On Thursday, BMO (TSX:BMO) Capital maintained a positive outlook on Torex Gold Resources (TSX:TXG:CN) (OTC: OTC:TORXF), reiterating an Outperform rating and a price target of Cdn$29.00. The firm's assessment follows Torex's second-quarter gold production at its ELG mine, which tallied 113.8 thousand ounces, closely aligning with the expected estimates of approximately 114.7 thousand ounces.
The operational performance of Torex Gold's ELG mine has shown robust results, with the underground segment achieving a mining rate of 2,145 tons per day, surpassing the anticipated steady state run rate. Additionally, the company has seen a reduction in open pit strip ratios, further indicating efficiency improvements in its mining operations.
For the first half of 2024, Torex Gold reported gold production of 229.3 thousand ounces, which is approximately 54% of the company's yearly midpoint guidance ranging between 400 and 450 thousand ounces. BMO Capital's analysis projects a total gold production of 421 thousand ounces for the year 2024.
The forecast for the remaining year takes into account a scheduled four-week mill shutdown in the fourth quarter, which is planned for integrating the Media Luna project. Despite this anticipated pause in operations, the Media Luna tie-in is reported to be progressing according to schedule.
In other recent news, Torex Gold Resources has been making significant strides. The company reported Q1 production of 115,000 ounces of gold with costs at $918 per ounce. The Media Luna project, currently 70% complete, is anticipated to start concentrate production in the fourth quarter.
Despite a negative free cash flow due to Media Luna investments, Torex Gold maintains a strong liquidity position with over $110 million in cash and expects to return to positive cash flow by mid-2025.
Simultaneously, Scotiabank (TSX:BNS) has reaffirmed its Sector Perform rating on Torex Gold, maintaining a shares target of C$25.00. The mining company has unveiled a multi-year exploration strategy for its Morelos Property, aiming to boost resources and secure new discoveries. To achieve this, Torex Gold has allocated a substantial $30 million budget for exploration activities in 2024.
CEO Jody Kuzenko has outlined a strategy for asset acquisition across the Americas, focusing on growth. The EPO project is expected to contribute to the company's goal of becoming a 500,000 ounce producer post-2027 with favorable cash costs.
InvestingPro Insights
As Torex Gold Resources (OTC: TORXF) continues to demonstrate strong operational performance and aligns with production estimates, real-time data from InvestingPro provides a deeper look into the company's financial health and market position. With a market capitalization of $1.43 billion and a P/E ratio of 7.95, Torex Gold presents an interesting valuation in the sector. The company's moderate level of debt and its trading near the 52-week high, as pointed out by InvestingPro Tips, support an optimistic view on its fiscal stability and market sentiment.
Investors might also take note of Torex Gold's profitability over the last twelve months, which is an encouraging sign for future earnings potential. The company's revenue growth in the first quarter of 2024 at 3.37% quarterly, alongside a substantial six-month price return of 55.25%, underscores the positive momentum that has captured the attention of analysts. Furthermore, the lack of dividend payments suggests that the company is likely reinvesting earnings back into operations, which could be promising for the Media Luna project integration and long-term growth.
For those considering a deeper dive into Torex Gold Resources, additional InvestingPro Tips are available, which could further inform investment decisions. By using the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a wealth of insights and analysis to navigate the market with more confidence.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.