Torex Gold Resources Inc.

Good morning and thank you for standing by. This is the conference operator. Welcome to Torex Gold's fourth quarter and full year 2024 results conference call and webcast. 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, then zero. I would now like to turn the conference over to Dan Rollins, Senior Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, Gaylene, and good morning, everyone. On behalf of the Torex team, welcome to our Q4 and full year 2024 results conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website at www.torxgold.com. I'd also like to note that certain statements to be made by the management team may contain forward-looking information. As such, please refer to the detailed cost-sharing notes on page 2 of today's presentation, as well as those included in the Q4 2024 MD&A. On the call today, we have Jody Kazenko, President and CEO, and Andrew Snowden, CFO. Following the presentation, Jody, Andrew, and I will be available for the question and answer period. This conference call is being webcast and will be made available for replay on our website. Last night's press release and the accompanying financial statements and MD&A are posted on our website and have also been filed on CDR+. Also 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 Q4 and year-end 2024 TORX results call. The agenda and speaker for today's call will be a little bit different than usual. First, the big news is that we've officially started our planned shutdown at the process plant to enable MediLuna tie-in. This means that Dave Stefanuto, our EVP of projects, is at site this week, and I will provide the MediLuna portion of the quarterly update. So I'll take you through the usual business highlights for the quarter and the full year, then the MediLuna progress report. Andrew will then address the financial results for the quarter and year end. And Dan Rawlins will join the call this quarter to provide the update on exploration. But before we get on with our usual business, I feel compelled to start the call today with some commentary on safety. Whether you're familiar with the Torex story or not, if you follow the industry, you'll know that Torex had an unthinkable event occur on December 5th, where three men lost their lives to carbon monoxide exposure. Two experienced staff employees and one contractor. If you do know the Torex story, you would know that a massive part of our company vision, and my own personal vision, is to set the standard in the mining industry on safety. And we'd been doing just that, 18 million hours lost time injury-free at our operating site, seven years fatality-free, winning awards and recommendations for our safety culture and performance. Yet, on December 5th, we had a multiple fatality incident on our ELG underground mine. Carbon monoxide is a well-known, well-understood hazard in underground mining. It's a byproduct of blasting. Gases get created and CO is one of them. For this reason, the entire mine schedule is set up around blasting and blast gas clearing, as ours was at ELG Underground. CO above certain limits is immediately deadly. You can't see it, you can't smell it, you can't taste it. And for this reason, we have strict protocols in place about wearing personal CO monitors and restricting areas pending ventilation being installed. And this was all in place on the date of the fatalities. On December 4th, we took a long-haul blast at the end of day shift. Nothing in the area happened on that night shift. And day shift December 5th, two contract employees were assigned to establish ventilation to the area. A few hours later, two staff employees, our ventilation supervisor and a blasting engineer, the actual engineer who designed the blast, approached the area. The evidence of the surviving contractor is that he told these two employees not to enter the area. Ventilation hadn't been established. Yes, and this is supposition on my part, we will never know. These two employees entered. I think the blasting engineer would have wanted to be the first to see the results of his hard work. They rationalized taking that risk, probably on some sort of logic of, I'll just be there for a second, and they entered on foot. One went down, one ran out for help, and that one enrolled the other two contractors to rescue. the downed employee. All three went in, one came out. So in a matter of minutes, three men are dead, one survived and has recovered. Families, friends, colleagues, and our team here are still picking up the pieces. This shows us a few things. First, mining is inherently hazardous. We cannot engineer out that hazard. It also shows us that even we have all of the best systems, rules, culture, and conditions, and when they're all in place, We're down to human behavior and human choices. People make choices to do something for just one second. And invite everybody on this call to think about that the next time you choose to look at your phone while you're driving or take a just one second risk. It also shows me that we have more work to do with our employees at all levels about risk-related choices, and we're doing just that. Now, turning to our full-year performance, I wanted to open with the usual overview of our strategic pillars on slide four, which you may have noticed have evolved slightly from our Q3 earnings call. Our strategy is not changing. It's evolving in subtle ways to reflect how much progress we have made over the last four years on execution. Our first pillar, for example, now reflects that Medialuna construction is nearing completion, and our focus turns to ramping up to commercial production, and hitting the designed mining rate of 7,500 tons per day. With the excellent progress we've made on our underground development, we now expect to achieve this mining milestone by mid-2026. Six months ahead of the schedule, we set out for ourselves in the technical report. And then, no sooner had we done the first, we're on to our next mine at Morelos. We're investing $30 to $35 million this year to kick off EPO construction in the middle of the year. Now, this is a much simpler, faster, cheaper build than MediaLuna. We expect first production from EPO by the end of 2026. Our next pillar focuses on our optimization plans for Morelos. As MediaLuna gets up and running this year, we're already planning to optimize various aspects of production and logistics, looking for ways to streamline performance to run safer, faster, and cheaper. Next, on Grow Reserves and Resources, you'll recall that we've increased our exploration budget this year to a record $45 million, up from $30 million last year, and Dan will touch more on this before the end of the call. On disciplined growth and capital allocation, our balance sheet remains in excellent condition with over $330 million of available liquidity. Coming out of the Medialuna build in a solid position to begin returning capital to our shareholders this year, And Andrew will cover off our financials and details shortly. On retain and attract talent, our workforce transition program for MediLuna is tracking the plan, with over 80% of the workforce required for MediLuna now in place, which included transferring almost 200 employees from ELG Open Pits during the course of 2024 and recruiting another new 140 employees. And finally, on industry leader and responsible mining, subsequent to year end, we saw good improvements on our S&P corporate sustainability assessment. We now rank in the 87th percentile of the metals and mining sub-industry. Our score is now 52 out of 100 compared to the average score for our sector of 30 out of 100. This assessment covers all facets of our operations, so I'm pretty proud here of the good work that goes on behind the scenes that gets reflected in our score improvements each year. On slide five, the chart you see on the left reflects the consistent performance Torex has come to be known for. In 2024, I'm proud to say that we achieved our annual production guidance for the sixth year in a row. While our cost performance landed towards the upper end of our guided range, our margins remained robust at 49% for the full year. We generated record annual revenue in 2024 of over $1.1 billion. and record annual adjusted EBITDA of over 540 million dollars. Q4 marked the last quarter of significant spending on Medialuna. So overall, we were free cash flow negative on the year as expected. However, and this is important, excluding the nearly 450 million dollars we invested on Medialuna through the year, the strong performance from ELG generated free cash flow of 326 million dollars. bolstering our already excellent liquidity position and a very good indicator of what is to come for Torex. Our operations also set new records in 2024, which are highlighted here on slide six. Q4 production and throughput at the processing plant were lower compared to prior quarters, given the temporary suspension we experienced in December. However, annual recoveries were more than 90% at 90.6%, which is a record for the company. At ELG Underground, mining rates were well above 2,000 tons per day for most of the year, setting a new annual record of nearly 2,100 tons per day. And you can expect to see rates here at ELG Underground average around 2,800 tons per day during 2025, given the plan to leverage long-haul open-stoping where some of the deposits steepens up in the underground mine. Speaking more broadly to 2025 guidance on slide seven, Given the four-week shutdown at the processing plant needed to complete MediLuna tie-in, production is expected to be lower this year compared to last, with quarter one being the weakest quarter. We expect production for the remaining quarters of 2025 will return to more usual levels and be relatively consistent quarter over quarter starting Q2. Given the production plan, all-in sustaining costs are also expected to be higher than in 2024, reflecting the lower finished ounce production and the fact that we'll be ramping up and building out economies of scale at the MediLuna mine. The higher costs also reflect the impact of the higher metal prices in 2025. Guidance is based on $2,500 per ounce gold versus $1,900 per ounce in 2024. I want to caution here that the calculation of gold equivalent sales is highly dependent on the metal price ratios. For example, A strong gold price relative to copper and silver this year will lead to a lower gold equivalent sales number and therefore higher ASIC. The opposite would occur if the price of gold were to weaken relative to copper and silver. Now, within the year of 2025 itself, given the production plan, costs will likely trend above the top end of the guided range during quarter one. before improving slightly in Q2 and then further in Q3 and Q4, with Q4 ASIC expected to be near the low end of the range, all else being equal. Further economies of scale are expected through the year of 26 and into 27, as Medialuna reaches full throughput of 7,500 tonnes per day and EPO comes online. The message here is twofold. First, 2025 will be anomalous on ASIC at 1,400 to 1,600 that we've guided, and the issue will be most pronounced through the first half of 2025. Finally, on this slide, on capex guidance, 2024 marks the final year of heavy investment in Medialuna, and as such, total non-sustaining capex is forecast to be in the $90 to $100 million range this year, significantly less than the $460 million incurred in 2024. Sustaining capex this year is forecasted to be a little bit higher than last year, reflecting the startup of MediLuna. So our development costs, our equipment lease costs, and other MediLuna costs will now be in sustaining moving forward post-Quarter 1. Turning to an update on MediLuna here on slide 9. Firstly, it's likely on the minds of many. I know it's certainly on mine is what I opened with. Earlier this week, we commenced the four-week time period for MediLuna, bringing us one step closer to bringing the project to a close. This started on February 18th, and when everything goes as planned, we expect to restart the mill on March 18th. In terms of broader project progress, we provided our Q4 MediLuna update release a few weeks ago. As at year end, overall project progress sat at 94% complete, with the largest single outstanding item being construction completion of the PACE plant, which will happen towards the end of quarter one. Engineering was completed last year in quarter three, and procurement is essentially complete with all major deliveries required to support the startup of operations now on site. Only minor deliveries remain outstanding, including some automated valves, some minor instrumentation, and some underground pipe for the paste distribution system. Importantly, we're tracking very nicely the plan, and in some cases ahead of plan, in Medialuna Underground. And I want to emphasize that this work does not stop during the process plant tie-in period. Most of the definition drilling for the 2025 mine plan is now complete, and we've already commenced the definition drilling for the stopes that are in plan for the year of 2026. We're targeting to have at least one year of stope inventory at all times at MediLuna going forward. Additionally, monthly underground development rates are tracking at 1,300 meters per month compared to the budget of 1,200 meters per month, and this is with our own crews. so we don't expect any transition issues moving forward. The headway we've made, both on definition drilling and in underground development, has put us ahead of our feasibility study timeline to achieve MediLuna's design mining rate of 7,500 tons per day, six months ahead of schedule. So the target for that is middle of next year. Elsewhere on surface works, paste plant construction is coming along nicely and is on track for commissioning in early quarter two. Installation of the power infrastructure is now substantially complete with a 115 kV system, that's our low-voltage system, fully energized and operational. That happened in December. And the transmission line between the 230 kV switchyard and the 230 kV substation, that's our high-voltage tie-in, that will be completed this quarter and energized in Q2, concurrent with the commissioning of the PACE plant. With the plant tie-in having just started, we're on track to produce first copper concentrate by end of March. We've given ourselves nine weeks to bring the new flotation circuits up to steady state, and this is with respect to recoveries and copper concentrate quality that nine weeks. We do expect commercial production will be declared prior to the nine weeks towards the end of April. The mill is not expected to be an issue ramping up, given that it's the same front-end grinding circuit we currently operate, and we've got plenty of experience stopping and starting mills, something that occurs each maintenance period. Slide 18 shows some of the pictures of the areas I just touched on. The flotation circuit there is on the top left. You can see it's currently undergoing tie-in and pre-commissioning activities. With the copper concentrate storage facility at the top right, substantially complete, we'll be ready for first copper con at the end of March. The 230 KV switchyard I just talked about is shown in the bottom left picture and will be connected to the national grid in quarter two. And you can see the progress being made on the paste plant construction in the bottom right where the focus is on mechanical assembly of the two large filter presses. And with that, I'll turn the call over to Andrew for financials.