Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources, Inc. 2nd Quarter 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 Dan Rollins, Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Rollins.
Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2019 conference call. 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. In the room today, we have Fred Stanford, President and CEO Stephen Thomas, CFO and Jody Kuzanko, COO.
Following the presentation, senior management 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 and the accompanying financial statements and MD and A are posted on our website and have been filed on SEDAR. Please note that all amounts mentioned in this call are U. S.
Dollars unless otherwise stated. I'll now turn the call over to Fred.
Thank you, Dan, and welcome to all on the line. And welcome, Dan, to your first conference call from this side of the phone line. We will follow the same pattern on this call as we did in Q1. Jody Kozenko, 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 turning the floor over to Jody, I would like to open with a comment about guidance.
We are well on track to deliver annual production and costs within the established range of guidance. An excellent Q2 put us right back on plan. A strong H2 was anticipated when guidance was established and that continues to be the case. I will now turn the floor over to Jodi for an overview of operations during the quarter.
Thank you, Fred, and good morning to all in the line. I'm delighted to be reporting out on a quarter that saw the operations team breaking several records, record ounces produced, record levels of ore tons mined, record quarterly production out of our underground deposit and a record low loss time injury frequency. What a difference a quarter makes. As always, I will start with an update on safety. We had 2 lost time injuries very early in the quarter.
The first was an ankle injury when a contractor fell while using a ladder. The second was a finger injury when a maintenance worker got several fingertips hurt while working under a suspended load when a cable snapped. We have not had a lost time injury since April 22 and closed the quarter with an impressive lost time injury frequency of 0.78, the lowest we have experienced since we started producing in 2015. On the environmental front, while there were no reportable spills in the quarter, we did experience our first reportable event on July 15, when we had a leak from a valve in our process water tank. On that date, the maintenance crew was assigned to prepare a pump connected to the tank.
In preparation for the work, the employees closed the valve as much as they could and they thought they left it in a closed position when unbeknownst to them, the valve was impeded from full closure because of sediment buildup in the pipe and in the tank. While the employees were working on the pump back in the shop, over a period of 3 hours, water from the tank made its way through the sediment and began to discharge freely from the valve. An internal investigation has since revealed that the leak itself occurred over a period of less than 25 minutes. As soon as the leak was detected, it was stopped at source and water redirection efforts were undertaken immediately through both pumping and burning, all to prevent the spilled material from reaching the lake some 1.8 kilometers away. Soil in the impacted area has since been removed and replaced, No permanent environmental damage was done.
At no time were there elevated readings of cyanide in the lake. Owing to the volume of spilled materials, the regulators were notified. We also informed local community leaders, government officials and all of our employees. The internal investigation is complete and corrective actions will include measures to systematically remove sediment buildup in all tanks, valving changes and additional engineered primary containment in that area. It is our commitment that an incident like this will never happen again.
Turning to production. As you read in our results released, we produced a record 100 645,000 ounces of gold in the quarter, 12% more than the prior standing record set in Q3 2018. We said in Q1 that our production profile for 2019 was always back end loaded and this quarter is evidence of delivery on that plan. This strong production performance places us nicely on track to deliver 2019 production guidance. Starting at the front end of the process with mining, average grade for the quarter came in on budget at 2.91 grams per ton, an increase over the grade we were seeing in the Q1, which came in at 2.45 grams per tonne.
Mining rates exceeded plan both in the open pits and underground. Over the quarter, ore production averaged almost 20,000 tonnes per day. This performance excellence in the mines allowed us to further refine and optimize our blending strategy. You may recall that in the Q1, as we began to see issues emerging with the presence of soluble copper and iron, impacting recoveries and reagent consumption, we started down the path of a blending strategy. The idea being a 2 pass blend, pass 1, to maintain gold at or above budget levels.
We call this the Make Money Pass. Pass 2, to achieve target conditions on copper and iron or at a minimum reduce variability of copper and iron in mill feed. We call this the Save Money Pass. Building on this strategy enabled us to blend up head grade to the mill, while maintaining recoveries at 88%, above design levels of 87% and maintain control on cyanide consumption, which averaged 2.7 kilograms per tonne in Q2 versus 4.6 kilograms per tonne in Q1, helping us immensely with our unit cost performance. This approach effectively allowed us to deliver on our commitments, while we continue to work through ongoing reliability issues in the crushing and grinding circuit, as the SAG mill continues to be our bottleneck.
Our average performance on throughput remains relatively unchanged from the Q1. As always, averages don't tell the whole story. During the quarter, throughput was 11,000 tons per day in April, as expected, given that we had a scheduled major maintenance period in that month. In May, we achieved 13,200 tons per day, which is in line with our best performance. In June, we were tracking for the exact same result when we hit 2 unexpected downtime events late in the month, which brought us back down to 10,800 tons per day for the month.
We have many initiatives in place to over resource the bottleneck and optimize throughput. These include changing maintenance contractors, augmenting our QC process on contractor performed work, using external expert support to create predictive maintenance plans, which will then be entered into our business process framework, creating a small internal predictive maintenance SWAT team, proactively having an OEM to do NDE testing and other critical testing equipment and more. While I can't say with certainty exactly when the throughput rates will begin to consistently match our best ever performance, I am confident that these initiatives will over time reduce the frequency and duration of unplanned downtime events. And before closing a word on SART. Over the latter part of this quarter, SART has been operating at 3 quarters of design on throughput, exceeding design on copper recovery and at 90% of design on cyanide regeneration.
Since we commissioned the SART plant, we have been limited on throughput owing to scaling accumulation in the pipes and inner workings. We believe a key contributor to the scaling is the absence of adequate agitation in the neutralization tanks. I am pleased to report that both redesigned agitators are now on-site and are scheduled to be changed out during the August maintenance window. We expect improved throughput once they are installed and operating. We look forward to updating you on this in Q3.
All in, while we still have issues to work through, we are very pleased with the operational performance this quarter. And I'll 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, ladies and gentlemen. As Jody outlined, Q2 saw record production with over 113,000 ounces of gold produced and sold, reflecting record ore tons mined and grade processed above plan, with revenue $151,000,000 and continued control of production costs, this resulted in a record $68,000,000 cash generated from operating activities before working capital and $101,000,000 for the year to date. The significant increase in ounces produced and sold, allied with a reduction in total operational costs before capitalization in Q2 compared to Q1 resulted in total cash costs of $606 per ounce compared to $7.45 per ounce in Q1. Similarly, all in sustaining cost per ounce for Q2 is at a record low of $7.60 per ounce, driving a record average realized margin of $708 per ounce. With total operating cost forecast to be similar in H2 to H1, but increased production from more ore tons processed and the higher processing grades, we expect to see TCC and ASIC per ounce fall further and margin per ounce increase accordingly.
This puts us firmly on track to meet our full year guidance range of plusminus7% on $5.80 per ounce for TCC $7.90 per ounce for AISC. Q2 saw cash outflows totaling $33,000,000 in respect of annual payments landing in this quarter, comprising settlement of the 2018 bonus for Mexican operation and payment of 20 eighteen's royalty obligations and in particular increased payments to reduce the trade payable balance brought forward from Q1 and lastly to transfer $5,000,000 to our restricted funds account. These payments in addition to routine operating cash outflows, which include $24,000,000 invested in our capital program and $27,000,000 for debt payments and interest resulted in a net cash outflow for the quarter of $8,000,000 As a result, the Q2 closing cash balance comprised $84,000,000 in unrestricted cash and $32,000,000 in restricted cash. It is worth noting that under the amended debt facility, we do not need to maintain the restricted funds account. The capital investment in Q2 comprised $11,000,000 invested across the growth projects of Media Luna, Sub Sill, El Limon Deep, as well as our proprietary technology Muckahi for which testing is taking place in the ELD deposit.
And a further $5,000,000 invested in sustaining capital and $7,000,000 attributed to the capitalization of 2 point 6,000,000 tons of deferred stripping activities in line with plan and guidance. Note that with the revised debt facility deferring the payment of our revolver out to June 2022, this significantly improves the working capital position reported at the end of Q2. The inventory balance has increased by $22,000,000 over the quarter $33,000,000 over year to date, due largely to an increase in ore stockpiled. With year to date mining rates exceeding processing rates, the ore in the stockpile has increased by approximately 400,000 tonnes or $25,000,000 For the 430,000 tonnes of subgrade material that we plan to process in 2024, the associated mining costs are effectively expensed in the period, so don't form part of this balance. The outstanding loan balance in respect of the term loan and revolving credit facility was reduced to $288,000,000 with a payment of $20,000,000 in Q2.
Along with the equipment loan and lease payments and interest, financing payments for the quarter totaled $28,000,000 Per the amended debt facility finalized at the end of July, we now have a term loan of $185,000,000 and a revolving credit facility of $150,000,000 of which $100,000,000 is drawn. Key benefits of the new facility have been to increase the proportion of the loan in the revolving credit facility as opposed to the term loan, defer the revolving credit facility repayment until June 2022, remove and or amend certain covenants and terms in keeping with the maturity of the operation compared to where we were at in 2017, reduce the interest rate and create a carve out for investment in development expenditures, including taking Media Luna through to feasibility study, continuing to develop Muckahi and advancing other growth projects such as El Limon Deep and Subsail. Turning now to earnings and liquidity. Income before tax was 22 point $6,000,000 which after the current and deferred tax expense of $12,600,000 results in net income of $10,000,000 or $0.12 per share. This compares to a net loss of $1,300,000 for Q1 2019, yielding a year to date earnings per share of $0.10 Adjusted earnings are $8,800,000 or $0.10 per share compared with a loss of $5,700,000 or 0.07 dollars per share in Q1.
That reflects the unrealized foreign exchange adjustments arising as the quarter end peso exchange rate strengthened by 1% compared to the U. S. Dollar. In closing, Q2 2019 has been strong operationally and financially and in line with plan. Record quarterly ore production has led to record operating cash flows before working capital and earnings from mine operations and realized margin per ounce.
This year to date performance in tandem with landing improved terms and flexibility in the debt facility puts the company in a strong position to deliver in the second half of the year, on track to meet full year guidance and provides the financial foundation for investment in future growth opportunities. Thank you for listening. And with that, I will turn the mic to Fred.
Thank you, Steve. Before opening the floor for questions, I'll make a few comments about exploration and Muckahi. The exploration team at Media Luna has done an excellent job with their directional diamond drilling program. They're well ahead of schedule and they expect to complete the program in the next couple of weeks. Since they were so close to being finished, we decided to wait and publish the drill results and the resource estimate at the same time.
That will be out before the end of the year, well ahead of the original schedule. In El Limon Deep ELD, a maiden underground reserve was published in Q2 and provides another nice sweetener with 86,000 gold ounces at 5.5 gold grams per tonne. ELD is where the proprietary Muckahi mining system is being tested. The testing of Muckahi progresses very well. We started by testing the big risks first.
The first big question was, could we successfully operate tunneling equipment that is suspended from an overhead monorail? The answer is yes. The stabilizing system works just fine. The next big question was, would the equipment perform on a 30 degree down ramp and could we effectively remove the blasted rock on such a steep incline? Again, the answer is yes.
We have taken 8 blasts in the steep ramp. If we can take 8, we can take 80. And if we can take 80, we can keep going until it gets too hot. We will keep excavating the steep down ramp in the ELD to facilitate future production. Preparations for testing the production aspects of Mokaha'ai are complete.
Overcuts and undercuts for long hole open stope mining are completed. The production drill is being shipped to site. Blasting and mucking are scheduled to start before the end of the quarter. Results to date in the Muckahi testing have been very encouraging. There are still risk factors to be tested, but the big risks have been put to bed.
The remaining risks are smaller. And if there are challenges, there are generally multiple alternative options that can be tried instead. 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.
That's probably good.
This concludes the question and answer session. I would like to turn the conference back over to the presenters for any closing remarks.
Thanks again. That's 3 in a row with no questions. In conclusion, ELG is a beautiful asset. The team is on track to deliver on the potential of that asset, and we look forward to the next call to report Q3 results. In signing off, I hope that you all have a wonderful day.
Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.