Torex Gold's Media Luna mine is past peak capex. The company expects free cash flow to turn positive in 2025, shifting the risk from construction to operations and gold prices.
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Torex Gold Resources (OTCPK:TORXF) is moving past the heavy capital spending phase at its Media Luna mine in Mexico. The company spent roughly $870 million over the past three years developing the underground operation. That bill is largely behind it now.
Media Luna hit nameplate throughput of 7,500 tonnes per day in late 2024. Full ramp-up to 7,500 TPD is expected by mid-2025, according to Seeking Alpha analyst Taylor Dart. At that point, Torex expects all-in sustaining costs to fall toward $1,050 per ounce, down from 2024's run rate above $1,200.
Gold prices above $2,300 per ounce make that margin wide. The company guided for 400,000 gold-equivalent ounces in 2025 from both Media Luna and the existing open pit. At current gold prices, that production profile would generate meaningful free cash flow after years of negative free cash flow during construction.
The transition matters because Torex has two mines on one lease: the open pit at El Limón Guajes is nearing the end of its life, while Media Luna replaces it underground. The open pit produced around 300,000 ounces in 2024. Media Luna is designed to produce 250,000 ounces annually. Combined production should hold above 400,000 GEOs through the early 2030s, according to the company's life-of-mine plan.
Execution risk remains. Media Luna is an underground block-cave mine in Guerrero state, a region with security challenges. Torex has dealt with illegal mining and road blockades before. A repeat would disrupt the ramp-up and delay the free cash flow inflection.
Dart, who holds a long position in shares of Alamos Gold (ALKEF) and not Torex, noted that the company's net asset value per share sits around $11.60 under conservative gold price assumptions. Torex traded near $9 in early March, a discount to that NAV. A successful Media Luna ramp would close that gap, Dart said.
The bigger risk sits on the downside. If gold prices drop below $1,800 per ounce, the margin at Torex narrows sharply. The company's balance sheet carries about $400 million in debt from the Media Luna build. Free cash flow would disappear and the stock would re-rate lower.
For traders watching the gold equity space, the key number is the ramp timeline. Every quarter of delay pushes the free cash flow turn into 2026. If Media Luna sustains 7,500 TPD by mid-2025, the stock has room to re-rate. If not, the margin of safety narrows.
The next scheduled catalyst is the first-quarter production report, due in April. That will show whether the ramp stayed on track through the start of the year.
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