MEDIA LUNA DEPOSIT
We are looking to the future of our mining operations in Guerrero through our Media Luna deposit, which is an advanced stage development project located seven kilometres from ELG. A Preliminary Economic Assessment (PEA) for Media Luna was released in September 2018, and a Feasibility Study is currently underway, with completion scheduled for Q1 2022. The Company intends to advance Media Luna from advanced stage development to production in the first quarter of 2024.
The Media Luna deposit is an underground deposit which primarily contains gold, copper and silver mineralization, located on the south side of the Balsas River. The deposit, hosted in a magnetic anomaly, was discovered in March 2012.
The conceptual design in the PEA envisions an underground operation with expected average annual gold equivalent production of approximately 350,000 ounces over approximately 10 years. The initial upfront capital to access and develop the underground operation as well as modify the ELG Processing Plant to produce both copper/gold/silver concentrate and gold/silver doré was estimated at $496 million. The updated Media Luna PEA outlines an after-tax IRR of 27% and an NPV (5%) of $582 million, based on a gold price of $1,200 per ounce, a silver price of $17 per ounce, and a copper price of $3 per pound.
RESULTS OF PRELIMINARY ECONOMIC ASSESSMENT FOR MEDIA LUNA (SEPTEMBER 2018)
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| ML Conventional PEA | Unit | Total | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes | Financial Outcomes |
| Au Eq (kozs) | Koz eq | 3,911 | - | - | - | - | 38 | 274 | 399 | 437 | 404 | 427 | 352 | 358 | 372 | 344 | 320 | 186 |
| Total Au ounces sold (commercial phase) | Koz | 2,099 | - | - | - | - | - | 61 | 195 | 242 | 247 | 264 | 192 | 199 | 203 | 200 | 180 | 114 |
| Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated | Cash Flow Generated |
| Revenue | M$ | 4,516 | - | - | - | - | - | 197 | 478 | 524 | 484 | 513 | 423 | 429 | 447 | 413 | 384 | 223 |
| Operating Cost | M$ | 2,243 | - | - | - | - | - | 96 | 213 | 221 | 220 | 230 | 235 | 225 | 228 | 219 | 217 | 139 |
| Operating Cash Flow | M$ | 2,273 | - | - | - | - | - | 101 | 265 | 304 | 265 | 283 | 188 | 204 | 218 | 193 | 167 | 85 |
| Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital | Capital |
| Project Capital | M$ | 496 | - | - | 64 | 121 | 257 | 55 | - | - | - | - | - | - | - | - | - | - |
Pre-Commercial Costs Capitalized (Cost-revenue) | M$ | (85) | - | - | - | - | (18) | (67) | - | - | - | - | - | - | - | - | - | - |
| Sustaining Capital | M$ | 109 | - | - | - | - | - | 13 | 17 | 20 | 12 | 17 | 10 | 10 | 7 | 3 | - | - |
| Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC | Total Cash Cost & AISC |
| Total Cash Cost (commercial phase) | M$ | 2,243 | - | - | - | - | - | 96 | 213 | 221 | 220 | 230 | 235 | 225 | 228 | 219 | 217 | 139 |
| Cash cost per Au Eq | $/oz eq | 596 | - | - | - | - | - | 586 | 534 | 505 | 544 | 539 | 668 | 629 | 613 | 638 | 678 | 745 |
| Total AISC | M$ | 2,331 | - | - | - | - | - | 109 | 230 | 241 | 232 | 247 | 246 | 235 | 236 | 222 | 217 | 117 |
| AISC per Au Eq | $/oz eq | 619 | - | - | - | - | - | 663.24 | 578 | 552 | 574 | 578 | 697 | 656 | 633 | 646 | 678 | 627 |
| Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics | Operating Statistics |
| Total Ore Mined | Mt | 30.9 | - | - | - | - | 0.25 | 1.94 | 2.79 | 2.81 | 2.81 | 3.11 | 3.08 | 3.10 | 3.13 | 3.08 | 3.07 | 1.77 |
| Au grade | g/t | 2.58 | - | - | - | - | 1.17 | 1.96 | 2.60 | 3.21 | 3.26 | 3.15 | 2.32 | 2.38 | 2.42 | 2.42 | 2.18 | 2.39 |
| Ag grade | g/t | 27.59 | - | - | - | - | 52.65 | 39.73 | 35.82 | 39.06 | 28.84 | 22.24 | 23.64 | 24.76 | 26.94 | 20.92 | 22.15 | 21.09 |
| Cu grade | % | 1.03% | - | - | - | - | 2.27% | 1.62% | 1.31% | 1.22% | 1.00% | 0.97% | 0.95% | 0.93% | 0.97% | 0.85% | 0.82% | 0.73% |
| Au Recovery | % | 85.10% | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Ag Recovery | % | 75.00% | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Cu Recovery | % | 88.80% | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Au Sold | Koz | 2,148 | - | - | - | - | 8 | 102 | 195 | 242 | 247 | 264 | 192 | 199 | 203 | 200 | 180 | 114 |
| Ag Sold | Koz | 18,657 | - | - | - | - | 287 | 1,684 | 2,186 | 2,395 | 1,772 | 1,512 | 1,591 | 1,680 | 1,841 | 1,406 | 1,487 | 817 |
| Cu Sold | Klbs | 599,448 | - | - | - | - | 10,605 | 59,143 | 68,894 | 64,243 | 52,751 | 56,809 | 55,013 | 54,031 | 57,050 | 49,391 | 47,340 | 24,177 |
| Au Eq (kozs) | Koz eq | 3,911 | - | - | - | - | 38 | 274 | 399 | 437 | 404 | 427 | 352 | 358 | 372 | 344 | 320 | 186 |
Additional technical information is contained in the technical report entitled “Morelos Property, NI 43-101 Technical Report, ELG Mine Complex Life of Mine Plan and Media Luna Preliminary Economic Assessment, Guerrero State, Mexico”.
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NI 43-101 Technical Report - ELG Mine Complex Life of Mine Plan and Media Luna Preliminary Economic Assessment
Note that a preliminary economic assessment should not be considered a prefeasibility study or feasibility study, as the economics and technical viability of the Media Luna Project have not been demonstrated at this time. The Media Luna PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
EXPLORATION
Since 2018, exploration at Media Luna has been focused on infill drilling in order to upgrade Inferred Mineral Resources to the Indicated Resource category for inclusion in the upcoming Feasibility Study. As of April 30, 2021, the Media Luna deposit shows Indicated Resource of 3.54 million gold equivalent ounces (20.9 million tonnes at a gold equivalent grade of 5.27 g/t) and a gold equivalent Inferred Resource of 2.48 million ounces (18.9 million tonnes at 4.08 g/t). The current Mineral Resource estimate is reported using a long-term gold price of $1,550/oz, silver price of $20/oz, and copper price of $3.50/lb.
The remaining 2021 infill drilling program is targeting to upgrade additional resources to the Indicated category for inclusion in the upcoming Feasibility Study, which remains on track for completion in Q1 2022 and will form part of an updated Technical Report for the entire Morelos property.
The current resource is contained within approximately 30% of the area of the magnetic anomaly which hosts the deposit. As such, the Company sees significant potential to grow and upgrade the resource base at Media Luna over the coming years.
PRESS RELEASE
Torex Gold Reports Exploration Results from the Media Luna 2020 Infill Drilling Program (March 25, 2021)
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