Okay. Good morning, everyone. Thank you for being here today to listen to the Torex story. To me, the Torex story is a very clear one. Actually, maybe for the comms team at the back, the slides have disappeared from the TV here. Anyway, the Torex story is a very clear one that's really focused on three key pillars: strong execution, visible growth, and disciplined capital allocation. Maybe just briefly on each of those topics. Firstly, on strong execution. We've developed a strong reputation here over the past 10 years of operations of being a very reliable, dependable, consistent producer, where we hit our production guidance year- after- year, and 2026 will be no different. We're on track to have a very strong second half of the year here, and we'll comfortably be hitting our 2026 guidance.
We also have a number of levers for growth across our portfolio, and I'll make a few comments around growth through the course of the presentation today. Finally, around disciplined capital allocation. Our business is generating strong free cash flow. At today's spot price, we'll be generating about CAD 600 million of free cash flow this year. We have the cash to be able to invest in growth opportunities which provide the best return for our shareholders, while also returning significant capital back to our shareholders. For those who are less familiar with Torex, I'll just provide a quick overview of who we are as a company. We're an intermediate gold, silver, and copper producer, market cap of about CAD 6.3 billion, $4.5 billion . Today, we're very attractively valued.
We're trading at 0.7 times consensus NAV and a free cash flow yield, based on consensus, of about 15%. You can think of us as a company of significant size and scale. Our flagship Morelos property, which you can see in red on the slide here, which is in Guerrero State, Mexico, roughly about 350 km southwest of Mexico City. From that asset, we're producing close to 450,000 ounces this year, and we've got a significant resource base, 30 million ounces across the company's properties, including 10 million ounces within the Morelos Complex. We produce that gold at healthy margin, 54% AISC margin for this year, and generating significant free cash flow, as I mentioned earlier. The company has changed materially over the last 12 months.
A year ago, we finished the construction of the Media Luna underground mine, which is the second underground mine at our Morelos property, and that mine has ramped up exceptionally well since then, and we actually hit design levels in Q1 of this year, a full year ahead of schedule. We also completed two acquisitions in the second part of last year, which transitioned us from being a single asset company to having a portfolio of assets through the mining life cycle. Thirdly, we also declared our inaugural return of capital program in November of last year, which we upsized a few months ago in May, where we'll be returning CAD 350 million to shareholders this year through a combination of dividends, which is about a 1% yield, and significant share buybacks, taking advantage of our current valuation and where we're currently trading.
Now, the Morelos property I mentioned is our flagship asset, and where that asset is today is we are producing 450,000 ounces a year for the next 10-year mine life. We have several growth levers within that property to be able to continue to extend the mine life and to increase production. Firstly, with drilling and on the resource potential of the property. We are actually investing a record CAD 50 million on drilling through the course of this year to be able to continue to add to the mine life at both our ELG underground mine and our Media Luna underground mine, and investing across the Media Luna cluster.
In fact, we issued a press release, I think it was Wednesday of last week, highlighting some recent drill results within the Morelos property. That actually highlighted a new potential corridor, mineralized corridor called the San Miguel Corridor, which is just across the bottom of that property, all the way from Media Luna South to Media Luna East. We will be continuing to invest in that property, and it has the potential to add significantly to our resource base. Now, the first example of us actually turning this drilling into additional ore and additional material is a new mine that we are building this year called Media Luna North. That will be the third underground mine that we will have on our property. The first ore is expected in December of this year.
That will actually shift us as a company from being mine constrained today to being plant constrained, which is a much more comfortable place to be and actually provides lots of optionality for us to increase our production at Morelos looking forward. That is our next growth lever is looking at how can we increase throughput at our plant at Morelos to increase production. We are currently advancing two separate studies. One is a debottlenecking process that could increase throughput and production by about 10%. That will be low capital investment, in and around CAD 10 million of investment that could achieve that throughput increase. We expect we could see the benefits of that as early as late 2027, so late next year.
The second opportunity that we are advancing is a larger expansion of our processing plant to really unlock the installed capacity of our current grinding circuit, which could bring us up to 14,500 tonnes per day. So overall, a 35% increase in throughput. We expect the capital cost of that will be in the region of CAD 100 million. That is engineering work that we are working on now to be able to be decisional as early as the first half of next year. In summary, Morelos is our flagship asset, 450,000 ounces a year for the next 10 years, with significant levers for us to be able to grow that asset, both in terms of mine life extension and production. We also have growth opportunities more broadly within our portfolio, and I will talk now about the Los Reyes gold silver development project in Sinaloa.
We actually issued the PEA on Los Reyes back in July, and that highlighted the strong economics of this project. As we demonstrated a 14-year mine life potential there with 161,000 ounces of production for the first 11 years of that mine life. A low-cost operation with an estimated AISC of CAD 1,600 an ounce and a very manageable capital investment, CAD 550 million to bring that project online, which can be very comfortably funded from our existing Morelos property, accounts for about 10 months of free cash flow from our existing operation. We are committed to continue to advance this project. The PEA was issued in July. We immediately started work on our pre-feasibility study, which will be issued in the second half of next year. Our feasibility study will then come out in 2028, followed by a two-year construction period in 2029 and 2030.
Elsewhere in our portfolio, we also have five exploration assets in our pipeline. Two in Nevada, Griffin and Medicine Springs, in an established mining district, as well as three in northern Mexico, one in Sonora, and two in Chihuahua. The goal here is not just to invest dollars in exploration for exploration's sake. It is to have these opportunities in our pipeline to compete for capital, to compete for dollars against the rest of the growth opportunities within our portfolio, and we will advance each of these opportunities based on their merits and based on the drilling results that we get from these properties. We are actually drilling across four of these five properties this year. When you piece all of that together, the disconnection of valuation becomes more apparent. You can see here where we are currently trading and there are some key metrics against our pay group.
We are not just waiting here for the market to rerate our shares. We are focused on execution to be able to bring forward our catalysts so that the market can understand what we have here as a company and how we can drive the share price higher. I will say a part of this valuation disconnect is also the discomfort that the investment community has at times on operating in Mexico. We have operated in Mexico very safely, very securely for the last 10 years. We know how to permit in Mexico. We have been able to get all the permits that we need to be able to operate and advance our projects as required.
The permitting landscape in Mexico is turning very positively here of late. In fact, over the last 12 months, we have probably had more permits granted in Mexico than we have over the previous eight years.
The catalyst will be focused on here to help drive that share price rerate really in a number of key areas. We touched on these through the course of my remarks today. First, focused on growth at Morelos, both in terms of extending the mine life as well as increasing throughput and production at our flagship asset. We are also committed to continuing to advance the Los Reyes project through study stage and into production by 2031, as well as advancing our various pipeline of exploration assets to drive that long-term upside. We will continue to be committed to returning strong cash flow to our shareholders through that combination of dividends and share buybacks, as I mentioned. Also just to note that we are in the process of applying for a U.S. listing on the New York Stock Exchange.
For those investors who prefer to invest through the U.S. exchange versus the TSX, we expect to be finalized with that listing here in the next few months. With that, in summary, Torex is a scaled, highly profitable company with strong free cash flow. That strong free cash flow here will enable us to focus on those growth levers I talked about through the course of the presentation today, both in terms of advancing and extending the mine life at Morelos, increasing production there, as well as advancing our various projects within our pipeline. That is the Torex story. With that, I will hand the microphone back to [Kaz] for any questions.
Thanks, Andrew, for a very good presentation. Any questions coming from the audience? If not, Andrew. Oh, there is one there maybe. Maybe I will kick it off first. Andrew, as you mentioned, recently you had released some exploration results potentially identifying a new corridor. Could you maybe elaborate on some of those results and why that matters? When could it matter? When could we start seeing it incorporated into the greater plans?
Thank you, [Kaz]. Maybe I will just bring back up the property slide here. You are right, [Kaz], and as I mentioned earlier, we did release our latest Morelos drilling results on Wednesday of last week, and the particularly exciting part of that news release was the potential here of this new San Miguel corridor that I mentioned. Our exploration team have conceptually been quite excited about this corridor for some time now. We have been doing some drilling there for the past several years. But the results were still very early for us to be able to declare this a potential new discovery within the property.
But as our exploration team continue to advance the drilling, it is becoming increasingly likely that this San Miguel fault, that really runs just to the bottom end of our property here, is a source of mineralized fluid within our property, and this area has the potential to add significantly to our resource base. Because of these exciting results we have had today, actually next year, we are likely to invest significant capital in this corridor and drill out across the full corridor from west to east. This corridor is actually different from the current Media Luna fluid source, which is more faults running north to south. Here we are looking kind of east to west, and so we will look across and drill across that fault to be able to really understand the full potential.
If all goes to plan here, we'll do that drilling through the course of 2027 with the potential of declaring an inaugural resource in that area by Q1 of 2028, then advancing the project from there. The actual really exciting kind of optionality with the San Miguel corridor is because of its proximity to Media Luna. It's likely that we'll be able to link in that San Miguel corridor into much of the existing infrastructure we have at Media Luna, including the material handling system. We've got the Guajes Tunnel, which is the connection from the Media Luna deposit all the way to our processing plant, a 7 km underground tunnel under a river. That will allow all of the material we find in this kind of Media Luna cluster area to be able to get brought and handled into our processing plant very effectively.
That will allow us to actually bring on this resource into production much earlier than if this was obviously a greenfield find within a property. We're looking forward to advancing that through the course of next year with a goal of providing more information at the beginning of 2028.
Thanks, Andrew. Was there a question coming from the audience? If not, I'll continue, Andrew. As you mentioned, the second half is going to be better than the first half, and you kind of touched on it, but could you maybe elaborate once again on what's happening in the second half that will improve upon what happened in the first half?
Sure. No. Thank you, [Kaz]. We've actually had a lot of questions, I'll say over the past several months, about our production profile this year. In fact, our expectation in 2026 was always the first half of the year would be softer. So we hit about 200,000 ounces in the first half of the year, and we're expecting to increase that significantly here through the back half of the year. That's really driven by grade. Although in an ideal world, we would look for our production profile to be flat quarter-over-quarter, this year our mine plan was somewhat constrained by the fact that with the Media Luna build last year, our paste plant only came on in September. Because our paste plant came on in September and was commissioned through until the beginning of the year.
We still had a number of open stopes that we had to backfill to be able to then give us flexibility in the mine plan. Our mine sequence through the course of 2026 did not have the typical flexibility we will have going forward, and it meant that we were mining more secondary stopes, lower grade stopes through the first half of the year, and we will be mining higher grade stopes here through the second half of the year. That is all tracking to plan. We are sitting here in late September here, and Q3 is tracked exactly to plan, exactly how we have talked to the market, where we will be stepping up production quite significantly on where we were at Q2, and are very comfortable with hitting in and around the midpoint of our production guidance for 2026.
Great. Thanks, Andrew. I think that is all the time we have. It is our first presentation, so thanks again for keeping us on time, on budget.
Perfect. Okay. Thank you everyone. I appreciate your time.