Gold price ahead of the Thanksgiving weekend
During this period, gold is usually just before forming a short-term top and starting the biggest decline within the final quarter of the year.
Just prior to the market closing this afternoon, Mexican gold developer, Torex Gold (TXG:TSX) announced a $125 million bought deal financing underwritten by BMO Capital Markets. The deal is for units at $1.20 per unit consisting of one share and 1/2 warrant exerciseable at $1.50 for 6 months. This brings the company closer to fully funding the $552-$675 million (Feasibility Study). The company completed a $380 million equity financing in October 2012 and signed an engagement letter for a $250 million credit facility.
BMO Capital Markets also underwrote their $380 million bought deal in October at a price of $2 per unit. The engagement letter was expected to be converted to a definitive agreement by the third quarter of 2013 (then moved to year end 2013, but still no word). I would suspect it is contigent upon permitting clarity (due diligence) as well as an adequate equity portion, which now may have been met. If the company is able to prove it can finance El Limon and Guajes now, then the stock would benefit.
The first of their two projects, El Limon and Guajes project, is slated to start in Q1/2015 at 128,000 ounces of gold and ramping up to 375,000 per year by 2017. Net of silver credits, cash costs are expected be roughly $421 per ounce LOM. At $1276 per ounce gold price, the post-tax NPV(5%) is $900 million with a payback of 3.6 years.
The company is continuning to aggressively spend on exploration especially in its next mine, the Media Luna and Media Luna West projects. Media Luna currently hosts 5.84 million ounces of gold at ana verage grade of 4.55g/t gold.
By the end of September 2013, the company had $272 million in cash and spent roughly $15 million per month in the first nine months of the year. With the proceeds of this latest equity financing, the company is likely sitting on $350-$365 million in cash.
Here’s the five-year chart:
Read: Torex Announces C$125 Million Bought Deal Financing
