🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Torex Gold shares target reaffirmed by Scotiabank amid new exploration strategy

EditorEmilio Ghigini
Published 06/11/2024, 08:24 PM
TORXF
-

On Tuesday, Scotiabank maintained its Sector Perform rating on Torex Gold Resources (TXG:CN) (OTC: OTC:TORXF), with a steadfast shares target of C$25.00.

The mining company unveiled a comprehensive multi-year exploration strategy for its Morelos Property, aiming to boost mineral resources in the short term and secure new discoveries in the medium term. This ambitious plan is crafted to extend the mine's operational life and ensure steady production and cash flow well past 2033.

Torex Gold Resources is setting its sights on maintaining an annual production rate exceeding 450,000 ounces of gold equivalent (AuEq) after 2027. To achieve this, the company has allocated a substantial $30 million budget for exploration activities in 2024. This investment underscores the company's commitment to maximizing the value of the Morelos Property, which spans 29,000 hectares and remains largely underexplored.

The completion of the Media Luna project is on the horizon, allowing Torex Gold to pivot its focus towards exploring the vast land package. With approximately 75% of the area still untapped, the exploration strategy holds the potential for significant discoveries. The strategy is perceived as a modest positive development for the company, as it could unlock the full mineral potential of Morelos.

Torex Gold's current stock rating reflects a neutral outlook, with the price target of C$25.00 remaining unchanged. The company's proactive approach to exploration and its efforts to sustain high production levels are crucial elements of its long-term strategy. The exploration budget for 2024 is a clear indicator of Torex Gold's priorities in resource development and operational longevity.

In other recent news, Torex Gold Resources Inc. had a strong start to 2024, with Q1 production levels normalizing and costs aligning with the full-year guidance. The company reported Q1 production at 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.

The company also increased its measured and indicated resource base by over 900,000 gold equivalent ounces in 2023 and has set a $30 million budget for exploration and drilling in 2024. The ELG Underground mine life has been extended by two years through 2028. In spite of investments in Media Luna affecting the free cash flow, the company's liquidity remains strong, with no amounts drawn on the credit facility.

CEO Jody Kuzenko has outlined a three-pronged 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. These are among the recent developments that set the stage for a year of expected growth and operational efficiency for Torex Gold.

InvestingPro Insights

In light of Torex Gold Resources' (OTC: TORXF) strategic exploration plans and sustained production goals, recent data from InvestingPro offers additional context for investors. With a market capitalization of $1.34 billion and a P/E ratio standing at an attractive 7.51, the company presents an interesting valuation profile. Notably, Torex Gold has been trading near its 52-week high, with a price that is 94.85% of this peak, reflecting investor confidence in its operational and strategic initiatives.

InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, anticipating profitability for the company this year. This optimism is backed by a strong return over the last three months, with a price total return of 21.13%, and an impressive six-month return of 53.73%. Additionally, the company operates with a moderate level of debt, which could be a reassuring factor for risk-averse investors. For those looking to delve deeper into the company's prospects, InvestingPro offers several more tips, and users can unlock these insights with a special offer using coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

The company's revenue growth remains modest at 0.08% over the last twelve months as of Q1 2024, yet it has managed gross profit margins of 53.13%, highlighting efficient operations. With an operating income margin of 23.95%, Torex Gold appears to be leveraging its assets effectively to generate earnings. These financial health indicators, coupled with the company's proactive exploration strategy, may provide a compelling narrative for investors considering Torex Gold as part of their portfolio.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.