CA - Torex Gold Resources Inc. (TORXF) Q2 2023 Earnings Call Transcript
2023-08-04 13:13:09 ET
Torex Gold Resources Inc. (TORXF)
Q2 2023 Earnings Conference Call
August 03, 2023, 09:00 AM ET
Company Participants
Dan Rollins - Senior Vice President, Corporate Development and Investor Relations
Jody Kuzenko - President and Chief Executive Officer
Andrew Snowden - Chief Financial Officer
Dave Stefanuto - Executive Vice President, Technical Services and Capital Projects
Conference Call Participants
Wayne Lam - RBC
Don DeMarco - National Bank Financial
Eric Winmill - Scotiabank
Presentation
Operator
Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources Inc., Second Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask the questions. [Operator Instructions]
I would now like to turn the conference over to Dan Rollins, Senior Vice President, Corporate Development and Investor Relations. Please go ahead Mr. Rollins.
Dan Rollins
Thank you, operator, and good morning everyone. On behalf of the Torex team, welcome to our Q2 2023 conference call.
Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website at www.torexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed cautionary notes on Page 2 of today's presentation, as well as those included in the Q2, 2023 MD&A.
On the call today we have Jody Kuzenko, President and CEO; Andrew Snowden, CFO; as well as Dave Stefanuto, Executive Vice President, Technical Services and Capital Projects. Following the presentation, Jody, Andrew and Dave will be available for the question-and-answer period. This conference call is being webcast and will be available for replay on our website.
Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on SEDAR. Also note that all amounts mentioned in this call are U.S. dollars unless otherwise stated.
I will now turn the call over to Jody.
Jody Kuzenko
Thank you, Dan, and good morning to all on the line. Welcome to the Torex Gold Q2, 2023 results call. I'll open my remarks by saying that we are at the halfway mark in the year and we're where we wanted to be. Opening highlights include, first, production is tracking nicely to the midpoint of the guided range. Second, development of Media Luna is on schedule and on budget with 18 months left to go in the project build and third, exploration drilling continues to demonstrate the potential for reserves and resource growth on both sides of the Balsas river.
In terms of the agenda for the call, it will be the same as usual. I'll provide a brief reminder of the strategic pillars that continue to frame our execution plans. Then I'll step you through the key business and operational highlights specific to the second quarter, then over to Andrew, who will provide a review of the financial results. Then Dave who will provide a progress update on Media Luna. I'll then make some closing remarks and hand the call over to the operator for the question-and-answer period.
Starting here on Slide 4, a quick review of our strategic pillars that set out the five key areas of focus as we make our way through 2023. On optimize and extend ELG, the recently released drill results from the ELG underground highlight the potential to replace reserves again in 2023, while also growing resources across multiple deposits, which bodes well for the future reserve growth and our plans to fill the mill post 2027.
In addition to future considerations, if we look at today's performance, we've been successful in increasing mining rates in the ELG underground, setting yet another quarterly production record with Q2 performance. On derisk and advance Media Luna, the project is tracking to schedule and budget. We passed the 4.5 kilometer mark in the Guajes Tunnel and executed purchase orders for the entirety of the underground mining fleet. Additionally, we recently awarded the contract for the underground construction and vertical development scopes. This contractor is now mobilizing the site.
On Grow Reserves and Resources, our 2023 exploration and drilling program is tracking nicely to plan and we expect to release the first set of infill and step out drilling results from EPO in the coming weeks. We're excited about the potential to develop yet another mining front at EPO, which will also support our plans to fill the mill with higher grade feed beyond 2027.
On prudent Capital Management, we remain in a solid position to fund the development of Media Luna. As at the end of the quarter, we had $606 million left to spend on the project against available liquidity of $527 million.
And lastly, on ESG Excellence, in May, we published our 8th Annual Responsible Gold Mining Report outlining the excellent work accomplished in 2022 on matters of safety, environment, community and climate.
Turning now to Slide 5, we produced over 107,000 ounces in the quarter, placing us at 230,000 ounces through the first half of the year. So we're in a solid position to achieve full year production guidance at this point as we do that it will be the 5th year running. The lower production quarter-over-quarter was expected and reflects where we are in the sequencing of our pit. With the depletion of the Guajes pit in May and the ongoing focus on waste stripping at El Limón, we were processing a much greater proportion of lower grade stockpile material in the quarter. The focus on waste stripping will continue through much of Q3 before ore production ramps back up in Q4.
On financials, the impact of the stronger Mexican peso and focus on waste stripping is reflected in total and all-in sustaining cash costs, which were above the upper end of the guided range for the quarter, and the team is working hard to bring that into the guided range for the full year. Cash flow from operations was $90 million. This includes $17 million of tax payments and the annual PTU payment of $30 million, PTU being the Mexican legislative employee bonus. With spending of $77 million on the Media Luna project during the quarter, we closed Q2 with $285 million of cash on hand and available liquidity of $527 million.
A note here on the liquidity. Our liquidity position will be enhanced over the coming days as we're in the final stages of amending our credit facilities, which will extend the maturity date of our facilities by one year to 2026 and increase the total boring opacity by an additional $50 million. The amendment was always part of our plan as we did not want to be overly focused on paying down debt in the same year we were ramping up production from Media Luna. Overall, the improved financial flexibility reflects, I think, the strength and confidence of our lenders in our underlying business.
Turning now to some operational highlights on Slide 6. You can see there in the top left that shows the quarterly production I've already discussed. The dip there in Q2 should be read in conjunction with the graph on the bottom left on grade. You can see that process grade was down as a result of processing a greater portion of stockpiled material given the sequencing of the open pits.
The top right, and I don't want this to be overshadowed by the grade story, the processing plant team set a new quarterly milling record of 13,293 tons per day driven by ongoing process improvement and maintenance practices. And finally on the bottom right, you can see we also delivered another record quarter on the underground mining front, hitting more than 1900 tons per day and closing in on our targeted rate of 2000 tons per day by the end of 2024.
Moving to Slide 7 to the overview of our annual guidance, we're well positioned for another successful year. On the production front, we're tracking towards the midpoint of the guided range with quarterly production in the second half expected to mirror that of the first. Total cash costs and all-in sustaining costs are tracking towards the upper end of the guided ranges given the focus on waste stripping and the stronger Mexican pesos. Like production, we expect quarterly TCC and AISC to mirror quarterly costs in H1.
On the capital front, sustaining capital expenditures are on track for the full year with capitalized stripping expected to remain elevated through much of Q3 before dropping off in Q4 as we move out of the period of higher stripping at El Limón.
And finally, you can see here how we're tracking on Media Luna CapEx with $144 million spent through the first half. While spending on Media Luna is expected to increase in H2, the lower level of spending in H1 has this tracking towards the lower end of the guided range. The lower spending is not expected to impact overall timeline and any capital not incurred in 2023 will be incurred in 2024.
Turning now to Slide 8, we're excited about the success we're having at the ongoing drilling program at ELG underground. We see potential here to extend the life of this mine well beyond the current reserve life of 2026. At El Limón Sur Deep, the top right in the section view on this slide, drilling returned multiple high grade intercepts including 88.9 grams per ton gold equivalent over 14.5 meters and 11.2 grams per ton gold equivalent over 29 meters. So they're pretty exciting. These two notable holes in addition to what else we're seeing here, validates the high grade nature of the feeders in this area of deposit, but also demonstrates the potential for ongoing resource growth at depth.
At Sub-Sill South, drilling encountered mineralization down to the 400 meter elevation which is 125 meters below the lowest resources at Sub-Sill and some 275 meters below ELD. In addition, follow-up drilling 100 meters to the West of El Limón Sur Deep continues to highlight the potential for another new zone of underground mineralization. Clearly plenty of upside here and we're very excited about the long-term prospects of ELG underground.
Next up on the exploration front will be a release detailing initial results from the 2023 program at EPO. That's on the South side of the river and it's focused on upgrading additional inferred resources to the indicated category and growing the overall size of the resource envelope. We expect to release these results in the coming weeks.
Turning now to Slide 9 for a quick point on ESG. In May we published our 8th Annual Responsible Gold Mining report, which details the great work our team does at site, on community relations, Environmental Protection and most importantly safety, the safety of our employees and our rapidly expecting contractor base with now over 1200 people working on the Media Luna project. Our performance on safety is reflected on the bottom left of this slide. Our lost time injury frequency at quarter end remains at an industry leading 0.58.
I'll now turn the call over to Andrew to speak to the quarterly financial performance.
Andrew Snowden
Okay, thank you Jody and good morning everyone. Q2 was another financial quarter delivered to plan here at Torex with the expected lower head grade due to a greater proportion of stockpiled material processed and higher stripping at El Limón pit pushback resulting in an increase in costs as compared to Q1.
In addition, the strength in the Mexican peso I highlighted in our Q1 earnings call did extend through Q2 and so we are continuing to see this put pressure on costs. Year-to-date, the peso has averaged a rate of about 18.2 to US$1 and that compares to the rate we've budgeted which was at 20 to 1. Year-to-date through to the six months to June, this has had an impact of approximately $10 million on operating costs or approximately $45.00 an ounce.
As a reminder, on an annual basis, each 1 peso variance in the exchange rate will have about a $10 million impact on operating costs.
As I've shown here on Slide 11, these operational and foreign exchange factors combined have resulted in Q2 total cash costs of $848 an ounce, all-in sustaining costs of $1308 an ounce and adjusted EBITDA of $106 million. And given the continued focus on waste stripping through Q3, we expect costs and EBITDAR in Q3 to be comparable to those reported in Q2 before then improving in Q4. With the potential ongoing strength of the Mexican peso, I expect this will continue to put some pressure on costs and we'll put this up your upper end of the guided range for both total cash costs and all-in sustaining costs for the full year.
Finally, on this slide, just commenting now on free cash flow, which is shown in the bottom right quadrant of the chart, we reported a $37 million free cash flow deficit during the quarter and this reflects the annual PTU or employee profit sharing payment, which was $30 million and that's paid in May of each year and also the free cash flow is impacted by the increased spending on capital. Specifically the spending on Media Luna increased by $11 million in the quarter to $77 million with further increases forecasting Q3 and Q4 which based on spending to date I expect this will bring us to the lower end of the guided Media Lunar capital range for 2023.
Turning now to Slide 12, you can see a summary of our unit cost performance. Despite the ongoing pressure from the stronger Mexican peso, mining costs are tracking well and been generally in line with the costs achieved in 2022. In the open pits, the improved productivity has helped offset peso pressures, with unit costs tracking in line with last year, whilst in the underground cost pressures have been more than offset by economies of scale given the increased mining rates achieved year-to-date.
At the processing plant, the increased costs relative to 2022 reflect the higher consumable prices we've flanked when we released our full year guidance at the beginning of the year, as well as the stronger the Mexican peso. While the stronger peso is putting upward pressure on costs, we are continuing to look for opportunities to reduce costs and this is something we've demonstrated our ability to do over the past few years.
Turning now to Slide 13, you can see here the $37 million in negative free cash flow we saw in the quarter led to our June 30th cash balance reducing to $295 million. Outside of our operating EBITDAR, the three key drivers behind this change in cash in the quarter, firstly and most significantly been capital spending where we invested $125 million in the quarter, which included $77 million at Media Luna, which is up from the $66 million in Q1.
Secondly, we paid the annual PTU or employee profit sharing as I mentioned with $30 million during the quarter and that's included at least on this chart within changes in working capital. And finally, quarterly tax payments were $17 million during the quarter, which is relatively in line with the $6 million to $7 million a month of tax installments I anticipate for the full year 2023.
Although the high tax and PTU quarters for 2023 are now behind us, we do expect quarterly free cash flow to continue to be negative for the balance of the year and into 2024 as media Luna capital continues to increase.
And turning now to Slide 14, you can see here that despite the increased capital spending in Q2, our balance sheet remains very strong and positions us well to fully fund Media Luna. We closed out the quarter with $285 million in cash and a further $242 million of available capacity on our credit facility and so a total of $527 million in available liquidity.
In addition to this available liquidity, we expect to close an amended credit agreement with our banking syndicate in the next few days which will extend the maturity of our revolving and term loan facilities by a year into 2026 and also increase the total capacity of the revolving facility by $50 million. In line with the extension, the drawdown date on the term facility will also be extended a year to the end of 2024.
On a pro forma basis, if we assume this was closed at June 30 th , this would have put our June 30th available liquidity at $577 million. And I think this additional credit capacity really reflects the strength of the underlying business and provides us with additional financial flexibility to support our strategic priorities.
And this is really demonstrated on the next slide here on Slide 15, where you can see how this liquidity well supports the remaining forecast capital expenditures on Media Lunar and our ability to deliver on our broader strategy by investing meaningfully in exploration and drilling while maintaining a strong balance sheet during the build period.
Including the additional $50 million of borrowing capacity on the revolving facility, we now estimate only $129 million of free cash flow needs to be generated from ELG over the next 18 months to fund our strategic priorities, which includes the $606 million of remaining Media Luna spend and maintaining $100 million of cash on the balance sheet.
This internal cash flow requirement of $129 million over the next 18 months compares with $220 million that we've actually generated from the ELG over the past 12 months and this supports our confidence in funding Media Luna internally.
Finally, now just an update on hedging and you can see here summarized on Slide 16, the quantity and price of gold hedges for the remainder of 2023 and 2024 remain unchanged and continue to provide effective support for the Media Lunar capital spend. We don't have any current intent to increase the gold hedging profile you see here on this slide further.
On these gold hedges, we generated a modest realized loss of $600,000 during the quarter, while the noncash gain of $50 million you'll see recognized on our income statement reflects the weaker forward prices that we saw at the end of the quarter.
I talked a little bit about peso cost pressures during the call today and I will note that we are continuing to assess options for foreign exchange hedging given approximately 45% of the remaining capital on Media Luna is exposed to movements in the Mexican peso. No final decision has been made there yet, but we plan to be -- and we plan to be opportunistic with the aim of minimizing any further downside risk while leaving the potential to benefit from weaker prices should the Mexican peso weaken relative to the U.S. dollar through the build period.
With that, I'll now hand the call over to Dave, who will provide an update on Media Luna.
Dave Stefanuto
Thanks Andrew. Slide 18 shows the progress at Media Luna after the first 15 months of a 33-month build period. The main take away is that the Media Luna project is tracking to budget and to schedule with the first concentrate production still anticipated in Q4 2024 and commercial production in early 2025. At quarter end the project was 35% complete across procurement, engineering, underground construction, development and surface construction, up from 24% at the start of the quarter.
Both engineering and procurement rates picked up as we issued a number of scheduled critical purchase orders such as a battery electric support equipment with MacLean and battery electric personnel transport vehicles with Rokion. Underground construction and vertical development contracts were awarded to Dumas with the various crews and now mobilizing to site. The award of the ball mill motors and variable frequency drives and additional electrical equipment including surface pad mounted transformers and switch gear.
Underground development kept pace during the quarter with 18 active headings. In Media Luna lower, the main spiral ramp, which will connect to the Guajes Tunnel, was completed. Development was prioritized at the South side to complete the underground excavation for the ore bins and the ore passes to support mobilization of the underground construction contractor. Delivery of the Guajes conveyor table segments commenced with the aim of installing the conveyor anchors and tables later this year.
On the North side of the Balsas River, civil works for the water treatment plant were completed, as well as rough grading for the 230 kilovolt substation. Extension of the main water management culvert below the area of the new flotation plant and copper concentrate storage facilities were significantly advanced, allowing remaining mass civil works to begin. Relocation of the power distribution and installation of new buried power conduits around the flotation plant are expected to be completed early next quarter, allowing preparation for the start of the plant concrete foundations. Additional camp modules to host project staff were also installed.
During the quarter, we invested $77 million in the project, resulting in the remaining expenditure of $606 million over the next 18 months. As of quarter end, 45% of the upfront project expenditures have been committed, including 31% incurred. While the level of spending is expected to increase in H2 given the lower spend rate through the first half of the year, we expect full expenditures to be towards the lower end of the guided range of $390 million to $440 million.
Slide 19 provides an update of the schedule of critical Guajes Tunnel. Based on the progress to date, we are on track for breakthrough of the Guajes Tunnel in early Q1 2024, if not earlier. At the end of July, the main Guajes Tunnel had advanced more than 4700 meters, having delivered an average daily advance rate of 6.9 meters per day since the start of the year.
South Portal Lower had advanced over 2100 meters with the main spiral ramp being completed. Our crews will now begin to progress from South to North in the Guajes Tunnel. Prioritization for development on the South side has been given to the mass excavations related to the ore and waste handling systems. This will ensure development remains well in advance to the requirement for our underground construction contractor. Given the rates we've experienced to date, we gradually recovered lost time due to earlier delays related to challenging ground conditions in the South Portal Upper and Lower.
Turning to Slide 20 and some recent pictures of the project. On the top left you can see the earthworks related to the sedimentation and decant ponds located outside South Portal Lower. Work on the ponds has accelerated with completion of the access road slope stabilization work. The middle top picture is the new security building, while at the top right you can see breakthrough of the West adit vent tunnel which is located towards the top of the Media Luna deposit. At the bottom left you can see the civil works being carried out to expand the pad for the MML camp which has significantly -- which was significantly completed in July and in the bottom right you can see the copper flotation cells arriving at site.
With that, I'll now turn the call back over to Jody.
Jody Kuzenko
Thanks Dave. Just by way of wrap commentary here, we're well on track to deliver another solid year in 2023. Production is tracking towards the midpoint of the guided range. Development of Media Luna is tracking the budget and schedule and our exploration drilling continues to demonstrate the underlying resource potential of the entire Morelos property. With the strong balance sheet, robust financial liquidity, we think we're well positioned to fund our strategic priorities, which when you combine that with the execution capability of this team that just continues to show itself quarter-after-quarter, we anticipate that will lead to further rerating of the company's share price and create value for everyone who believes in us.
With that, I'll pass the call over to the operator for the Q&A.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] The first question comes from Wayne Lam with RBC. Please go ahead.
Wayne Lam
Yes, thanks. Good morning everyone. Just a quick question that ELG on the underground mining rates, the prior commentary had mentioned exiting the year at 1800 tons per day, implying that there was still a ramp up period through the year. Obviously you guys have well outperformed that. Given the 1900 tons per day achieved in the quarter, I just wanted to clarify if we should be modeling 1800 as an average for the full year or if that bar should now be set to exiting the year at the higher 2000 ton per day target that you guys had set for 2024?
Jody Kuzenko
Yes. That's a good question, Wayne. And the reality is, is that the performance you see in ELG underground shows our ability to flex plans from an execution perspective as the business needs require. So as the mining sequence shaped up in Q2 and in Q3, we're really pushing hard in the underground to beat that 1800 tons per day. So you can expect a performance in Q3 that's either similar or greater to that you saw in Q2 and then it will come off again in Q4.
What we're doing, we don't want to push so hard that we deplete reserves so quickly and so we're trying to balance the push on the underground with what we're seeing in the pits to deliver on our overall commitments. And so I think probably a safe modeling number is in the 1900 ton per day range for the balance of this year recognizing that Q3 will be high and then we're looking to step that up one more step in the performance next year.
Wayne Lam
Okay, great. Thanks and good to see the result. Maybe moving to Media Luna, I think you guys had mentioned the 45% CapEx exposure to the Mexican peso. I guess the peso has moved nearly 3 points from the 20 to 1 using the feasibility study. And just wondering if you might be able to provide an estimate for what kind of impact that's had on the project given that that's nearly $400 million exposure on the 875 estimate or what kind of sensitivity the CapEx has around that FX rate?
Andrew Snowden
Yes, Sure. Wayne, it's Andrew here. I'll take that question. So the way I'll think about that sensitivity Wayne, would be for every kind of 1 peso movement in the exchange rate that would impact our project capital by about $15 million for the full project life through until the end of 2024. So obviously there has been some of that would have been realized in the expenditure that has been incurred to date. I'd probably say maybe it's around $5 million of that incremental pressure that's been realized within our capital spend through to the end of June, but then looking forward for the rest of the project, that $15 million sensitivity per peso, I think is a reasonable assumption to take.
Wayne Lam
Okay, great. Thanks for that detail. And then maybe just last one on the facility, how does the refinancing tie in with the sustainability linked loan? Just wondering if those are mixed together or if they're two completely separate? And then just given the lower spend anticipated this year and the strong cash balance you guys currently have, when do you guys anticipate the first drawdown on the facility? Is that kind of well into next year?
Andrew Snowden
Yes. So and I'll take those questions again, Wayne. So on the facility, this new facility or this amended and upsized facility and extended facility is exactly the same as the sustainability linked loan. So this is the sustainability linked loan. Those KPIs which have about 5 basis point impact we talked about last quarter are captured within this loan facility. And so it's just that same loan facility that's been extended to our total credit capacity. And once this gets closed and the next few days will be that $300 million I refer to in my commentary.
In terms of kind of timing on drawdown, I don't expect there will be drawing down on the facility this year. With the extension of the facility, we now have until the end of next year to draw down on the term loan, so that's helpful. Previously we would have had to draw on it this year otherwise that availability would have fallen away. My current projections are that we won't need to draw on that until at some point in the first half of next year.
Wayne Lam
Okay, perfect. That's all from me. Thanks for taking my questions.
Operator
The next question comes from Don DeMarco with National Bank Financial. Please go ahead.
Don DeMarco
Thank you, operator, and good morning, everyone. The last caller talked about mining rates. I have a question about throughput. I see congratulations on this record throughput in the quarter. Can you comment on the drivers of this trend seems to be upward and is it sustainable at the Q2 level or what should we expect going forward?
Jody Kuzenko
Thanks for the question Don. The driver of this is really two-fold, one opening up more headings and have plenty of places to work in active mining fronts and two, really working on utilization of the existing mining fleet. Some time ago we took the scope on managing the mining fleet from our underground mining contractor and are doing that ourselves. Two drivers there, one is efficiency and the other is cost. And so I think those two things taken together really contributed to the increased mining rates.
Don DeMarco
Okay, great. Great to see that. And then I saw that you drew on stockpiles and then the average gold grade was a little bit lower in the quarter. Going forward, would you anticipate additional draws on stockpiles or was that something that was more of a Q2 only item?
Jody Kuzenko
Yes, I think you can expect to see Don, the continued draw on stockpiles through Q3 and then as we complete the aggressive stripping phase at El Limón and get to ore in the latter part of Q3 and into Q4, we'll pull off stockpiles and head to or at El Limón in Q4. So think about Q3 is looking a lot like Q2 and then Q4 is looking a lot like Q1.
Don DeMarco
Okay, thank you. And as a final question, we know that Torex challenged the mining law reforms and challenged the unconstitutionality of it. And as I understand, there's no immediate or anticipated impact to Torex, but can you give us an update on this process and what the next steps and timing might be?
Jody Kuzenko
Sure, happy to. I'll give you just a brief overview. As you can imagine, there's lots of moving pieces here and quite a bit of detail. Torex did file something called an Amparo to challenge the totality of the mining laws. And in Mexico the way it works, if the view is that the laws are unconstitutional, there isn't a single challenge on those. They're done on a owner by owner or company by company basis. Many of our peers in Mexico have also filed a similar challenge. The way the process works is that the case is adjudicated on the merits in terms of interim relief and then final relief. We've now been granted some interim relief on the Amparo. The state has appealed that.
So that continues to wind its way through the court system. In the meantime, while this gets resolved and addressed through the judicial process, there's also political process ongoing where the opposition parties have challenged the mining laws. So that's happening in a parallel path. In the meantime, Torex carries on business as usual. To date, we haven't seen any impact to the operations and quite frankly with our relationships with the regulators and the maturity of our permitting and our operations, we don't expect to in the interim.
Don DeMarco
Okay, great. Well, thank you for that and certainly good luck to that, to you, both of you and all your peers. That's all from me.
Jody Kuzenko
Thank you.
Operator
[Operator Instructions] The next question comes from Eric Winmill with Bank of Nova Scotia. Please go ahead.
Eric Winmill
Hi, good morning to everyone here. Thanks for taking my question. Just a quick question on the drilling here at ELG, just wondering if you could elaborate a bit on the plans going forward and obviously some pretty decent hits. What do you still see in terms of getting that into the mine plan or how much drilling is needed there? Thanks.
Jody Kuzenko
Yes, I'll take that one Eric. We have $6 million in the budget allocated to ELG Underground this year. We're about halfway through that. We like what we're seeing down deep. We like what we're seeing to the West of El Limón Sur. We haven't yet pulled together our mine plans for 2024. We're in the midst of doing that. But early projections at least from my perspective, one of the things I like about what we're seeing is the elevated copper numbers over to the areas at El Limón Sur and El Limón Sur West and that should dovetail nicely with us having landed the copper flotation circuit as part of the Media Luna project.
So not only are we seeing increased life there and increased availability of product production, what I see there is the potential for increased margins because we now have the potential, we now have the processing capability to make money off of what we're seeing down there. So down deep over to the West, we're pulling the mine plans together and the margins look like they're going to be healthy.
Eric Winmill
Okay, great. No, that's super helpful. Thank you. And just another quick one from me, in terms of the in-pit tailings deposition, anything there or any sort of milestones or next steps we're looking for?
Jody Kuzenko
Yes, I'll take that one. We have gone to some extra steps here to have a very detailed thoroughly complete technical permit application. We're now in the final stages of pulling that together. We expect to file that application in August. So imminently. And just as a reminder to everyone on the call, we have plenty of time to discuss and land that in-pit tailings deposition permit. We have capacity in our existing filter tailing storage facility out to 2026. That's by design to give ourselves plenty of time to lend that permit and events of when we need it.
Eric Winmill
Okay, fantastic. Thanks so much for the added color and congrats on a good quarter.
Jody Kuzenko
Thanks, Eric. I appreciate it.
Eric Winmill
Thanks.
Operator
As there appears to be no more questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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Torex Gold Resources Inc. (TORXF) Q2 2023 Earnings Call Transcript