Torex Gold Resources Inc has provided an inaugural quarterly update on the development of its Media Luna Project in Mexico for the period ending December 31, 2022. Media Luna Project is located seven kilometres from the existing El Limón Guajes Mine Complex (ELG) comprised of the El Limón, Guajes and El Limón Sur open pits, El Limón Guajes underground mine plus the processing plant and related infrastructure. Media Luna is an underground deposit which primarily contains gold, copper and silver mineralisation, located on the south side of the Balsas River.
Jody Kuzenko, President & CEO of Torex, stated: “Development of Media Luna is well underway with the project tracking to schedule and to budget. At year-end, project completion stood at 15%, with first production still anticipated in late 2024. Capital expenditures are tracking well to the original budget, with 26% of the upfront costs committed at year-end including 14% incurred. Project activity is expected to ramp-up significantly in the months ahead, with 2023 expected to be the peak year of spending.”
She added that during the quarter procurement activities continued to advance with purchase orders executed for the Guajes conveyor radial stacker, cleaner flotation circuits, hydrocyclones and tailings positive displacement pumps, rock breakers, and electrical transformers and switchgear. Letters of intent were signed for the production mobile equipment fleet in December and support mobile equipment fleet post year-end, with purchase orders, including for battery electric vehicles, nearing completion.
The Guajes Tunnel remains on track for breakthrough in Q1 2024, with the tunnel successfully crossing under the Balsas River in December. Approval was also received to increase the power draw at the Morelos Property to 65 MW from 45 MW, building on approvals received earlier in 2022.
“We are off to a solid start as we continue to de-risk and advance Media Luna. With budget and schedule on track, $590 million of available liquidity at the end of the third quarter and strong forecast cash flow over the next two years, we are in a strong position to fund the development of the project, continue to invest in value enhancing exploration and drilling, and maintain $100 million of liquidity on the balance sheet.”
Total upfront expenditures related to the development of Media Luna are unchanged at $874.5 million. As at year-end, the company had commitments in place for $229.7 million of project expenditures (approximately 26%), including $124.7 million of expenditures incurred (approximately 14%). Based on purchase orders and contracts awarded to date, project costs in general are tracking well to the costs outlined in the Technical Report.
Torex expects to incur $390 to $440 million of capital expenditures at Media Luna in 2023, which is forecasted to be the peak year of investment. Quarterly expenditures are expected to remain relatively consistent through H1 2024, before declining as development activities wind down ahead of commercial production, which is anticipated in early 2025.
With project completion at 15% as at year-end, Media Luna remains on track for first production in late 2024, following the tie-in of the copper and iron flotation circuits with the existing processing plant.
Detailed engineering is tracking ahead of procurement activity. All critical path engineering is on track. Surface engineering during the period focused on finalisation of key process equipment sizing and specifications as well as continued detailing of the new flotation plant. Underground engineering advanced layout work related to infrastructure such as maintenance bays, refuge stations, west vent adit, as well as ore and waste handling systems.
There have been just a few adjustments to the project execution plan include:
- Engineering and procurement phase has been extended six months to June 2024, mainly related to non-schedule critical procurement packages.
- Early installation of the iron sulphide (FeS) concentrator and the water treatment plant pushed back by four months, with completion dates well ahead of commissioning the process plant in October 2024.
- Breakthrough of the Guajes Tunnel advanced two months to early January 2024, resulting in the anticipated installation of Guajes conveyor a month earlier than originally scheduled.
- Completion of the paste plant pushed out three months to October 2024, reflecting additional time take for a peer review and subsequent refinements to the original design.
Steady progress was made in advancing the Guajes Tunnel (about 7 km) and South Portals. Breakthrough of the Guajes Tunnel on the south side of the Balsas River remains on track for Q1 2024, which is expected to provide ample time to hang the conveyor (approximately four months) and ensure all services are in place to connect Media Luna with the upgraded processing plant on the north side of the Balsas River.
Daily advance rates in the Guajes Tunnel averaged 6.4 m during Q4 2022, including a record average daily advance rate of 7.2 m during December. As at year-end, the Guajes Tunnel had advanced approximately 3,250 m (3,455 m as of end of January 2023), and successfully crossed under the Balsas River with no issues related to ground conditions or water. At South Portal Lower, development of the main lower ramp has commenced, with the main tunnel drive recently completed. Steady progress was made on ventilation during the quarter, with Guajes Tunnel ventilation raise bore advancing (70 m of 180 m completed) and additional vent fans installed at both South Portal Upper and Lower.
Regarding surface construction, during the quarter, multiple surface construction projects were advanced, including slope stabilisation along the access road to South Portal Lower, pad preparation for the paste plant and back-up generators adjacent to South Portal Upper, and development of the Mazapa bypass road. Key projects that kicked off in Q4 include construction of settling and decant ponds, and expansion of the MML construction camp.
