Ms. Jody Kuzenko reports

TOREX GOLD PROVIDES THIRD QUARTERLY UPDATE ON MEDIA LUNA PROJECT

Torex Gold Resources Inc. has provided the third quarterly update on the development of its Media Luna project. Unless otherwise stated, progress and milestones referenced in this press release are as of June 30, 2023. (All amounts are expressed in U.S. dollars unless otherwise stated.)

Jody Kuzenko, president and chief executive officer of Torex Gold, stated: "Development activities related to the Media Luna project continued to advance well during [second quarter] with the project remaining on budget and on schedule. At quarter-end, Media Luna was 35 per cent complete across engineering, procurement, underground development and surface construction. With $143.6-million of expenditures incurred through [first half] and the quarterly spend rate expected to increase further, full-year guided expenditures are trending towards the lower end of the guided range of $390-million to $440-million. As of June 30, 45 per cent of upfront project expenditures had been committed or incurred.

"Detailed engineering and procurement activities increased materially during the quarter, with several key purchase orders awarded, the most significant being the battery electric mining fleet for production support and personnel transport, as well as the ball mill motors equipped with variable frequency drives. In addition, we awarded the vertical development and underground construction contract, and the contractor is now mobilizing to site. Work to expedite the paste plant filter presses has been successful in pulling the delivery dates forward by one month while efforts to expedite the schedule critical underground electrical equipment to mitigate schedule risk are ongoing.

"The Guajes tunnel has advanced 4,500 metres with breakthrough on track for early [first quarter] 2024, if not earlier. At South Portal Lower, the main spiral ramp was completed postquarter-end, and the primary tunnel has advanced 2,075 metres. Civil works on both sides of the Balsas River continued during the quarter, and concrete installation will commence as the site-wide concrete contractor is selected.

"With development activities tracking to plan, robust financial liquidity and strong ongoing cash flow from El Limon Guajes, we are well positioned physically and financially to deliver Media Luna on time and on budget, with first concentrate production in fourth quarter 2024 and commercial production in early 2025."

Capital expenditures

Total upfront expenditures related to the development of Media Luna are tracking to the initial estimate of $874.5-million. As at quarter-end, Torex Gold had incurred $268.3-million of project period expenditures (31 per cent to date) with $395.9-million of expenditures committed or incurred (45 per cent to date).

The company has guided $390-million to $440-million of capital expenditures related to the development of the Media Luna project in 2023 ($143.6-million accrued during first half, including $77.2-million in second quarter). Quarterly expenditures are expected to increase in second half 2023 and remain relatively consistent through first half 2024, before declining as development activities wind down ahead of commercial production, which is anticipated in early 2025.

More detail on the Media Luna project, including the feasibility study results, can be found in the company's most recent technical report dated effective March 16, 2022, filed on March 31, 2022.

Project completion

As at quarter-end, development of Media Luna was tracking to plan, with the project 35 per cent complete, up from 24 per cent at the end of first quarter 2023. Detailed engineering is at the 60-per-cent completion mark, while procurement is 48 per cent complete, with a majority of the schedule critical purchase orders either awarded or soon to be awarded. Based on the current schedule, first concentrate production is on track for late 2024.

Procurement

During the quarter, the company executed numerous key purchase orders, including the paste plant conveyors and hoppers, underground material-handling transfer conveyors, rubber lined pipe spools for the tailings system feeding the paste plant, and additional camp modules to accommodate its underground construction contractor. For the surface plant, key orders included medium-voltage switchgear, pad mounted transformers, air compressors, concrete reinforcing steel to initiate foundation installation next quarter and most notably the ball mill motors with variable frequency drives.

Orders were also finalized with Maclean for its battery electric vehicle (BEV) production support equipment and with Rokion for its BEV personnel transport equipment. With respect to contracts, both the vertical development and underground construction contract evaluations were completed and awarded on a combined basis to an already well-established Torex Gold contractor, with a view to creating cost and productivity synergies. Contractor mobilization has commenced.

Engineering

The pace of detailed engineering increased during the second quarter and continues to support procurement activities. Key engineering activities included detailing of the underground ore and waste-handling infrastructure, advancement of electrical supply, and distribution systems within the mine considering the selected BEV vendor's fleet requirements. For the surface facilities, final foundation designs for the water treatment plant and flotation plant were issued, and steel detailing was initiated with a view to advancing fabrication. Electrical foundations and layout designs were submitted and reviewed with the federal power regulator CFE, with the overall design and installation of the 115-kilovolt and 230-kilovolt systems and associated infrastructure advancing to plan.

Underground development and construction

Steady progress was made in advancing the Guajes tunnel and South Portal Lower. Breakthrough of the Guajes tunnel on the south side of the Balsas River remains on track for first quarter 2024, if not earlier. Delivery of the Guajes conveyor table segments began during this period, as well as preparation of the tunnel for conveyor anchor installation next quarter.

As of the end of June, the Guajes tunnel had advanced 4,500 metres, and South Portal Lower had advanced 2,075 metres. Development of the main Media Luna Lower spiral ramp continued and was completed in mid-July. This crew then moved to advancing infrastructure excavation in the lower part of the mine in preparation for the arrival of the underground construction crews, all of which was enabled by the excellent progress of the Guajes development crews. With this work complete postquarter-end, the development crew will commence advancing the Guajes tunnel from south to north.

Steady progress was also made on ventilation and in-mine development during the quarter. The first 112-metre ventilation raise was completed in Media Luna Upper, and the second 175 metre raise pilot was started. As of the end of June, there were 18 active headings, including six in Media Luna Lower and 12 in Media Luna Upper. Development across all headings continues to advance well, with high monthly development rates achieved as ground conditions are excellent.

Surface construction

On the north side of the Balsas River, civil works for the water treatment plant were completed, as well as rough grading, for the 230-kilovolt substation with concrete foundations planned to start next quarter. The expanded laydown area in Atzcala began receiving large equipment such as the 100-cubic-metre copper flotation cells and Guajes conveyor table segments. Additional camp modules to house project staff were also installed. Extension of the main water management culvert below the area of the new flotation plant and copper concentrate storage facilities was significantly advanced, allowing remaining mass civil works to begin. Relocation of the power distribution and installation of new buried power conduits around the flotation plant are expected to be completed early next quarter, allowing preparation for the start of the plant concrete foundations and slab on grade.

On the south side of the Balsas River, expansion of the construction camp pad continued, and work began on the foundation preparation for the new kitchen and project office areas. Slope remediation of the South Portal access road was completed, which allowed for advancing the construction of both the south sedimentation and decant pond dams. Final slope reinforcement of the west paste plant wall excavation was completed, and grading of the backup generator area for foundation work to start next quarter was completed. Work advanced well on both the Mazapa-San Miguel bypass road, which received final regulatory clearance (archeological), and the Mazapa bridge, which will be in place by fourth quarter 2023 to accept deliveries of larger equipment related to both the paste plant construction and the underground construction.

Operational readiness

In parallel with development and construction activities, the surface and underground operational readiness strategy is progressing to plan. Operational readiness teams are accountable for ensuring that processes and systems for all new work areas are established and ready in advance of the handover from the project team to operations. This includes work force transition planning and training (hiring for roles has commenced with initial job-specific training expected to start shortly), developing the operating strategy (including all standard operating procedures), maintenance plans for all fixed and mobile equipment, blend and feed strategies, detailed commissioning plans, first fills, concentrate shipment logistics, and all other requirements to ensure a smooth ramp-up to commercial production in first quarter 2025.

Project execution plan

Based on progress made during second quarter 2023 and a detailed review of both the surface and underground schedules completed late in the quarter, the overall project execution plan is unchanged compared with the prior plan outlined within the inaugural Media Luna update press release published on Feb. 9, 2023, with some potential movement within the plan as set out below.

Initiatives to expedite the delivery of the paste plant filter presses are progressing, and the delivery schedule has been improved by one month since the last update. The company is also working to expedite the underground electrical equipment to reduce schedule risk given delivery times for the underground electrical equipment are some of the longest for the project. Plans for the installation of the early phase 1 FeS flotation circuit and water treatment plant have been adjusted. Given the company's success with reducing cyanide consumption levels over the last 18 months, the business benefits of a single schedule for construction and commissioning the FeS circuit and water treatment plant at the same time as the copper flotation circuit outweighed the benefits to landing the FeS circuit early. In terms of underground development, schedule gains have been made since the last update.

The current project plan relative to the technical report reflects the company's estimates for the completion of key project deliverables. These updated deliverables have not impacted the overall project schedule given the original plan had assumed the potential for schedule adjustments and the possibility for supply chain disruptions.

About Torex Gold Resources Inc.

Torex Gold is an intermediate gold producer based in Canada, engaged in the exploration, development and operation of its 100-per-cent-owned Morelos property, an area of 29,000 hectares in the highly prospective Guerrero gold belt located 180 kilometres southwest of Mexico City. The company's principal asset is the Morelos complex, which includes El Limon Guajes mine complex, the Media Luna project, a processing plant and related infrastructure. Commercial production from the Morelos complex commenced on April 1, 2016, and an updated technical report for the Morelos complex was released in March, 2022. Torex Gold's key strategic objectives are to optimize and extend production from the ELG mine complex, derisk and advance Media Luna to commercial production, build on environmental, social and governance excellence, and expand through continuing exploration across the entire Morelos property.

Qualified person

The technical and scientific information in this press release has been reviewed and approved by Dave Stefanuto, PEng, executive vice-president, technical services and capital projects, of the company, and a qualified person under National Instrument 43-101.

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