en.Wedoany.com Reported - Torex Gold Resources expects first production from its Media Luna Norte project in Guerrero State, Mexico, by the end of 2026, as part of the company's strategy to boost overall output at its Morelos Complex.
The Canadian miner invested $26.7 million in the project during the first half of the year, including $12 million in the second quarter. The company said development of the main access ramp and haulage drift is progressing well, with work advancing on primary access routes and haulage infrastructure. CEO Andrew Snowden stated that project development is on track, with Media Luna Norte set to achieve first production by year-end, while the company maintains its drilling program to expand reserves at the Morelos Complex.
The Morelos Complex currently includes two operating units: Media Luna and ELG Underground. In the second quarter, the miner produced 96,297 ounces of gold equivalent, bringing first-half cumulative output to 197,171 ounces. Torex maintains its 2026 production guidance of 420,000 to 470,000 ounces of gold equivalent, expecting a significant increase in second-half output as it enters higher-grade zones at Media Luna and ELG Underground. July achieved monthly production of 43,431 ounces of gold equivalent, including 32,898 ounces of gold.
In terms of mining rates, Media Luna averaged approximately 7,700 tonnes per day in the second quarter, while ELG Underground averaged 3,000 tonnes per day. The processing plant operated above its design capacity, averaging 10,793 tonnes per day during the period.
Cumulative non-sustaining (non-recurring) capital expenditures for Media Luna Norte over the first six months totaled $26.7 million, compared with $8.5 million in the same period of 2025, with second-quarter spending of $12 million and an additional $2.9 million allocated to project drilling. Looking at the broader capital program, Torex's total capital expenditures in the first half amounted to $110.3 million, versus $224.3 million in the year-ago period, of which $53.3 million was sustaining capital, $23.1 million was directed to the Media Luna project, and $26.7 million to Media Luna Norte.
On cash flow, the company generated $94.2 million in free cash flow in the second quarter and $251.5 million in the first half, despite a $39.3 million payment for Mexico's 2025 employee profit-sharing plan during the quarter. As of the end of June, Torex held $169.4 million in cash, with $336.9 million available under its $350 million credit facility, bringing total available liquidity to $506.3 million. In July, the company amended the credit facility, extending the maturity date by one year to June 2030 and retaining a $200 million accordion option.
The expected production expansion in the second half is also intended to offset cost pressures. All-in sustaining costs (AISC) were $2,459 per ounce of gold equivalent in the second quarter, compared with $1,917 per ounce in the first quarter. Torex attributed the increase to lower grades, higher reagent costs, and a stronger Mexican peso. The company raised its full-year AISC guidance from $1,750–$1,850 per ounce of gold equivalent to $2,000–$2,100, stating that the anticipated production growth in the second half should benefit costs, though some pressure is expected to persist.
On exploration, Torex increased its 2026 drilling and exploration budget from $77 million to $85 million, primarily to evaluate the southern and eastern extensions of the Media Luna deposit within the San Miguel corridor. The company plans to drill an additional 13,400 meters in the southern and eastern extensions of Media Luna this year, targeting resource expansion, with an update expected in March 2027. At Media Luna Norte, drilling continues to de-risk the anticipated production start-up and assess deeper extensions.
Morelos' performance has also enabled Torex to advance another Mexican project. In July, the company submitted a preliminary economic assessment for Los Reyes in Sinaloa State, projecting a post-tax net present value of $1.491 billion, an internal rate of return of 37.3%, and initial capital of $515 million. Torex expects to complete a pre-feasibility study for Los Reyes by the end of 2027, with initial capital fully funded by cash flows generated from the Morelos Complex.
With Media Luna Norte coming on stream at the end of 2026, Torex aims to sustain growth at Morelos while capitalizing on expected higher grades in the second half. Snowden stated that mining and processing rates continue to exceed design levels, with anticipated production increases in the coming quarters, and with Media Luna Norte and Los Reyes advancing as planned, the company will deliver very strong results in the second half of the year.
