New Mexican gold mine officially opens
Investors in Torex Gold Resources (TSX:TXG) saw their patience rewarded on Friday with an 11.5 percent bump in the stock price.
The Toronto-based, Mexico-focused gold explorer has seen its stock nearly triple in value, having recovered from a 52-week low of $0.85 to its current $2.23 a share – a 76.9 percent gain year to date.
The spike is all down to the opening of the company's principle asset- the El Limon-Guajes mine located in the prospective Guerrero Gold Belt north of Acapulco. According to Newstrike Capital (TSXV:NES) which is exploring the area including its flagship Ana Paula property, the belt holds a gold inventory of over 30 million ounces. Newstrike acquired Ana Paula from Goldcorp (NYSE:GG, TSX:G) in 2010 and the belt is also host to Goldcorp's Los Filos mine.
Last week the state governor was on hand to officially inaugurate Torex's mine, which sits on its Morelos Gold Property. Along with El Limon-Guajes, Morelos also contains the Media Luna Project, which Torex describes as "advanced exploration" stage. A PEA for that project was completed in July 2015. Governor Héctor Astudillo praised Torex for spending $42-million to build 169 houses for locals. Mexico News Daily quoted him saying "that there had never been an investment — 'neither a hotel nor a highway' — that matched that of the new mine."
The $800-million project will create 500 jobs in direct employment and through contractors, according to Torex CEO Fred Stanford quoted by the daily newspaper. The mine is working with the Autonomous University of Guerrero to ensure adherence to environmental protection standards, Stanford said.
The opening is the culmination of a project that started construction three years ago but hasn't been exactly smooth. Last year construction was suspended for a week after about 13 people were kidnapped, including mineworkers, a female custodian and a contractor. Eleven of those kidnapped were freed with the help of the Mexican Army. Delays have also resulted from difficulties securing contractors willing to work in the state due to security concerns.
Activities were again halted at the beginning of April when three families blockaded the site and demanded compensation for environmental damages. Torex called the demands "extortion." Commercial production at the mine started on March 30th with initial output since December of 38,161 ounces. When it is in full production, El Limon-Guajes is expected to produce 369,000 ounces annually. The open-pittable deposit contains measured and indicated resources of 4.77 million ounces at 2.95 grams per tonne, and an inferred resource of 530,000 ounces at 2.15 g/t .