Torex Gold Resources Inc.

Q2 revenue was not stated on the call. Q2 production was just over 96,000 ounces, with year-to-date production around 197,000 ounces gold equivalent. All-in sustaining costs were $2,459/oz in the quarter, and the all-in sustaining margin was 46%. Free cash flow was $94 million, including a $39 million Mexican profit sharing payment. Cash increased to $169 million from $130 million, and the company ended the quarter with no debt and over $500 million of available liquidity. Guidance was updated: full-year AISC to $2,000 to $2,100/oz from $1,750 to $1,850/oz, sustaining capital to $135 million to $145 million, while full-year production guidance remained 420,000 to 470,000 ounces. Management also said Q3 production should be about 115,000 ounces, with a step-up in Q4.

Andrew Snowden said the key message from the quarter was that Morelos is performing to plan and remains on track to meet annual production guidance. He pointed to July output of over 43,000 ounces gold equivalent as evidence that grades and recoveries are improving in the second half, and he framed Q2 as likely the low point of the year. He also highlighted strong safety performance, saying the company logged a fifth straight quarter with no lost-time injuries.

Dan Rollins focused on the cost drivers behind the higher AISC guide: about $130/oz from higher reagent consumption and pricing, $70/oz from a stronger peso versus the original assumption, $40/oz from higher mining volumes and lower gold recoveries, and $30/oz from higher sustaining capex. He said free cash flow of $94 million was after $39 million of annual profit sharing, cash rose to $169 million, and Torex ended with no debt and more than $500 million of liquidity. He also said the company expects income tax installments of around $55 million per quarter in the second half and is targeting $350 million of shareholder returns for the year while ending 2026 with at least $200 million of cash.

Analysts pressed management on whether consumables or the peso were the bigger cost driver; Dan said consumable costs were the larger factor, with consumption rates contributing about $100/oz, pricing about $30/oz, and the peso about $70/oz. On Los Reyes, management said drilling started in May, the 20,000-meter program is still on track, and pulling the PFS forward is unlikely because more geotech and metallurgical work is needed. Questions on provisional pricing and hedging drew the response that the pricing lag is now about one month, QP hedges are no longer needed for current shipments, and any peso hedging will be dynamic, with Torex aiming to hedge up to about 60% of exposure. Analysts also asked about throughput upside; management said 10,000 to 11,000 tonnes per day is the right current assumption, with debottlenecking potentially adding up to 10% and a larger expansion to 14,000 tonnes per day possible later.