SA News • Thu, Nov. 20
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- Torex Gold announced a small C$1.2 million loss relating to development expenses.
- This is in line with my expectations.
- Investors continue to overvalue this company in spite of the high quality of its Morelos Project, and I continue to avoid the shares for now.
- Torex Gold is making great progress at its Morelos gold project in Mexico.
- This isn’t unexpected, but I’m encouraged by the fact the first gold pour is anticipated in less than 10 months from now.
- The investment thesis doesn’t change. I’d like the company to get a little bit cheaper before investing.
- Torex Gold drew $45 million from its credit facility in order to begin developing the mill at its Morelos Project.
- This is in line with the company's timeline and my expectations.
- Enthusiasm over this large, fully financed, low cost, low risk gold mine leaves the shares elevated in this weak gold market environment, proceed cautiously.
- Torex Gold announced that it increased the resource at its El Limon Sur deposit through in-fill drilling.
- Continued exploration was anticipated but mine construction is the current focus.
- This is bullish insofar as more ounces are good, but they won't impact the mine's near-term cash-flow generation.
- Investors like the name as it approaches production but it is overvalued, especially given weakness in the gold market.
Update: Drilling Increases Torex Gold's Resources At El Limon SurThe Investment Doctor • Thu, Sep. 11
- Torex Gold announces an updated resource estimate at El Limon Sur, indicating these ounces could be used to cover the excess mill capacity.
- This was in line with expectations and this news won’t change that much.
- The investment thesis remains standing. Right now, Torex’ task is to build the project and ramp it up towards full production.
- Torex Gold signs an agreement for a $300M project finance facility and $75M cost overrun facility at very competitive interest rates.
- The required hedging of gold and the Mexican peso is fair and reasonable.
- Torex can now focus on its first gold pour, which is expected next year.
Torex Gold: Enthusiasm Over The Financing Announcement Offers Investors A Chance To Exit An Overvalued Stock
- Shares of Torex Gold have risen over 20% since the company announced its latest financing deal.
- While the deal generates value, the market has overreacted to the upside, especially in a weak gold price and gold mining stock environment.
- While the Morelos Project is still of high quality, and while it will generate a lot of cash flow, the recent increase in Torex shares offers investors a chance to exit.
Torex Gold: The New Mexican Mining Tax Will Be A Pain
- Torex Gold is trading at a slight discount to the NPV of the remaining cash flows at El Limon, but the discount is too low to get excited.
- Additional value will come from the Media Luna Zone where 5.8M gold-equivalent ounces were found on 24% of the potentially 'hot' zones.
- Torex doesn't play hide-and-seek about potential security risks and has hired its own security force.
- Because of the security risks I prefer to use a discount rate of 8% vs. the 5% which was used in the feasibility study.
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Thu, Nov. 20, 6:54 PM
- "You can’t find a sector that is more out of favor right now than gold,” says former geologist and gold fund manager Joe Foster, who expects volatility to continue but with seemingly every headwind already pushing on the price of gold, it might not take much to spark a rally.
- Foster prefers junior miners to larger companies, as "the large caps have really gotten too big for their own good,” singling out Rio Alto Mining (NYSE:RIOM), thanks in past to its success with lower-cost heap leaching; RIOM recently acquired another heap leach operation in Peru.
- He also prefers regional miners, because geographic focus allows companies to better handle the local regulatory and political situation; Foster likes Randgold (NASDAQ:GOLD), which operates mostly in west Africa and has one of the most successful discovery track records in the industry.
- Rounding out Foster's five favorites: B2Gold (NYSEMKT:BTG), Eldorado Gold (NYSE:EGO) and Torex Gold Resources (OTCPK:TORXF).
Wed, Jan. 8, 1:21 PM
- With the gold mining sector at its cheapest relative value in at least two decades (according to Bloomberg), investment bankers are sniffing around in hope of a rebound in M&A deals. There were just $10.1B in gold producer deals last year, 4.4% less than 2012, and the lowest total since 2004. A pickup in activity, however, was seen in December, with both Goldcorp (GG -0.9%) and Newmont Mining (NEM -1.7%) saying they're looking to add low-cost operations.
- “Majors who have done portfolio optimization will look at some of the juniors and say, ‘Here’s a chance for us to acquire a potentially better asset than we’ve sold and to mitigate the loss of production,’” says Barclays' Paul Knight.
- Possible targets might include single-project developers like Pretium Resources (PVG) and Torex Gold (TORXF +5.3%).
- Thanks to a regime of cost cuts, the 10 largest producers - led by Barrick Gold (ABX -1.7%) - should have some firepower, maybe generating $4.17B of free cash flow this year vs. a negative $1.74B in 2013, says Bloomberg. At the same time, exploration and development companies - who rely on regular financings - have good incentive to sell. “Darwinism is alive and well in the gold industry right now,” says Fidelity's Joe Wickwire. "While ultimately there will be fewer companies producing less gold, “the profitability of the industry is going to go up.”
- ETFs: GDX, GDXJ, NUGT, DUST, GLDX, RING, GGGG, JNUG, PSAU, JDST
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