Torex Gold Resources Aktie

Hello, and welcome to the Annual and Special Meeting of Shareholders of Torex Gold Resources Inc. Please note that today's meeting is being recorded.

If you participate in today's meeting and disclose personal information, you'll be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you'll be deemed to represent and warrant to Computershare and the company that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure.

During the meeting, we will have a question-and-answer session. [Operator Instructions]

It is now my pleasure to turn today's meeting over to Mr. Rick Howes, Chair of the Board of Directors. Mr. Howes, the floor is yours.

Thank you. Good morning, ladies and gentlemen, and welcome to the Annual and Special Meeting of Shareholders of Torex Gold Resources Inc. I'm very pleased to be here today. With me in attendance today are Jody Kuzenko, in her last engagement as President and Chief Executive Officer; and Andrew Snowden, Chief Financial Officer, who upon completion of today's meeting will assume the role of President and CEO as Jody enters retirement. Also in attendance are Adam Segal, the company's General Counsel and Corporate Secretary; Daniel Ricica, Audit Partner with KPMG, the company's auditor.

We will begin with the formal part of the meeting, and then I will make a few closing remarks. As this meeting is being held virtually via a live webcast, it is necessary to set out a few rules for the orderly conduct of the meeting.

Questions on a motion can be submitted by any registered shareholder or duly appointed proxy holder by clicking on the Q&A icon on the virtual interface at any time. When you submit a question, the system will include your name, which entity you represent, if any, and whether you are a registered shareholder or a duly appointed proxy holder in the message that is sent to us. Questions about procedural matters or directly related to the motions before the meeting may be addressed during the meeting.

If you have already voted by submitting your proxy form or voting instruction form in advance of the meeting, it is not necessary for you to vote again today. Voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item and a short time will be provided to finish recording your votes after the presentation of all business items.

When the polls open, click on the Vote icon to register your vote. You will only have a certain amount of time to vote when the polls are open. In our capacity as shareholders in attendance at this virtual meeting to expedite the formal business, I will move and Mr. Segal will second all motions.

We will now proceed with the formal portion of today's meeting.

I now ask the Annual and Special Meeting of the Shareholders of the company come to order and I appoint Adam Segal as Secretary of the meeting. For the purposes of this meeting, I appoint Computershare Investor Services Inc. through its representatives as scrutineers to tabulate the votes of the polls taken at this meeting and to report on the results.

The matters to be considered at today's meeting are set out in the management information circular of the company dated May 6, 2026, which I will simply refer to as the circular.

The notice calling this meeting, the circular, and a form of proxy were delivered to the shareholders via notice and access notification that was mailed on or around May 14, 2026. A copy of the circular and other meeting materials are available under the company profile on the SEDAR+ website and on the company's website. The audited consolidated financial statements in the company for the fiscal year ended December 31, 2025, and related MD&A were filed on SEDAR+ and posted on the company's website. A copy was also mailed to anyone who requested the financial statements and related MD&A.

Unless there is any objection, I will dispense with the reading of the notice of meeting.

Computershare has attested the proper delivery of the notice calling this meeting. Proof of service of such delivery has been provided to me by Computershare. I direct that a copy of the proof of service be attached to the minutes of this meeting as a schedule.

A quorum for the transaction of business at this meeting is 2 persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy holder holding or representing, in the aggregate, not less than 25% of the issued voting shares of the company. I've been advised that the quorum requirements have been met, and I declare that this meeting is properly called and duly constituted for the transaction of business.

I have received the scrutineers' report, and I direct that their formal report be attached to the minutes of this meeting as a schedule.

As we mentioned, voting today will be conducted by electronic ballot. Polls are now open. And at this point, all registered holders and duly appointed proxy holders who have properly logged in with their control number or invite code will be able to register their votes by clicking on the Vote icon.

We will now discuss each item of business on the agenda for today's meeting.

As the first item of business on the agenda, I now present to the meeting the audited consolidated financial statements of the company for the fiscal year ended December 31, 2025, together with the auditor's report to the shareholders. As I mentioned earlier, copies of these documents were mailed to the shareholders who requested them, and they are available on the company's profile on the SEDAR+ website.

We do not propose to read them to the meeting and no vote is required on them. Any questions relating to or discussion of the company's audited financial statements and auditor's report will be deferred until the question-and-answer period at the conclusion of the formal part of today's meeting.

The next item of business is the election of directors. The company did not receive notice of any other director nominations in connection with the meeting in accordance with its advance notice bylaw. Accordingly, the only persons eligible to be nominated for election to the Board of Directors of the company are the following nominees who were named in the circular.

I therefore move that each of the following nominees be elected as a director to serve until the close of the next Annual Meeting of Shareholders: Richard Howes, Andrew Snowden, Caroline Donally, Jennifer Hooper, Jacques Perron, Jay Kellerman, Rosie Moore, and Rodrigo Sandoval.

I second the motion.

The next item of business is the appointment of auditors of the company. I move that KPMG LLP, Chartered Professional Accountants, be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their compensation.

I second the motion.

The next item of business relates to changing the name of the company from Torex Gold Resources Inc. to Torex Resources Inc., which must be approved by not less than 2/3 of the votes cast at the meeting. I move that the approval of name change resolution, the full text of which is set forth on Page 10 of the circular, be approved.

I second the motion.

The next and final item of business is the approval of the company's approach on executive compensation, often referred to as Say on Pay advisory resolution. I move that the Say on Pay advisory resolution, the full text of which is set forth on Page 10 of the circular, be approved.

I second the motion.

Are there questions on any of the motions before the meeting?

As there are no questions, we will move on to vote. If you haven't voted already, please register your votes by clicking on the Vote icon and select the For or Withhold buttons next to the name of each proposed director and next to the resolution for the appointment of KPMG as the company's auditors.

For the other items of business, the approval of name change resolution and the Say on Pay advisory resolution, register your votes by selecting the For or Against buttons next to the resolution.

We will provide registered shareholders and duly appointed proxy holders another 10 seconds to complete the electronic ballots.

[Voting]

The electronic balloting will now be closed. When the voting page indicates the resolutions are closed, the votes will automatically be submitted.

I have been advised that all of the resolutions have been passed. I ask that the scrutineer compile the report regarding the results of the voting on all business matters and the results will be published on SEDAR+ and by press release. I also direct that the results of the poll be included with the minutes of this meeting.

The formal items of business as set out in the notice of meeting have now been dealt with. And as there is no further business to come before the meeting, I declare the formal part of the meeting to be terminated.

But before we close the call, I would like to make a few remarks. Today, we say farewell to a very talented leader, Jody Kuzenko, who is retiring as President and CEO of Torex after 8 years of exceptional service. I want to thank Jody for her unwavering dedication to creating lasting value for our shareholders while fostering a resilient and values-driven organization. Jody's numerous contributions to Torex have been foundational and will continue to have a lasting impact on our business and our team. On behalf of everyone at the company, we wish her the very best in this next chapter.

As we say farewell to Jody, we welcome Andrew Snowden as the company's new President and CEO. Since joining Torex in 2021, Andrew has done an impeccable job as CFO and has played a pivotal role in the company's success. The Board has full confidence in Andrew and the executive team to lead the company through the next phase of continued growth and success.

In closing, I would like to thank you, our shareholders, for your continued support and trust in us and I want to reiterate our commitment to generating meaningful and sustained value for all who choose to invest in us. As shareholders, we have much to be proud of in the strong performance of the team we have entrusted to manage this business. And I would like to recognize the dedication and accomplishments of the entire Torex team. We continue to build a strong foundation for sustained growth in Mexico and beyond.

That concludes today's meeting. Thank you all for joining us.

This concludes the meeting. You may now disconnect.

Thank you for standing by. This is the conference operator. Welcome to the Torex Gold First Quarter 2026 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [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.

Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q1 2026 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. I'd 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 Q1 2026 MD&A.

On the call today, we have Jody Kuzenko, President and CEO; and Andrew Snowden, CFO. Following the presentation, Jody and Andrew 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 also been filed on SEDAR+. Also note that all amounts mentioned in this call are U.S. dollars unless otherwise stated. I'll now turn the call over to Jody.

Thank you, Dan, and good morning to everyone on the line. As this will be my final earnings call as CEO of Torex, I wanted to take a moment here to reflect on how the company has evolved since I joined back in 2018.

Back then, we were a single mine company with production from ELG and a mine life out to 2024. Media Luna wasn't yet in reserves, and we were facing a potential gap in production between the depletion of the open pits and the start of Media Luna Mining.

In the years since, we've extended the mine life of the open pits and systematically stepped up production from ELG underground to ensure stable production until Media Luna came online. We tunneled 7 kilometers underneath the river to connect to the south side of Morelos, we designed and built and successfully ramped up Media Luna ahead of schedule, and we now have steady production of gold, copper and silver coming from two mines with the third on track to come online later this year.

We've also invested meaningfully in exploration, adding 10 years of mine life at Morelos, now out to at least 2034, and we have a very clear line of sight to continue to extend mine life far beyond that.

From a financial perspective, we funded Media Luna of cash flow and a small amount of debt. Not even 3 quarters after starting up Media Luna, we are now once again debt-free and generating strong free cash flow, announcing a return of capital program for our shareholders for the first time in the company's history late last year and stepping that up even further with our results announced last night.

We've also expanded our portfolio with the addition of Los Reyes and 4 early-stage exploration properties, extending our footprint outside of Guerrero and venturing into Sinaloa, Chihuahua and the United States.

As I step into retirement here and Andrew takes the helm, I leave the company a place that I'm proud of and excited about the future under Andrew's leadership as the company continues to grow in Mexico and beyond.

Now getting into our quarterly results, turning to key highlights here on Slide 4. Finished production was lighter quarter-over-quarter due to mine sequencing at Media Luna as we mine through lower grade and lower recovery stopes per this year's mine plan. All-in sustaining costs of $1,917 per ounce were elevated, primarily as a result of the lower finished production, higher reagent consumption and stronger-than-expected Mexican peso. However, our financials remained very strong with a record AISC margin of 60% for the quarter as well as record quarterly revenue and adjusted EBITDA.

Despite $165 million of tax and royalty payments to government, we generated $157 million of free cash flow, enabling the full repayment of debt outstanding while also returning $121 million to shareholders through dividends and buybacks during the quarter.

Importantly, and critically, all of this success was accomplished safely. I am so pleased to say that our lost time injury frequency is once again 0 per million hours worked for both employees and contractors, just truly remarkable safety performance.

Full year guidance is outlined here on Slide 5, with a return to higher grades and recovery stopes planned in the second half of this year, production and costs are expected to strengthen accordingly. As such, we remain on track to achieve both production and cost guidance for the year. And I'd note here that Q2 production and costs are expected to be similar to those achieved in quarter 1.

Moving on to our operational performance on Slide 6. The processing plant was impacted by two extended periods of maintenance during the quarter. One was planned, and the other was unplanned when we went down in February to replace a faulty batch of bolts, which subsequently created issues with the discharge grades in the SAG mill. I'm pleased to say that following the repair, the plant has returned to operating above design levels. And in the month of April, we averaged over 11,400 tonnes per day.

Recoveries in the chart on the right reflect the lower recovery stopes that I mentioned and are expected to remain at current levels through quarter 2 before increasing in the back half of the year.

Mining rates at both Media Luna and ELG underground are ahead of plan, as shown here on Slide 7. At Media Luna, we were able to achieve consistent production at design mining rates of 7,500 tonnes per day. This is 9 months ahead of the schedule set out in the technical report and 3 months earlier than our latest forecast. This is due to how far advanced we were in capital development in 2025, which provided us the operational flexibility we needed. It's also due to the performance of the ore handling systems, including the Guajes Tunnel conveyor that the team got working very reliably, very quickly. At ELG underground, rates continue to deliver ahead of their targeted 2,800 tonnes per day, a trend we plan to continue until Media Luna North comes online in quarter 4 of this year.

Updates on our projects are summarized here on Slide 8. At Media Luna North, we continue to make excellent progress on the North adit breakthrough, which is on track for midyear. Once completed, ventilation fans will be installed, allowing access to the ore body for infrastructure construction to support first ore production.

We have also continued to progress on plan the main haulage ramp back to the existing Media Luna infrastructure with breakthrough on this ramp expected in late June. At Los Reyes, work on the preliminary economic assessment continues to progress is on schedule for completion midyear. The study is contemplating a combined open pit and underground mine with mill throughput of 5,000 tonnes per day. Our target is for production between 140,000 and 150,000 gold equivalent ounces per year with an initial mine life of at least 10 years.

Field work on site has not yet resumed at Los Reyes, but we continue to be in active discussions with all three levels of government and the local communities to create the conditions to safely and importantly, sustainably return to the area and resume work.

Finally, before I hand the call over to Andrew, I'll touch on the exploration results we shared last week, summarized here on Slide 9. In the Media Luna cluster, we're seeing strong potential to expand resources to the south and east of the mine with surface mapping suggesting potential continuity between these two zones. Additionally, infill drilling is being conducted at the mine to upgrade inferred resources to indicated with our year-end update with a target to offset depletion.

Drilling at Media Luna North has recommenced, targeting to expand resources even further to the north of the new mine, while drilling at Media Luna West will resume in the second half of this year, looking to build on the inaugural resource we declared in March of this year.

At ELG underground, following the discovery of mineralized structures running parallel to the El Limón Sur trend announced in May last year, we've continued to find more of these structures, which importantly remain open along strike and at depth.

We also continue to encounter mineralization beyond the boundary of known resources at Sub-Sill and El Limón West trends. All of this suggests that we've yet to fully unlock the full potential of ELG underground and expect another year of resource expansion and reserve replacement with our year-end update next March.

At our regional targets at Morelos, early drilling at Atzcala is giving us a better idea of the structural orientation of the Breccia bodies, while drilling at El Naranjo commenced last month. We look forward to sharing the results of these programs once they are available. With that, I'll hand the call over to Andrew to take you through financials.

Okay. Thank you, Jody, and good morning, everyone. And I'll start my commentary just turning first to Slide 11. And as Jody noted, our all-in sustaining costs for the quarter came in just above our guided range, largely due to lower production and a strong Mexican peso, also due to the impact that higher metal prices. Had on our royalties and profit sharing as well as higher reagent consumption required to process the lower recovery ore that, again, Jody mentioned.

Despite this, our margins remain robust at a record 60% for the quarter. And costs are expected to trend lower through the back half of the year as we return to higher grade and recovery stopes.

One area we've been seeing cost pressure is with the peso. As I mentioned, we have budgeted the year at an average exchange rate of 19:1 but averaged about 17.5:1 through the first quarter. With 50% of our operating costs peso denominated, we are sensitive to movements in the exchange rate. And in Q1, it added about $50 an ounce to our cost profile. We have placed further peso hedges now for both 2026 and 2027 to provide additional protection and to mitigate against these fluctuations, but we recognize this is a cost pressure we expect will continue for the foreseeable future.

Additionally, a number of our peers have seen cost inflation owing to higher diesel prices, and this has been a common question we've received from shareholders over recent months. And so I do want to just touch on this briefly.

Given our operations are now fully underground and the majority of our Media Luna fleet is battery electric, diesel costs only make up a small percentage of our cost profile. In addition, diesel is subsidized in Mexico and to date has only seen an increase of approximately 15% year-to-date. And so for context, if prices stayed at this level through the end of the year, we would see less than a $5 an ounce impact to our all-in sustaining costs.

Next, just talking briefly about free cash flow. You would have seen that we generated an impressive $157 million for the quarter, and that was after we paid $165 million of taxes and royalties in Q1. Our outlook for free cash flow remains very strong. And at current spot prices, we're forecasting approximately $650 million of free cash flow to be generated this year.

Turning next to Slide 12. You can see here this provides a breakdown of our cash flow for the quarter. Our adjusted EBITDA of $159 million was a quarterly record, of course, supported by high metal prices and record margins. And this allowed us to fully repay the outstanding debt accumulated during the Media Luna build while also returning $121 million of cash to shareholders through both the dividend and $111 million of share to share repurchases. And I'll speak more on our enhanced return of capital program that we announced last night momentarily.

Before we move off the topic of cash flow, though, just as a reminder to everyone of the cash flow seasonality we have, and you can see that here on Slide 13. I know as the group on the call are aware, Q1 is always our highest cash outflowing quarter of the year as we pay our annual true-up for taxes and royalties this year amounting to $165 million in total on account of higher metal prices we saw through the course of last year.

Q2 will see our annual Mexican mandated profit sharing payment, which we expect will be approximately $38 million this year. Q2 will also likely be impacted by lower sales compared to Q1, just given Q1 benefited from the sale of the inventory on hand at the end of the year. And as usual, we expect Q3 and Q4 to be the highest cash flow quarters of the year with these annual payments then fully behind us.

Next, just turning to Slide 14. You can see here an outline of our current liquidity position. And despite the significant tax and royalty payments that I mentioned as well as the return of capital program that we've been executing on, our cash balance grew quarter-over-quarter to $130 million, and we expect this to continue to grow over coming quarters and to at least our minimum balance of $200 million, which is our current target.

Following the repayment of the final $30 million of debt outstanding in January, we're once again debt-free and had available liquidity of $467 million at the end of Q1.

Next, just moving on to capital allocation. And you can see on Slide 15 that there are four key priorities for our capital allocation. These are all outlined here. Firstly, we're looking to continue to invest in our Morelos property to extend the production profile of the property, and that's supported by $45 million of drilling on the property for this year. We're also investing $100 million of capital to complete the construction of Media Luna North by the end of this year.

Secondly, we're focused on unlocking value across our portfolio of development stage and exploration properties, including Los Reyes and Sinaloa and our other properties across Chihuahua and Nevada, while continuing to look for and seek value-accretive M&A.

Thirdly, focusing on our balance sheet, growing our financial strength to a minimum $200 million of cash on hand, and that will provide us both operational and strategic flexibility looking forward.

And finally, our shareholder returns, which we have just enhanced, and I'll dive into that next on Slide 16. And as you will have seen last night, we announced a target to return a total of $350 million to shareholders in 2026 through both an increased dividend and continuing to aggressively buy back shares, which is a strong return, particularly given where our shares are currently trading.

As I mentioned, at spot prices, we're expecting to generate approximately $650 million of free cash flow this year. And so the $350 million we expect to return to shareholders represents about 55% of this forecasted free cash flow or approximately 40% prior to nonsustaining capital expenditure.

The $350 million includes the $121 million returned during the first quarter and builds on the total of $165 million that has been returned to shareholders to date since announcing our inaugural return of capital program last November. With this announcement, our dividend was also increased by 7% to [ CAD 0.16 ] per share, implying a forward annualized dividend yield of about 1%.

Our intention with this announcement was to provide more transparency and clarity on the magnitude of capital we expect to return this year. And we feel that returning over 50% of our free cash flow to shareholders is a meaningful way to generate value for our shareholders with the remaining amount being reinvested across other capital allocation priorities in our portfolio.

Finally, before I open up the line for questions, although Jody is not retiring for another month, this will be her last earnings call before I step into the President and CEO seat next month. Anything I say here will not do her leadership and tenure at Torex justice, but I do want to take a moment to acknowledge Jody publicly in front of the analysts and investors on the line for all she has done and accomplished at Torex over the past 8 years. She has made a real difference to the lives of so many in Mexico and beyond and will be greatly missed by everyone across the team here at Torex as well as I'm sure all of our stakeholders, including those on the line today. And with that, I'll open up the line for questions.

[Operator Instructions] The first question comes from Cosmos Chiu with CIBC.

Jody, all the best to you, enjoy retirement. And Andrew, congratulations. And here comes the questions. Maybe my first question is on the enhanced return of capital program. As you mentioned, you really talked about the intention in terms of capital return in 2026. But there wasn't any mention in terms of what happens beyond 2026. I guess maybe a question to Andrew. Is the intent of the enhanced program to be maintained into future years? Or is it something that you would, I guess, look at year-over-year?

So our intent with the return of capital announcement last night was to provide guidance on what to expect in 2026. And so we will be looking at that program annually to determine what our annual commitment will be each year going forward. Just to note, though, of course, our return of capital program does include a dividend, and that quarterly dividend is expected to be declared every quarter going forward. And so that's something that you can expect we would maintain in future years. And then in addition to that, we'll be providing annual guidance on what to expect from a share buyback perspective.

Great. And then Andrew, maybe if you can talk about how you came up with that sort of 55% of free cash flow being returned back to investors. We've seen from other companies in your peer group, they've talked about 35% return, 40% return. 55% is certainly on the higher end. Maybe can you talk about how you came up with that number?

Look, I think for us, Cosmos, I mean what's very compelling is where our shares are currently trading. We're currently trading at a significant discount compared to our peer group. And so it's a very compelling business case to be buying back our shares at this price. And so that helps motivate us to be very aggressive in our share buybacks this year.

That said, we are looking to maintain in and around 50% of our free cash flow for our own balance sheet. And so we're looking to both return that capital to shareholders as well as grow our cash balance and liquidity on the balance sheet to deliver on broader capital allocation priorities. And so we just felt like the right balance for us given the opportunity for our share buybacks as well as our broader strategic priorities.

Maybe switching gears a little bit at Los Reyes. Likely, you won't be able to give me a time line in terms of when you can potentially return to site. But if you can, that's great. If not, then could you maybe walk us through when you do return to site, what can we expect? Are you going to bring drills back? Are you going to start drilling once again? Like what can we expect? Is there a plan in place in terms of what we can expect once you get back to site?

And then I guess there's been some news in terms of a change in government at Sinaloa. The government -- the Governor of Sinaloa had recently resigned. Is there any kind of read-through in terms of the asset level and how you view the time line of your potential return? Anything that we should read into it?

I'll take this question, Cosmos. And so a few questions in there. Firstly, just to validate your assumption, Cosmos, we're not in a position to provide a specific date on when we'll be returning to site. I don't think it's appropriate to put pressure on the team. We'll make that decision at the right time.

And that said, though, I'd say our discussions at all level of government, both locally and federally has all been very positive and constructive. We're feeling very well supported across all levels of government and are making positive steps forward to create the conditions to access site. We're hoping to get to site, obviously sooner rather than later, but the timing is still -- would still to be determined.

When we do get to site, though, our plans are already set. We'll be looking to get the drills turning fairly imminently once we do get access to site. The drill rigs are actually already on site. They were not removed from site by prime when they stood down the workforce over a year ago. And so the drills will be ready to turn fairly quickly after access is available.

And then we'll also be looking to do work to support advancing our PFS. And so there's various other sample testing that we'll look to do to be able to support column testing and other metallurgical work. We'll want to fully assess the initial plans of plant location to make sure that, that location makes sense based on geotech conditions and do further sampling and testing at site. And so the work will be twofold, both drilling to continue to support the resource base as well as work to support the PFS.

Great. And then maybe one last question, Media Luna North. As you mentioned, production start in late 2026. There's a number of kind of items being progressed at this point in time. There's the main access ramp haulage drift, ventilation. But I guess my question is, is there a critical path? Is there certain items that we need to make sure that you complete on time to hit that target in terms of late 2026 production?

Yes. There's a number of key milestones in the plan, Cosmos. And as Jody mentioned today, everything is tracking to plan. I would say, I mean, at this point, the key critical milestone, which is imminent here is the breakthrough of the North vent adit. It's important for us to get access to additional ventilation to be able to commence the broader ramp development and open up the mine. That's in plan for May of this year, and that will be a key milestone to then start building out the mine.

In addition to that, there's obviously the procurement activities that are underway. All of our long lead items have already been -- orders have already been put in place. we've got commitments from those vendors to be able to deliver online with our schedule. But until that equipment obviously arrives at site, there's always some risk associated with that. But as we did with Media Luna, we're working very closely with our suppliers to make sure that they adhere to their commitments to us. And that work is ongoing. But at this point, everything that we're seeing is supportive of us producing first ore in December of this year.

The next question comes from Don DeMarco with National Bank.

I'd just like to echo Cosmos's comments as well. Jody, best wishes on next steps. First question, great to see the shareholder return program. With that, the $200 million minimum cash balance seems readily achievable, especially looking to the high free cash flow quarters in H2 and beyond. Is this minimum adequate dry powder to develop Los Reyes or even for M&A given cash could provide a bidding advantage on some deals?

Look, Don, I'll take that question again. The $200 million we see as being a minimum balance that can provide us good operational flexibility as we work through seasonality in our cash flow looking forward.

We will naturally, as you rightly point out, we will naturally build a cash balance beyond that through the course of this year. And in addition, we do have a fully undrawn $350 million revolver. And so the combination of where our cash will land at the end of this year and the available credit facility that we have, we feel provides us good flexibility to be able to support our broader strategic initiatives.

As we kind of think about M&A more broadly, obviously, if opportunities do come up that are beyond that, we've got lots of debt capacity that we could take on to support the right deal at the right time. And so we feel we've got the balance sheet to be able to support whatever strategic priorities we are looking to focus on going forward.

And sorry, just to answer your question about Los Reyes, we'll be coming out with our PEA on that, of course, next month. As we've talked about in the past, we expect capital to be in the region of $500 million. And so that's the level of cash that we can build up very quickly here. And the timing of that would be in the '29, 2030 period. And so a significant period of time here to build cash to be able to support that build, and we're very comfortable with that path forward.

Okay. That's helpful. Then looking at Media Luna, given that you achieved the Media Luna mining rates ahead of schedule, is there any read-through -- favorable read-through to higher production this year, maybe even possibly towards the upper end of the guidance range?

Well, I mean, there's a potential read-through there, Don, in us being able to achieve mining rates at Media Luna beyond 7,500 tonnes per day. And so that's something that we're working through. And today, I would say, assuming a steady state of 7,500 tonnes per day is a good go-forward plan to include in your models and your assumptions.

In terms of overall production, I wouldn't expect that we would be above our guidance range. I think we're very comfortable with our guidance range. And that is although we're ahead of schedule on hitting the rates at Media Luna. If you remember, I think in Q1, our initial target was to be at 7,000 tonnes per day, and we achieved 7,500 tonnes per day. And so the incremental ore there will not have a meaningful impact on our annual production.

Okay. And then just as a final question, looking to your exploration update from last week, there was some comments on the prospective drill target at Atzcala. Are you getting any initial indications from the modest drilling that's been done so far of its potential in terms of the stand-alone oxide deposit and so on? Or is that really something that we need more drilling to verify?

Look, it's too early, Don, to be able to share any specifics at this point. We will have more data that we can share later on this year. But I know we've had discussions in the past about the real potential that we see within Atzcala and everything we're seeing today continues to support the potential that we hope we can prove out in Atzcala, but we'll have more data that we can share in the second half of this year once we undertake further drilling.

[Operator Instructions] The next question comes from Lauren McConnell with Paradigm Capital.

Congratulations, Jody, again on the retirement. Just talking about the plant at Morelos, you guys have contemplated taking it back up to that historical 13,000 tonne per day levels. Can you just remind us of sort of when that decision could possibly be made and sort of what the key factors going into that are?

Yes. I can take that question again, Lauren. Thanks for the question. So that's work that's underway now. Clearly, in the current gold price environment, the business case is potentially compelling here. But there's work that we need to do both to understand the engineering that's required to bring the plant back up to those historic levels as well as understanding the broader impact that, that decision could have on our go-forward mine plan and resource base. And so what we're -- the work we're looking to do through the course of this year is to support us having a discussion and becoming decisional, I would say, in Q1 of next year.

Okay. Perfect. That's really helpful. And then if we were to factor in or think about factoring in, it would be more like a 2028 time frame then if you did move forward with it.

Yes. I think that's a fair assumption, Lauren. Correct.

And then just a quick question on Media Luna North. When you do tie that in, I just want to confirm that there's no plant downtime and there's no Media Luna mining rate downtime during that tie-in.

That's correct, Lauren. No impact to the plants in any way and no downtime within the Media Luna mine either.

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.

Thank you for standing by. This is the conference operator. Welcome to Torex Gold's Fourth Quarter and Full Year 2025 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [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.

Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our fourth quarter and full year 2025 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'd 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 Q4 2025 MD&A.

On the call today, we have Jody Kuzenko, President and CEO; and Andrew Snowden, CFO. Following the presentation, Jody and Andrew 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'll now turn the call over to Jody.

Thank you, Dan, and good morning to everyone on the line. I thought it's important to start with our strategy slide here at the outset. It underpins some of the opening comments I want to make about the CEO transition that was announced a few weeks ago. As most to follow us well know, one of the key reasons Torex has been able to deliver results so consistently over the years is that we have anchored our business and systems. Planning, scheduling and executing work in very defined, clear and thoughtful ways. And these systems are in place across all aspects of our organization, not just production and maintenance work at the operations. Succession planning within Torex is no different. This is something we plan for at all staff levels of the business. .

Since Andrew joined Torex as CFO in 2021. He's been an integral part of developing and executing against the strategy that has yielded very successful results to date and beyond strategy, designing and implementing the systems that have made us successful. Certainly, certainly within finance, but well beyond that as well, including systems that touch projects and operations, maintenance and supply chain, all of this has positioned us nicely to now actually execute on the succession plan. So this transition really is a product of planning, planning that will deliver continuity for Torex and by extension, our shareholders. Our stakeholders should expect to see no less than the consistent results this team has delivered together over the past several years. This also means that there won't be a material shift from the strategic pillars outlined here on Slide 4.

Our focus in 2026 will continue to be on servicing the value that now sits within our expanded portfolio. First, by demonstrating the long-term potential of Morelos through drilling, by delivering preliminary economic assessment for the Los Reyes asset by midyear, starting drilling at the early stage exploration projects acquired in Nevada and Chihuahua and with the cash flow we're now generating with Media Luna behind us aggressively returning capital to shareholders.

Reflecting on the accomplishments from 2025 here on Slide 5, the year was truly a transformational one for our company. We achieved commercial production at Media Luna in May and successfully ramped up ahead plan through the year, exiting 2025 at a mining rate of 7,000 tonnes per day, well ahead of our targeted 6,500 tonnes a day. We remain on track to achieve design levels of 7,500 tonnes a day out of Media Luna by midyear 6 months ahead of the schedule outlined in the feasibility study. The success of this ramp-up can be seen on the slide. You can see strong second half production as mining rates hit stride and throughput at the process plant remains strong and stable. Production is expected to remain around these H2 '25 levels going forward, noting that in this year, production is slightly weighted to the back half, and there are a couple of reasons for this grade and what we're seeing at the mine through stope sequencing and achieving that 7,500 tonnes per day run rate by midyear.

Strong 2025 production supported by a backdrop of high metal prices resulted in record annual all-in sustaining cost margin of 51%. Additionally, record quarterly free cash flow of $166 million enabled us to fully repay the debt we had accumulated through the Media Luna project. I want to take a moment to underscore this point here. Torex paid for Media Luna out of cash flow, no stream, no royalties, no equity raise. And here we are, 6 months post commercial production debt-free.

Lastly, on this slide, but certainly not least, our next level safety program has been appraised across the business, which is evident in the lost time injury frequency of 0.07 per million hours worked for both employees and contractors, compared this to the most recently reported Mexican mining industry average of 3.61%. 2025 has certainly marked 1 of the safest years on record at the Morelos Complex. We expect 2026 to be no different.

Slide 6 outlines our 2026 guidance, which was released last month. Gold equivalent production of 420,000 to 470,000 is markedly higher than the 383,000 ounces produced in 2025. This primarily reflects the full year of production from the processing plant and steady-state mining rates at Media Luna this year. Costs are largely in line with the all-in sustaining costs of $17.83 per ounce gold achieved in 2025. This is elevated over previous years due to the impact that significantly higher metal prices have on the taxes royalties to government and the Mexican legislative profit sharing that we pay our employees. Sustaining capital expenditures are slightly higher than the $107 million spent in 2025, as you would expect because this marks the first full year of commercial production from Media Luna.

Non-sustaining capital expenditures this year include $100 million to $105 million related to Media Luna North project costs. as well as $65 million to $70 million on various projects across Morelo that are centered on optimizing and driving efficiencies. One example of a project like this is the construction of a conveyor that connects the Guajes Tunnel to the Guajes crusher. This conveyor will reduce rehandling costs by more than $1 per tonne mined from Media Luna. At our guided metal prices of $4,000 per ounce gold, $45 per ounce silver and $4.90 copper and the Mexican exchange rate at 19:1, we have forecasted generating $450 million of free cash flow this year. With where metal prices are sitting today, we're now forecasting this to be upwards of $700 million of free cash in 2026.

Moving on to our 5-year outlook here on Slide 7, you'll note the stable production profile we expect to deliver through at least 2030. This outlook is also markedly improved from the previous 5-year outlook of 450,000 to 500,000 ounces of gold equivalent per year through 2029. So if you normalize this year's outlook for the 2024 reserve metal prices used in the prior outlook, production would actually be closer to 480,000 to 530,000 ounces of gold equivalent. This is a market step-up. A few factors contribute to this increase, including the Media Luna ramp-up being ahead of schedule, continued mine life extension on ELG Underground from ongoing exploration success and mill throughput consistently delivering above design levels.

On the subject of mill throughput performance is outlined here on the left on Slide 8, you can see the second half performance was ahead of the design rates even when considering the 5 days of scheduled mill maintenance we had in October. The chart on the right showcases the quick ramp-up we had for gold and copper recoveries, both consistently achieving design levels of 90% and 92%, respectively, and silver recoveries are also ramping up nicely to the design level of 85%.

On the mining front, mining rates at both Media Luna and ELG Underground are shown here on Slide 9. The chart on the left displays the steady ramp-up at Media Luna this year. The key to unlocking the final step-up to 7,500 tonnes a day by midyear was the successful commissioning of the final rock breaker, the final waste pass and the final waste conveyor this quarter, all of which have now been completed.

ELG Underground mining rates have also been consistently ahead of the 2,800 tonnes per day we targeted last year and even delivered a new quarterly mining record in Q4. I expect to see mining rates stay around this 2,800 tonnes per day through the end of this year before reducing to more normalized levels when consistent feed is being delivered from Media Luna North at the end of 2027. Those 2 things go together.

Further details on the progress of Media Luna North is provided here on Slide 10. As we announced with our annual guidance release, total project CapEx is now expected to range between $108 million and $113 million compared to the pre-feasibility study estimate of $82 million. This increase primarily reflects the decision to purchase the mining fleet outright instead of leasing it, which just made sense in the context of this record metal price environment. Underground development is progressing very well. It sits today at about 40% complete. You can see the completed development here in gray and the development planned in red. We've already started development on the North Vent Adit and have started on the haulage tunnel from the Media Luna side coming in towards Media Luna North. With the development on track and procurement sitting at 30% of orders placed, including all long lead items, we expect first mine production by year-end and then expect to quickly ramp up this new mine through 2027.

Moving on to Slide 11, I'll touch on our next development project in the pipeline Los Reyes. The preliminary economic assessment is progressing nicely and is on track to be completed by mid-year. For 2026, we have budgeted $18 million to complete the PEA, commence the PSS and conduct 20,000 meters of drilling on the property. I want to note here that delivery of the PEA is not dependent on resuming drilling activities at site given the amount of drilling completed to date. That said additional drilling will be required to adequately advance the pre-feasibility study. We have to conduct more metallurgical testing, some geotechnical work, we have work to do to derisk the resource model and in certain areas, we're looking to upgrade more inferred resources to the indicated category.

I want to make a comment here on security at Los Reyes. No different than the approach in Guerrero, the safety of our employees and contractors as the most important consideration of this project. We will not resume drilling at Los Reyes until we have confidence -- complete confidence that it can be done both safely and sustainably, that's key. We're working closely with local communities, and we're working closely with all 3 levels of government to create the conditions for these employees and contractors to return to their field work.

Lastly, our exploration program for the year is summarized here on Slide 12. The overall budget for this program has increased to a record $77 million for 2026. Approximately $43 million of that will be attributed to Morelos as you would expect to conduct just over 113,000 meters of drilling. Similar to previous years, the program will focus on replacing reserves and expanding resources at ELG underground and Media Luna cluster, with a smaller portion of the budget set aside to explore 2 higher priority regional targets Atzcala and El Naranjo. I've already mentioned that $18 million has been earmarked for both exploration and study-related costs at Los Reyes, these coming months here will determine whether in the extent to which it will be spent. In Nevada, we expect to spend $12 million primarily on 7,500 meters of drilling at Gryphon, where we have the option to earn into 100% of the property. Additionally, 2,500 meters of drilling will be conducted at Medicine Springs, where I'm pleased to say we earned into 100% ownership as of January.

Finally, $4 million of set aside for 5,000 meters of drilling at Batopilas and early-stage targeting work at GD. All in we're pretty excited about our exploration program this year. It's quite robust with plenty of high-quality targets across the entire suite of assets. In terms of news flow, you can expect our annual reserve and resource update late March per usual, and we'll look to provide an update on some of our exploration programs in Q2.

With that, I'll turn the call over to Andrew to walk through our financial results.

Okay. Thank you, Jody, and good morning, everyone. So before we dive into the financial details this morning, I did want to take a moment just to acknowledge Jody's retirement announcement. I believe I share the same sentiment as everyone on the line that Jody has done an incredible job of delivering on her mandate as CEO. With the Media Luna project complete and a clear line of sight on production for at least the next 10 years, generating strong free cash flow and a return of capital program now in place the company is well set up for this next stage of growth. May I echo Jody's comments that the underlying message from my transition to CEO in June is one of continuity. And I look forward to continuing the strong relationship we've built with all of our stakeholders by building on the strategy we've been successful in executing over the past several years. .

Moving now on to our Q4 financial performance here on Slide 14. Our excellent second half performance and the current metal price environment resulted in record margins of 51% for the year and a record 57% for the quarter. Q4 costs were slightly higher quarter-over-quarter, primarily reflecting the first quarter of paste backfill in Media Luna as well as the impact of higher metal prices on royalties. Given the timing of paste commissioning, we will incur some additional costs at Media Luna through until mid-2027 as we look to catch up on the backfilling backlog incurred during the 2025 year given the delays in completing the paste plant. The lower chart on this slide just shows a record free cash flow of $166 million generated in Q4 as Media Luna really came into its stride.

Turning to our cash balance through the 2025 year are shown next on Slide 15, with record adjusted EBITDA of $730 million for the year enabled us to execute on a number of capital allocation priorities, including the acquisition of Reyna Silver for $27 million in cash repaying all but $30 million of our debt balance by the end of the year, and we subsequently fully repaid our debt in January. And we also returned $44 million of cash to shareholders through a combination of dividends and share buybacks. This is in addition to the over $350 million of capital expenditure for the year, most of which was related to the completion of the Media Luna project.

Turning next to Slide 16. I just -- I do want to just take a moment here to remind everyone at the cash flow seasonality that we typically see year-on-year. While production is expected to be largely consistent quarter-over-quarter, albeit slightly second half weighted, the first half of the year is when our heaviest tax royalty and profit-sharing payments are made. I wanted to just walk through briefly here some of the key cash payments that we're expecting here through that first half period. You can expect to see a 1% royalty payment, which we pay in March each year, about $12 million. Our 8.5% mining tax payment is also due in March. We expect that to be about $55 million. And we also have the annual income tax true-up, which is paid in March and that's expected to be about $20 million this year. And this is all in addition to the regular quarterly tax installments of at least $60 million in Q1. And related to fiscal 2026 as well as a quarterly 2.5% royalty.

Additionally, we do have several employee payments scheduled for the first half of the year. And this year, we paid about $30 million in January related to the company's long-term incentive plan. And in Q2, we'll see a $35 million payment related to the payment of our annual profit sharing in Mexico. And as usual, Q3 and Q4 are expected to be our strongest cash flow quarter of the year. Our balance sheet and liquidity position are clearly well set to fund these payments and we've laid out next on Slide 17. As of year-end, we had about $30 million of debt remaining outstanding, and we subsequently repaid that, as I mentioned, in January. So we're now sitting here debt-free. Total liquidity at the end of the year sat at $426 million, $120 million of which was in cash. And we continue to have access to our $350 million credit facility, which matures in June of 2029. As well as an accordion feature of $200 million that is available at the discretion of the lenders.

Now being debt free, we expect our cash position to quickly build over the coming year, especially at current metal prices. And that to be available for capital allocation priorities. Overall, we're an excellent financial position to deliver and execute on these capital allocation priorities, and these are summarized on Slide 18. Our focus remains on deploying in 4 key areas: firstly, increasing mine life and expanding margins at Morelos, which we're doing so through the exploration program that Jody spoke to just a few moments ago. Growth through Los Reyes, our portfolio of early-stage exploration projects and value-accretive M&A, should an opportunity present itself. Thirdly, building on our balance sheet up to the minimum of $200 million cash. And finally, continuing to return capital to shareholders, which you can see summarized next on Slide 19.

Just to touch on that return of capital. In the second half of 2025, we returned about $44 million to shareholders through our Phase 1 return of capital program. This is comprised of a quarterly dividend of $0.15 a share, the first of which was paid in December and coupled with some share buybacks. In total, we purchased over 800,000 shares in 2025 and at an average price of CAD 57 a share, and we've continued to be active on the NCIB in 2026, repurchasing over 400,000 shares at an average price of just under $67 a share. And that's year-to-date. We also just last night declared our second quarterly dividend at that $0.15 a share level.

We expect to continue to opportunistically buy back shares this year and have just entered into an automatic share purchase plan to enable share repurchases at times when we are in blackout period. With numerous exploration targets in the pipeline for this year, operations at Morelos delivering ahead of expectations and the record free cash flow generation as well as the solid return of capital program in place or well set up to embark on our next chapter of growth.

And with that, operator, I'd like to open the line for questions.

[Operator Instructions] Our first question comes from Allison Carson with Desjardins.

First of all, I was wondering if you could discuss how the security situation at Los Reyes could impact the work you've planned for 2026 and what that could mean for the overall time line of the project?

Yes. Thanks, Allison. That's a good question. It's certainly on everybody's mind with the incidents occurring in Sinaloa over the course of this last month. I want to start by saying how saddened we are by the incident. I mean this is a situation where the Mexican mining community really comes together. 10 men lost their lives, 10 good miners. And it's just an absolutely tragic situation. As I said in my commentary, we had plans to start drilling this year and $18 million allocated. The team here, desktop in Toronto and Vancouver is working away on the PEA that work continues. We expect to have the PEA ready and available to market by middle of the year this year.

The big question on everybody's mind is, if and to the extent we're unable to get to site for a bit of a prolonged period at what point does that start to impact the pre-feasibility study? Because as I mentioned, we have to get to site to actually do the work. And the way we're thinking about it is probably about middle of the year this year. If the teams aren't on site doing environmental baseline work additional drilling, get some additional samples for the geomet work and the Hydro G work, then the pre-feasibility study will start to be shifted out from mid-2027, down towards the end of 2027. This is not like a week-for-week month-for-month shift because, of course, we'll work to compress it because we're not going to be capital constrained here. We want to get on with building this mine, but there will be some impact if we don't have the data available to us by accessing the deposits.

I will say in terms of security situation more in terms of the security situation more broadly. There are state-by-state nuances in security. And even within states, there are local nuances. And so that's very much the case here in Sinaloa. I will also say that when we made the decision to acquire this project, we diligenced this issue extensively. We knew what we were getting into. And my view is that, that was deeply reflected in the purchase price. The outcome of the events of the last month is that government at all levels is now deeply involved. They have to be. And so the work we have been doing has gained some new momentum here to enable us to create the conditions to put our people to work and put them to work safely and sustainably. So we're optimistic that, that can be achieved.

That's great. It's very helpful to get all that color in there as well. My next question is just on Media Luna. With the strong mining rates out of Media Luna in Q4 and now that we're already partway through Q1. I was wondering if you could comment on whether we're seeing rates continue to advance ahead of schedule? And if it appears likely that the ramp-up will be completed ahead of mid-year .

I'll take that one, too, Allison. I mean, I consider the ramp-up to be complete. The difference between 7,000, 7,500 tonnes a day isn't really that significant, it's a couple of extra loads onto the belt. The real ticket to getting it ramped up stably was bringing on that last waste path. So we have an outlet for the waste and can start campaigning waste through Guajes tunnel. The other thing that has happened over the course of the last, I would say, 5 months is that we've really broken the back of the paste plant. All of that infrastructure that supports backfilling is now working very well and to design rates. And the other thing that has happened is we've connected now the pace plant to the stable source of reliable energy, which is the low voltage power line instead of using the dead set. So all of that bodes really well for this continued accelerated ramp-up and even ramp up beyond the 7,500 tonnes a day. So feeling very confident about what we're seeing out of Media Luna from a volume perspective. .

Great. That's very helpful. Congratulations on the great 2025.

Our next question comes from Lauren McConnell with Paradigm .

Jody, congratulations on your retirement announcement. And I think I speak for most and saying things, we'll obviously miss you on these calls and tours. You've been wonderful obviously, to work with from this side of things, but look forward obviously to continuing working with Andrew and the rest of the team. My first question comes about EPO or Media Luna North. What are sort of the critical path items to keep first production in Q4? Is it development meters, long lead procurement or infrastructure tie-ins. And where do you see sort of the highest risk in execution? .

That's a really good question. We see Media Lunas a very low-risk project. largely because there's hardly any construction to do. Remember, it just ties back into all of the Media Luna ore handling system. So there are 3 things really on the list. One is development. I mentioned how well we're progressing on it. We have no issues with continuing at the rates we're seeing. The other is landing the long-lead electrical equipment and fans and ventilation. Both the fans and the electrical equipment have been ordered. We expect those to land here in the coming months tying them in will be orders of magnitude more simple than the electrical and ventilation tie-ins that happened at Media Luna.

And so the way we are looking at it is that Q4 of 2026 for first production is a very solid forecast. We very much expect to be producing ore through the back half of this year at Media Luna North, and that will then enable us to dial back rates at ELG Underground. So in terms of the overall production profile, you should be thinking about the mill as consuming 10,800 tonnes a day, 7,500 tonnes or more of that coming from Media Luna and then the delta divided in some way that makes sense between Media Luna North and ELG underground, but feeling very good about the progress of. It's a very -- I would describe it as an uncomplicated tuck-in to the Media Luna cluster.

And then just to be clear, too, with the Media Luna North tie in. Is there any impact to Media Luna copper mining rates or processing at that time? .

That's actually a really good question. One of the things, as we were completing a study on Media Luna North was the integrated mine planning with Media Luna, so that we didn't get in the way of taking stopes at Media Luna or material handling, what stope is going to be available as many of the Luna North comes on as we would expect with Torex, that is very, very tightly planned. Those 2 assets need to work coherently and together so that they complement one another, not get in each other's way. And so that's planned. We don't expect any impact to Media Luna production as we bring on Media Luna North.

Our next question comes from Don DeMarco with National Bank Financial.

Thank you, operator, and good morning to the Torex team. Congratulations on the high free cash flow and the debt-free status. So my first question on the mining rates at Media Luna. So -- now that you're on the cusp of achieving that 7,500 tonne per target and sooner than expected, is there a potential? And do you see merit in exceeding this mining rate? .

There is potential to exceed that mining rate, Don. There will come a point in time in the not-too-distant future that we'll be talking about production from the Media Luna mine collectively, which will include Media Luna North and then eventually Media Luna East and Media Luna West. What we would do with the material is produced it laid on the ground, stock pilot and feed it through the plant in the event that we face an interruption out of the mine for whatever reason. But we will be mill constrained moving forward. And so as we start to produce more from the underground, we are actually, as a management team, turning our attention to the possibility of upsizing the flotation circuits at the mill, which will be the constraint. That could unlock some additional production from a finished ounce perspective at Morelos. And so this is an evolving increase.

First, we've got to get the mines. We've got to bring EPO on and get that producing to more than 10,800 tonnes a day and concurrently do a study to see how much CapEx it would be to bring the mill back up to that 13,000 tonnes a day we used to run at when we were in open pit production, which essentially involves adding cells to the flotation circuits. So exciting times for us from a life of mine planning perspective, that I would characterize as very much as upside only here.

Okay. That's great. And that's actually -- that was my next question about the mill. I mean I think now that you're in production really hitting your stride it's -- the questions turn to the levers to optimize and upsize the operations. So you mentioned 13,000 tonnes per day at the mill, and we'll look forward to more. But is that kind of an upper limit then -- or is there scenarios before that? Or is it just too early to kind of know where this might head at some point in the future? .

I think there are scenarios to get us from the current 10,800 to 13,000 in a stepwise incremental way. It's not something that you should think about as all at once. And based on the information and the equipment and what we know today, you should be thinking about 13,000 in that range as an upside cap. Beyond that, we would need a new grinding circuit, which then you start to do through your life of mine very, very quickly, producing 450,000 to 500,000 ounces a year is already a really big mine.

Okay. And then maybe just as a last question. I mean, how do you manage? you have a development team and operations team. Do the 2 teams kind of work interchangeably, whether it's on development or operations? And -- or do you kind of redeploy the development team to work on North how do you kind of manage the different skill sets and sort of that's very required on site.

Really that's a really good question. And it will become increasingly important for us as we bring on Media Luna North and we are looking to deploy our development team and our operations team as cost efficiently as safely and as productively as possible. I don't know that interchange is the right word, but cooperatively is definitely a word. And I'm going to give you a specific example of this. We originally, when we were doing the development on Media Luna North had development reporting into the projects team, right? That's a normal thing to do. It's a new project. The project owns the project, and then we'll be handed over to the operations once it's complete at the end of the year. Because there were so many synergies available to us with equipment, with men, with material with supervision, we moved the development of Media Luna North over to be hung from the operations team so that the crews could be lined up together so that we made sure that we were maximizing productivity and minimizing costs and downtime. Just a really specific example of how we're thinking about that Media Luna deposit as a cluster. And as I said, there will come a point where we're treating it as one integrated giant mine.

Okay. And congratulations again on your retirement.

As appears, there are no more questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Thank you for standing by. This is the conference operator. Welcome to Torex Gold's Third Quarter 2025 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded.

I would now like to turn the conference over to Dan Rollins, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q3 2025 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found on the Investors section of our website at www.torexgold.com. I'd 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 Q3 2025 MD&A.

On the call today, we have Jody Kuzenko, President and CEO; and Andrew Snowden, CFO. Following the presentation, Jody, Andrew and I 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 releases and the accompanying financial statements and MD&A are posted on our website and have been also filed on SEDAR+. Also note that all amounts mentioned in this call are U.S. dollars unless otherwise stated.

I'll now turn the call over to Jody.

Thank you, Dan, and good morning, everyone, on the line. Last night, we released our quarter 3 earnings. And in every way, this has truly been a pivotal quarter for Torex. It really is the one we've been working for. Highlights as follows: The ramp-up at Media Luna underground has been advancing ahead of plan. ELG underground continues to exceed expectations. Our processing plant is delivering above nameplate on both throughput and recoveries. We hit a major milestone with our first quarter of significant free cash flow generation since the beginning of the Media Luna build.

We have finally arrived here at our free cash flow inflection point. We used that money to substantially reduce our debt. We implemented our inaugural return of capital policy with both the dividend and the buyback program now in place. And during the quarter, we bought back $7 million worth of shares. And overall that, we've taken our first steps on growth beyond Morelos, closing 2 acquisitions, adding 5 new assets to our portfolio. In what's been a transformational year for the company, our third quarter results are the first time we're really able to showcase the new operating and cash flow capability of our Morelos assets.

Starting here with our strategic pillars on Slide 4. No changes to discuss in our overall strategy. We just continue to work this plan. I'll get into the detail on the progress under each of these pillars throughout the call, but I do want to start with an update on the pillars centered around being a leader in responsible mining. In our ongoing efforts to reestablish ourselves as one of the safest mining companies in the industry, we've been hard at work designing and executing a comprehensive program that we've called next level safety.

This is a combination of work streams aimed at safety leadership, risk mindset, safety systems, including fatal risk standards and critical control refreshers across the operations. And we're doing some real interesting work to either further -- even further enhance our culture of care. I'm proud to say this work is paying off. There were no lost-time injuries during the quarter and the lost-time injury frequency at the end of quarter 3 of 0.42 per million hours worked for both employees and contractors on a rolling 12-month basis, really an industry-leading number.

Getting into our operational results here on Slide 5, you can see the significant step-up in production we had quarter-over-quarter. Quarter 3 coming in at 119,000 ounces of gold equivalent was much more representative of how successful the ramp-up at Media Luna has been, which up until now wasn't so obvious given the impact of the capacitor failure we had causing the 10-day shutdown at the mill in quarter 2. All-in sustaining cost was also improved quarter-over-quarter, coming in at $1,658 per ounce, resulting in strong margins of 53%.

Additionally, we generated $113 million of free cash flow, an important inflection point for the company as it allows us to execute on our capital allocation priorities, which included repaying $75 million of debt, plus another $20 million post quarter end. And it allows us to implement our inaugural return of capital policy, which Andrew will speak to shortly. Slide 6 sets out how we're tracking to our annual guidance. As you can see here, the gold price continues to put pressure on both production and cost guidance given that we report on a gold equivalent basis. And our guidance for this year was set at a gold price of $2,500 an ounce.

Our year-to-date production of 262,000 ounces would have been closer to 270,000 ounces were if not for the higher gold price, and our year-to-date all-in sustaining costs of $1,732 would have been closer to $1,600. With that said, we're still aggressively chasing the low end of production guidance and the upper end of cost guidance for the year. To be clear, this statement is made at our guided metal prices. You will also note on this slide, we made a minor adjustment to sustaining capital guidance during the quarter, increasing it by $15 million. This reflects the increased underground development we've had to undertake to support the Media Luna mine ramp-up to get us to hit our targeted tonnes in spite of the delays in commissioning of the paste plant.

That said, I'm very pleased to report that we've been paste backfilling since September. We've got 3 stopes now filled with 6 more in the plan between now and year-end. The last point on this slide is a reminder that non-sustaining capital guidance was revised in quarter 2. There have been no further changes, and we continue to expect to come in within this range. Slide 7 showcases the strong performance of the processing plant, which has been exceeding expectations for the past several months. The chart on the left shows throughput, which you can see has consistently been above 11,000 tonnes per day, well ahead of the nameplate capacity of 10,600 tonnes per day.

While it's still too early for us to say that this type of performance can be considered steady state, it certainly points us in a direction that we have upside beyond 10,600 especially during months not impacted by major planned maintenance periods. The chart on the right shows recoveries, which were 94% for gold and 95% for copper in September also ahead of their design levels of 90% and 92%, respectively, reflecting how well the met teams have optimized the flotation circuit since commissioning.

Switching to the performance of our underground operations on Slide 8. The chart on the left shows the steady ramp-up of the mining rates at Media Luna. We have set a target to exit quarter 3 at 6,000 tonnes per day, and the team exceeded expectations. They delivered a quarterly average of nearly 6,150 tonnes per day. You'll see that rates in September are about 7,800 tonnes per day, and this largely reflects the third primary ore pass and rock-breaker coming online during that month as well as a greater amount of development ore moved during the month.

Just to caution here, do not carry the September number forward. We expect the monthly averages to return to levels more in line with our targeted ramp-up rate, especially as we're adding paste backfill to the cycle and we maintain our guidance that we're looking to exit 2025 at 6,500 tonnes per day out of Media Luna. The chart on the right shows that mining rates at ELG underground are also well ahead of our targeted 2,800 tonnes per day, averaging 3,200 tonnes per day for each of August and September.

We expect to continue mining at around 2,800 tonnes per day out of ELG until EPO comes online at the end of next year. On the topic of EPO, you'll see the update set out here on Slide 10. We continue to make good progress on design, development and permitting, all concurrently. As at the end of October, we've completed just over 500 meters of development in the ramp, taking off from the Guajes tunnel and remain very much on pace for first ore production by the end of 2026. Importantly, the modification to our MIA-Integral to permit construction of a waste dump facility was approved by SEMARNAT in July.

So this means we now have all necessary permits required to begin operating EPO. It also means that we have operational flexibility to dump waste on the south side or campaign it through the Guajes tunnel on the conveyor. On the feasibility study work, our teams have now finalized the mine design, the waste dump design, mine sequencing and integrating that mine sequence and scheduling with Media Luna.

We've also initiated procurement processes for long lead equipment supply in support of construction, leveraging the specifications and engineering that we undertook with the Media Luna project. All in here, both our operations and projects are performing exceptionally well, and we fully expect this strong momentum to carry through to the remainder of the year.

I'll now turn the call over to Andrew to talk about our financial results.

Okay. Thank you, Jody, and good morning, everyone. So starting first on Slide 11, you can see a step change in our cost profile from our second quarter performance as we started to see the benefit of the Media Luna ramp-up. This cost performance, coupled with the continued strength of the gold price supported strong all-in sustaining cost margins of 53% in the quarter, which is 47% year-to-date. I expect our margins to remain robust as we close out the year here, particularly as gold prices hold and as economies of scale continue through the Media Luna ramp-up.

As Jody noted, we also generated $113 million of free cash flow during the quarter, marking the first quarter of significant free cash flow since the early days of Media Luna Construction. Really nice to get to this point, and you can expect to see Torex continue to generate strong free cash flow from this point going forward. With the strength in the gold price, I do want to just remind you of the impact this has on our reported gold equivalent production and cost performance compared to our guidance metal prices, and you can see this summarized on Slide 12.

As Jody mentioned, the gold price year-to-date has been about 28% higher than our guided price of $2,500 an ounce. This has had about an 11,000 ounce impact to our reported gold equivalent production amount due to the nature of the gold equivalent calculation, and this was slightly offset by the higher silver price, but it still resulted in gold equivalent production being about 8,000 ounces lighter than where we would have been, all else being equal.

This impact was even more pronounced on our all-in sustaining costs as the higher gold prices not only impacted the gold equivalent calculation, but also the amounts we pay in our Mexican legislative profit sharing, our royalties and our temporary occupation agreements. At guided metal prices, our year-to-date all-in sustaining costs would have been around $1,600 an ounce, which puts us in line with the top end of our annual guided range of $1,400 to $1,600.

Turning to Slide 13. The robust free cash flow generated during the quarter allowed us to repay $75 million of debt, fund the $26 million acquisition of Reyna Silver in cash and also repurchased $7 million of shares. Also to note, we did repay another $20 million of debt in October post the Q2 close here. While I'm talking free cash flow, just a brief reminder, we do have some seasonality to our free cash flow, as I think everyone is well aware.

In Q1 of next year, the Q1 '26, we are expecting and currently forecasting annual payments of about $90 million to cover the company's annual tax true-ups, the 8.5% mining tax and the 1% mining royalty. In addition, there will be the annual PTU or profit sharing payments, which will be paid in Q2, and I expect that will be in the $35 million to $40 million range.

Turning next to Slide 14. You can see here our liquidity position and debt profile at the end of the quarter. With net debt of $48 million, excluding leases, we're in a solid position to repay all of our remaining debt over the next couple of quarters. I expect that will be repaid by the end of Q1, while also increasing our cash position. As of the end of Q3, we had $280 million of available liquidity, $107 million of which sat in cash at the end of the quarter.

Next, turning to Slide 14. I do want to talk about some big news that we announced yesterday around our return of capital program. You can view this announcement really as the first phase of our return of capital program. One we expect will evolve as our balance sheet further strengthens with the expectation that the next phase will allow us to be more decorative on the overall level of capital to be returned annually. Under this initial phase, we've declared a quarterly dividend of CAD 0.15 per share, the first of which will be paid out to shareholders in early December. We view this dividend level as sustainable and one that can potentially grow over time.

In addition to this dividend, we will also be opportunistically buying back shares, which as noted earlier, we've already started to be active on. We plan to renew our current normal course issuer bid in the coming weeks, and we'll look to leverage this program over the next 12 months. With the projected level of free cash flow to be generated by the business, this return of capital program will not impact our ability to fund other capital allocation priorities, which include continuing to invest heavily in the drill bit across our expanded portfolio, funding value-enhancing growth such as EPO and Los Reyes and maintaining a strong balance sheet with significant liquidity to take advantage of accretive external opportunities as and when they come up.

Finally, just a very brief update on our hedge book. You can see that summarized on Slide 16. Since the Q2 update, we've just added some initial colors on the Mexican peso looking out to 2026 and '27. These are all summarized here on the slide, and we'll look to layer in further hedges over the coming quarters to grow this protection with the goal of having hedges in place to protect up to 60% of our peso-denominated costs. The gold put options that we have in place for 2025 do all roll off at the end of this year, and we have no additional puts in place on the gold price beyond 2025.

With that, I'll turn the call over to Dan.

Thanks, Andrew, and good morning. Starting on Slide 18. We've made excellent progress on our acquisitions of Reyna Silver and Prime Mining with both transactions now closed and integration efforts well underway. Early exploration work has commenced at Gryphon and Batopilas, 2 of the 4 assets we acquired through Reyna Silver. At both assets, we're completing target definition work to assess and rank targets to be drilled in 2026. This assessment will be based on results from geochemistry, geophysics and remote sensing work with teams already on the ground at both assets. We expect to invest around $10 million across the 4 properties from Reyna Silver in 2026.

At Los Reyes, development stage project we acquired through the acquisition of Prime Mining, work on the preliminary economic assessment is underway following closing the transaction in October. With enough drilling done to date to advance the PEA, we are tracking for completion by mid next year. We expect to invest about $10 million in drilling at Los Reyes in 2026, plus additional dollars to complete the PEA and kick off a pre-feasibility study.

Lastly, on Slide 19 summarizes the drilling results from the ELG underground press release we put out last month. Drilling was focused on the El Limón Sur and Sub-Sill trends and additionally uncovered 2 second order structures running parallel to both these trends. These new trends appear to have acted as conduits for mineralizing fluids and have extended mineralization both laterally and vertically, supporting our target of expanding resources at this deposit year after year. This discovery only underscores that we're yet to unlock the full potential of ELG underground, a deposit where we firmly believe we can continue to extend mine life and expand resources year after year for many years to come.

With that, I'll turn the back -- the call back over to the operator for any questions.

[Operator Instructions] The first question comes from Cosmos Chiu with CIBC.

Maybe my first question is on your return of capital strategy here. Great to see that you've put in an inaugural dividend of CAD 0.15 per share. But maybe if I can ask, how did you come up with that number? How did you come up with that level? To me, it calculates to about a 1% dividend yield. Was that something that you're striving towards?

Cosmos, Andrew here. I'll take that question. I mean 1% felt about right. Really, the genesis behind the dividend level that we wanted to start at was thinking about a level that we felt very comfortable that we could continue and was sustainable in any gold price environment and that -- and the overall $40 million that equates to U.S. annually was a level that we felt very comfortable with in the mix of our overall capital allocation priorities and that happens to come out at about 1%, which I think was fairly in line with the general levels of our peer group.

I'll also maybe just note that this is really only our first quarter of free cash flow post Media Luna. It's really what I would describe and as we talked about on the call, as our first -- our initial phase, first phase return of capital program. We'll look to evolve that through the course of 2026 as the balance sheet continues to build, but that's the right level that we thought would be the inaugural dividend.

Great. And as we talk about levels here, you also repurchased CAD 10 million in shares in Q3. Is that a good level in terms of the foreseeable future in terms of quarterly buybacks?

Again, Cos, I think given this is just our first phase, we've deliberately not come out with any kind of annual targets on volume of shares that we'll look to buy back in any specific period of time. We'll probably evolve to that, I think, through the course of 2026. I'll say the volume of our buybacks in any given month or any given quarter will be dependent on where our share price is trading and how we've been performing against our peer group. That said, obviously where our share price is trading today is a very attractive price. We're obviously blacked out for the next couple of days post our Q3 earnings, but I would expect that we'll be looking to dip into the market and buy back some shares in short order here.

Great. And maybe if I can switch gears a little bit, and this might be another question for you, Andrew. I'm looking at these QP hedges -- and I've read it quite a few times. I'm still kind of not fully grasping it. Is it just related to, I guess, mitigating the risk in terms of provisional pricing, and that's why you're hedging out the silver and copper. I guess my question is, how significant is it? Is it related to provisional pricing? And then it sounds like it cannot qualify as hedge accounting. So is it going to introduce some kind of accounting volatility into your reporting?

Yes. Good question, Cos. This is the first time we're actually entering into the QP hedging. And so just to give you some context around why we're doing that. So firstly, it relates to our concentrate sales that we started to produce following the Media Luna construction. So it's the concentrate that now comes from our plant under our contracts with the traders. So to date, most of those concentrate has been sold to the traders. The traders actually have the option right now to select M+1 or M+4 as in the settlement terms.

What we're looking to do is actually overall reduce volatility over an annual period where we want to make sure that we achieve M+1 settlement terms on all of our sales. And so although the traders are typically elected M+1 on all of our sales to date, when the market is in backwardation, they'll likely select M+4 from time to time. And when they do that, we'll enter into QP hedging to ensure that M+1 outcome is achieved.

And the goal here is really to make sure that through the year, we'll average something close to the market price rather than having some contracts close at M+1 and some contracts close at M+4. So I think at this point, it's very small volumes that we've entered into, but we will look to execute that from time to time where we see that exposure to achieve that consistent outcome.

Great. And then maybe one last question. Gold equivalent ounce reporting has caused a bit of, I would say, not volatility, but kind of a lot of explanation needed to be made in terms of gold equivalent ounces, how that's being calculated, how that compares to your original guidance. Is that something that you would reconsider in terms of the way you guide, in terms of the way you report in the coming years, especially given the fact that as you talked about Media Luna coming in, there's more byproduct now, including copper. Again, how should we look at gold equivalent ounce calculation and reporting on a go-forward basis?

Yes. That's a fair comment, Cos. I mean it's -- we've not lived through this period of price volatility that we've had over the past 12 months. And so we weren't expecting, obviously, the explanations that we've had to provide through the course of this year to explain some of the variances.

I think as we look forward to 2026 here and the guidance that we'll be releasing in January, at this point, we expect to probably expand that guidance more than it maybe was in 2025 to provide guidance on individual metals rather than just gold equivalent. And so we will continue to report on gold equivalent. I think that's an important metric, but we will provide incremental guidance on individual metals so that helps the market and investors and analysts understand our production profile.

The overall goal line for us here, Cos, is transparency. We want everybody to understand clearly what our production is and how we're tracking against our commitments to market.

The next question comes from Don DeMarco with National Bank Financial.

First off, I'll start with the plant. I see it's running above the 10,600 tonne per day nameplate. Can you restate the drivers for this? And do you have an upper limit target that you might hope to achieve? And can you sustain grades at this higher level throughput? I mean, obviously, that will be in flux of Media Luna ramps up, but just interested to hear more color on this.

Yes. Thanks, I'll take that question. Yes, I'll take that question. As you know, we did over 11,000 tonnes a day through quarter 3. And one of the key drivers for that was centered around we didn't have a major maintenance period scheduled in the quarter. You'll recall the downtime we took in May of this year as a result of the capacitor failure. So the team just didn't take that time down. They took the opportunity to do every bit of maintenance they could to set us up for a maintenance-free quarter 3, which drove those rates.

The other thing driving those rates is that, generally speaking, the ore on the Media Luna South side is softer than the ore on the north side, which allows us to increase tonnes per hour. And when we took the mill down during the transition period from [indiscernible] 10,600 tonnes a day with the Media Luna transition, we didn't downgrade power and power to the SAG mill and the ball mill had been the limiting factor under the open pit flow sheet.

So we've got more power than we need. We've got a little bit softer ore, and we are continuing to optimize our maintenance planning, both on a quarterly basis and an annual basis. What that all tools up to is something that we are actively discussing, what kind of commitment we make to the market. At this point, we're holding on 10,600 tonnes a day. I will tell you, as we're running the 2026 budget, we are flexing an upside at 11,000 tonnes a day.

Too soon to put it into the models, but that could very well be where we're headed here. In terms of your question around grade, as you know, we are looking to get as many tonnes as we can out of Media Luna and ELG underground at a $4,000 gold price, that has allowed us to selectively soften cutoff grade zone by zone to get more tonnes with maybe a little bit less grade. So there will be impacts around the margin, I would say, on grade driven predominantly by the gold price, but secondarily by this upside we're seeing at the mill. It's all connected.

Okay. That's -- all that is just very excellent color, and we look forward to further details on your throughput rates going forward. But maybe we can dig into grade a little more. So you got Media Luna underground, I see it's on track for 6,500 tonnes per day at year-end. You got -- you had a record in September. I see that. That's great. But you're still on track for that pace and then 7,500 midyear. But with this looming, how should we think about year-over-year improvements in grade going forward with a more favorable blend with higher weighting to Media Luna?

Yes. It will be very unlikely that we'll have a lot of blending capability moving forward. I mean, at 7,500 tonnes a day, another 3,000 tonnes a day and 2,000 tonnes a day out of EPO, you can see that we're going to be filling a hungry mill, even call it, at 11,000 tonnes a day. And so you can expect to be grade to be fairly flat moving forward.

Okay. Okay. And just maybe as a final question and I'll shift over to Dan. So Dan, yes, great to see the Prime acquisition close at Los Reyes. You mentioned the PEA is tracking mid-2026. Looking forward to this milestone. But is this subject to a resumption of exploration at site? And what is the level of working conditions right now in...

Yes. I'll let Jody talk about the working conditions. On the PEA, there's over 200,000 meters of drilling and a significant portion of the resource is already in the indicated category at very tightly spaced drilling. So there's enough critical mass of drilling to continue to move ahead with the work that Prime had started on the PEA. Our team has just taken that over now. We've got our team heading down to Vancouver to meet with some of the consultants over the next couple of weeks. They'll take a look at the design elements that were sort of proposed by the Prime team, look to see if we want to do anything differently.

Again, we bring a bit of a better balance sheet. We're an operating company. We're going to be looking to put a PEA out that is going to be a study that we're going to build off and will inform the PFS and then subsequent to a feasibility study. So we're well on track there. No more drilling. The drilling that we want to do in 2026, if not earlier, is really to I'd say, expand the resource, tighten up some areas of that resource model where we want to see some more drilling and really inform the work that will be part of the PFS study that will kick off next year with the aim of getting that PFS out to market sometime in 2027 and likely a year later, followed by a feasibility study.

In terms of the security concerns at site, Don, our team has been there on multiple occasions now. Even just this last week, we have a team of managers from Morelos heading out there across functions, security, logistics, HR and finance. And I would say we are making our way there step by step with a view to resuming drilling just as soon as we can without pushing it too quickly. What does that look like?

We've tapped into our relationships with the Federal National Guard to show a presence there. We have had many discussions with the municipal level of government to start to undertake the work to rehab the road from [indiscernible] to the site. There's some 30 kilometers of road there. We will start to let contracts to rehab that road. And then we will start to show a presence there from a security perspective, which we have done. So all of those things coming together step by step, we will make the decision when we feel it is safe to do so to resume that drilling program. Progress is being made.

The next question comes from Allison Carson with Desjardins.

Congratulations on a great quarter. Most of my questions have already been asked, but I do have one more question on the capital return program. You mentioned that this is just the initial program. I was wondering if you could sort of expand on how you expect it to evolve over time or how you'll change your decision-making process with it.

Yes. So I can take that one again, Allison. Really, how we expect it to evolve is to -- with the goal of being a bit more declarative on the overall return of capital program. This Phase 1, we've announced an initial dividend with the goal of opportunistically buying back shares. As it evolved through the course of next year, I expect we'll get to a point where we'll be able to come to the market with an overall percentage of free cash flow that will be allocated to the overall return of capital program that would be allocated between the different buckets between dividends and share buybacks. And so that's really how you can expect the program to evolve through 2026.

[Operator Instructions] The next question comes from Lauren McConnell with Paradigm Capital.

Congratulations on that nice free cash flow. Just building a little bit on Don's question about the processing plant and operating above nameplate. Just wondering, you talked about the fact that there was no maintenance in Q3. Is there any maintenance planned for this quarter? And could you give any color in terms of how the plant has been operating so far quarter-to-date?

Yes. The plant has been doing really well, both on throughput and metallurgically on recoveries. We look at it in 2 ways, Lauren. And there is maintenance scheduled for this quarter 4. We have to do a liner change at the mill and various other maintenance. And so we're tracking that closely to be able to go down and pull back up to deliver on that targeted low end of production guidance. You can't go maintenance-free for too many quarters in a row. If you don't schedule the maintenance, your equipment will schedule it for you, Lauren.

That makes sense. Yes. And then just switching gears a little bit to exploration. You guys commented that you're thinking around $10 million for Los Reyes and $10 million for the Reyna Silver portfolio. Can you provide any color on sort of what you're thinking for 2026 in and around Morelos in terms of budget for exploration?

Yes. So caveat, we're just going through that budgeting process right now. So we'll come out with final numbers, but $10 million at Los Reyes, $10 million across the Prime assets, probably the majority of that at Gryphon and Batopilas. At Morelos, we're probably looking at something consistent with what we did in 2025. So think about $40 million to $45 million at this point in time, similar focus to what we've been doing in 2025.

Again, large focus on ELG underground. That's an asset that starting in 2018, we had around 185,000 ounces of reserves. We've now increased that by almost 500% on what we've mined and having the reserves at the end of 2024. So that will see a big chunk. Media Luna cluster will continue to see a big chunk of spending, Media Luna proper, Media Luna East, Media Luna West, EPO, EPO North. And then we'll continue to refine our regional targeting, where we look to get a little bit more targeted on some of the regional targets, specifically at [indiscernible].

Perfect. And then just in terms of exploration updates between now and year-end, what should we be watching for?

Yes. So we'll have another release out likely late November, early December on Media Luna West drilling, just the final results from that work. We'll also have an update on EPO, where we've now completed that drill program. And then we'll likely have a couple more updates in January, February, setting us up for our year-end MR&R update, which tends to come out mid- to late March ahead of our publishing our annual information form.

As there appears to be no more questions, this concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.

Thank you for standing by. This is the conference operator. Welcome to the Torex Gold's Second Quarter 2025 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. I would now like to turn the conference over to Dan Rollins, Senior Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2025 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'd 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 2025 MD&A.

On the call today, we have Jody Kuzenko, President and CEO; and Andrew Snowden, CFO. Following the presentation, Jody, Andrew and I 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'll now turn the call over to Jody.

Thank you, Dan, and good morning to all on the line. We'll take you through the detailed results over the next 20 minutes, of course, but I wanted to open this call with some high-level commentary about the quarter. In some ways, quarter 2 was exactly what we wanted. Our safety performance was impeccable. We had no lost time injuries in the quarter, and we made very good progress on our next level safety program, including continued implementation of the fatal risk standards and critical controls first in our underground operations and then over the surface facilities.

Second, and importantly, as planned, we declared commercial production at our Media Luna Project on May 1, which is a major milestone for the organization. You can take from this that the process plant ramped up through the first part of the quarter as expected, as did the Media Luna mine, both good news. And notably, in June and July, we announced 2 M&A transactions back to back, the all-cash acquisition of Reyna Silver and the all-share acquisition of Prime Mining. Really, this is a year's worth of work coming together within a month of one another. Dan will provide more details on this shortly.

Now all that said, in other ways, the quarter was not what we wanted at all. Even though ramp-up at the process plant was tracking very well through the early part of May, at the end of the month, we had a capacitor failure in the electrical house that feeds the variable frequency drives of the ball mill. This took us down for 10 days while we sourced a replacement from Europe. So production was not what we wanted it to be at all. It came in at 83,000 ounces of gold equivalent for the quarter and 142,000 ounces year-to-date. This means that for the first time in years, we're going to be on the back foot here to deliver annual production guidance of 400,000 to 450,000 ounces. We think we can do it. We've got a plan to do it, but we have our work cut out for us for sure.

This disappointing production result and the fact that the Media Luna mine is still in ramp-up translated into what I would describe as forgettable performance on all-in sustaining costs. Andrew will take you through that in his section. And finally, on nonsustaining CapEx, we've had to adjust annual guidance upwards by $70 million for various reasons I'll describe later in the call. But largely, it's a reflection of the extended project period from the delays we encountered late last year and a ramp-up plan that has us maintaining aggressive development rates at Media Luna underground to achieve that 7,500 tonnes per day, 6 months ahead of the schedule we set out for ourselves in the technical report.

All of that said, we look forward, and there's plenty to look forward to here. With the May downtime behind us, June and July production at the process plant was excellent. Tonnes per day was above 11,100 for both months and finished production for June was 37,000 ounces gold equivalent and 45,000 ounces gold equivalent in July, both real step-ups from what we saw in the early part of quarter 2.

Secondly, the extra capital on Media Luna means that we're largely on track with the paste plant commissioning, which is happening now, and the third and fourth ore passes at the Media Luna mine, both of which support achieving the targeted mining rates at Media Luna. And notwithstanding the challenges in the quarter, importantly for us, we finally turned the corner on free cash flow. June was our first positive month and quarter 3 very much tracking to be our first positive quarter.

Now getting into the details here, starting on Slide 4, which sets out our strategic pillars, which would be familiar to everyone. They remain unchanged. One area of the strategy that came into sharp focus here in the quarter was centered around disciplined growth and capital allocation in two ways: first, with the announced acquisitions of Reyna Silver and Prime Mining. And second, we expect to further advance the work in this aspect of our strategy later this year when we announce our inaugural return of capital policy, which we remain very much committed to.

I want to underscore here and be clear that with the free cash flow we have anticipated out of Media Luna, we're not thinking that M&A and capital returns are exclusive propositions. This is very much an end conversation for Torex. We intend to proceed with both. The rest of the progress on the various aspects of the strategy will be covered off through the remainder of today's update.

Turning now to Slide 5. You can see our quarterly production illustrated on the chart. I've already spoken to the drivers behind the weaker production and higher AISC for the quarter. We expect quarterly results will return to normalized levels in the second half here, and we think this will reinforce to our shareholders the margin and cash flow capability of Morelos. We already got a glimpse of this potential in June with gold equivalent production over 37,000 ounces and our first month of positive free cash flow since completing the Media Luna build.

Slide 6 shows how we're progressing on delivering on full year guidance. With a strong second half in sight, we're maintaining our annual production and cost guidance. Note here that we expect to be at the lower end of production guidance and the higher end of the cost range. The second point to note on this slide, as I mentioned at the outset, is nonsustaining CapEx has increased to $160 million to $170 million for the year, largely due to costs associated with finalizing the Media Luna Project.

This increase comes in a couple of categories. One, the main driver is scope transfer from 2024 to 2025 and demobilization and remobilization costs following the December fatalities. Associated with that scope transfer and the fatalities was the extension of the mining infrastructure construction period that is now drawing to a close.

With the scope shift and extended project period comes additional indirects for this extra time, so you can see how it builds on itself. And over top of those things, we have a continued aggressive mine development plan at Media Luna, all to support accelerating those mining rates to 7,500 tonnes per day.

Over top of that, we have no room to reallocate nonsustaining CapEx from EPO to Media Luna as progress on EPO is maintaining pace. That study in concurrent mine development will consume its $30 million to $35 million budgeted this year. I'd note here that there's been no change to sustaining CapEx guidance. That's very much on pace.

The final point of note on this slide, when comparing our year-to-date performance to performance at guidance metal prices, you can see the impact that elevated gold price is having on our costs as we now report on a gold equivalent basis. I mean it's a good problem to have, but an important one to note in the context of where we sit today compared to where we thought we would be when we set guidance at $2,500 an ounce gold price. Andrew will take you through this in more granularity.

Got some new slides here on operational performance, and the first of them is on Slide 7. You can see there on the chart on the left, setting aside the 10 days of downtime at the mill in May, the processing plant is ramping up exceptionally well. Throughput in both June and July surpassed 11,100 tonnes per day, well above the nameplate capacity of our upgraded mill, which is at 10,600 tonnes per day.

On the recovery side at the right, you can see the metallurgical results. The plant has also been hitting its stride since the conclusion of the commissioning period late March. Recoveries for gold, silver and copper have consistently been achieving their targeted levels. What you will notice in the chart on the top right is that copper and silver recoveries in June were significantly lower than previous months. There's a reason for this.

With the mining of our last open pit El Limon Sur drawing to its close, we processed open pit material in the month of June, which, as you know, is lower in copper content. Our upgraded processing facilities were designed with the ability to batch process our ore, switching between the leaching circuit and the copper and iron sulfide flotation circuits as the metallurgy in the ore dictates.

This June was our first true test of that capability, and I'm quite pleased to say it went smoothly and according to plan. Once we had processed the available high-grade open pit ore, we redirected feedback through the flotation circuits and quickly reestablished our targeted recoveries, which returned to levels more reflective of where we were in April and May on copper, certainly.

To my mind, this is a really good demonstration of the flexibility we've built for ourselves with the new processing facilities. Last note here is that remaining open pit ore has been stockpiled to be used to top up the mill if and as required until EPO comes online or preferably towards the end of mine life.

Moving now to mining on Slide 8. You can see both mines continue to perform very well. Media Luna stepping up nicely towards the targeted 7,500 tonnes per day by mid-'26, more on this in a moment. And over at ELG underground, after a slower start to the year, mining rates picked up and are at or above targeted rates of 2,800 tonnes per day. Recall, we expect to be mining at these rates at ELG underground for this year and next, supporting our need to fill the mill through the construction of EPO before returning to more typical levels of 1,500 to 2,000 tonnes per day at ELG underground as EPO ramps up in late '26 and starts producing in 2027.

I should also note that we're not reporting open pit mining rates on this slide as that part of our operations is now behind us. With the last blast having occurred on July 30, today, at Morelos, we're now mining 100% underground.

Turning to progress and milestones remaining on Media Luna. What's left here? It's set out on Slide 9. First is the delivery of pace to be able to get backfilling and open up more stopes in the underground. Construction of the paste plant and paste distribution is all but complete with the wet commissioning of the paste plant itself and the associated distribution infrastructure currently underway.

I expect paste to begin flowing in the coming weeks. I would note, commissioning of this infrastructure is just a few weeks behind schedule. It's a very sequential step-wise and detailed process. People tend to think here just about the paste plant, but it's about the plant, the GEHO pumps, the big positive displacement pumps, the water line, the tailings line to the paste plant that has to go 7 kilometers through the tunnel, 750 meters vertical delta to get to the paste plant and then the paste distribution lines on the back end. That all has to be hydrostatic tested, tested under pressure, water tested and then solid is introduced. I'm pleased to say that first tailings is scheduled to be introduced August 19 and binder about a week after that.

Second important milestone here is the completion of the two remaining ore passes in the underground, one at the end of August and the other at the end of November. Once these ore passes are completed and in combination with the base backfill, we expect to open up more stopes, allowing us to hit the targets we've set out for ourselves here, 6,000 tonnes per day by the end of quarter 3, then a step up to 6,500 by the end of the year and 7,500 tonnes a day consistently by mid-2026.

Moving on here to Slide 10 sets out the sketch of our next mine on the Morelos property, EPO. It's advancing quite nicely. In May, we took our first development blast for the access ramp off the Guajes tunnel. Those of you who are on the mine tour saw this as we drove through the tunnel from the north side to the south side. We've now developed about 230 meters into that tunnel, so just about halfway to the deposit.

Importantly, we also submitted our permit application in May and received approval for SEMARNAT in July for a modification to our MIA-Integral for the construction of the new waste dump to support EPO construction. Additionally, the feasibility study continues to progress with a number of key items finalized during the quarter, including mine design parameters, mine sequencing, and integrated mine plan and integrated scheduling with Media Luna.

Recall that EPO will utilize Media Luna's ore handling system. So it's important that we have these two mines working in harmony together. We completed field test and test work programs covering aspects of geotechnical issues, hydrogeological issues and metallurgical programs, all of which have now been built into the integrated mine design.

We also assessed various trade-off studies on key elements of the infrastructure design, including ore handling, ore bin, ore waste pass sizing, mine fleet composition and ventilation requirements. Through the back half of the year, we'll start to place orders for long lead time items. In short, things are progressing very well at EPO, and we're on track for initial production in late 2026.

And with that, I'll pass the call over to Andrew to discuss our financials.

Okay. Thank you, Jody, and good morning, everyone. So I'll start my comments first looking on Slide 12, which provides a summary of our Q2 financial performance. Now we were expecting our costs to peak here in Q2, which they have, and that was due to the processing and sale of the initial higher cost ore coming from Media Luna. These higher costs, however, were further elevated in the quarter due to the lower-than-planned production for the reasons Jody just walked through as well as the higher gold price quarter-over-quarter, increasing the cost of royalties and profit sharing.

This higher all-in sustaining cost resulted in tighter margins in Q2 compared to what you've been used to, but our margins do remain robust on a year-to-date basis at around 42%. With costs expected to decline through the second half of the year, we fully expect to improve these margins, particularly if these gold prices continue to hold.

Just looking at the lower chart on this slide now, this shows our free cash flow on a quarterly basis. And you'll know that's our negative free cash flow in Q2, and this will be our last quarter of negative free cash flow. As telegraphed, we transitioned back to free cash flow in the month of June, generating $44 million of free cash flow in the month, and we expect to generate a quarterly positive free cash flow going forward given Media Luna Capital is closing out on our heavy tax royalty and PTU payments for this year are now behind us.

And looking next on Slide 13. I've included this slide just to highlight the impact of the gold price on our -- on some of our key metrics. We did guide at $2,500 gold for the year, $28 silver and $4.30 copper. And given the high elevated metal price environment, although positive margins, we are seeing an impact on that higher gold price compared to where we expected to land at those guided ranges, particularly with respect to all-in sustaining costs, which on a year-to-date basis are just over $100 an ounce higher than where we would have been if metal prices remained at those budgeted and guided levels.

The increase is primarily driven by our royalties in Mexican mandated profit sharing payments or PTU, which account for about $50 an ounce, so about half of that increase. We're also seeing just under $10 an ounce impact on our temporary occupation agreements, and that's due to the higher gold price as well as the expansion of our continued exploration footprint at Morelos, while $33 an ounce is due to the impact of the lower calculated gold equivalent sales.

Going forward, if metal prices remain at these levels, we do expect to continue to see elevated costs as every $100 an ounce increase above our guided gold price we will see about a $20 to $25 impact to all-in sustaining cost.

Moving on next to Slide 14, and you can see here that we ended the quarter with just over $100 million in cash, which is maintaining our target of retaining over that threshold on the balance sheet. In the quarter, we paid our annual profit sharing or PTU payment to our employees, and that was a total of $30 million, and that shows up within changes in working capital given it was accrued for at year-end.

In addition, the capital expenditures for the quarter were about $100 million, of which $55 million relates to Media Luna and the construction of EPO. To support these demands on cash, we did draw $35 million on our credit facility early in the quarter to maintain that $100 million cash on the balance sheet.

With a return now to positive free cash flow in the month of June and the expectation this will continue to be generated going forward, our balance sheet and liquidity position will significantly improve through the back end of the year, and I expect we will start to pay down our debt this quarter.

Our debt facility and liquidity position are better illustrated here on Slide 15, and you can see here our net debt position at June 30 was $226 million or if you were to exclude leases, about $127 million.

To note, during the quarter, we also did amend our credit facility to increase the maturity from December 2027 to June 2029, so it's now a 4-year term. And we also increased the capacity from $300 million to $350 million. Just to note, the debt facility continues to include an accordion feature, which was also increased from $150 million to $200 million. This amended facility is all to provide financial flexibility going forward to execute on our strategic objectives while protecting our strong liquidity position.

Finally, I wanted to just quickly remind everyone of our hedging position, which is summarized in the table on Slide 16. And just to note, there were no additional hedges put in place during the quarter, we continue to have a mixture of 0 cost collars and forward contracts to protect our peso-denominated operating costs. As a reminder, these provide protection for about 60% of our peso operating costs through the year. We will look to add to this peso hedge book for 2026 as we see opportunities present themselves.

With that, I'll hand the call over to Dan.

Thanks, Andrew. Turning to Slide 18. We have been active on the M&A front in recent months, starting with the announced acquisition of Reyna Silver in June and the announced acquisition of Prime Mining last week. The Reyna Silver and Prime acquisitions fit within our strategic objective of becoming a diversified Americas-focused precious metals producer with assets throughout all stages of the development pipeline.

These transactions support asset diversification and enhance our medium- and long-term growth prospects beyond the potential to offer up through our flagship Morelos Property. The acquisition of Reyna Silver builds out our exploration portfolio by adding four highly prospective early-stage exploration properties, two located in Nevada and two in Chihuahua, Mexico.

Our exploration team is extremely eager and excited to get to work on these assets given the underlying potential of all four properties and the strong technical work completed to date by the Reyna Silver team. The acquisition of Prime Mining will give us 100% ownership in the advanced stage Los Reyes development project in Sinaloa, Mexico. Los Reyes will become Torex's next growth project outside of Morelos and given the quality and level of work completed to date, we are looking to complete a preliminary economic assessment on the project mid next year.

The real benefit we're capitalizing on with these acquisitions is our operating expertise, including: one, exploration. We have steadily built out our exploration team over the last few years and now have the people in place to deliver on the potential we see across these five new assets, leveraging our exploration framework.

Number two, project development. Our project team is coming off the Media Luna build and well positioned to advance Los Reyes from PEA stage all the way through to construction and into production. And finally, three, operationally. Our team in Mexico is exceptionally well versed in handling community relations, government relations and the ins and outs of operating in Mexico, including permitting and security.

In our view, these attributes provide us with a strategic advantage to derisk and advance the various projects forward, especially Los Reyes. Overall, we believe we are well positioned to leverage our competitive advantage to unlock significant value across our expanded portfolio over the coming years.

Finally, Slide 19 illustrates how we see these five assets fitting into our exploration pipeline. A significant amount of drilling has already been conducted at Los Reyes, which is notable in where the project sits in our exploration pipeline. Future programs will be aimed at upgrading and expanding the current resource while testing regional targets, both within and outside the known trends.

The Reyna assets will slot into various levels of our exploration system pipeline at the earlier levels, and we've already drawn up plans to begin advancing programs through the remainder of 2025 and into 2026. We'll have more color on these programs when we put out our guidance for 2026 early next year.

It's important to note that these projects won't make us take our foot off the gas when it comes to drilling at Morelos. With 45 million and nearly 125,000 meters of drilling planned for this year, we continue to believe we've yet to unlock the full potential of Morelos, an asset we expect we will be mining for decades to come.

With that, I'll turn the call back over to the operator for any questions.

[Operator Instructions]

The first question comes from Don DeMarco from National Bank Financial.

So yes, congratulations on the positive free cash flow inflection late in the quarter. My first question is on the paste backfill plant. I'm reading that connection is -- hookup is imminent. Can you provide maybe just a little bit more color when you expect it to be operational? And there any CapEx to be incurred in Q3 on this particular item?

Thanks, Don. It's Jody here. Yes, there is CapEx to be incurred in terms of the conclusion of the paste plant, and that is built into the revised sustaining CapEx number that we provided. In terms of concluding the paste plant, you'll recall, Don you at the site visit that we had expected to be feeding tailings by this time. We've had a couple of hiccups there.

One is as we were finishing the Guajes tailings return line, that 7-kilometer line, it took extra time to get the last pressure fittings and components to complete that line, and because it's a high-pressure line, you can't substitute fittings and components. It had to be perfect. So we took an extra week there.

And second, the very large GEHO pump when we were mechanical testing that seal. So that seal had to be replaced. So we're a little bit behind schedule on that. With all of that said, with all of the components, the pump, the lines, the paste plant and then the paste distribution lines, we're hydrostatic testing now in various stages of that at different systems.

We expect to introduce tailings August 18, that is the plan and then a binder about a week after that. We've done a lot of prework outside of the plant to make sure we have the paste recipe right, and so we expect to have a steady stream of paste here flowing by the end of August.

Okay. Good to hear, and so what are the implications of this on your ramp-up of Media Luna underground? Or is there any really?

Yes, that's a good question. There are implications because our stope sequencing had to be adjusted based on the timing of backfilling, and so the team has had to recast the underground mining plan a couple of times now because of the sequencing of not only paste conclusion and backfilling, but also the conclusion of the third and fourth ore pass.

Now the forecast we have for the balance of the year integrates the revised forecasting for paste availability and availability of RB3 and RB4. But what I will say, Don, this is a testament to our strategy of keeping our foot on the gas on development.

Development at over 1,200 or 1,300 meters a month, both lateral and vertical. It's cost us money. It's contributed to that nonsustaining CapEx overrun, but because the mine was so opened up in terms of both delineation drilling on the stopes and in mine development, we had some flexibility. We had some optionality and turns out we needed it because of the paste plant timing and RB3 and RB4 timing, and so I'm pleased with the contingency we've created for ourselves. It's a testament to our operating skills here.

Okay. Great. That's very helpful, and then just as a final question, just shifting over to exploration. I see that you've got a very upsized program this year, a lot of catalysts. Can you just highlight maybe the top 2 or 3 catalysts and the timing of these we might expect? And in particular, also, when might we expect first results out of Atzcala, on the site tour, I saw that, that would look like an interesting target.

Yes. Thanks, Don. So we put out a press release recently and a couple of other ones this quarter. The next probably set of press releases will be later in the summer, and then we'll see a more flurry of them as the programs come together towards the end of the year.

Again, the key one for us is really ELG underground in Media Luna West. ELG underground is key because every year, we can replace reserves that continues to push out that longer -- that production profile at steady state every year because we just displaced low-grade stockpiles.

Media Luna West, you saw the results earlier this year. We're continuing to drill there. The goal there is to get that potentially to a resource either at the end of this year or in sometime in 2026. So those are the key targets. Drilling at Atzcala, as you will have remembered, was going to be more later dated for this year, just waiting on some permits to get drilling there, but we should start to see results flowing through the pipeline to the news flow line probably in early '26 on Atzcala.

More importantly, I think the key ones for us are going to start to do work at the Reyna and Silver assets. We'll get our feet on the ground here at Griffin later this year, start to do some groundwork there, set it up to start to do some drill testing in 2026. The same thing at Batopilas, which, as you know, is a very highly prolific silver district with a very large historical endowment.

We want to get in there, start to do the groundwork again this year and set it up for drilling in 2026 as well as start to advance both Medicine Springs and Guajes. And then additionally, once we close Los Reyes, the Prime transaction, we'll get back and start drilling Los Reyes as well. So lots going on the pipeline, but the key ones at Morelos this year are ELG underground Media Luna West, and then we should start to see more news flow towards the end of this year.

The next question comes from Eric Winmill from Scotiabank.

Just a quick follow-up here on the paste plant commissioning and the backup pumps, are those still on track for installation? I think you had said it was somewhere around October or so.

Yes. The short answer to that, Eric, is yes.

Okay. No, great to see, and maybe just a question on exploration. The Naranjo project, I see drilling has been paused there. It sounds like there's some construction of the drilling platforms underway, any updates there on Naranjo and when drilling will start there again?

Yes. No, we're just working through that. So we'll get back and start drilling that later this year or into early next year. We're just sort of allocating priorities. So the drilling that won't happen there, we'll push it to other targets on the property. But again, that's a very early stage one, really more drill testing of a couple of targets, not a large focus for this year's program.

Okay. I appreciate that, and just on permitting, so it was good to see that there was a permit granted, I guess, for the modification to waste dumps, any sort of read-throughs there in terms of permitting that we should think about for Prime and some of the stuff that you want to do at Los Reyes? Is that a fair statement?

Yes. Eric, Torex has a long and established history, I think, of getting permits largely as we require them, both through the Media Luna build and now evidenced by EPO. That's a testament, a, to our reputation in country; b, the solid science and technical and engineering work we have associated with our permit applications, putting the environment first, which is critically important to the Sheinbaum administration.

I don't think you can reasonably read through a mere modification for a waste dump on an established site to any sort of indication of a breaking up the log jam on open pit mining permitting in country. I think that story is yet to be written there, but I've said this before, and I'll say it again, we remain cautiously optimistic that under Sheinbaum's leadership, the exceptions that she's signaling as it relates to open pit mine permitting is something that we can work with the administration as it relates to Los Reyes on. We have a shot at it, we think. We were clearly prepared to place the bet.

Okay. Great. That's helpful. I appreciate it. And yes, looking forward to the back half of the year, it looks like it should be well on track, free cash flow inflection. So looking forward to the updates.

The next question comes from Allison Carson from Desjardins.

Question is mostly on M&A. So you've obviously been busy on the M&A front and now have secured projects through much of the development pipeline, are you still open to more M&A? And if so, what stage of projects would you be looking at now? Is it more likely to be something closer or in production? Or could M&A still be focused on exploration and development assets?

That's a great question, Allison, and we've gotten it a lot over the last week since we announced the Prime transaction. What I will say to you is that our strategy remains unchanged. I mean Torex was looking to get out from the single asset moniker, and we were looking at assets in the Americas in three streams. One is early-stage exploration plays; two is get our project team working on another project; and three is a producing asset.

We'd always wanted to be doing it from a position of strength and at the right time for the organization, which explains the timing of why we did it this quarter, both on Prime and Reyna. What I will say is because we acquired four assets on the early-stage exploration category, we are not out actively looking to acquire more.

I think an important part of this is we're not collecting assets for the sake of or scaling for the sake of. We want to have some time here to unlock value from the assets that we have acquired, both in the context of project development and early-stage exploration, that very last part of your question still is of interest for us.

Notwithstanding the fact that we're not a single asset anymore, we're still a single producer. We have a couple of mines, but we still have a single process plant, and so we remain open to M&A as it relates to potentially acquiring a producing asset, but again, it will be at the right time, at the right price in a way that complements the portfolio. We don't need to overpay.

Media Luna is ramping up beautifully. We've got free cash flow coming to us from Morelos in a way that we're quite pleased about. So still very much the right deal at the right time. I think we're pretty much done on exploration for a while. We've got another project now ahead of us in addition to the Morelos projects with EPO and then Media Luna West and Media Luna East behind it, but remain open to a producing asset as appropriate.

That makes a lot of sense. And then just looking at Los Reyes, Prime had not been drilling the project since January, but security conditions seem like they were improving. Are you expecting to be able to drill at the property once the acquisition closes in H2? And then how important is being able to drill the project for you in terms of achieving the time line that you've set out?

Yes. When you're talking about achieving the time line that we've set out, what we did say when we acquired Prime was that we would put a PEA out mid-2026. Scott Hicks and his team have done a brilliant job of drilling off that asset. They've drilled more than 220,000 meters, and so while you could always have more drilling to inform a PEA, we think there's enough drilling there to responsibly put out a credible PEA by mid-2026. So that doesn't impact the time line.

In terms of your first question around the security circumstances in Cosalá, what I would emphasize is that Scott's assessment and our assessment of the security issues were not centered around any anti-mining sentiment. They were not centered around any anti-Prime or anti-drilling sentiment. What they really were was cartel issues where Scott and his assessment found that it was not appropriate to have his team traveling the road to site.

What we will do very early days here in concert and in discussion with Scott and his team, even pre-closing is get our team on the ground, start to put resources in place to gain information, real-time information about the security situation, and we hope to be -- I can't say we expect to be because this is in part out of our hands. We hope to be drilling again this year as that settles down. We believe the security issue is very much a point-in-time issue. Sinaloa is widely known for being a fairly stable region from a security perspective historically.

The next question comes from Jeremy Hoy from Canaccord Genuity.

Just one for me. You've talked about recasting the mine plan for this year to accommodate the slight delay in the paste plant and also to achieve the guidance range, which you've set out. Is there any anticipated impact on production or costs in the following years? Or has the development you guys have done provided sufficient space to breathe on that front to be able to maintain your longer-term outlook?

Yes. That's a really good question, Jeremy, because sometimes some companies do mine planning as though the year ends and then there is not a discussion about what happens in the following year. We've been very thorough in recasting the mine plan 6 months, 12 months, 18 months and 24 months ahead of ourselves here, getting less and less specific as time goes out, as you would imagine.

We've got very good short-term mine planning processes in place, and so the short answer to your question is that we are exceedingly optimistic about the mine plan heading into 2026. It is less risky. It will be less changed throughout the course of the year, and when you're not changing things as a result of construction activities, a planned mine is more likely to deliver better safety, better production and better costs, and so we look forward to getting back to the usual state here with Torex, where we plan, schedule and execute with discipline as opposed to moving through a number of different plans given the variabilities of construction in the active mine this year.

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.

Hello, and welcome to the Annual and Special Meeting of the Shareholders of Torex Gold Resources Inc. Please note that today's meeting is being recorded.

If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure.

During the meeting, we'll have a question-and-answer session. [Operator Instructions]

It is now my pleasure to turn today's meeting over to Mr. Rick Howes, Chairman of the Board of Directors. Mr. Howes, the floor is yours.

Thanks. Good morning, ladies and gentlemen, and welcome to the Annual and Special Meeting of Shareholders of Torex Gold Resources Inc. I am Rick Howes, the Chair of the Board of Directors. Jody Kuzenko, President and Executive Officer; Andrew Snowden, Chief Financial Officer; Mary Batoff, General Counsel and Corporate Secretary, are here with me and in attendance. Daniel Ricica, Audit Partner with KPMG, the company's auditors, is also in attendance.

We will begin with the formal part of the meeting, and then I will make a few closing remarks. As this meeting is being held virtually via live webcast, it is necessary to set out a few rules for the orderly conduct of the meeting.

Questions on a motion can be submitted by any registered shareholder or duly appointed proxy holder by clicking on the Q&A icon on the virtual interface at any time. When you submit a question, the system will include your name, which entity you represent, if any, and whether you are a registered shareholder or a duly appointed proxy holder in the message that is sent to us. Questions about procedural matters or directly related to the motions before the meeting may be addressed during the meeting.

If you have already voted by submitting your proxy form or voting instruction form in advance of the meeting, it is not necessary for you to vote again today. Voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item, and a short time will be provided to finish recording your votes after the presentation of all business items.

When the polls open, click on the Vote icon to register your vote. You will only have a certain amount of time to vote when the polls are open.

We will now proceed with the formal portion of today's meeting. To expedite the formal business, I will move and Mary will second all motions.

I now ask that the Annual and Special Meeting of the Shareholders of the company come to order, and I appoint Mary Batoff as Secretary of the meeting. For the purposes of this meeting, I appoint Computershare Investor Services Inc. through its representatives as Scrutineers to tabulate the votes of the polls taken at this meeting and to report on the results.

The matters to be considered at today's meeting are set out in the management information circular of the company dated May 7, 2025, which I will simply refer to as the circular, which was supplemented by a news release issued on May 26, 2025.

A notice calling this meeting, the circular and a form of proxy were delivered to the shareholders via notice and access notification that was mailed on or around May 16, 2025. A copy of the circular and other meeting materials are available under the company's profile on the SEDAR+ website and on the company's website. The audited consolidated financial segments of the company for the fiscal year ended December 31, 2024 and related MD&A were filed on SEDAR+ and posted on the company's website. A copy was also mailed to anyone who requested the financial statements and related MD&A.

Unless there is any objection, I will dispense with the reading of the notice of meeting.

Computershare has attested to the proper delivery of the notice calling this meeting. Proof of service such as -- of such delivery has been provided to me by Computershare. I direct that a copy of the proof of service be attached to the minutes of this meeting as is scheduled.

A quorum for the transaction of business at this meeting is 2 persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy holder holding or representing, in the aggregate, not less than 25% of the issued voting shares of the company.

I have been advised that the quorum requirements have been met, and I declare that this meeting is properly called and duly constituted for the transaction of business. I have received the Scrutineer's report, and I direct that their formal report be attached to the minutes of this meeting as is scheduled.

As we mentioned, voting today will be conducted by electronic ballot. The polls are now open. And at this point, all registered holders and duly appointed proxy holders who have properly logged in with their control number or invite code will be able to register their votes by clicking on the Vote icon.

We will now discuss each item of business on the agenda for today's meeting.

As the first item of business on the agenda, I now present to the meeting the audited consolidated financial statements of the company for the fiscal year ended December 31, 2024, together with the auditor's report to the shareholders. As I mentioned earlier, copies of these documents were mailed to the shareholders who requested them, and they are available on the company's profile on SEDAR+ website.

We do not propose to read them to the meeting and no vote is required on them. Any questions relating to or discussion of the company's audited financial statements and auditor's report will be deferred until the question-and-answer period at the conclusion of the formal part of today's meeting.

The next item of business is the election of directors. The company did not receive notice of any director nominations in connection with the meeting in accordance with its advanced bylaw notice. Accordingly, the only persons eligible to be nominated for election to the Board of Directors of the company are the following nominees who were named in the circular.

I therefore move that each of the following nominees be elected as a director to serve until the close of the next Annual Meeting of Shareholders: Richard Howes, Jody Kuzenko, Caroline Donally, Jennifer Hooper, Jay Kellerman, Rosalie Moore, Rodrigo Sandoval.

I second the motion.

The next item of business is the appointment of auditors of the company. I move that KPMG LLP, Chartered Professional Accountants be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their compensation.

I second the motion.

The next two items of business relate to the company's share compensation arrangements, and each must be approved by not less than a majority of the votes cast at this meeting.

The first of these items is the approval of the unallocated share units under the company's employee share unit plan, and I move that the employee share unit plan resolution, the full text of which is set out on Page 10 of the circular, be approved.

I second the motion.

The second of these items is the approval of the unallocated share units under the company's restricted share unit plan and the amendment to this plan that was disclosed in the news release issued by the company on May 26, 2025.

As set out in that news release, the resolution on Page 11 of the circular is supplemented to include approval of the RSU amendment described in the news release. Being the insertion of the words, "amend this Section 5.02" as a new section -- subsection of the Section 5.02 and the corresponding grammatical changes.

Therefore, I move that the RSU plan resolution, the full text of which is not set out on Page 11 of the circular, with the addition of the RSU amendment, be approved.

I second the motion.

The next and final item of business is the approval of the company's approach on executive compensation, often referred to as a say-on-pay advisory resolution.

I move that the say-on-pay advisory resolution, the full text of which is set forth on Page 11 of the circular, be approved.

I second the motion.

Are there any questions on any of the motions before the meeting?

As there are no questions, we will move on to voting. If you haven't voted already, please register your votes by clicking on the Vote icon and selecting the For or Withhold buttons next to the name of each proposed director and next to the resolution for the appointment of KPMG as the company auditors.

For the other items of business, the employee share unit plan resolution, restricted share plan resolution and the say-on-pay advisory resolution, register your votes by selecting the For or Against buttons next to the resolution.

We will provide registered shareholders and duly appointed proxy holders another 10 seconds to complete the electronic ballots.

[Voting]

The electronic balloting will now be closed. When the voting page indicates the resolutions are closed, your votes will automatically be submitted.

I have been advised that all of the resolutions have been passed. I ask that the Scrutineer compile the report regarding the results of the voting on all business matters and the results will be published on SEDAR+ and by press release. I also direct that the results of the poll will be included with the minutes of this meeting.

The formal items of business as set out in the notice of meeting have now been dealt with. And as there is no further business to come before the meeting, I declare the formal part of the meeting to be terminated.

But before we close the call, I would like to make a few remarks. Today, we say farewell to Roy Slack, who is stepping down from the Board of Directors after 5 years of outstanding service as an Independent Director, Chair of our Technical Committee and member of the Safety and CSR Committee. I want to thank Roy for his wisdom and guidance, especially in terms of steering the progression of Media Luna Project since its inception. And on behalf of everyone in the company, we wish him the very best in his future endeavors.

In closing, I would like to highlight that as shareholders, we have much to be proud of in terms of the performance of the team we have entrusted to manage the business. I would like to recognize the efforts and accomplishments of Jody Kuzenko, President and Chief Executive Officer, the executive team and the wider Torex management team.

As Chair of the Board, I am proud of what the company delivered in 2024, and I want to thank the team for their unwavering dedication to deliver excellence as we set the foundation for continued growth in Mexico and beyond.

That concludes today's meeting. Thank you all for joining us.

This concludes the meeting. You may now disconnect.