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Torex Gold shares jump on positive assays from ELG underground in Mexico

El Limon Guajes complex. Credit: Torex Gold

Torex Gold Resources (TSX: TXG) has received positive assay results from the El Limón Guajes (ELG) underground mine in Mexico, where it is currently in the midst of a 27,000-metre program targeting resource upgrades and extensions at the Sub-Sill and El Limón Deep (ELD) deposits.

ELG underground is part of the El Limón Guajes mine complex that also includes three open pits and a processing plant. The mine complex, which began commercial production in 2016, is hosted within Torex’s 100% owned Morelos property located 180 km southwest of Mexico City.

Also within this 29,000-hectare property is the Media Luna deposit, an advanced-stage development project located 7 km from ELG.

The company considers ELG underground as a “key value driver” as its reserves have been expanded and the mining rate has steadily risen over the years. Proven and probable reserves for ELG underground were estimated at 494,000 oz. of gold (2.68 million tonnes at an average grade of 5.74 g/t gold) at the end of 2021, representing a 20% increase year-over-year.

Since underground mining commenced in late 2017, ELG underground has produced approximately 288,000 oz. of gold through the end of 2021 (327,000 oz. mined prior to process plant recoveries at an average gold grade of 7.45 g/t). Cumulative gold mined, plus reserves as at year-end 2021, is more than 3.5 times greater than the initial underground gold reserves of 183,000 oz. estimated as of the end of 2017.

The mine is on track for another strong year of production in 2022, with 43,000 oz. of gold produced (oz. ounces of gold mined prior to process recoveries at 5.98 g/t gold) in the first half of the year. Over the last three calendar years, annual production from ELG underground averaged approximately 85,000 oz. (97,000 oz. prior to process recoveries at an average gold grade of 7.36 g/t).

“ELG underground has been a significant driver of mineral reserve and resource growth over the last several years, and the latest results from the ongoing drill campaign continue to validate our positive outlook,” Jody Kuzenko, CEO of Torex, said in a news release.

“We are excited about the long-term prospects of the ELG underground given the potential to continue to grow higher grade reserves and resources while steadily increasing mining rates toward a target of 2,000 tonnes per day.”

The 2022 program consists of a mixture of infill drilling to upgrade the inferred resources within the Sub-Sill and ELD zones and step-out drilling to extend both deposits as well as other zones such as Sub-Sill South (a mineralized zone between Sub-Sill and El Limón Sur).

At ELD, infill drilling successfully intersected high-grade mineralization 110 metres below the current reserve envelope, which Torex believes bodes well for reserve replacement and ongoing reserve growth. Key intercepts include 16.96 g/t gold over a core length of 17.5 metres, 16.87 g/t gold over 9.7 metres, 10.39 g/t gold over 11.7 metres and 13.49 g/t gold over 5.5 metres.

Step-out and infill drilling at Sub-Sill South has also been encouraging with several high-grade intersections, including 7.18 g/t gold over a core length of 21.3 metres, 10.01 g/t gold over 9.7 metres and 7.66 g/t gold over 8.9 metres. These results, when combined with previous drilling, highlights the potential for a new mining front within the ELG underground.

While further drilling is required to determine the extent of the mineralization, if Sub-Sill South is developed, underground development required to access the zone could be leveraged to access another potential mining front below the El Limón Sur open pit, Torex says.

Shares of Torex jumped 3.1% by midday Friday following the latest drill results from ELG underground. The Canadian gold miner has a market capitalization of C$795.7 million ($533m).