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On Wednesday, Raymond (NSE:RYMD) James reiterated its Outperform rating and Cdn$34.00 price target for Torex Gold Resources (TXG:CN) (OTC: OTC:TORXF). The firm’s analyst highlighted the company’s significant progress on its Media Luna underground gold and copper project, noting that construction was 94% complete at the end of 2024, a jump from 87% at the end of the third quarter of 2024. The stock has shown remarkable momentum, with InvestingPro data showing a 127% return over the past year and trading near its 52-week high of $23.22. According to InvestingPro’s comprehensive analysis, the company currently appears undervalued based on its Fair Value assessment. The project remains on schedule to commence production of its first copper concentrate by the end of the first quarter of 2025.
Torex Gold’s Morelos Complex in Guerrero, Mexico, which includes the El Limon Guajes (ELG) Mine Complex and the Media Luna Project, is central to the company’s operations. The paste plant, the largest remaining construction item, is expected to be completed and commissioned in early second quarter of 2024. Modifications to the existing processing plant, particularly the addition of a copper flotation circuit, are underway to accommodate ore from Media Luna.
The upgraded processing plant, with a capacity of 10,600 tonnes per day (tpd), will process ore from multiple sources. Media Luna will contribute 7,500 tpd, while the ELG Underground and EPO will add another 3,100 tpd. The company has also improved its underground lateral development rates, achieving 1,300 meters per month against a budget of 1,200 meters per month.
Torex Gold’s production in 2024 reached 453 thousand ounces of gold, matching the revised guidance of 450 to 470 thousand ounces. This was an increase from the original forecast of 400 to 450 thousand ounces, with the adjustment coming after the company postponed a planned processing plant shutdown for Media Luna’s commissioning from late 2024 to the first quarter of 2025.
Looking ahead, Torex Gold has scheduled the release of its financial results for after market close on Wednesday, February 19, 2025. With a strong financial health score rated as "GREAT" by InvestingPro, and impressive revenue growth of 35% in the last twelve months, investors are eagerly anticipating these results. The company has provided guidance for 2025, expecting to produce between 400 and 450 thousand gold equivalent ounces at an all-in sustaining cost (AISC) of $1,400 to $1,600 per gold equivalent ounce. The company maintains a moderate debt level with a debt-to-equity ratio of just 0.08, positioning it well for future growth. Capital expenditures for the year are projected to be significantly lower than in 2024, ranging from $90 to $100 million, including $30 to $35 million earmarked for the EPO development, which is set to start in mid-2025.
For 2026, Torex Gold anticipates production to be between 450 and 500 thousand gold equivalent ounces. The company is also increasing its investment in drilling and exploration to $45 million in 2025, a 50% hike from 2024. This will fund 125 kilometers of drilling aimed at increasing reserves and resources, supporting the company’s goal to sustain annual production of at least 450 thousand gold equivalent ounces beyond 2030. With a P/E ratio of 15.9 and an attractive EV/EBITDA of 3.89, the company shows strong value metrics. For deeper insights into Torex Gold’s financial health and growth potential, including 8 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In other recent news, Torex Gold Resources reported robust financial and operational results for the third quarter of 2024. The company highlighted a production of 119,000 ounces of gold for the quarter, contributing to a year-to-date total of nearly 350,000 ounces. This led to a quarterly revenue of $314 million and an all-in sustaining cost (AISC) of just over $1,100 per ounce, yielding a 52% AISC margin.
Despite a temporary halt in operations due to an incident at the ELG Underground mine, Torex Gold’s production forecast has been adjusted to 448 thousand ounces by BMO Capital Markets, aligning with the lower end of the company’s 2024 guidance. The company’s guidance for the year has been reaffirmed, and the current situation is not expected to significantly affect the schedule for the Media Luna project, which is 87% complete.
These are recent developments and the overall outlook for Torex Gold remains positive. BMO Capital Markets has maintained its Outperform rating and Cdn$35.00 price target for Torex Gold Resources, despite the temporary setback. The firm will continue to monitor the situation and provide updates as more information becomes available.
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