Torex ups Media Luna capex to US$950mn on strong peso

Mexico-focused Torex Gold finalized capex for its Media Luna underground project at US$950mn, almost 9% up from the original budget. 

As of end-June, the gold mine in Guerrero state had reached nearly 80% completion, up from almost 70% at end-March, the Toronto-based company said in a release.

“As a result of near completion of engineering and procurement activities and incorporating the strength of the Mexican peso, budgeted capital expenditures have been finalized at US$950mn. This represents a US$75.5mn increase (+8.6%) over the original budget of US$874.5mn,” the company said.

“The key driver is the stronger MXN which represents US$48.0mn (+5.5%) of the increase, with the remaining US$27.5mn (+3.1%) related to out-of-scope items and additional carryover costs as commercial production is now expected to be declared towards the middle of Q1 2025 compared to the start of the year as assumed in the original budget.” 

The miner said the continued strength of the peso has been an ongoing cost headwind, with the currency averaging 17.9 to the US dollar weighted by quarterly expenditures from April 1, 2022, to June 30, 2024. “This compares to the rate of 20:1 assumed within the original budget, for which approximately 45% of the total capital expenditures were expected to be incurred in MXN.” 

According to Torex, another driver of the increase is the US$18.5mn of out-of-scope upgrades to the regional power infrastructure requested by the power authority as part of the permitting approval received in 2023. 

“Approvals for the increased draws have been received from the power regulators and construction is well underway. The investment in this power infrastructure positions the company to add further mining areas, including EPO, without the need for additional upgrades to power infrastructure,” the company added. 

78% complete

As of the end of June, the project was 78% complete across engineering, procurement, underground development/construction and surface construction, compared to 69% at the end of March.

"Development of Media Luna continues to track to schedule, with the first production of copper concentrate anticipated by year-end and commercial production expected in Q1 2025,” said CEO Jody Kuzenko.

“Given the project capital increase, our Media Luna capital expenditures guidance for 2024 will be adjusted and the range narrowed to US$430-450mn, from US$350-400mn,” she added.

Media Luna is expected to produce 440,000oz/y gold, 1.7Moz/y silver and 21,000t/y copper.