Torex plans new security strategy following worsening conditions at Morelos
Published: Wednesday, February 27, 2013
By Samuel Williams
Business News Americas
Toronto-based Torex Gold Resources (TSX: TXG) is drawing up a new security strategy to present to the Mexican government following worsening conditions at its Morelos gold project in Guerrero state, CEO Fred Stanford said.
A 30-strong criminal gang has moved into an area about 30km from the project, which is between Mexico City and Acapulco, Stanford told the BMO Capital Markets Global Metals & Mining Conference on Wednesday. This has resulted in a slight deterioration in the security situation since November.
The gang has not targeted the company, which has a 60-strong private security team, but has affected contractors and the local community, he said.
Previous security issues at the project were "sorted out" about two years ago, Stanford said, when the army was sent in to tackle the problem.
The company is compiling a "detailed plan" to put to federal authorities to improve security in the region, including bringing in police, which currently don't patrol the area, according to the executive. The company is willing to help by building a police station if required.
Torex is also progressing with a planned relocation of a local village close to the project, Stanford said, and contracts with 171 families are expected to be signed within the next six to eight weeks.
The relocation, which involves building three-bedroom houses for the families, has been welcomed by the community, he added.
PERMITS AND FINANCING
The company raised US$383mn in a bought deal which closed in October, with an engagement letter regarding a US$250mn debt deal with five financial institutions signed earlier this week.
The deal is expected to be completed in six months following due diligence.
A further US$125mn is expected from warrants in October, leaving the company "about a year" to secure alternative funding if the warrants "don''t come through", Stanford added.
Final permits for the project are expected by June.
The project is expected to require US$675mn to bring to full commercial production, with average annual production of 375,000oz gold expected between 2017 and 2024, according to a bankable feasibility study released last September.