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On Wednesday, Scotiabank reaffirmed its optimistic outlook on Torex Gold Resources (TXG:CN) (OTC: OTC:TORXF), maintaining a Sector Outperform rating and a price target of C$29.00. The firm's confidence is bolstered by Torex Gold's third-quarter production results, which surpassed expectations. The gold miner reported a production of 119.4 thousand ounces of gold (koz Au), exceeding the 114.2 koz Au that Scotiabank had estimated.
This outperformance was attributed to the processing of higher-grade ore, averaging 3.47 grams per tonne compared to the estimated 3.30 grams per tonne.
Torex Gold has produced approximately 348.7 koz Au year-to-date, which is about 82% of the company's mid-point guidance for the year. To reach the mid-point of the annual guidance, the company needs to produce roughly 76.3 koz Au in the fourth quarter, which is historically weaker. However, only about 51.3 koz Au is required to meet the lower end of the guidance range. The firm has confirmed its full-year 2024 production guidance, which projects 400,000 to 450,000 koz Au, indicating that Torex Gold is on track to meet its full-year production target for the sixth consecutive year.
Scotiabank views these third-quarter production figures as a positive development for Torex Gold's stock. The company's ability to consistently meet or exceed production targets is seen as a strong indicator of its operational reliability. In addition, Scotiabank anticipates increased margin expansion for Torex Gold, especially as gold prices have reached new all-time highs during the quarter.
Looking ahead, Scotiabank is anticipating further updates on the Media Luna project, including a planned four-week shutdown of the mill for tie-in, which is scheduled for this quarter. The bank believes that the strong production results, coupled with the anticipated project updates, will continue to support Torex Gold's stock performance. Following adjustments to their model, Scotiabank has reiterated both the Sector Outperform rating and the C$29.00 price target for Torex Gold Resources.
In other recent news, Torex Gold reported a robust second quarter for 2024, with a significant progress on its $950 million Media Luna project. The company announced record gold prices, solid margins, and robust cash generation. BMO Capital Markets and Scotiabank have both upgraded their stock price targets for Torex Gold, with BMO raising the target to Cdn$30.00 and Scotiabank to Cdn$29.00, both firms maintaining an Outperform rating on the stock.
The upgrades follow the company's recent investor day where Torex Gold presented encouraging preliminary feasibility study results on the El Limón Guajes mining complex.
Torex Gold announced a new reserve estimate at its Morelos property, which includes an inaugural reserve of 781,000 ounces of gold equivalent. This addition is projected to contribute around 1,700 tonnes per day to the operation. The company is on track to meet its full-year production guidance, having already produced 229,000 ounces of gold in the first half of 2024. The Media Luna project, which is 78% complete, is expected to produce its first concentrate in the fourth quarter of 2024 and reach commercial production by mid-2025.
InvestingPro Insights
Torex Gold Resources' strong performance highlighted in the article is further supported by real-time data from InvestingPro. The company's market cap stands at $1.67 billion USD, reflecting investor confidence in its operations. Notably, Torex Gold has demonstrated impressive revenue growth, with a 27.92% increase in quarterly revenue as of Q2 2024. This aligns with the article's mention of the company's strong production figures and its ability to consistently meet or exceed targets.
InvestingPro Tips reinforce the positive outlook presented in the article. One tip indicates that Torex Gold is "Trading near 52-week high," which is consistent with Scotiabank's optimistic stance and price target. Additionally, the company has shown a "Strong return over the last three months," with InvestingPro data revealing a 17.52% price total return over the past three months.
For investors seeking a deeper understanding of Torex Gold's financial health and market position, InvestingPro offers 5 additional tips not mentioned here. These insights could provide valuable context for the company's performance and future prospects in the gold mining sector.
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