Torex Gold Resources Inc
TSX:TXG
Earnings Call Analysis
Q4-2023 Analysis
Torex Gold Resources Inc
The company closed out 2023 with a robust financial performance, underpinned by the strongest all-in sustaining cost performance (AISC) in the fourth quarter and improved cost management. Notably, the AISC margin expanded to 46%, leveraged by higher production and a record-high quarterly realized gold price. Although impacted by a strong Mexican peso, financials were buttressed by healthy gold prices, leaving the company well-positioned for 2024.
Despite high capital expenditures, particularly on the Media Luna project, the company maintained robust free cash flow, excluding Media Luna spending. This financial discipline evidenced by over $180 million in free cash flow has set a solid foundation for the transition to positive free cash flow expected in mid-2025. Additionally, improved cyanide pricing due to reduced ammonia costs bodes well for cost management in 2024.
Media Luna's last year of substantial investment is anticipated in 2024, with expected capital expenditures significantly reducing thereafter. Rising costs for 2024 are mainly due to a temporary production shutdown and start-up costs, which will give way to lower all-in sustaining costs and a swift transition to positive cash flow during 2025. Moreover, the strength of the peso is factored into the financial guidance, hinting at a strategic approach to currency fluctuations.
The company has prudently hedged a portion of its gold production to ensure financial stability during critical investment periods. With approximately 45% of Media Luna expenditures expected to be in Mexican pesos, the comprehensive approach to risk management, including no changes to foreign exchange collars, speaks to a disciplined financial strategy amid market uncertainties.
Encouraging exploration results, especially at Media Luna West, have opened up prospects for another mineralized zone in proximity to the existing infrastructure. These findings not only confirm the resource potential on the south side of the Balsas River but also carve out a path for future exploration priorities.
Although the federal government has announced potential legal amendments affecting mining operations, there is no indication of retroactive application. As such, well-established companies like Torex are expected to continue operations unimpeded into the foreseeable future, providing reassurance against the backdrop of regulatory uncertainty.
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Thank you for standing by. This is the conference operator. Welcome to Torex Gold's Fourth Quarter and Full Year 2023 Conference Call and Webcast. As a reminder all participants are in listen-only mode and the conference is being recorded. [Operator Insructions] 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 Q4 and Full Year 2023 Conference Call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website at www.torixgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed contrary notes on Page 2 of today's presentation as well as those included in the Q4 2023 MD&A. On the call today, we have Jody Kuzenko, President and CEO; Andrew Snowden, CFO; as well as Dave Stefanuto, Executive Vice President, Technical Services and Capital Projects. Following the presentation, Jody, Andrew and Dave will be available for the question-and-answer period. This conference call is being webcast and will be available for replay on our website. Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on SEDAR. Please 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. I'll open my remarks today by speaking to how proud I am of both the operations and the project teams at Morelos for another strong year of results. On the operating side of the business at ELG, we produced 454,000 ounces of gold, and we delivered on our original production guidance for the fifth straight year and solidify our position as the largest gold producer in Mexico. In Q4, we also achieved the second highest quarter of production in our history, and this was driven by a number of new operational records, which I'll speak to shortly. Alongside our operational results, the Media Luna team continued to make significant progress. The project was 60% complete at the end of the year with 84% of expenditures committed and 56% of expenditures incurred. We remain on schedule for first copper concentrate production by the end of this year. Dave will speak more to the project specifics, but with 21 months behind us and 12 months to go in the project period, we are very much tracking to schedule. In terms of CapEx for the project, procurement for equipment, materials and services is tracking reasonably well to the feasibility study plan. That said, the strength of the Mexican peso remains a headwind to contend with along with general inflationary pressures and the teams continue to work hard to find offsets against these pressures. Andrew will speak to this subject in more detail shortly. Most importantly, from my perspective, we accomplished what we accomplished in 2023 safely with no lost time injuries for the full year at ELG and none in the second half of the year at the Media Luna project. We continue to pride ourselves in being one of the safest operators in the industry. And I'm happy to say that in Q4, we surpassed 10 million hours worked without a lost time injury at the ELG operations for the third time since 2020, which is a pretty significant achievement and one that I'm personally very proud of. Beginning on Slide 4. This is our strategy. This should look familiar, but a bit different to most of you, while our strategic pillars remain largely consistent with what you've seen for the last 3 years. Given the progress we've made on our plan, it was time to update the strategy to reflect some slight shift in focus. I'll take you through this pretty quickly. First, the previous pillar of advanced and derisked Media Luna is now squarely focused on getting Media Luna dune, delivering the project on schedule and on budget and then ramping up the mine to full production of 7,500 tonnes per day. A number of key project risks that we were actively managing just a year ago are now in the rearview mirror. We broke through in the Waha tunnel in December, and we've now obtained all permits for both the operational and development phases. From where we sit today, we're confident in our ability to deliver first production in Q4 '24, commercial production in early 2025 and achieved steady state production within the 3-year ramp-up we outlined in the technical report. Next, our teams are focusing on integrating the Media Luna project with our ELG operations to really get the site working inside the same systems. And from there, we'll optimize the entire Morelos property to have both sides of the river, running at continuously improved performance in terms of productivity and costs, no different than what we view today at ELG operations. While our operations and project teams are hard at work, it's critical that we remain focused on disciplined growth and capital allocation. With $465 million of available liquidity at year-end, we're pretty pleased to say that available liquidity now is greater than the remaining spend on the Media Luna project, which is $384 million left to spend. And that is before even considering the 4 quarters of strong cash flow we have coming to us from ELG operations this year. On the bottom left of the slide, you'll see grow research and resources. This is a new, the 2 areas of near-term focus. Our drilling at ELG underground, which has further increased our confidence to replace reserves and increase resources. And the second area is drilling on the south side of the Balsas River. It continues to highlight the potential for new mining areas such as EPO and Media Luna West. We're making good progress on completing an internal pre-feasibility study this year on EPO to see how we can optimally fit this into our future life of mine plans as an additional source of feed for the mill. In the bottom center, you'll see retain and attract best industry talent as a new pillar. But this really isn't new to the Torex agenda. We continue to see our talent and our culture as key strategic differentiators in terms of our ability to consistently deliver results. And finally, there on ESG excellence. We closed the year with a lost time injury frequency of 0.31 per million hours worked, and we continue to work our sustainability agenda such that risks in this category are responsibly managed. Turning to some highlights of our results on Slide 5. As you can see from this chart, Torex has firmly asserted itself as a consistent, reliable producer with average production over the past 5 years of over 450,000 ounces. Production in 2023 was near the midpoint of the full year guided range. Full year total cash costs and AISC came in at the upper end of the revised guided ranges. Total cash costs at $866 per ounce, while AISC was $1,200 per ounce. While free cash flow was negative in the year as expected, company-wide, we generated $181 million of positive cash flow for the full year, that's prior to spending $366 million on the Media Luna project. Really, that 181 is a testament to the cash generation capability of our Morelos asset. We exited the year with a very strong balance sheet, and Andrew will touch on that in more detail when he is up. On Slide 6, I wanted to point out that the strong production in Q4 was driven by a number of operational records that were broken for both the quarter and the year. While not shown specifically on these charts, in the ELG open pits, average tonnes per day mined for the quarter was 19,400. This set a new daily ore tons mined record and certainly contributed to the finished production results you see on the top left. On the top right, throughput rates in the processing plant remained above 13,000 tonnes per day for the fourth consecutive quarter. And so the team set a new annual throughput record of 13,178 tonnes per day. Bottom left, you can see the grades picked up as expected in Q4, following the completion of that low grade, high strip phase of the open pit mine plan we saw through the middle of 2023. And finally, on the bottom right, the momentum from ELG underground continued into the fourth quarter with mining rates averaging 2,300 tonnes per day in Q4 and over 2,000 tonnes per day for the year. This is important for 2 reasons. First, it surpassed the previous annual record set in 2022. And second, it means that we achieved our targeted production rate 1 full year ahead of our schedule. Over now to Slide 7 on the topic of the 2024 outlook. This table captures the guidance we issued in mid-January. There are a couple of important takeaways. First, 2024 will be the first year we're also reporting on a gold equivalent basis as we begin to see meaningful copper production in Q4 when Media Luna comes online. Second, production is forecast to be slightly lower this year than in 2023 as we're budgeting a 1-month shutdown of the processing plants in Q4. This will allow us with the necessary upgrades to be done to the processing plants as part of the Media Luna project. This includes the tie-in for the copper and iron sulfide flotation circuits, the time for the regrind mills on the water treatment plant as well as the installation of variable speed drive on the ball mill. As a result of this lower production, total cash costs are expected to be modestly higher in '24 than in '23, reflecting both the 1-month shutdown and the initial start-up costs at Media Luna. That said, all-in sustaining costs are guided lower for '24 than in '23 as capitalized waste stripping is significantly lower now that we're through the high strip phase at the open pits. We've also factored in considerations for the stronger peso and Andrew will provide specifics on that momentarily. Finally, we're very pleased that this will be the last year of significant investment at Media Luna with a guided range of $350 million to $400 million. We expect capital expenditures to decrease significantly in '25 and a rapid return to positive free cash flow during 2025. Looking longer term on Slide 8, the work we've done over the last few years to improve mining rates and plant efficiencies and add meaningful ounces to the mine plan continues to improve the long-term outlook. And you can see in this table how it's evolved. 2 years ago, we were guiding 385,000 to 425,000 ounces for this year for 2024. Now guidance for this year is solidly above that and is averaging over 450,000 ounces of gold equivalent ounces per year through 2027. The benefit of the reserve additions we made in 2022 can be seen in the improved production profile in the year of 2028. Which is now 10% higher than outlined in the '22 technical report. This reflects the deferral of lower-grade stockpiles and replacing it with higher grade run-of-mine feed. We can expect to further improve on the production outlook by continuing to replace and grow ELG underground reserves and potentially bringing EPO into that life of mine plan I discussed. With that, I'll pass the call over to Andrew to walk us through the financial performance and balance sheet positioning.
Okay. Thank you, Jody, and good morning, everyone. And I'll start my commentary first on Slide 10, where you can see we closed out 2023 on a solid financial note, supported by the strong operational performance achieved in the fourth quarter, which Jody just walked through. During Q4, we achieved our strongest all-in sustaining cost performance of the year, with our AISC margins improving to 46%, driven by higher fourth quarter production, ongoing focused cost management and also a strong realized price of almost $2,000 an ounce. And this is actually the highest quarterly realized gold price seen by the company. Although financial performance was supported by the stronger gold prices, we were impacted in the year by the strength of the peso, which averaged $17.71 in 2023, and this compared to our budgeted rate of 2:1. The stronger peso through the year increased our all-in sustaining cost by approximately $50 an ounce in the year. Considering the ongoing strength of the peso, we have budgeted in 2024 on the basis of an 18:1 exchange rate. And this is also the rate that's reflected in both our total cash costs and our all-in sustaining cost guidance, which Jody walked through road earlier. Recall that for every 1 peso move relative to the U.S. dollar, our all-in sustaining costs will be impacted by about $10 million a year. Looking next to the bottom left quadrant of this slide. As expected, capital spending continued to increase in the fourth quarter with $124 million spent on Media Luna. This is the highest quarterly spend on the project to date. We expect project expenditures to remain around these levels through to and including the third quarter of this year before decreasing in Q4 as we approach commercial production. For full year 2023, total capital spending was $478 million, and that includes $366 million spent on the Media Luna project. And this directly impacted free cash flow as shown on the bottom right quadrant of the slide. Excluding the spend on Media Luna, our underlying business, including costs incurred on drilling and corporate continue to produce robust cash flows with over $180 million of free cash flow for the year. Turning now to Slide 11. You can see here a summary of our unit cost performance for the year. And despite the ongoing pressure from the stronger Mexican peso, I referenced, overall costs were largely in line with the costs achieved in 2022. In the open pit, costs were slightly up, just given the additional stockpile rehandling and contractor costs associated with a period of elevated waste stripping in the second and third quarters. At ELG underground, you can see that record mining rates led to the stronger cost performance there compared to 2022. And then finally, at the processing plant, the increased costs relative to 2022 reflect the higher consumable prices flagged at the start of the year, particularly cyanide pricing as well as a stronger Mexican peso, and these were partly offset by the higher mill throughput. I will note here though, that with ammonia prices coming down in -- through the course of 2023, we have secured improved cyanide pricing for the 2024 year and so I don't expect that to be a significant of a cost pressure in this year's cost profile. Turning now to Slide 12. You can see the impact here of the increased capital spending on our cash balance, which declined by about $200 million through the year from $376 million at the start of the year to a closing cash balance of $173 million. As you can see here, this use of cash was primarily driven by the $478 million spent on capital, including that $366 million attributable to the Media Luna project. In addition to this capital expenditure, the company also paid $116 million in taxes during the year. And we also did see a negative working capital outflow of about $40 million, which was partially related to some slow of VAT refunds we saw towards the end of the year. These VAT refunds did resume in February with $12 million collected in the last few weeks, and we expect further amounts to be received in March. While I'm talking cash though, I do want to just remind everyone that as always, we do expect seasonality in our cash flow related to taxes and royalty payments through the course of 2024. Through this year, I expect monthly tax installments will continue to average about $6 million a month, but we also expect a small annual income tax true-up, which we paid in March. In addition, the annual 7.5% mining tax, this is accrued throughout the year, but paid annually in March, and we expect $25 million of that to be paid next month. And in addition to that, there's a 0.5% royalty related to the proceeds from gold and silver sales. This, again, is accrued monthly through the year, but only paid in Q1, and we expect about $4 million of that royalty to be paid next month. And finally, just to remind everyone about the Mexican profit sharing payment. Gain is accrued monthly through the year and paid out annually in Q2. The 2023 PTU that we expect to be paid in May of this year is about $24 million. And finally, on cash flow. The one item I did want to also highlight is the seasonality impact that we'll see in Q4. And as Jody referenced earlier, we are expecting to have the plant shut down for a month in Q4 for the media unit tie-ins. And so all only we have about 2 months of revenue during that period. With this shutdown in addition to the significant level of Media Luna spending anticipated over the remainder of the year, we do expect free cash flow to remain negative through 2024 before turning positive in mid-2025 with the ramp-up of Media Luna and significant decline in our capital expenditure. And looking at our liquidity position on Slide 13. Just one point I wanted to highlight here is you can see our lease-related obligations did increase during the quarter to end the year at $32 million. These leases relate to mobile equipment for Media Luna with $20 million outstanding for advanced payments made by our lessor in the year. and with the arrival of our first pieces of Sandvik equipment in the fourth quarter, $12 million in leases did commence. These leases will continue to climb throughout 2024 and into 2025 as we take further deliveries on our underground Media Luna mining fleet. The key takeaway from this slide, though, is our balance sheet remains strong with $465 million in available liquidity, and we're well positioned to allow us to deliver on our strategic priorities. And as illustrated on Slide 14, you can see how this liquidity position well supports Media Luna and our strategic goal of maintaining at least $100 million of cash on our balance sheet.As noted earlier, available liquidity of $465 million is now greater than the $384 million of capital remaining on Media Luna. When including our strategic goal of maintaining $100 million in the balance sheet, we only require $19 million of cash flow from ELG over the next 4 quarters to achieve this, which I expect sitting here in mid-February, we've already generated that level of free cash flow. Given the solid liquidity position, coupled with strong ongoing free cash flow from ELG, which was over $180 million in 2023, we're extremely confident in our ability to fund Media Luna exit 2024 with a strong balance sheet. And as I mentioned, return to positive free cash flow generation next year in 2025. Now finally, I'll touch briefly on hedging, which is summarized here on Slide 15. And just to note to take advantage of the higher gold prices we saw in Q4 and to match the spending profile forecast through the course of this year on Media Luna. We have locked in an additional 17,000 ounces of gold forward sales in Q3 of 2024, and that was at a price of just over $2,100 an ounce, bringing the Q3 average forward price to over $2,000 an ounce. This now brings our total amount of gold hedged for the year to 158,000 ounces at an average gold price of $19.72 an ounce, and you can see that summarized on this slide by quarter. As noted in the past, we feel these purpose-built hedges are prudent to protect about 40%, sorry, of our gold production this year during a period in which internal cash flow as a key source of funding for Media Luna. Also just to note, there have been no changes to the 0 cost collars placed to hedge against foreign exchange rate for the Mexican peso. And as a reminder, we expect approximately 45% of Media Luna expenditures to be peso-denominated. With that, I'll turn the call over to Dave for an update on Media Luna.
Thanks, Andrew, and good morning to everyone on the call. Slide 17 shows the progress at Media Luna during the fourth quarter. The project is 60% complete, up from 49% at the start of the quarter and is tracking the schedule and budget. Underground development work is also 60% complete, and I'm proud of the work our teams have done at site. Project to date, underground crews have achieved 22,000 meters of lateral and vertical development with about 14,800 meters of lateral and vertical development remaining on the project. This is split approximately 50-50 between project capital development and operating. On surface, construction of the important Mazapa bypass road bridge is now complete, allowing for deliveries of large equipment to the sell side of the Balsas River. Concrete foundation work, including the WaaS conveyor drive station flotation plant, water treatment plant and 230 kV substation continue to make good progress with planned completion expected this quarter. [indiscernible] the foundations for the PACE plant are well underway with our single largest port to date completed in the thickener area. Production mobile equipment deliveries have also commenced. These include the diesel electric Sandvik Rhino raise borer and the first Sandvik Electric jumbo. A simulator for this equipment has also arrived and has been commissioned at site with the first operators having already completed their initial training. In parallel, our operational readiness and workforce transition plans continue to keep pace with physical progress to ensure we can execute efficiently during the commissioning and ramp-up phases of the project later this year. Now on Slide 18. As noted earlier, breakthrough of the LIS tunnel was completed in December, 3 months ahead of schedule. I want to touch on how impressive an achievement this is given that the tunnel is not only 7 kilometers long, but also 6 meters wide by 6.5 meters high. The alignment at the tunnel at the breakthrough point was within centimeters, a truly remarkable accomplishment. Crews that were previously working on the tunnel have now been redeployed to assist with the capital development work at Media Luna lower, further ensuring our ability to complete all required project development. Connection to the tunnel will improve travel time between both sides of the river and now connects the 2 sides as one unified operation. This also creates opportunities for a more efficient and uninterrupted installation of mine services and the ore handling conveyor in the tunnel. Majority of these conveyor components, including all the conveyor tables and belt segments have been received, anchor bolting to hang the conveyor commenced in January and conveyor installation is expected to take several months with commissioning in August of 2024. On Slide 19, we've included some pictures of these key accomplishments I just highlighted. Concrete works on the surface are seen in both the top-left photo outside the Southportal upper where the pace plant and tailings thickener will be installed and the bottom left photo where footings for the flotation circuits are nearing completion ahead of steel erection, which has started this month. The top middle photo shows part of the completed Mazapa bypass road and bridge. The top right photo shows Jody initiating the final blast for breakthrough at the Haas tunnel. And finally, to the bottom left is our Sandvik Rhino raise borrower that was delivered to site. In summary, lots of progress has been made in a number of significant accomplishments were achieved during Q4. With first production still on track for Q4 of this year, we're looking forward to delivering Media Luna to plan. With that, I'll turn the call back over to Jody.
Thanks, Dave. Before we wrap up here, I wanted to just take some time to highlight some noteworthy exploration results we released during the quarter and touch on the plan for this year, starting on Slide 21. Beginning here with the ELG underground, our understanding of the structural controls of the ore body is evolving, and results indicate that mineralization is controlled by north, northwest structural corridors. We call them trends here on this planned view. You can also see northeast trending fault. There are 2 of them there, Laflaca and Zone 71 faults in blue on the image. Where these trends intersect these faults will be a key focus of our exploration and drilling program in 2024. Importantly, results at ELG Underground have increased our confidence in the ability to continue to replace reserves year after year, and you can expect our year-end 2023 mineral reserve and resource update in March. Moving to the south side of the Balsas River shown here on Slide 22. We conducted our first drilling at Media Luna West since 2013, some 10 years ago and have identified it as a potential third mineralized zone within the Media Luna cluster. Drilling encountered mineralization in close proximity to existing and planned infrastructure being developed as part of Media Luna, with some very notable high grades, including almost 30 grams per tonne over 14 meters. While it's still early days at Media Luna West, there's strong potential for this to become yet another source of feed to fill the mill. The positive drill results were encountering further underscore our belief in the resource potential of the south side of the property. A portion of the 2024 budget at Media Luna will be focused in this area. Finally, on Slide 23, the positive results from our 23 exploration and drilling program will form the baseline for our 2024 program, which is outlined here. has been budgeted for this program in 2024, $15 million of which is attributed to the Media Luna cluster, where we'll be conducting infill and expansionary drilling at EPO and furthering the exploration program at Media Luna West. We're also interested in a new target called Todos Santos. You can see it there in plan view, where an inaugural drilling program will kick off this year. $12 million has been set aside for further drilling at ELG underground, where we will look to access untapped upside along the trends and continue to add reserves and expand resources. And finally, $3 million has been allocated for near mine and regional exploration and drilling. There are a number of targets across Morelos that warrant additional investigation and really speak to how we see this as a long-life foundational asset. All in 2023, it was just an excellent year across the board. We look forward to delivering this pivotal year in 2024 and really setting ourselves up for decades of mining at Berellos and with that for growth in Mexico and beyond. I'll now turn the call back over to Ariel to initiate the question process.
Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Eric Winmill of Scotiabank.
The Torex team. Maybe just firstly on the financial side, great to see you've got lots of liquidity here. Any comments on how we should think about the balance sheet through this year when you plan to draw on the credit facilities or kind of minimum cash balances and how you're going to manage that. Would be helpful.
Yes. And so Andrew here, Eric. So we expect, as I mentioned in my commentary, to try and maintain $100 million cash balance throughout the year. And so as our cash balance looks to decline below that, then we'll start our first draws on the credit facility. As I mentioned, we do have a fairly significant cash outflows here in Q1, particularly in March, with all of the tax payments I mentioned, the 7.5% royalties, a 0.5% royalty and other tax payments. And so my current expectation is that we will start to draw on the facility in March of this year. And then I'll probably expect quarterly draws in and around the same level throughout the first 3 quarters of this year as we continue to deliver on our Media Luna expenditure.
Okay. Fantastic. Maybe just another question too on Mexico. Obviously, lots of news in the headlines these days. Any comments on sort of what's happening on the ground or any potential impacts here to Media Luna energy.
Yes. I think, Eric, what's captured the headlines recently is the federal government's announcement on 20 law amendments, many of which are constitutional in nature. But two, that touch on the mining industry is a proposed ban on open mining and then some pretty serious limitations on water concessions and water-scarce areas. A couple of comments on that. There's just no indication at all that any of this is thought to be retroactive. So established companies like Torex should be able to continue operating well into the foreseeable future as we plan to do. And the other thing I would say is that we did expect some excitement, if you will, during a pre-election period. And so I wouldn't confuse that with really a specific policy-oriented movements here in the mining industry. So the Morena administration needs a majority in the Congress to pass any of these constitutional amendments. There's some 6 months to go here until the June election. We'll see what gets tabled and advanced, but it's a long way to go before either of those amendments is a done deal.
Okay. Fantastic. Very helpful. Great to see the progress at Media Luna and I look forward to following the updates this year. I'll hop back in the queue. Thanks.
Our next question comes from Don DeMarco of National Bank Financial.
So Jody, a lot of contributing factors to the success in operational success in Q4, as you mentioned, mining rates, throughput and grade. On grades, in particular, what can we expect for the open pit grades through the year in 2024?
Yes, Don, I'll start with open pit mining in 2024. It's going to be what I would describe as at usual levels in Q1 and Q2 and then it tapers off significantly in Q3 and Q4. In terms of how that translates into process grade, it will be fairly flat during the first 3 quarters of this year and then picks up in Q4 as we bring Media Luna feed on. Overall, year-on-year, we closed 2023, I think, about 3.3 gram a tonne, and we'll be slightly above that in 2024, somewhere between 3.5 and 4 gram a tonne gold equivalent.
Okay. And next question, looking to the 30-day shutdown, the 1-month shutdown that you mentioned. Can you provide any more color on this, like specifically, for instance, do you know the timing of the shutdown is it earlier later or later in Q4? Is there a possibility that it straddles Q3? And during the shutdown, will you continue to mine and stockpile or?
We'll definitely continue to mine and stockpile ore. And one of the important things to mention is that we have a full year mine plan out of ELG. And so irrespective of the timing of the shutdown, we're mining. And so if it moves a little to the right, we just continue to produce. It's not as though it's a brand-new project. And if it doesn't turn on exactly in October that were out of production or cash flow. From where we sit today, we're looking at either the month of October or November. One of the things that we're really focused on to keep that shutdown tight is to integrate as much as possible in the planned maintenance periods that we take monthly between now and the time of the Q4 shutdown. I'll give you an example. The Media Luna flow sheet calls for an additional trash screen. On the last shutdown, we did in early February, we poured concrete for that. And on the shutdown in April, we will be installing that trash screen. That's already baked into the production plan. And so we'll be looking to fill up each of those maintenance periods, with as much Media Luna scope as we can. And so from where we sit today, Don, we're looking at some point in Q4, preferably earlier away from Christmas as possible. We canceled Christmas in '23. We would like to have it in '24 and be celebrating bringing Media Luna online.
Okay. And adding to that question then, can you just comment on the pace of the ramp-up towards commercial production post that 1-month shutdown period and connecting the mill to various tie-ins and so on?
Yes. I'm going to make a distinction here between mine ramp-up and processing plant ramp-up. We see the process plant ramp-up as being fairly rapid. You can see in our information that we plan to get to commercial production in Q1 of 2025 because really, we're just turning on the copper and iron sulfide flotation circuits, which is not an exceptionally complex process. Now on the mining side, we've given ourselves 3 full years to ramp up to 7,500 tonnes a day. In fact, the mine will essentially be paid off before we ramp up to full production. And so we expect that will be a long process. We have to open up many headings in full production. The Media Luna mine will be turning somewhere between 90 and 100 stopes a year. That takes time. That takes time. And so we've given ourselves enough time reasonably to be able to do that. Again, the emphasis for the Torex team on the feasibility study was to put something realistic that will hold ourselves accountable to. That's project schedule, CapEx and includes the ramp-up schedule.
[Operator Instructions] Our next question comes from Wayne Lam of RBC.
Just had a question on costs. I know you guys have guided to the top end of basic guidance which came in at the very top end despite an almost record quarter production-wise in Q4. Just curious what the main driver is on that outside the stronger peso. And are there any elements that continue to drive cost pressures higher versus your expectations?
I mean really weighing the main single driver for the AISC being at the higher end of our guided range was the peso. I mean, we were expecting to have a strong Q4 operationally, and so that was built into our revised guidance when we issued that. And it was really the peso hanging out around that 17:1 that was the real main driver.
Okay. Great. And then maybe just curious on Madia Luna following up on the question on the time line. The breakthrough on the tunnel was obviously a big milestone for the company. Are there any activities that you can get a head start on now with that complete kind of ahead of schedule?
Yes. This is Dave Stefano here. Definitely, I think what the advance in 3 months has done for us is allowed us to actually improve the installation of the Waas conveyor, which is going to be critical in terms of building up our ore stockpile in advance of commissioning that flotation plant. So although we're targeting in August commissioning date, we think we've got a little bit of flexibility to try and advance that to increase some production and reduce some risk in terms of that initial ramp up of the flotation plant.
Okay. Perfect. And maybe just on the remaining CapEx spend this year. Are there any remaining long lead time items? Or just wondering what the bottleneck components are in getting to completion in Q4.
Yes. Good question. I mean, as we suspected all along, electrical components and electrical switch gear have been the challenge on the project. And it's been a challenge in the industry in general, certainly driven by the excitement around alternative energy sources, EV power and so on. So we're feeling that. So we're tracking that very closely. And unfortunately, electrical equipment is one of the last things that you engineer on a project. So there were some of our later POs that we issued. I can say that all of those POs have been issued, and we're tracking that very well. So some of the longer-lead POs for the high-voltage equipment, we did get out on the street early on those, and they're tracking well as well. But we are making sure our vendors meet their commitment, and that's really the next step that we're -- we need to focus on.
As there appear 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.