Gold prices bounce off 3-week lows; demand likely longer term
Torex Gold Resources Inc . (TSX:TXG) stock rose Thursday after RBC Capital Markets raised its price target to C$65 from C$60, citing exploration potential and the ongoing ramp-up of the company’s Media Luna project in Mexico.
The Canadian mining company is currently ramping up its Media Luna operation at the Morelos Complex in Guerrero, Mexico, targeting 6,500 tonnes per day by year-end 2025 and full production of 7,500 tonnes per day by mid-2026.
The final major component, a paste backfill plant, is now being commissioned following the completion of the Media Luna tie-in during the first quarter and commercial production in the second quarter.
RBC expects Torex to generate significant free cash flow starting in the third quarter through at least 2030, with an average yield of 16% at spot prices.
The firm now models gold production above 400,000 ounces annually through 2032, extended from its previous forecast ending in 2030, based on Torex’s record of reserve replacement from drilling and approximately 800,000 ounces of gold equivalent resources.
The Morelos complex currently has approximately 10 years of reserve-based production, with Media Luna providing 60-70% of mill feed through 2034, supplemented by ELG underground (15-20% through 2029) and EPO underground (15-20% from 2027-2034), along with lower-grade open pit stockpiles.
Management has allocated a $45 million exploration budget targeting reserve replacement, resource growth, and new discoveries.
RBC forecasts 399,000 ounces of gold equivalent production in 2025, compared to company guidance of 400,000-450,000 ounces and consensus estimates of 397,000 ounces.
The firm expects the second quarter to be the last quarter of negative free cash flow, with approximately $300 million forecast for the second half of 2025 at spot prices, and about $450 million in 2026.
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