Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources Inc. 4th Quarter and Year End 2019 Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Mary Badoff, General Counsel and Corporate Secretary. Please go ahead.
Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q4 year end 2019 conference call. Before we begin the presentation, please note that certain statements to be made today by the management team may contain forward looking information. So please refer to the detailed cautionary note in today's MD and A. On the call today, we have Fred Stanford, President and CEO Stephen Thomas, CFO and Jody Kacenko, COO.
Following the presentation, they will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website. This morning's press release, together with the financial statements and MD and A are posted on our website and have been filed on SEDAR. Also, please note that all amounts mentioned on the call today are in U. S.
Dollars unless otherwise stated. I'll now turn the call over to Fred.
Thank you, Mary, and welcome to all on the line. We will follow the same pattern on this call as we did in Q3. Jody Kuzenko in the COO role will handle the operations portion of the call. Steve Thomas in the CFO role will follow with a financial highlights overview of the quarter. Before getting started, I would like to recognize Jody and the entire site team for the recent achievement of a phenomenal safety outcome.
Earlier in February, they surpassed a milestone of 5,000,000 hours worked on-site without a lost time injury. Achieving 1,000,000 hours in the mining industry without a lost time injury is something to be celebrated. Achieving 5,000,000 hours is almost unheard of. Congratulations to the entire team.
After Jody and Steve have provided their updates, I will provide an update on Media Luna Exploration and Muckahi.
I will now turn the floor over to Jody for an overview of operations during the quarter.
Thank you, Fred, and good morning to all on the line. I'm pleased to report that we posted another solid quarter to round out 2019, producing 125,000 ounces in the quarter and 454,000 ounces in the year. This level of production not only placed us at the high end of guidance, but also surpassed the 2018 production record by 28%. As Fred mentioned, our production achievements were outdone only by our safety performance. We had no lost time injuries in the quarter and closed out the year with frequency of 0.63 over a 1000000 hours.
This represents a 32% improvement over year end 2018 and stacks up against best in class performance anywhere in the world. The 5,000,000 hour milestone is something that we are all exceptionally proud of and the entire team is committed to delivering 5,000,000 more. Finally, on the ESG agenda, there were no reportable environmental skills in the quarter. Turning now to production. Performance excellence continued out of both the pits and sub stills with the mines not breaking stride at all in 2019.
In the quarter, an average of 16,000 tonnes per day was mined out of Alimond and Juarez, grades averaging 2.7 grams per ton as expected. Similarly, sub still contributed with an average of 1,000 tons per day in the quarter with grades averaging 7.6 grams per ton completely in line with plan. Turning to the process plants, there are 3 key areas to report out on. 1st, performance excellence in SART 2nd, soluble iron as it relates to reagent consumption and 3rd, alignment issues in the SAG mill, taking these one at a time. 1st up, SART.
During the last market update, I reported that we had an excellent September through the start plans with the agitators and the neutralization takes having been changed out. And I am pleased report that this trend continued for the entirety of Q4. Flow through the plant averaged 4.52 cubic meters per hour the quarter against the design of 400. Copper recovery averaged 91% against the design of 91% and cyanide recovery averaged 0.49 kilograms per tonne of ore milled versus a design of 0.47. With this sustained level of performance, I think we can safely say that we now have starts operating as designed.
Next, soluble iron. In the Q3, we reported that the presence of soluble iron solution was driving cyanide consumption and we were just starting to bench test various methods to oxidize the iron. At the tail end of Q3, we tried oxidizing iron in the leach circuit using plant air. That seemed to work, so we moved on to bench testing the addition of oxygen gas. With success on the bench, we moved into a field trial pumping oxygen into tank 3 during the 1st week of November.
I am pleased to say that while levels of iron and solution went up from 61,000 to 66,000 parts per million from Q3 to Q4, our cyanide consumption had a reverse trend, went down from 4.05 kilograms per ton to 3.52 kilograms per tonne from Q3 to Q4. We were so encouraged by the results that in January we installed piping to an additional tank in the leach circuit and began to pump oxygen in there as well. Early days on the 2nd level of testing, but results have been promising. In terms of impact to cash flow, every half kilogram per ton of cyanide saved results in a cost savings of approximately $400,000 per month in cyanide alone. And there are results in savings in the
quarter. Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources, Inc. 4th Quarter and Year End 2019 Results Conference Call.
As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Mary Badoff, General Counsel and Corporate Secretary. Please go ahead.
Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q4 year end 2019 conference call. Before we begin the presentation, please note that certain statements to be made today by the management team may contain forward looking information. So please refer to the detailed cautionary note in today's MD and A. On the call today, we have Fred Stanford, President and CEO Stephen Thomas, CFO and Jody Kacenko, COO.
Following the presentation, they will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website. This morning's press release, together with the financial statements and MD and A are posted on our website and have been filed on SEDAR. Also, please note that all amounts mentioned on the call today are in U. S.
Dollars unless otherwise stated. I'll now turn the call over to Fred.
Thank you, Mary, and welcome to all on the line. We will follow the same pattern on this call as we did in Q3. Yoti Kuzenko in the COO role will handle the operations portion of the call. Steve Thomas in the CFO role will follow with a financial highlights overview of the quarter. Before getting started, I would like to recognize Jody and the entire site team for the recent achievement of a phenomenal safety outcome.
Earlier in February, they surpassed a milestone of 5,000,000 hours worked on-site without a lost time injury. Achieving 1,000,000 hours in the mining industry without a lost time injury is something to be celebrated. Achieving 5,000,000 hours is almost unheard of. Congratulations to the entire team.
After Jody and Steve have provided their updates, I will provide an update on Media Luna Exploration and Muckahi.
I will now turn the floor over to Jody for an overview of operations during the quarter.
Thank you, Fred, and good morning to all in the line. I'm pleased to report that we posted another solid quarter to round out 2019, producing 125,000 ounces in the quarter and 454,000 ounces in the year. This level of production not only placed us at the high end of guidance, but also surpassed the 2018 production record by 28%. As Fred mentioned, our production achievements were outdone only by our safety performance. We had no lost time injuries in the quarter and closed out the year with a lost time injury frequency of 0.63 over a 1000000 hours.
This represents a 32% improvement over year end 2018 and stacks up against best in class performance anywhere in the world. The 5,000,000 hour milestone is something that we are all exceptionally proud of and the entire team is committed to delivering 5,000,000 more. Finally, on the ESG agenda, there were no reportable environmental skills in the quarter. Turning now to production. Performance excellence continued out of both the pits and sub stills with the mines not breaking stride at all in 2019.
In the quarter, an average of 16,000 tonnes per day was mined out Alimond and Juarez, grades averaging 2.7 grams per tonne as expected. Similarly, sub scale contributed with an average of 1,000 tons per day in the quarter with grades averaging 7.6 grams per ton completely in line with plan. Turning to the process plants, there are 3 key areas to report out on. 1st, performance excellence in SART 2nd, soluble iron as it relates to reagent consumption and 3rd, alignment issues in the SAGNO, taking these one at a time. 1st up, starts.
During the last market update, I reported that we had an excellent September through the starts plants with the agitators and the neutralization takes having been changed out. And I am pleased to report that this trend continued for the entirety of Q4. Flow through the plant averaged 4 52 cubic meters per hour for the quarter against the design of 400. Copper recovery averaged 91% against the design of 91% and cyanide recovery averaged 0.49 kilograms per tonne of ore milled versus the design of 0.47. With this sustained level of performance, I think we can safely say that we now have SART operating as designed.
Next, soluble iron. In the Q3, we reported that the presence of soluble iron in solution was driving up cyanide consumption and we were just starting to bench test various methods to oxidize the iron. At the tail end of Q3, we tried oxidizing iron in the leach circuit using plant air. That seemed to work, so we moved on to bench testing the addition of oxygen gas. With success on the bench, we moved into a field trial pumping oxygen in tank 3 during the 1st week of November.
I am pleased to say that while levels of iron in solution went up from 61,000 to 66,000 parts per million from Q3 to Q4, our cyanide consumption had a reverse trend, went down from 4.05 kilograms per ton to 3.52 kilograms per ton from Q3 to Q4. We were so encouraged by the results that in January we installed piping to an additional tank in the leach circuit and began to pump oxygen in there as well. Early days on the 2nd level of testing, but results have been promising. In terms of impact to cash flow, every half kilogram per ton of cyanide saved results in a cost savings of approximately $400,000 per month in cyanide alone. And there are resulting savings in downstream reagents used in the cyanide destruction process as well.
Lastly, seg up time and alignment issues. BAG throughput averaged 12,120 tons per day in the 4th quarter, relatively flat from quarter 3. The main factor that negatively impacted throughput in the quarter was an unexpected failure in the SAG coupling on the pinion side of the drive system. This happened in late December and took us 81 hours to repair, taking us off of our track of a record milling month to close out the year. You may recall that we had a similar coupling failure in June of 2019, that one was on the reducer side of the drivetrain.
Given that both of these failures were alignment related, we immediately took the following actions. 1st, we undertook 2 separate independent of the grouting and the sole plates under the SAG, looking to rule in or rule out the theory that some visible cracking in the grouting was contributing to the alignment issues. We landed 2 external alignment specialists on-site, one with global experience and the other from Mexico. And while temperature was already being tracked automatically, we also began to track and plot vibration measurements 3 times per day. We took some extra time during our January shutdown to fully align all components of the drivetrain.
Together with other maintenance being performed, the January shut down was 88 hours all in. At this point, I can report that temperature and vibration data is holding within design And we have seen an excellent run of over 14,000 tons per day milled in the period of the month between the January February shutdown. While I don't think it's prudent to conclusively rule out that craft grouting has contributed to the alignment issues, certainly the passage of time without temperature and vibration excursion is very encouraging and I expect that we will have more to report out on this at the end of Q1. I will now turn the call back over to Fred.
Thank you, Jody. Steve, can you please take us through the highlights of the financial results?
Thank you, Fred, and good morning, everyone. Q4 was another strong quarter for Torex Gold both operationally and financially. This quarter rounded out a record breaking year for the company, leaving Torex with a far stronger balance sheet than at the start of 2019. Record production levels and elevated gold price in the second half of the year delivered over $300,000,000 of cash from operating activities. Given this significant cash generation, in Q4, we elected to pay a further $66,000,000 in accelerated debt payments in addition to the $20,000,000 accelerated in Q3.
This meant that we closed 2019 with principal debt outstanding of $180,000,000 and a net debt position of $22,000,000 approximately $200,000,000 better than at the end of 2018. The Q4 closing cash balance of $162,000,000 underpins a positive working capital balance of $97,000,000 The reduction in working capital compared to Q3 arises as the debt prepayments made reduce the long term portion of the debt balance rather than the current liability. Also, the income tax accrual increased in Q4 as tax losses were used up in Q3. This current tax liability will be settled in Q1 of 2020. The other major component of the working capital balance is inventory of $129,000,000 up by $6,000,000 from Q3, due largely to a $10,000,000 increase in the ore stockpile balance reflecting the $300,000 increase in ore tons as we continue to mine rates above processing and after taking account of a primarily non cash impairment.
The balance sheet reflects also that during Q4, we invested a further $12,000,000 in deferred stripping activities and sustaining capital in line with plan and a further $11,000,000 in the growth projects of Media Luna, Sub Sill, El Limon Deep, and further development of the Muckahi mining program. For the full year, this brings us to over $100,000,000 invested to develop the open pits, invest in sustaining capital and advance the growth projects that will support near and long term production. Per our guidance for 2020, investment in these programs will continue and grow for Media Luna as we develop the feasibility study, advance the infill drill program and commence the tunnel under the Bolsys River. With this future capital program ahead of us and whilst we pay down debt during 2020 2021, we implemented a modest hedging program to cover 8,000 ounces of monthly production using 0 cost collar hedges with a call at $1400 and above. We will continue to monitor the suitability of this program being rolled into 2021.
Now turning briefly to earnings for the quarter and full year. Q4 produced over $102,000,000 of EBITDA and $330,000,000 for the full year. Along with the minimal net debt position mentioned earlier, this means our net leverage ratio is below 0.05 and along with other covenants under the credit agreement, we are in full compliance. Earnings from mine operations at $41,000,000 took us to full year earnings of 161,000,000 dollars underpinned by increasing price in Q4 versus Q3, which resulted in an average realized margin of $8.64 per ounce for the 127,000 ounces sold. However, earnings were lower than Q3 due to lower volume of sales and higher depreciation, largely reflecting the non cash impact of impairing the long term low grade and ore stockpile, along with depreciation of the previously capitalized costs of a Limon Sea and the Juarez West pits.
I'm pleased to say that with all the total costs for Q4 at $6.17 per ounce and full year at $6.19 per ounce and AISC at $7.67 per ounce for Q4 $805 for the full year, both cost measures fall within our guidance range. This was achieved despite cost being impacted by elevated reagent consumption to treat soluble iron and the increased cost of the site based profit share plan driven by our higher taxable profit position. Income before income tax expense for the quarter was $31,000,000 $118,000,000 As indicated earlier, the company is now accruing current income tax in addition to the mining royalty, resulting in a tax expense for the full year of $64,500,000 offset by a deferred tax recovery of 17,700,000 The 2 key drivers giving rise to the sizable deferred tax recovery are the depletion of tax losses and the relative change in the book value for property, plant and equipment versus the peso denominated tax value for which the tax value was impacted by a 4% strengthening in the peso during the year. This has resulted in net income of 35 $1,000,000 at $0.41 per share for the quarter and for the full year net income of $71,000,000 or on a basic basis $0.84 a share $0.80 a share on an adjusted basis.
In summary, Q4 has delivered significant free cash flow and earnings per share and our closing balance sheet shows a healthy working In 2020, our focus will remain on maximizing cash generated through sustained production and cost control, strengthening our balance sheet through effective treasury management, and enhancing corporate returns through a rigorous capital investment discipline. Thank you for listening and with that, I will turn the mic back to Fred.
Thank you, Steve. I'll conclude with an update on Media Luna exploration in Muckahi. The infill drilling program at Media Luna provided a nice boost to confidence in the geological model for the deposit. The team had 100% success rate in upgrading targeted inferred tons to the indicated confidence class with a modest increase in grade. In 2020, we will drill to intercept another 100 targets with the objective of upgrading 2 additional areas of the deposit.
This will give us 3 mining areas to include in the feasibility study, which is planned for release in Q1 of next year. Several trade off studies are underway in preparation for the feasibility study. One of the critical trade offs was how to access the deposit. We looked extensively at options to go over the Balsas River, on it or under it and we have recently decided to go under the Balsas River with a 7 kilometer tunnel from the ELG to the Media Luna deposit. In effect, this makes Media Luna an extension of ELG and we can continue to use the facilities and systems that we have established over the past few years.
The tunnel under the river will be far and away the best option from an environmental perspective with no risk of anything falling or leaking into the river. It will also reduce costs and permitting risk. With the designs we are working on, we expect that Media Luna will be one of the most environmentally and socially optimized mines in the world. We expect it to be an all electric mine and Jody is looking at solar power options to take advantage of the high solar loading in this part of the world. However, the tunnel under the river has a longer excavation schedule than some of the other access options.
We expect it to be of lower cost, but it does pose a schedule risk if not started this year. Hence, we have advanced some of the Media Luna project build CapEx to 2020 to get started on this tunnel and for infill drilling to further add to the reserves. Note, we have diamond drilled under the river and the rock quality is excellent for tunneling. Drilling in ELD and sub sill also continues to be successful in extending the high grade mineralization. We will be investing capital in 2020 to get ELD opened up for mining and extending the sub sill infrastructure.
Interestingly, these deeper discoveries are getting down to the elevation of the processing plant which opens up options for future lower cost access. Continuing with the Muckahi update, 2019 was a year of testing the more innovative aspects of the mining system. We demonstrated that we could excavate tunnels using overhead monorail based equipment, We can excavate tunnels at a gradient of minus 30 degrees which is 4 times steeper than conventional tunnels and hence 1 quarter of the length to achieve the same elevation change. We demonstrated that we can achieve conveyable fragmentation in both short hole and long hole primary blasting. We also demonstrated that we can muck out a long hole open stope with a low cost 30 horsepower electric slusher.
2020 will be a year of perfecting the processes that we have demonstrated viable in 2019 and moving on to test the conveying systems that are part of the Muckahi system. The flexible tramming conveyor is being commissioned now. The steep ramp conveyor has been manufactured and is in transit to site. The conveying solution from the open stope brow to the foot wall will be tested later in the year. In the Midu Luna Tunnel, we will test using conveyors in the excavation process.
We are expecting to excavate that tunnel at advanced rates that will challenge the modern area records for drilling blast tunnels. We are also advancing on the design work for the services to support this mining system of the future. The current focus is on automating mine design. The pace of inbound queries from other companies' corporates is increasing. 2020 is going to be a very interesting year for Torex on a number of fronts.
I'll now turn the floor over to the operator to coordinate any questions from call participants
rather than the current liability. Also, the income tax accrual increased in Q4 as tax losses were used up in Q3. This current tax liability will be settled in Q1 of 2020. The other major component of the working capital balance is inventory at $129,000,000 up by $6,000,000 from Q3, due largely to a $10,000,000 increase in the ore stockpile balance reflecting the $300,000 increase in ore tons as we continue to mine rates above processing and after taking account of a primarily non cash impairment. The balance sheet reflects also that during Q4, we invested a further $12,000,000 in deferred stripping activities and sustaining capital in line with plan and a further $11,000,000 in the growth projects of Media Luna, Sub Sill, El Limon Deep and further development of the Muckahi mining program.
For the full year, this brings us to over $100,000,000 invested to develop the open pits, invest in sustaining capital and advance the growth projects that will support near and long term production. Per our guidance for 2020, investment in these programs will continue and grow for Media Luna as we develop the feasibility study, advance the infill drill program and commence the tunnel under the Bolsus River. With this future capital program ahead of us and whilst we pay down debt during 20 2020 21, we implemented a modest hedging program to cover 8,000 ounces of monthly production using 0 cost collar hedges with a call at $1400 and above. We will continue to monitor the suitability of this program being rolled into 2021. Now, turning briefly to earnings for the quarter and full year.
Q4 produced over $102,000,000 of EBITDA $330,000,000 for the full year. Along with the minimal net debt position mentioned earlier, this means our net leverage ratio is below 0.05 and along with other covenants under the credit agreement, we are in full compliance. Earnings from mine operations at $41,000,000 took us to full year earnings of 100 and 61,000,000 underpinned by increasing price in Q4 versus Q3, which resulted in an average realized margin of $8.64 per ounce for the 127,000 ounces sold. However, earnings were lower than Q3 due to lower volume of sales and higher depreciation, largely reflecting the non cash impact of impairing the long term low grade and ore stockpile along with depreciation of the previously capitalized costs of El Limon Sea and the Juarez West pits. I'm pleased to say that with all the total costs for Q4 at $6.17 per ounce and full year at $6.19 per ounce and AISC at $7.67 per ounce for Q4 $8.05 for the full year, both cost measures fall within our guidance range.
This was achieved despite
Our first question comes from Trevor Turnbull of Scotiabank. Please go ahead.
Yes. I had a couple of questions. I guess the first one just related to some of the work you were doing with cyanide consumption in the iron. You mentioned that you've got it down about 0.5 kilogram per ton. And I it sounded like it was around 3.5 kilograms per ton.
I just wondered in a perfect world kind of what is your target for cyanide consumption?
I'll answer that. We've just started with tank, the 2nd tank on the cyanide consumption and we would expect the results to about double what we saw in the first tank. So if we get down to 3, we're doing well.
Okay. And then a quick question on Muckahi. You have talked about having tested the ability to do these excavations at a 30 degrees. And I know you're waiting to get a conveyor so that you can convey up that steep ramp. I just wondered what are you doing in the meantime to actually get material up that ramp or is it going out another way?
Right now we slush it up the ramp and the site tour will be there tomorrow and the next day and people will get a chance to see that. But we flush it up the ramp and later on when we use the conveyor in the excavation process, will slush on to the tail end of the conveyor as we advance it down the ramp.
Okay. And then last question Fred, You came out with the first tranche of updated infill drilling for Media Luna. And I couldn't recall, had that resource calculation also taken into account any dikes that you have at Media Luna? I know you've gone and done those calculations in other parts of the mine, but I couldn't remember if that but I couldn't remember if that had been adjusted for Medialuna yet.
Yes. Going back a few years, Trevor, it was the work on the dikes in Medialuna and the age dating of them relative to the period of mineralization that led to the changes in ELD. So all of those things were included in the very original media loaner resource.
This concludes the question and answer session. I would like to turn the conference back over to Mr. Stanford for any closing remarks.
Thank you, Ariel. In conclusion, Torrex has a lot of exciting catalysts in play for the near, medium and longer term. ELG is a beautiful foundational asset. The team is delivering on the potential of that asset. The Media Luna project is moving forward on schedule and shows great promise to make the ELG asset a cash generator for many years into the future.
Baukaha'i continues to demonstrate that it has the potential to be an industry disruptive mining system and a strategic advantage for Torex. These are interesting times to be a part of the mining company that Torex is and is becoming. We look forward to the next call to report the Q1 results and signing off. I hope that you all have a wonderful day.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Being impacted by elevated reagent consumption to treat soluble iron and the increased cost of the site based profit share plan driven by our higher taxable profit position. Income before income tax expense for the quarter was $31,000,000 $118,000,000 As indicated earlier, the company is now accruing current income tax in addition to the mining royalty, resulting in a tax expense for the full year of $64,500,000 offset by a deferred tax recovery of 17,700,000 dollars The 2 key drivers giving rise to the sizable deferred tax recovery are the depletion of tax losses and the relative change in the book value for property, plant and equipment versus the peso denominated tax value for which the tax value was impacted by a 4% strengthening in the peso during the year. This has resulted in net income of $35,000,000 at $0.41 per share for the quarter and for the full year net income of $71,000,000 or on a basic basis $0.84 a share $0.80 a share on an adjusted basis. In summary, Q4 has delivered significant free cash flow and earnings per share and our closing balance sheet shows a healthy working capital position and a continued journey to a net cash positive position expected in 2021.
In 2020, our focus will remain on maximizing cash generated through sustained production and cost control, strengthening our balance sheet through effective treasury management, and enhancing corporate returns through a rigorous capital investment discipline. Thank you for listening and with that I will turn the mic back to Fred.
Thank you, Steve. I'll conclude with an update on Media Luna Exploration and Muckahi. The infill drilling program at Media Luna provided a nice boost to the confidence in the geological model for the deposit. The team had 100% success rate in upgrading targeted inferred tons to the indicated confidence class with a modest increase in grade. In 2020, we will drill to intercept another 100 targets with the objective of upgrading 2 additional areas of the deposit.
This will give us 3 mining areas to include in the feasibility study, which is planned for release in Q1 of next year. Several trade off studies are underway in preparation for the feasibility study. One of the critical trade offs was how to access the deposit. We looked extensively at options to go over the Balsas River, on it or under it and we have recently decided to go under the Balsas River with a 7 kilometer tunnel from the ELG to the Media Luna deposit. In effect, this makes Media Luna an extension of ELG and we can continue to use the facilities and systems that we have established over the past few years.
The tunnel under the river will be far and away the best option from an environmental perspective with no risk of anything falling or leaking into the river. It will also reduce costs and permitting risk. With the designs we are working on, we expect that Media Luna will be one of the most environmentally and socially optimized mines in the world. We expect it to be an all electric mine and Jody is looking at solar power options to take advantage of the high solar loading in this part of the world. However, the tunnel under the river has a longer excavation schedule than some of the other access options.
We expect it to be of lower cost, but it does pose a schedule risk if not started this year. Hence, we have advanced some of the Media Luna project build CapEx to 2020 to get started on this tunnel and for infill drilling to further add to the reserves. Note, we have diamond drilled under the river and the rock quality is excellent for tunneling. Drilling in ELD and sub sill also continues to be successful in extending the high grade mineralization. We will be investing capital in 2020 to get ELD opened up for mining and extending the sub sill infrastructure.
Interestingly, these deeper discoveries are getting down the elevation of the processing plant, which opens up options for future lower cost access. Continuing with the Muckahi update, 2019 was a year of testing the more innovative aspects of the mining system. We demonstrated that we could excavate tunnels using overhead monorail based equipment, that we can excavate tunnels at a gradient of minus 30 degrees which is 4 times steeper than conventional tunnels and hence 1 quarter of the length to achieve the same elevation change. We demonstrated that we can achieve conveyable fragmentation in both short hole and long hole primary blasting. We also demonstrated that we can muck out a long hole open stope with a low cost 30 horsepower electric slusher.
2020 will be a year of perfecting the processes that we have demonstrated as viable in 2019 and moving on to test the conveying systems that are part of the Muckahi system. The flexible tramming conveyor is being commissioned now. The steep ramp conveyor has been manufactured and is in transit to site. The conveying solution from the open stope brow to the foot wall will be tested later in the year. In the Midu Luna Tunnel, we will test using conveyors in the excavation process.
We are We are also advancing on the design work for the services to support this mining system of the future. The current focus is on automating mine design. The pace of inbound queries from other companies' corporates is increasing. 2020 is going to be a very interesting year for Torex on a number of fronts. I'll now turn the floor over to the operator to coordinate any questions from call participants.
Thank you. We will now begin the question and answer session. Our first question comes from Trevor Turnbull of Scotiabank. Please go ahead.
Yes. I had a couple of questions. I guess the first one just related to some of the work you were doing with cyanide consumption in the iron. You mentioned that you've got it down about 0.5 kilogram per ton. And I it sounded like it was around 3.5 kilograms per ton.
I just wondered in a perfect world, kind of what is your target for cyanide consumption?
I'll answer that. We've just started with tank, the second tank on the cyanide consumption and we would expect the results to about double what we saw in the first tank. So if we get down to 3, we're doing well.
Okay. And then a quick question on Mukahai. You've talked about having tested the ability to do these excavations at a 30 degrees. And I know you're waiting to get a conveyor so that you can convey up that steep ramp. I just wondered what are you doing in the meantime to actually get material up that ramp or is it going out another way?
Right now we slush it up the ramp and the site tour will be there tomorrow and the next day and people will get a chance to see that. But we slush it up the ramp and later on when we use the conveyor in the excavation process, we'll slush on to the tail end of the conveyor as we advance it down the ramp.
Okay. And then last question Fred, you came out with the first tranche of updated infill drilling for Media Luna and I couldn't recall, had that resource calculation also taken into account any dikes that you have at Medialuna? I know you've gone and done those calculations in other parts of the mine, but I couldn't remember if that had been adjusted for Medialuna yet.
Yes. Going back a few years, Trevor, it was the work on the dikes in medialuna and the age dating of them relative to the period of mineralization that led to the changes in ELD. So all of those things were included in the very original media loaner resource.
Okay, great. That's all I had. Thanks Fred.
Thanks Trevor.
This concludes the question and answer session. I would like to turn the conference back over to Mr. Stanford for any closing remarks.
Thank you, Ariel. In conclusion, Torrex has a lot of exciting catalysts in play for the near, medium and longer term. ELG is a beautiful foundational asset. The team is delivering on the potential of that asset. The Media Luna project is moving forward on schedule and shows great promise to make the ELG asset a cash generator for many years into the future.
Baukaha'i continues to demonstrate that it has the potential to be an industry disruptive mining system and a strategic advantage for Torex. These are interesting times to be a part of the mining company that Torex is and is becoming. We look forward to the next call to report the Q1 results and signing off. I hope that you all have a wonderful day.