Torex Gold Resources Inc.

Thank you for standing by. This is the conference operator. Welcome to the TORX Gold's second quarter 2025 results conference call and webcast. As a reminder, all participants are in a 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, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2025 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the investor section of our website at www.torresgold.com. I'd 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 cautionary notes on page two of today's presentation, as well as those included in the Q2 2025 MD&A. On the call today, we have Jody Kosanko, 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 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 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. We'll take you through the detailed results over the next 20 minutes, of course, but I wanted to open this call with some high-level commentary about the quarter. In some ways, quarter two was exactly what we wanted. Our safety performance was impeccable. We had no lost-time injuries in the quarter, and we made very good progress on our next-level safety program, including continued implementation of the fatal risk standards and critical controls, first in our underground operations and then over the surface facilities. Second, and importantly, as planned, we declared commercial production at our Medialuna project on May 1st, which is a major milestone for the organization. You can take from this that the process plant ramped up through the first part of the quarter as expected, as did the Medialuna mine. Both good news. And notably, in June and July, we announced two M&A transactions back-to-back. The all-cash acquisition of Raina Silver and the all-share acquisition of Prime Mining. Really, this is years' worth of work coming together within a month of one another. Dan will provide more details on this shortly. Now, all that said, in other ways, the quarter was not what we wanted at all. Even though ramp-up at the process plant was tracking very well through the early part of May, at the end of the month, we had a capacitor failure in the electrical house that feeds the variable frequency drives of the ball mill. This took us down for 10 days while we sourced a replacement from Europe. So production was not what we wanted it to be at all. It came in at 83,000 ounces gold equivalent for the quarter and 142,000 ounces year to date. This means that for the first time in years, we're going to be on the back foot here to deliver annual production guidance of 400 to 450,000 ounces. We think we can do it. We've got a plan to do it, but we have our work cut out for us for sure. This disappointing production result and the fact that the MediLuna mine is still in ramp up translated into what I would describe as forgettable performance on all unsustaining costs. Andrew will take you through that in his section. And finally, on non-sustaining CapEx, we've had to adjust annual guidance upwards by $70 million for various reasons I'll describe later in the call. But largely, it's a reflection of the extended project period from the delays we encountered late last year and a ramp-up plan that has us maintaining aggressive development rates at MediLuna Underground to achieve that 7,500 tons per day six months ahead of the schedule we set out for ourselves in the technical report. All of that said, we look forward, and there's plenty to look forward to here. With the May downtime behind us, June and July production at the process plant was excellent. Tons per day was above 11,100 for both months, And finished production for June was 37,000 ounces gold equivalent and 45,000 ounces gold equivalent in July. Both real step-ups from what we saw in the early part of quarter two. Secondly, the extra capital on Medialuna means that we're largely on track with the PACE plant commissioning, which is happening now, and the third and fourth ore passes at the Medialuna mine, both of which support achieving the targeted mining rates at Medialuna. And notwithstanding the challenges in the quarter, importantly for us, we finally turned the corner on free cash flow. June was our first positive month and quarter three very much tracking to be our first positive quarter. Now, getting into the details here, starting on slide four, which sets out our strategic pillars, which would be familiar to everyone, they remain unchanged. One area of the strategy that came into sharp focus here in the quarter was centered around disciplined growth and capital allocation in two ways. First, with the announced acquisitions of Reina Silver and Prime Mining, and second, We expect to further advance the work in this aspect of our strategy later this year when we announce our inaugural return of capital policy, which we remain very much committed to. I want to underscore here and be clear that with the free cash flow we have anticipated out of Medialuna, we're not thinking that M&A and capital returns are exclusive propositions. This is very much an end conversation for Torex. We intend to proceed with both. The rest of the progress on the various aspects of the strategy will be covered off through the remainder of today's update. Turning now to slide five, you can see our quarterly production illustrated on the chart. I've already spoken to the drivers behind the weaker production and higher ASICs for the quarter. We expect quarterly results will return to normalized levels in the second half here, and we think this will reinforce to our shareholders the margin and cash flow capability of Morelos. We already got a glimpse of this potential in June with gold equivalent production over 37,000 ounces and our first month of positive free cash flow since completing the MediLuna build. Slide six shows how we're progressing on delivering on full year guidance. With a strong second half in sight, we're maintaining our annual production and cost guidance. Note here that we expect to be at the lower end of production guidance and the higher end of the cost range. The second point to note on this slide, as I mentioned at the outset, is non-sustaining CapEx has increased to $160 to $170 million for the year, largely due to costs associated with finalizing the MediLuna project. This increase comes in a couple of categories. One, the main driver is scope transfer from 2024 to 2025 and demobilization and remobilization costs following the December fatalities. Associated with that scope transfer and the fatalities was the extension of the mining infrastructure construction period that is now drawing to a close. With the scope shift and extended project period comes additional indirects for this extra time so you can see how it builds on itself. And over top of those things, we have a continued aggressive mine development plan at Medialuna, all to support accelerating those mining rates to 7,500 tons per day. Over top of that, we had no room to reallocate non-sustaining capex from EPO to Medialuna, as progress on EPO is maintaining pace. That study and concurrent mine development will consume its $30 to $35 million budgeted this year. I'd note here that there's been no change to sustaining capex guidance. That's very much on pace. The final point of note on this slide, when comparing our year-to-date performance to performance at guidance metal prices, You can see the impact that elevated gold price is having on our costs as we now report on a gold equivalent basis. I mean, it's a good problem to have, but an important one to note in the context of where we sit today compared to where we thought we would be when we set guidance at $2,500 an ounce gold price. Andrew will take you through this in more granularity. Got some new slides here on operational performance, and the first of them is on slide seven. You can see there on the chart on the left Setting aside the 10 days of downtime at the mill in May, the processing plant is ramping up exceptionally well. Throughput in both June and July surpassed 11,100 tons per day, well above the nameplate capacity of our upgraded mill, which is at 10,600 tons per day. On the recovery side at the right, you can see the metallurgical results. The plant has also been hitting its stride since the conclusion of the commissioning period late March. Recoveries for gold, silver, and copper have consistently been achieving their targeted levels. What you will notice in the chart on the top right is that copper and silver recoveries in June were significantly lower than previous months. There's a reason for this. With the mining of our last open pit, Elie Mansour, drawing to its close, we processed open pit material in the month of June, which, as you know, is lower in copper content. Our upgraded processing facilities were designed with the ability to batch process our ore, switching between the leaching circuit and the copper and iron sulfide flotation circuits as the metallurgy in the ore dictates. This June was our first true test of that capability, and I'm quite pleased to say it went smoothly and according to plan. Once we had processed the available high-grade open pit ore, we redirected feed back through the flotation circuits and quickly reestablished our targeted recoveries. which returned to levels more reflective of where we were in April and May on copper, certainly. To my mind, this is a really good demonstration of the flexibility we've built for ourselves with the new processing facilities. Last note here is that remaining open-pit ore has been stockpiled to be used to top up the mill, if and as required, until EPO comes online, or preferably towards the end of mine life. Moving now to mining, on slide 8, you can see both mines continue to perform very well. MediLuna is stepping up nicely towards the targeted 7,500 tons per day by mid-26. More on this in a moment. And over at ELG Underground, after a slower start to the year, mining rates picked up and are at or above targeted rates of 2,800 tons per day. Recall, we expect to be mining at these rates at ELG Underground for this year and next. supporting our need to fill the mill through the construction of EPO before returning to more typical levels of 1,500 to 2,000 tons per day at ELG underground as EPO ramps up in late 26 and starts producing in 2027. I should also note that we're not reporting open pit mining rates on this slide as that part of our operations is now behind us. With the last blast having occurred on July 30th, Today, at Morelos, we're now mining 100% underground. Turning to progress and milestones remaining on Medelluna, what's left here? It's set out on slide nine. First is the delivery of PACE to be able to get backfilling and open up more stopes in the underground. Construction of the PACE plant and PACE distribution is all but complete, with wet commissioning of the PACE plant itself and the associated distribution infrastructure currently underway. I expect PACE to begin flowing in the coming weeks. I would note commissioning of this infrastructure is just a few weeks behind schedule. It's a very sequential, stepwise, and detailed process. People tend to think here just about the PACE plant, but it's about the plant, the GIHO pumps, the big positive displacement pumps, the water line, the tailings line to the PACE plant that has to go seven kilometers through the tunnel, 750 meters vertical delta to get to the PACE plant, and then the PACE distribution lines on the back end. That all has to be hydrostatic tested, tested under pressure, water tested, and then solids introduced. I'm pleased to say that first tailings is scheduled to be introduced August 19th and binder about a week after that. Second important milestone here is the completion of the two remaining ore passes in the underground, one at the end of August and the other at the end of November. Once these ore passes are completed and in combination with the base backfill, we expect to open up more stoves, allowing us to hit the targets we've set out for ourselves here. 6,000 tons per day by the end of quarter three, then a step up to 6,500 by the end of the year, and 7,500 tons a day consistently by mid-2026. Moving on here to slide 10 sets out the sketch of our next mine on the Morelos property, EPO. It's advancing quite nicely. In May, we took our first development blast for the access ramp off the Wajas Tunnel. Those of you who were on the mine tour saw this as we drove through the tunnel from the north side to the south side. We've now developed about 230 meters into that tunnel, so just about halfway to the deposits. Importantly, we also submitted our permit application in May and received approval for SummerNet in July for a modification to our MIA integral for the construction of the new waste dump to support EPO construction. Additionally, the feasibility study continues to progress with a number of key items finalized during the quarter, including mine design parameters, mine sequencing, an integrated mine plan, and integrated scheduling with Medialuna. Recall that EPO will utilize many of Medioluna's ore handling systems, so it's important that we have these two mines working in harmony together. We completed field tests and test work programs covering aspects of geotechnical issues, hydrogeological issues, and metallurgical programs, all of which have now been built into the integrated mine design. We also assessed various trade-off studies on key elements of the infrastructure design, including ore handling, or bin or waste path sizing, mine fleet composition, and ventilation requirements. Through the back half of the year, we'll start to place orders for long lead time items. In short, things are progressing very well at EPO, and we're on track for initial production in late 2026. And with that, I'll pass the call over to Andrew to discuss our financials.

Okay, thank you, Jody, and good morning, everyone. So I'll start my comments first looking on slide 12, which provides a summary of our Q2 financial performance. Now, we were expecting our costs to peak here in Q2, which they have, and that was due to the processing and sale of the initial higher cost ore coming from MediaLuna. These higher costs, however, were further elevated in the quarter due to the lower than planned production for the reasons Jody just walked through. as well as a higher gold price quarter over quarter, increasing the cost of royalties and profit sharing. This high all-in sustaining cost resulted in tighter margins in Q2 compared to what you've been used to, but our margins do remain robust on a year-to-date basis at around 42%. With costs expected to decline through the second half of the year, we fully expect to improve these margins, particularly if these gold prices continue to hold. Just looking at the lower chart on this slide now, this shows our free cash flow on a quarterly basis. And you'll know that's our negative free cash flow in Q2. And this will be our last quarter of negative free cash flow. As telegraphed, we transitioned back to free cash flow in the month of June, generating $44 million of free cash flow in the month. And we expect to generate a quarterly positive free cash flow going forward. given MediaLuna Capital is closing out on our heavy tax royalty and PTU payments for this year are now behind us. I'm looking next on slide 13. I've included this slide just to highlight the impact of the gold price on some of our key metrics. We did guide at $2,500 gold for the year, $28 silver and 430 copper. And given the high elevated metal price environment, although positive margins, we are seeing an impact on that high gold price compared to where we expected to land at those guided ranges, particularly with respect to oil and sustaining costs, which on a year-to-date basis are just over $100 an ounce higher than where we would have been if metal prices remained at those budgeted and guided levels. The increase is primarily driven by our royalties and Mexican mandated profit sharing payments, or PTU, which account for about $50 an ounce, so about half of that increase. We're also seeing just under $10 an ounce impact on our temporary occupation agreements, and that's due to the higher gold price as well as the expansion of our continued exploration footprint at Morelos, while $33 an ounce is due to the impact of the lower calculated gold equivalent sales. Going forward, if metal prices remain at these levels, we do expect to continue to see elevated costs. As every $100 an ounce increase above our guided bill price, we'll see about a $20 to $25 impact to all in sustaining cost. Moving on next to slide 14, you can see here that we ended the quarter with just over $100 million in cash, which is maintaining our target of retaining over that threshold on the balance sheet. In the quarter, we paid our annual profit-sharing, or PTU, payment to our employees, and that was a total of $30 million. And that shows up within changes in working capital, given it was accrued for at year-end. In addition, the capital expenditures of the quarter were about $100 million, of which $55 million relates to MediaLuna and the construction of EPO. To support these demands on cash, we did draw $35 million in our credit facility early in the quarter to maintain that $100 million cash on the balance sheet. With a return now to positive free cash flow in the month of June and the expectation that will continue to be generated going forward, our balance sheets and liquidity position will significantly improve through the back end of the year, and I expect we will start to pay down our debt this quarter. Our debt facility and liquidity position are better illustrated here on slide 15. And you can see here our net debt position at June 30th was $226 million, or if you were to exclude leases, about $127 million. To note, during the quarter, we also did amend our credit facility to increase the maturity from December 2027 to June 2029, so it's now a four-year term. And we also increased the capacity from $300 million to $350 million. Just to note, the debt facility continues to include an accordion feature, which was also increased from $150 to $200 million. This amended facility is all to provide financial flexibility going forward to execute on our strategic objectives while protecting our strong liquidity positions. Finally, I wanted to just quickly remind everyone of our hedging position, which are summarized in the table on slide 16. And just to note, there were no additional hedges put in place during the quarter. We continue to have a mixture of zero-cost collars and forward contracts to protect our peso-denominated operating costs. As a reminder, these provide protection for about 60% of our peso operating costs through the year. We will look to add to this peso hedge book for 2026 as we see opportunities present themselves. With that, I'll hand the call over to Dan.

Thanks, Andrew. Turning to slide 18, we've been active on the M&A front in recent months, starting with the announced acquisition of Reina Silver in June and the announced acquisition of Prime Mining last week. The Reina Silver and Prime acquisitions fit within our strategic objective of becoming a diversified, America-focused precious metals producer, with assets throughout all stages of the development pipeline. These transactions support asset diversification and enhance our medium and long-term growth prospects beyond the potential to offer up through our flagship Morales property. The acquisition of Reina Silver builds out our exploration portfolio by adding four highly prospective early-stage exploration properties, two located in Nevada and two in Chihuahua, Mexico. Our exploration team is extremely eager and excited to get to work on these assets, given the underlying potential of all four properties and the strong technical work completed to date by the Reina Silver team. The acquisition of Prime Mining will give us 100% ownership in the advanced stage Los Reyes development project in Sinaloa, Mexico. Los Reyes will become Torex's next growth project outside of Marlos. And given the quality and level of work completed to date, we are looking to complete a preliminary economic assessment on the project mid-next year. The real benefit we're capitalizing on with these acquisitions is our operating expertise, including, one, expiration. We have steadily built out our expiration team over the last few years and now have the people in place to deliver on the potential we see across these five new assets, leveraging our expiration framework. Number two, project development. Our project team is coming off the Media Luna build and well-positioned to advance Las Reas from PEA stage all the way through to construction and into production. And finally, three, operationally. Our team in Mexico is exceptionally well-versed in handling community relations, government relations, and the ins and outs of operating in Mexico, including permitting and security. In our view, these attributes provide us with a strategic advantage to de-risk in advance of various projects forward, especially Las Reas. Overall, we believe we are well positioned to leverage our competitive advantage to unlock significant value across our expanded portfolio over the coming years. Finally, slide 19 illustrates how we see these five assets fitting into our exploration pipeline. A significant amount of drilling has already been conducted at Las Reas, which is notable in where the project sits in our exploration pipeline. Future programs will be aimed at upgrading and expanding the current resource, while testing regional targets both within and outside the known trends. The rain assets will slot into various levels of our exploration system pipeline at the earlier levels, and we have already drawn up plans to begin advancing programs through the remainder of 2025 and into 2026. We will have more colour on these programs when we put out our guidance for 2026 early next year. It's important to note that these projects won't make us take our foot off the gas when it comes to drilling at Morelos. With 45 million and nearly 125,000 meters of drilling planned for this year, we continue to believe we've yet to unlock the full potential of Morelos, an asset we expect we'll be mining for decades to come. With that, I'll turn the call back over to the operator for any questions.

We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. The first question comes from Don DeMarco from National Bank Financial. Please go ahead.

Thank you, operator, and good morning, Jody and team. So, yeah, congratulations on the positive free cash flow inflection late in the quarter. My first question is on the PACE backfill plan. I'm reading that connection is hookup is imminent. Can you provide maybe just a little bit more color when you expect it to be operational? Is there any capex to be incurred in Q3 on this particular item?

Thanks, Don. It's Jody here. Yes, there is CapEx to be incurred in terms of the conclusion of the PACE plant, and that is built into the revised sustaining CapEx number that we provided. In terms of concluding the PACE plant, you'll recall, Don, you were at the site visit that we had expected to be feeding tailings by this time. We've had a couple of hiccups there. One is as we were finishing the Oahu's tailings return line, that seven-kilometer line that It took extra time to get the last pressure fittings and components to complete that line. And because it's a high pressure line, you can't substitute fittings and components. It had to be perfect. So we took an extra week there. And second, the very large geho pump, when we were mechanical testing that, blew a seal. So that seal had to be replaced. So we're a little bit behind schedule on that. With all of that said, with all of the components, the pump, the lines, the paste plant, and then the paste distribution lines, we're hydrostatic testing now in various stages of that at different systems. We expect to introduce tailings August 18th. That is the plan. And then a binder about a week after that. We've done a lot of pre-work outside of the plant to make sure we have the paste recipe right. And so we expect to have a steady stream of paste here flowing by the end of August.

Okay, good to hear. And so what are the implications of this on your ramp up media luna underground? Or is there any really?

Yeah, that's a good question. There are implications because our stope sequencing had to be adjusted based on the timing of backfilling. And so the team has had to recast the underground mining plan a couple of times now because of the sequencing of not only paste conclusion and backfilling, but also the conclusion of the third and fourth ore paths. Now, the forecast we have for the balance of the year integrates the revised forecasting for paste availability and availability of RB3 and RB4. But what I will say, Don, this is a testament to to our strategy of keeping our foot on the gas on development. Development at over 1,200 or 1,300 meters a month, both lateral and vertical, it's cost us money. It's contributed to that non-sustaining capex overrun. But because the mine was so opened up in terms of both delineation drilling on the stoves and in mine development, we had some flexibility, we had some optionality, and it turns out we needed it because of the pace plant timing and RB3 and RB4 timings. And so I'm pleased with the contingency we've created for ourselves. It's a testament to our operating skills here.

Okay. Great. That's very helpful. And then just as a final question, just shifting over to expiration, you know, I see that you've got a very upsized program this year, a lot of catalysts. Can you just highlight maybe a top two or three catalysts and the timing of these we might expect? And in particular, also, when might we expect first results out of ASCALA? On the site tour, I saw that that would look like an interesting target.

Yeah, thanks, Don. So we put out a press release recently and a couple other ones this quarter. The next probably set of press releases will be later in the summer, and then we'll see a more flurry of them as the programs come together towards the end of the year. Again, the key one for us is really ELG Underground and Media Luna West. ELG Underground is key because every year we can replace reserves. That continues to push out that longer production profile at a steady state every year because we just displaced low-grade stockpiles. Media Luna West, you saw the results earlier this year. We continue to drill there. The goal there is to get that potentially to a resource either at the end of this year or sometime in 2026. So those are the key targets. Drilling at Ad Scala, as you will have remembered, was going to be more later dated for this year, just waiting on some permits to get drilling there. But we should start to see results flowing through the pipeline to the new flow line, probably in early 26 on Ad Scala. More importantly, I think the key ones for us are going to start to do work at the rain and silver assets. We'll get our feet on the ground here at Griffin later this year, start to do some groundwork there. set it up to start to do some drill testing in 2026. The same thing at Batapilas, which, as you know, is a very highly prolific silver district with a very large historical endowment. We want to get in there, start to do the groundwork again this year, and set it up for drilling in 2026, as well as start to advance both Medicine Springs and Gigi. And then additionally, once we close Las Reas, the prime transaction, we'll get back and start drilling Las Reas as well. So lots going on in the pipeline, but the key ones at Morelos this year are ELG Underground, Media Luna West, and then we should start to see more news flow towards the end of this year.

Okay, great. That's very helpful. A lot to look forward to, and we'll keep an eye out for that. That's all from me, Dan. Good luck with the rest of the quarter.

The next question comes from Eric Windmill from Scotiabank. Please go ahead.

Oh, hi. Good morning, Jody and team. Thanks for taking my question. Just a quick follow-up here on the paste plant commissioning and the backup pumps. Are those still on track for installation? I think you had said it was somewhere around October or so.

Yeah, the short answer to that, Eric, is yes.

Okay, no, great to see. And maybe just a question on exploration, the Naranjo project, I see drilling's been paused there. Sounds like there's some construction of the drilling platforms underway. Any updates there on Naranjo and when drilling will start there again?

Yeah, no, we're just working through that. So we'll get back and start drilling that later this year or into early next year. We're just sort of allocating priorities. So the drilling that won't happen there, we'll push it to other targets on the property. But again, that's a very early stage one. really more drill testing of a couple targets, not a large focus for this year's program.

Okay, I appreciate that. And just on permitting, so it was good to see that there was a permit granted, I guess, for the modification to waste dumps. Any sort of read-throughs there in terms of permitting that we should think about for Prime and some of the stuff that you want to do in Los Reyes? Is that a fair statement?

Yeah, Eric, I'm... Torix has a long and established history, I think, of getting permits largely as we require them, both through the Medialuna build and now evidenced by EPO. That's a testament, A, to our reputation and country, B, the solid science and technical and engineering work we have associated with our permit applications, putting the environment first, which is critically important to the Scheinbaum administration. I don't think you can reasonably read through a MIA modification for a waste dump on an established site to any sort of indication of a breaking of the logjam on open pit mining permitting in-country. I think that story is yet to be written there. But I've said this before and I'll say it again. We remain cautiously optimistic that under Scheinbaum's leadership, the exceptions that she's signaling as relates to open pit mine permitting is something that we can work with the administration as relates to less raise on. We have a shot at it, we think. We were clearly prepared to place the bet.

Okay, great. That's helpful. Really appreciate it. I'll hop back in the queue. And, yeah, looking forward to the back half of the year. It looks like it should be well on track, you know, free cash flow inflection. So looking forward to the updates. Thank you.

It's going to be great. The next question comes from Allison Carson. From Dejardin. Please go ahead.

Good morning, Jodi and team, and thanks for taking my questions today. The question is mostly on M&A. So you've obviously been busy on the M&A front and now have secured projects through much of the development pipeline. Are you still open to more M&A? And if so, what stage of projects would you be looking at now? Is it more likely to be something closer or in production? Or could M&A still be focused on exploration and development assets?

That's a great question, Alison, and we've gotten it a lot over the last week since we announced the prime transaction. What I will say to you is that our strategy remains unchanged. I mean, Torex was looking to get out from the single asset moniker, and we were looking at assets in the Americas in three streams. One is early stage exploration plays. Two is get our project team working on another project. And three is a producing asset. We'd always wanted to be doing it from a position of strength and at the right time for the organization, which explains the timing of why we did it this quarter, both on Prime and Reyna. What I will say is because we acquired four assets on the early stage exploration category, we are not out actively looking to acquire more. I think an important part of this is we're not collecting assets for the sake of or scaling for the sake of. We want to have some time here to unlock value from the assets that we have acquired, both in the context of project development and early stage exploration. That very last part of your question still is of interest for us. Notwithstanding the fact that we're not a single asset anymore, we're still a single producer. We have a couple of mines, but we still have a single process plant. And so we remain open to M&A as relates to potentially acquiring a producing asset and But again, it will be at the right time, at the right price, in a way that complements the portfolio. No need to overpay. MediLuna is ramping up beautifully. We've got free cash flow coming to us from Morelos in a way that we're quite pleased about. So still very much the right deal at the right time. I think we're pretty much done on exploration for a while. We've got another project now ahead of us, in addition to the Morelos project with EPO and then MediLuna West and MediLuna East behind it. but remain open to a producing asset as appropriate.

Well, thanks. Yeah, that makes a lot of sense. And then just looking at Los Reyes, you know, Prime had not been drilling the project since January, but security conditions seemed like they were improving. Are you expecting to be able to drill at the property once the acquisition closes in H2? And then how important is being able to drill the project for you in terms of achieving the timeline that you've set out?

Yeah, when you're talking about achieving the timeline that we've set out, what we did say when we acquired Prime was that we would put a PEA out mid-2026. Scott Hicks and his team have done a brilliant job of drilling off that asset. They've drilled more than 220,000 meters. And so while you could always have more drilling to inform a PEA, we think there's enough drilling there to responsibly put out a credible PEA by mid-2026. So that doesn't impact the timeline. In terms of your first question around the security circumstances in Kosala, what I would emphasize is that Scott's assessment and our assessment of the security issues were not centered around any anti-mining sentiment. They were not centered around any anti-prime or anti-drilling sentiment. What they really were was... cartel issues where Scott and his assessment found that it was not appropriate to have his team traveling the road to site. What we will do very early days here in concert and in discussion with Scott and his team, even pre-closing, is get our team on the ground, start to put resources in place to gain information, real-time information, about the security situation. And we hope to be. I can't say we expect to be because this is in part out of our hands. We hope to be drilling again this year as that settles down. We believe the security issue is very much a point in time issue. Sinaloa is widely known for being a fairly stable region from a security perspective historically. Well, great. That's it for me.

So thank you so much for taking my questions this morning.

Thank you.

As a reminder, if you have a question, please press star 1. The next question comes from Jeremy Hoy from Canaccord Genuity. Please go ahead.

Hi, Jody and team. Thanks for taking my question. Here's one from me. You've talked about recasting the mine plan for this year to accommodate the slight delay in the pace plant and also to achieve the guidance range. which you've set out, is there any anticipated impact on production or costs in the following years, or has the development you guys have done provided sufficient space to breathe on that front to be able to maintain your longer-term outlook?

Yeah, that's a really good question, Jeremy, because sometimes some companies do mind planning as though the year ends and then there's not a discussion about what happens in the following year. We've been very thorough in recasting the mind plan six months, 12 months, 18 months, and 24 months ahead of ourselves here, getting less and less specific as time goes out, as you would imagine. We've got very good short-term mind planning processes in place. And so the short answer to your question is that we are exceedingly optimistic about the mine plan heading into 2026. It is less risky. It will be less changed throughout the course of the year. And when you're not changing things as a result of construction activities, a planned mine is more likely to deliver better safety, better production, and better costs. And so we look forward to getting back to the usual state here with Torex where we plan, schedule, and execute with discipline as opposed to moving through a number of different plans given the variabilities of construction in the active mine this year.

Okay, great. Thanks, Jody. Looking forward to the back half of this year.

So are we. Thank you, Jeremy.

As there appears to be no more questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.