Welcome to the Torex Gold Resources, Inc. 1st 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 Danny Vaiman, Corporate Controller.
Please go ahead.
Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q1 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. We have in the room Fred Stanford, President and CEO Stephen Thomas, CFO and Jody Kuzenko, 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 and the accompanying financial statements and MD and A are posted on our website and have been filed on SEDAR. Also, please note that all amounts mentioned in this call are U. S. Dollars unless otherwise stated.
I will now turn the call over to Fred.
Thank you, Danny, and welcome to all on the line. Danny, thanks for stepping in to coordinate the call. Dan Rollins will be joining the company at the end of the week. He will be able to coordinate the next conference call. We will do things slightly differently on this call.
Jody Kuzanko in the COO role has been with us for 6 months now. She will handle the operations portions of the call. Steve Thomas in the CFO role will follow with a financial highlights overview of quarter. Before turning the floor over to Jody, I would like to open with a comment about guidance. We fully expect to deliver annual production and costs within the established range of guidance, perhaps at the lower end, but fully within the range.
Our guidance was established with the top end based on 14,000 tonnes per day processed at grades predicted by the reserve model and a design recovery rates. The midpoint of guidance was established at 13,000 tonnes per day, same grades and recovery rates. The lower end of guidance was established at 12,000 tonnes per day, again, at grades predicted by the reserve model and at design recovery rates. In Q1, grades were very close to what was predicted by the reserve model. Throughput was at 12,000 ton per day and recoveries were above design level.
Q1 results had us on track to achieve the lower end of guidance. In Q2, grades have increased as forecasted by the reserve model. Recoveries have continued to be favorable and with changes made in April, throughput levels are trended seeing noticeably higher. We are on track for year end performance within the guidance range established at the beginning of the year. I will now turn the floor over to Jody for an overview of operations during the quarter.
Thank you, Fred, and good morning, everyone. I will start with an update on safety. In mid February, we achieved a safety milestone of 125 days lost time injury free, the longest run-in our company's history and something that we are very proud of. Unfortunately, as runs do, it came to an end when we experienced one LTI later in February and another in March. The first was a foot injury to a contractor, a diamond driller's helper got his foot pinched when the drill was lowered by the operator.
The second injury was sustained when a surveyor slipped and fell while walking on uneven ground and hit his elbow. On the environmental front, there were no reportable spills. Additionally, in March, our filter tailings storage facility was independently audited. We undertake these audit 2 times per year, once during the dry season and once during the wet season. The overall finding of this dry season audit was that the facility is well managed and is performing in accordance with the intent of the design.
In a climate where responsible and sustainable tailings disposal is a key concern for investors, we are both pleased and assured by the outcomes of this audit. Turning to production. As you read in our results release, we produced 77,800 ounces of gold in the quarter. While our production profile for 2019 was always back end loaded and there was never any plan for Q1 to deliver 1 quarter of the year's gold, We were dealt a number of challenges by the ore body that had downstream impact in the processing plant. These were dealt with and require some explanation.
But first, I want to talk about the mine. The good news is that total tons in gold grade were completely in line with expectations, both in the open pits and at Subsill. This is particularly impressive for two reasons. First, mining rate of the open pits, as measured by total tons was set at its highest in the life of mine and the team delivered 13,352 kilotons for the quarter. Similarly, subsill met and exceeded its daily production rate of 8 50 tons per day, even while commissioning the electrical tie ins, the vet fence and the cement rock fill plant.
The complicating factors came from the nature of the ores that were mined in the quarter. Specifically, in the open pits, we were no longer mining from Guajes and we're at the very bottom benches of El Limon B and the very top benches of El Limon C. A full 75% of our ore came from the top and bottom of these 2 pits in the Q1, the balance coming from El Limon Sur and Sub Sill, which were both brought on in mid Q4. Out of this combination of ore, a few critical issues emerged that impact downstream processing. 1, the ore contained more total copper than we had seen in the past.
2, a small pocket of the ore out of El Limon Sur contained high levels of soluble iron, so much so that it was off gassing SO2 while it was being mined by the crews. And 3, the ore we saw out of El Limon at the top was harder than the ore we have seen in the Q4. Taking these two issues separately, first, soluble copper and soluble iron. The fundamental issues with soluble copper and iron in our process plant is that they preferentially consume oxygen and cyanide and preferentially bind to carbon in our carbon and pulp process, which ultimately impacts recovery. In late Q4, when we started to see this issue emerge, we went immediately to work on maintaining recovery.
This was the first priority because if we fail on recoveries, gold has lost its tails and there's just no getting it back. I'm pleased to say that with that focus, our recoveries actually came in at a percentage point above design for the Q1, 88%, which added approximately 1300 ounces of gold to finish product for the quarter. Once we tackled recoveries, we moved on to deal with cyanide consumption, which ultimately goes to our cash costs. Again, through optimized blending and tighter controls on our sampling and cyanide addition processes, we were able to get cyanide consumption down from an average of 5.7 kilograms per ton in January to 3.2 kilograms per tonne in March and April results are just in at an average of 2.5 kilograms per tonne. Moving forward for the balance of 2019, we don't expect to see any major surprises in copper and iron as we continue to mine at relatively steady states from El Limon C, El Limon Sur and Sub Sill and we are confident that our optimized operational strategies will continue to serve us well to maintain recoveries and keep cyanide consumption under control.
Turning now to the issue of hardness. The presence of hard ore negatively impacted rate through the SAG mill in the quarter. We went from 6 19 tons per hour in Q4 to 5.76 tons per hour in Q1. Hardness in the SAG is measured by SAG Mill Commmunution or SMC. A small data set we have indicates that the ore in El Limon is harder than the ore in Guajes.
El Limon averages 11.1 kilowatt hours per ton, while Guajes averages 9.9 kilowatt hours per ton. We also mined through more horn cells at the top of El Limon C, which is harder than our other ores. Our SAG specific energy went from an average of 11.3 kilowatt hours per ton in Q4 to 12.4 kilowatt hours per ton in Q1, indicating that the mill had to work harder to grind the ore. We are now working to outfit our production drills with hardware and software that will give us real time data on ore hardness. This will enable us to optimize our blending and crushing processes ahead of the SAG in response to pockets of hard ore.
Apart from the issue of hardness, which impacted rate, we also had extended planned downtime in the mill and too much unplanned downtime. Our utilization in the segment went from 88% in Q4 to 87% in Q1. The net effect of these two issues, rate and utilization, is that we achieved 1200 tons per day in the Q1 through the process plant, which is less than the 1300 tons per day we achieved in the Q4 of last year and certainly less than the design rate of 14,000 tons per day. The team is now working hard to optimize operational and maintenance practices in the grinding circuit. We have the support of external experts coming next week, and we expect throughput to improve moving forward.
I am pleased to say that April ounces produced was a healthy 34,400 and the May month to date throughput has been 14,200 tons per day. Early days yet, but the optimization plans appear to be delivering results. Turning 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. Revenue for the quarter was $102,000,000 with 77,000 ounces of gold sold at an average realized price of $13.02 per ounce and a margin of $5.37 per ounce. We generated $32,000,000 of net cash from operating activities and from this invested heavily in our capital program and in paying down our debt. We spent $38,000,000 on capital investment with $10,000,000 continuing to drive our growth projects of Media Luna, SubSill, El Limon Deep, as well as our proprietary technology Muckahi, which is being tested successfully at sites. A further $28,000,000 was invested in sustaining capital and deferred stripping activities.
Total tons mined in the quarter at $13,400,000 were in line with plan and are the highest in the mine's history. Of those tons, dollars 7,500,000 were capitalized as deferred stripping accounting for $19,000,000 of the sustaining capital during the quarter, we also repaid $19,000,000 in respect of our loan facility, which along with the equipment loan and lease payments and interest totaled $26,000,000 This resulted in a net cash outflow in Q1 of $30,000,000 The quarter 1 closing balance cash balance of $92,000,000 excluding our restricted funds of 20 $7,000,000,000 and our positive working capital position at the quarter end sees us maintain a healthy balance sheet through which we will continue to invest in our growth projects and reduce the term loan by $76,000,000 for the year. Increased production plans for Q2 onwards see our current treasury position grow meaningfully over the remainder of the year. In respect of operating costs in the quarter, consumption of reagents at the beginning of the quarter were higher than planned, driving processing plant costs up. In response, management initiated cost reduction measures across mining and site support activities, which brought total operating costs excluding the stripping costs below plan.
These efficiency initiatives will continue throughout the year to further reduce cost per ton. Although total operating and sustaining capital expenditures were in line with plan with 77,000 ounces of gold sold, this resulted in TCC of $7.45 per ounce and AISC of $11.61 per ounce for the quarter. We will see these per ounce numbers fall throughout the year and our forecasts and for us to remain in line with our forecast and guidance as cost per ton continue to reduce and ounce production increases in line with the production plan weighted to the second half of the year. I'm pleased to report that we collected a further $15,000,000 in VAT, resulting in over 70% of the VAT receivable balance being current. In April, further amounts were received in record time indicating the considerable progress that has been made in conjunction with the Mexican tax authorities.
Lastly, the company remained in compliance with the covenant test by the term loan agreement and is forecast to do so throughout the next 12 months. Turning now to earnings, the net loss of $1,300,000 or $0.02 per share for Q1 compares to a gain of $1,400,000 for Q4, twenty eighteen. Income before tax was $4,900,000 with a combined current and deferred tax expense of 6,200,000 dollars As reported in previous quarters, the deferred tax expense is impacted by fluctuations in the U. S. Dollar versus peso exchange rate, which saw the peso strengthening by 1.5% against the U.
S. Dollar over the quarter. Since the quarter end, the peso strengthened further by 1.8%, which would decrease the Q1 deferred tax expense by approximately $3,000,000 equal to earnings increase of $0.03 per share. Adjusted earnings, which is reported at a loss of $5,700,000 or $0.07 per share does adjust the unrealized foreign exchange adjustment arising on the deferred tax calculation along with other similar adjustments. In summary, Q1 2019 has seen record tons mined along with combined operating and capital expenditure in line with plan.
However, with relatively fewer ounces produced, paying down debt and continued investment in mine development and growth projects, earnings and cash flows as expected are negative. Production rates have increased in April and plan to do so throughout the remainder of the year. This along with our ongoing program to improve operating efficiencies and lower costs will significantly drive improvements in earnings, cash flow and lower unit cost per ounce in the remaining quarters of 2019. Thank you for listening. And with that, I will turn the mic back to Fred.
Thank you, Steve. Before opening the floor for questions, I'll make a few comments about exploration in Muckahi. Media Luna infill drilling is tracking ahead of schedule and we anticipate providing an update on results in the next 6 weeks or so. In El Limon Deep, we anticipate releasing a maiden underground resource in the same timeframe. The team operating the Muckahi Jumbo has now drilled and blasted 3 rounds with the machine.
The core function of drilling from a monorail has been demonstrated to work as designed. There are the standard rats and mice issues that crop up with any new machine, things such as leaking hydraulic hoses and adjustments to hydraulic pressures, etcetera. These issues are being quickly sorted out. Testing the development process for a 30 degree decline is expected to start in early Q3, which will be our next big milestone. Development to test the production side of the Muckahi system is also advancing quickly in El Limon Deep.
We expect to be in a position to start drilling for the long hole open stope mining in early Q3. Lots on the goal with the testing of the system. Progress has been very encouraging. The operating philosophy has been, first we get good, then we get fast. The team works on a 20 day in rotation and a 10 day out rotation.
They returned to site this week to work on perfecting the procedures for working with the new system. I'll now turn the floor over to the operator to coordinate any questions from the call participants.
Thank you. We will now begin the question and answer session. We currently have no questioners in the queue. 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 all. And once again, we'll take that as a brilliant presentation with no questions. In conclusion, I would just like to say 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 Q2 results. In signing off, I hope that you all have a wonderful day.