemic will stay with me for the rest of my career."

As with many mining executives, Kuzenko has spent much of the past year working out of her home office, juggling her corporate responsibilities with family life, home-schooling and battles over bandwidth. She jokes she may be the only gold mining CEO who unloads the dishwasher between meetings, but the company takes diversity and inclusion seriously.

Thirty per cent of its board and 40% of its executive team are women.

"Diversity has been important at Torex since day one. Forty-five per cent of the corporate office employees are women and we have a pipeline of women in the operations including 20% of the haul truck drivers," she said.


Torex Gold Resources' ELG complex in Guerrero, Mexico

With predictability and stability being the key attribute of Torex's El Limon Guajales (ELG) operation in Guerrero, 2021 looks set to be a repeat year of 2019 (or an uninterrupted 2020) with 450,000oz production at a similar AISC to 2020. The company will continue to assess the possibility of extending the life of ELG with $13 million to be spent on underground exploration "to see what is below El Limon Deep and Sub-Sill".

"We will also analysis the potential of a layback," said Kuzenko.

A key task in 2021 will be continued derisking of the Media Luna development including initiating an early works programme and working on a feasibility study for completion in early 2022 looking at a mine start up in early 2024. "This year we will spend $90 million on Media Luna with $60 million on early works. The resource is 7km from the existing infrastructure and across a river so $30 million of that will be working on the tunnel from the north to get there and come up under the orebody and $30 million on starting the 1km tunnel from south side to get to top of orebody," said Kuzenko.

Some $12 million will also be spent to advance the feasibility and $14 million for more infill drilling.

The feasibility could be a landmark document in mining history as it will provide a base case using conventional mining technology for the 8,500 tonnes per day operation, and an economic evaluation using the company's Muckahi monorail-based technology from which equipment is suspended and which can be deployed in steeper and narrower tunnels, resulting in les development capex and time.

"Muckahi is still in active testing in the upper part of the El Limon Deep orebody. 2019 was about, can we break rock and suspend drilling equip from it, and the answer was, yes. 2020 was about moving rock, and the answer was, yes. 2021 is about if it works as an integrated system and to determine the rate that is achievable. Does it go as fast as we think it can?" said Kuzenko.

A key decision for Torex will be whether to make a full deployment of Muckahi at media Luna or whether to use it in combination with a conventional approach. "We have a real decision to make. Do we want to trial at Media Luna at full scale or try it somewhere else?" said Kuzenko.

With the Muckahi concept proving up, executive chair Fred Stanford will also start looking at commercialising the technology outside Torex, to potentially develop another revenue stream for the company.

With ramps that are four times steeper, Muckahi promises to dramatically reduce the carbon footprint of underground mining operations in addition to its potential economic gains. On the same topic. Torex is looking at developing an 8.5MW solar plant to reduce its dependence on the local grid whose energy matrix is 53% natural gas, 28% hydro and the rest a mix of coal, nuclear and geothermal.

With Media Luna shaping up for the medium term, Torex is starting to look at how it will maintain its production profile in the longer term, including a resumption of regional exploration through a $2.5 million spend on the exploration of its broader land package this year, and possibly M&A. "A key impediment on our valuation is that we carry a higher equity risk premium because we are a single asset company.  With our first transaction we will also look to diversify geographically, but after that we would consider Mexico as we have shown we can operate well there," said Kuzenko.

Shares in Torex Gold are trading at C$15.44, valuing the company at $1.3 billion.


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