Torex Gold Resources Inc.

Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources Inc. second quarter 2021 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would like to turn the conference over to Dan Rawlins, Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Rawlins.

Thank you, operator, and good morning, everyone. On behalf of the TORX team, welcome to our second quarter 2021 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be accessed through the investor section of our website at www.torexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed contrary notes on page 2 of today's presentation, as well as those included in the Q2 2021 MD&A. On the call today, we have Jody Kazenko, President and CEO, as well as Andrew Snowden, CFO. Following the presentation, Jody and Andrew will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website. This morning's press release and the accompanying financial statements in MD&A are posted on our website and have been filed to CDAR. Also, please note that all amounts mentioned in this call are U.S. dollars unless otherwise stated. I'll now turn the call over to Jody.

Thank you, Dan, and good morning to all on the line. Welcome to the Torex Gold Q2 results call. It's been an eventful first half. Highlights are as follows. Solid operational performance in spite of ongoing challenges related to COVID and metallurgy issues as we mine deeper in the pits. We're on track to deliver 2021 production and cost guidance. And after months of study, some key strategic decisions have come to ground, which we think bring enhanced clarity and certainty around the path forward for the company. In terms of the agenda for the call, I will provide a brief reminder of the strategic plan we are working to. Then I will step you through the key business and operational highlights specific to the second quarter. Then I'll turn the call over to Andrew Snowden for some detail on the financials. And after that, I'll provide a progress update on our critical projects, the key decisions that have been landed and close with some commentary relating to the completion of our board refresh. Dan has touched on the safe harbor language, so I'll move straight to the content slide four. This slide sets out the five pillars of our strategic plan. These remain largely unchanged. We've been very disciplined about executing this plan systematically and have made substantial progress in the first half of 2021. On that first pillar of optimize and extend ELG, optimization efforts are evident in the continued delivery of ounces to plan. In terms of extending ELG, we published the updated ELG MRMR in the first quarter, showing a 15% increase in underground reserves over 2019, and we are on pace with our 40,000 meter 2021 drill program at ELG Underground. Additionally and importantly, we've now received board approval to proceed with the pushback at Eliement Pit. I consider this to be just right sized or fit for purpose, spending just enough capital to add approximately 150,000 ounces to that transition period between ELG and Medialuna in late 23, mid 24. There's more detail on that at the end of the call. On the second pillar of de-risking and advancing Medialuna, We have made the risk-based decision to advance the Medialuna feasibility study on the basis of conventional mining and development methods. We're also continuing the Medialuna infill drill program through the second half of 2021, which is completely consistent with the shift in strategy to increase focus on exploration. We're adding another portal on the south side of the river to access the lower portions of the Medialuna deposit. And critically, we've now submitted to the regulators our permit application for the MIA integral. I will discuss all of this in more detail as we move through the slides. First on slide five, starting with the as-is business. This slide sets out some key operational and financial highlights for the second quarter. We delivered 118,000 ounces in Q2, placing us at 247,000 ounces mid-year. Clearly, we're well positioned to deliver on production guidance of 430 to 470. That says, I would caution not to expect that we will exceed 470, given that grade will trend closer to reserve levels for the second half of this year. Our total cash costs and ASIC at mid-year are tracking better than the best end of guidance on both parameters. There were and will continue to be some offsetting puts and takes in these numbers, increased reagent consumption, offset by PTU accruals under new legislation. Both Andrew and I will address this in further detail on the update. The cash generation capability of this asset continues to show itself with a year-to-date ASIC margin of $922 an ounce, over 50% per ounce. Given that, we were able to add to our bank balance and conclude the quarter with $196 million in cash and no debt, given that that was cleared off in Q1. So, with the large tax and PTU payments behind us in the first half, we expect the second half of the year to deliver healthy cash generation and to add to our total liquidity, which is completely consistent with our plan to cash up ahead of the Medialuna build. Now, on this next slide, I've already briefly touched on 2021 guidance. This slide sets out some of the specifics. Three key takeaways here. Production and total cash costs are tracking within original guidance. Second, the range on capitalized waste has been increased by $15 million. This is on account of the additional stripping that will be done in the Eliement pit for the second half of 2021, given that we are proceeding with the pushback. Of note, we're not increasing the ASIC range, given that we're tracking beyond best end as at the middle of the year. We're keeping that range at 920 to 970, but I would expect it to come in towards the upper end of that range, given the addition on capitalized waste. Thirdly, that last line there in the chart, though we haven't changed the non-sustaining capital guidance, we are guiding toward the very upper end of that range as well. given two key additions to the plan. First, we've allocated $7 million to an expanded infill drill program at Medialuna and another $15 million for a lower portal on the south side at the Medialuna deposit. Given the broad range that we started with and progress year-to-date on the non-sustaining capital program, we expect to conclude the year at or just above the $150 million guided. Now, while I didn't mention ESG strategic pillar at the outset, we would be remiss not to call out the highlights for the quarter, which sees us on path of continued ESG excellence. Three points here, one in the top left quadrant. While COVID is settling in for yet another wave in Mexico and case counts are sadly on the rise, we're maintaining our existing approach of adherence to strict protocols. And we bolted on a specific vaccination program in concert with the local health authorities. At last week's count, we have more than 1100 people with at least one dose of vaccination. This is critical to safe operation moving forward. Second, despite a lost time injury in the quarter when a diamond drill contractor was struck by a hose that got tangled up in a drill bar. We closed the quarter with our LTI frequency at an impressive 0.26 per million hours worked, something I'm very proud of, a continued world-class safety performance. And you'll note on the right-hand side of that slide, we've been working hard to upgrade our disclosure to reflect the reality of the good ESG work we're doing on the ground in Mexico. And this has shown up in the improved ratings you see on this slide, notably On the ISS scoring, on social and governance, our rating has now gone to one. Lower is better on this scheme, and so it's the highest score possible. Turning now to some additional detail around operational performance. If you step back and look at these quadrants, you can clearly see the operational stability depicted by the bar charts over the last four consecutive quarters. I will draw your attention to a couple of highlights and a low light, starting with the low light first. Average plant throughput for the quarter was just under 12,000 tons per day, lower than the last three consecutive quarters and definitely not what we wanted. Ironically, it was our best ever performance on delivering the monthly maintenance plan. The team just did an outstanding job with planning, scheduling, and execution for each monthly maintenance shutdown in the quarter. The issue was that the metallurgy through the circuit with higher iron and copper and sulfides forced us to slow down or shut down the plant for a cumulative 60 hours in the quarter. We really did need additional residence time in leach to reach targeted metallurgical parameters with a view to maintaining recoveries and not wasting gold to tailings. On that note, recoveries was a highlight. Maintaining 88%, which is 1% above design, in the face of those metallurgical challenges is a testament to the strength of our MET program, our systems, and the metallurgical team. And the underground team did not disappoint once again, setting another quarterly record of over 1,400 tons per day at an average grade of 7 grams per ton. This performance certainly supported delivery of ounces in the quarter. Now, this next slide sets out how the unit cost took shape in the first half here. Two notes. One, you can see in that first line that our open pit mining costs are up slightly over 2020. As reported with our Q2 production results, our rope con has been down for repair since early June, when some wear was detected on the belt during a routine maintenance inspection. Given the specialty nature of the equipment, a splice kit had to be sourced from Europe and technicians flown in to install this, we expect it to be back in service by mid-August. While the team has done an excellent job to maintain production and blending by trucking ore from the pit down to the process plant, this event has driven up our maintenance and re-handling costs. Second, you can see that processing costs were up to $38 a ton in the quarter or $35 a ton on the half. This is driven by the cyanide consumption. With our historical cyanide costs coming in at an average $2.25 a kilogram, this impact to processing costs was not insignificant. We have several key initiatives underway to mitigate the higher reagent consumption, including operationally, further refinement of our geomet modeling, and what I now call precision blending strategies. And from an engineering perspective, we're looking at the possibility of bringing forward the installation of some aspects of the MediLuna flow sheet to deal with the soluble iron, namely the water treatment plant, and the iron flotation circuit. And you can see on that slide, if you look at the third line against the last line, the offsetting costs of the higher reagent consumption versus the new treatment of the PTU, given the new legislation that Andrew will detail. On that note, I'll now turn the call over to Andrew for a review of the financial performance.