- (All amounts expressed in U.S. Dollars unless otherwise stated)
TORONTO, Ontario, May 6, 2020 – Torex Gold Resources Inc. (the “Company” or “Torex”) (TSX: TXG) reports the Company’s financial and operating results for the three months ended March 31, 2020.

Fred Stanford, President & CEO of Torex, stated:

“Operationally this was a solid quarter, with 108,537 gold ounces produced. The production performance was complemented by the continued outstanding safety performance. As of the end of March, the team had worked over 5.5 million hours without a lost time injury. Since then, the lost time injury free record has been extended to over 6 million hours and more than one year worked. This commitment to safe work practices has been expanded to healthy work practices as well. To date, we have had no known or suspected cases of COVID-19 at our operation.

“Cost control was successful, with oxygen addition to the leach circuit resulting in a 25% reduction in cyanide consumption since the start of the program. Accounting changes in the treatment of stockpiled ore, and a wild swing in the value of the Mexican peso, created more challenges. For the quarter the accounting changes to stockpiled ore resulted in an increase of approximately $100 per ounce to TCC and AISC. This impact will decline over the coming quarters and is expected to average out at the impact expected in the original annual guidance numbers. The US monetary stimulus in reaction to COVID-19 resulted in the depreciation in many emerging market currencies, including Mexico’s. This has us offside with our currency hedges and when ‘marked to market’, the significant lost opportunity to benefit from the depreciated peso, affected earnings. There were also benefits realized due to the rapid deterioration in the value of the peso. All said and done, the business was solid for the quarter, the financials are a bit messy.

“At the end of the quarter we started a significant planned maintenance shutdown. The decree to suspend non-essential businesses in Mexico was enacted during this shutdown, and we did not restart when the maintenance was completed. Extensive infection control has been effective, and the care and maintenance team has remained free from COVID-19 infection. It is too early to be certain, but we anticipate a lifting of the suspension decree in our area by May 18th. In preparation for that event, we are warming up the processing plant with feed from stockpiles to test the effectiveness and durability of the repairs that were completed during the maintenance shutdown. This will highlight whether additional repairs are required, and they can then be completed before the decree is lifted.

“This should be the last long quote from me in a press release…our succession plan is for Jody Kuzenko to take over as CEO at the annual shareholder meeting and for me to transition to the Executive Chair role. With Jody at the helm, well-established management, technical, and social systems firmly in place, and given the underlying talent of those throughout the entire organization, I am extremely confident in the future direction and success of the Company.”

This release should be read in conjunction with the Company’s March 31, 2020 Financial Statements and MD&A on the Company’s website or on SEDAR. A summary of Torex’s operating and financial results can be found in Table 1.

First Quarter 2020 Highlights
•Gold production: Produced 108,537 ounces of gold.
•Plant throughput and availability: Plant throughput averaged 12,464 tpd. Plant availability increased to 90%.
•Gold sold: 108,064 ounces at an average realized gold price of $1,571/oz.
•Total cash costs1 and All-in sustaining costs1: Total cash cost of $794/oz and all-in sustaining cost of $975/oz. ?The change in estimate for accounting for stockpiles resulted in $10.8 million of inventory transferred to operating costs, which contributed approximately $100/oz to total cash costs and all-in sustaining costs during the quarter.

•Net loss: Reported loss of $47.0 million, or $0.55 per share on a basic basis and a loss of $0.57 per share on a diluted basis. ?Net loss was negatively impacted by the 24.8% depreciation in the Mexican peso relative to the US dollar during the quarter.

•Adjusted net earnings1: Adjusted net earnings of $19.9 million, or $0.23 per share on a basic and diluted basis.
•EBITDA1 and Adjusted EBITDA1: Generated EBITDA of $39.4 million and adjusted EBITDA of $67.4 million.
•Cash flow from operations: Cash flow from operations totalled $29.5 million ($21.8 million prior to changes in non-cash working capital). ?The Company paid $47.2 million in taxes during the quarter, primarily related to the March payment regarding taxes accrued in 2019.

•Free cash flow1: Generated $2.1 million in free cash flow ($14.9 million prior to non-sustaining capital expenditures).
•Debt payments: Repaid $21.8 million of outstanding debt during the quarter.
•Lost time injury frequency: Exited the quarter with a LTIF of 0.31 per million hours worked. We now have worked over 6 million hours without a lost time injury, with our last reported LTI on April 22, 2019.

COVID-19 Update

While the complete suspension of operations at ELG was a post quarter event, much time during the quarter was spent designing and executing COVID-19 scenario plans. The purpose of the various plans was two-fold:
•To look after the health of our employees, contractors and community members during the global health pandemic.
•To maintain production for as long as possible and, subsequently, to resume production as early as possible.

As the spread of COVID-19 increased overseas, we undertook several initiatives to protect the health of our employees, contractors, and local community members. These initiatives included:
•Educational campaigns at site, and in the local communities, about the virus, methods by which the virus can be transmitted, and the need for good hygiene.
•Made a significant donation of hand sanitizer and protective masks to the local communities.
•Enacted various control measures at site including social distancing, meetings held in outdoor spaces, additional sinks for hand washing, increased cleaning of vehicles, rooms, and common areas, and a symptom reporting system.
•Proactive measures were taken to shore up the supply chain, given some of our critical consumables are sourced from affected regions.

As the global impact of the virus intensified, our actions evolved as we implemented enhanced protocols at site with the purpose of maintaining full production with the fewest people at site. These enhanced measures included:
•International travel for all employees was suspended and international travelers were restricted from site.
•The majority of employees providing service and support roles transitioned to working remotely.
•High-risk employees were identified and commenced working from home.
•Created laydown areas for contractors delivering supplies to site without having to directly interact with employees.
•Three-tiered health screening was implemented for all employees and contractors arriving at site.
•Suspended exploration drilling at both ELG and Media Luna as well as on-site testing of Muckahi.

In April, we placed our assets on care and maintenance in accordance with the Decree issued by the Mexican Federal Health Ministry on March 31st. The majority of employees went home to isolate. In addition to the care and maintenance crews, we retained a healthy security force to safeguard the assets. We also chose to maintain a contingent of community relations employees based in the local communities to continue with education and information campaigns. During the suspension of operations, we have continued to pay all employees their wages, paid out the annual bonus, and are staying current with tax payments and accounts payable.

Uncertainty remains around the timing of a re-start of full operations but with the possibility for the decree to be lifted on May 18th for communities with low infection rate, we are preparing for that possibility. Site activities will ramp-up in step with the ability to maintain contagion prevention protocols. The initial step is processing of ore from stockpiles. Mining will restart later. How much later, depends upon a number of factors, including working together with local communities to understand and mitigate net risk.

Guidance Update

The Company is not able to re-establish full year guidance at this time given the uncertainties related to COVID-19. Torex withdrew full year guidance on April 2nd given there was no clear line of sight as to when, how often, and how long this pandemic could affect the Company’s ability to produce gold at El Limon Guajes. The visibility on production and costs is still unclear, and as such, Torex is not in a position to re-establish guidance.

Enhanced Balance Sheet Liquidity

In late April, Torex drew $50 million on its revolving loan facility in order to provide additional cash liquidity during the suspension of operations. The Company ended April with $134.8 million in cash and has now drawn $100 million on the $150 million facility.

Conference Call and Webcast Details

The Company will host a conference call today at 9:00 AM (ET) where senior management will discuss the first quarter operating and financial results. Please call the below numbers approximately 10 minutes prior to the start of the call:
•Toronto local or international: 1-416-915-3239
•Toll-Free (North America): 1-800-319-4610
•Toll-Free (France): 0800-900-351
•Toll-Free (Switzerland): 0800-802-457
•Toll-Free (United Kingdom): 0808-101-2791