Torex Gold Resources (TSE:TXG) reported a 37% quarter-over-quarter increase in production in the third quarter of 2026, as higher grades and improved gold recovery boosted margins and cash flow at its Morelos complex.
Production rose to 132,000 ounces, while all-in sustaining costs fell 27% to $1,803 per ounce, President and CEO Andrew Snowden and CFO Dan Rollins said on the company’s earnings call. Free cash flow increased to $150 million from $94 million in the second quarter, and adjusted EBITDA rose to $344 million from $204 million.
The company returned $95 million to shareholders during the quarter and ended September with $226 million in cash. All amounts discussed on the call were in U.S. dollars unless otherwise noted.
Production and cost outlook
Torex maintained its full-year production guidance of 420,000 to 470,000 ounces. Through September, it had produced approximately 329,000 ounces, or 74% of the guidance midpoint. Year-to-date all-in sustaining costs were $2,025 per ounce, within the company’s $2,000 to $2,100 guidance range.
Snowden said planned mine sequencing moved operations into higher-grade stopes during the quarter. The average mined grade across Morelos rose to approximately 4.6 grams per ton of gold equivalent from 3.7 grams in the second quarter. Gold recovery improved by 2.8 percentage points to 88%, while copper recovery was approximately 95%.
Snowden expects grades in the fourth quarter to remain around third-quarter levels. For 2027, he said production and grades should be more stable than in 2026, when the first half had lower grades than the second. He suggested quarterly production of 110,000 to 115,000 ounces as a benchmark at current plant throughput levels.
Rollins said 2027 all-in sustaining costs are expected to remain relatively consistent with 2026 guidance. He cited pressure on consumable prices, higher sustaining capital spending associated with the startup of Media Luna North and additional equipment, and projects to support greater plant throughput.
Cyanide consumption declined moderately in the third quarter but remained above budget. Snowden said current consumption was a reasonable placeholder for at least the next 12 months as Torex works to balance costs and recoveries.
Plant expansion and mine development
Torex plans to begin debottlenecking its processing plant in the first quarter of 2027. The work is expected to increase capacity to approximately 12,000 tons per day at a plant capital cost of about $5 million. Third-quarter throughput averaged 10,800 tons per day.
Snowden said the project would address a bottleneck in the cyanide destruction circuit through operating changes and equipment updates, including pipes and pumps. He expects the work to be completed by the end of 2027, with a full-year benefit in 2028. The company estimates the project could add approximately 50,000 ounces of annual production, depending on throughput, grade, recovery and feed availability.
A larger proposed expansion would add flotation capacity and supporting equipment, raising plant capacity to 14,500 tons per day. The plant expansion is currently estimated at about $100 million and could add a further 100,000 ounces annually, subject to the same operating factors. Torex expects to make a decision in the first quarter of 2028, after more drilling at the San Miguel corridor.
Additional investment could be needed to supply the expanded plant with underground material. Snowden estimated about $50 million for expanded underground material handling and a conveyor motor change. Rollins said a new mining front could also be needed; accelerating Media Luna West, for example, might require an additional $100 million to $150 million, though the development approach depends on drilling results.
At Media Luna North, first ore remains on track for late 2026. Snowden said the mine is expected to average approximately 1,000 tons per day in 2027 and finish that year near 1,400 tons per day, before ramping toward its 2,300-ton-per-day design capacity in subsequent years.
Cash flow and shareholder returns
Rollins said fourth-quarter operating and free cash flow will be lighter because of payment timing on Torex’s first direct concentrate sale to a smelter. The company expects to recognize revenue in the fourth quarter but receive payment in the first quarter of 2027, resulting in an estimated $120 million accounts receivable build at year-end.
Through September, Torex returned $271 million to shareholders, or 77% of its $350 million target for 2026. That included $239 million in share repurchases and $32 million in dividends. The company had repurchased approximately 4.9 million shares at an average price of just over 67 Canadian dollars per share.
Exploration and other projects
Snowden said drilling to date supports the potential for a mineralized corridor extending at least four kilometers westward from Media Luna toward Media Luna West. Torex intends to announce a maiden resource estimate for San Miguel in the first quarter of 2028. Snowden described the corridor as having potential for a multi-million-ounce gold-equivalent deposit, while noting that further drilling is needed.
At Los Reyes, Torex is targeting a pre-feasibility study for late 2027. Snowden said six rigs were active and nearly 100 people were on site. He added that conditions in the project’s area of interest had remained calm during the third quarter after security challenges kept the company off site until May.
Torex is also progressing a planned New York Stock Exchange listing, subject to exchange approval and listing conditions.
About Torex Gold Resources (TSE:TXG)
Torex Gold Resources Inc is a Canadian mining company engaged in the exploration, development, and production of gold, copper, and silver from its flagship Morelos Complex in Guerrero, which is currently Mexico’s largest single gold producer.
