Torex Gold Resources Inc. (TXG) Earnings Call Transcript & Summary

Hello. And welcome to the Annual Meeting of Stockholders of Torex Gold. Please note that today's meeting is being recorded. [Operator Instructions] If you experience technical difficulties during the meeting, please click on the support link on the broadcast screen. It is now my pleasure to turn today's meeting over to Chairman of the Board, Terry MacGibbon. Mr. MacGibbon, the floor is yours.

Thanks, Jimmy. Good morning, ladies and gentlemen. And welcome to the Annual and Special Meeting of Shareholders of Torex Gold Resources Inc. My name is Terry MacGibbon, and I am the Chairperson of the Board. Fred Stanford, President and Chief Executive Officer; Jody Kuzenko, Chief Operating Officer; Steve Thomas, Chief Financial Officer; and Mary Batoff, General Counsel and Corporate Secretary are in attendance. Katherine Wetmore, audit partner with KPMG, the company's auditors, is also in attendance. Following the conclusion of the formal part of the meeting, Fred and I will make a few closing remarks. As this meeting is held virtually via live webcast, it is necessary to set out a few rules for the orderly conduct of the meeting. Questions on a motion can be submitted by any registered shareholder or duly appointed proxy holder using the instant messaging service of the virtual interface at any time. When you submit a question, the system will include your name, which entity you represent, if any, and whether you are a registered shareholder or a duly appointed proxy holder in the message that is sent to us. Questions about procedural matters or direct related to motions before the meeting may be addressed during the meeting. Any other questions may be addressed after the formal part of the meeting, or by follow-up e-mail by the company after the meeting. If you have already voted by submitting your proxy form or voting instructions form in advance of the meeting, it is not necessary for you to vote again today. Voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item and a short time will be provided to finish recording your votes after the presentation of all business items. When you are asked to vote, the voting page will appear on the virtual interface. You will only have a certain amount of time to do so when the polls are open. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move, and Mary will second all motions. I now ask that the normal -- that the annual and special of the -- shareholders of the company come together -- come to order. I appoint Mary Batoff, General Counsel and Corporate Secretary of the company as secretary of the meeting. For the purposes of this meeting, I appoint Compushare (sic) [ Computershare ] Investor Services, Inc., through its representatives, as scrutineers to tabulate the votes of the polls taken at the meeting and to report thereon to the Chairman. The purposes of today's meeting are set out in the management information circular of the company dated May 5, 2020, which I will simply refer to as the circular. The notice calling this meeting, the circular and a form of proxy were delivered to the shareholders via notice and access notification that was mailed on or around May 15, 2020. A copy of the circular and other meeting materials are available under the company's profile on the SEDAR website and on the company's website. The audited consolidated financial statements of the company for the fiscal year ending December 31, 2019, and related MD&A were filed on SEDAR and posted on the company's website. A copy was also mailed to anyone who requested the financial statements and related MD&A. Unless there is any objection, I will dispense with the reading of the notice of the meeting. Our transfer agent, Compushare (sic) [ Computershare ] Investor Services, has attested to the proper delivery of notice calling this meeting. Proof of service of such delivery has been provided to me by Compushare (sic) [ Computershare ]. I direct that a copy of such proof of service be attached to the minutes of this meeting as a schedule. A quorum for the transaction of business at the meeting is 2 persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy or proxy holder holding or representing, in the aggregate, not less than 25% of the issued voting shares of the company. I've been advised that the quorum requirements have been met, and I declare that the meeting is properly called and duly constituted for the transaction of business. I have received the scrutineer's report, and I direct that their formal report be attached to the minutes of the meeting as a schedule. As we mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be opened to registered shareholders and appointed proxy holders. The polls are now open, and at this point, all registered holders and proxy holders who have properly logged in with their control numbers or user name and wish to vote, will be able to see on the screen all motions being brought forth at this meeting. We now will discuss each item of business on the agenda for today's meeting. As the first item of business on the agenda, I now present to the meeting the audited consolidated financial statements of the company for the fiscal year ended December 31, 2019, together with the auditor's report to the shareholders thereon. As I mentioned earlier, a copy of these documents has been mailed to the shareholders who requested them and is available on the company's profile on the SEDAR website. We do not propose to read them to the meeting and no vote is required on them. Any questions relating to or a discussion of the company's audited financial statements and auditor's report will be deferred until the question-and-answer period at the conclusion of the formal part of today's meeting. The next item of business is the election of directors. The company did not receive notice of any director nominations in connection with the meeting in accordance with this advanced notice by-law. Accordingly, the only persons eligible to be nominated for election to the Board of Directors of the company are the following nominees named in the circular. I, therefore, move that each of the following nominees be elected as a Director to serve until the close of the next annual meeting of the shareholders: Andrew B. Adams; Franklin L. Davis; David A. Fennell; Michael D. Murphy; Elizabeth A. Wademan; Frederick M. Stanford; Robin A. Bienenstock; Richard A. Howes; Jody L.M. Kuzenko; Roy S. Slack.

I second the motion.

Thank you, Mary. The next item of business is the appointment of auditors of the company for the ensuing year and to authorize the directors of the company to fix their remuneration. I move that KPMG LLP, chartered professional accountants, be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their remuneration.

I second the motion.

Thank you, Mary. The next item of business is to consider, and if deemed appropriate, to pass with or without variation, a resolution of the company confirming certain amendments to the company's By-Law No. 1 as set forth in the circular. To be effective, the resolution to confirm the amendments to the company's By-Law No. 1 must be approved by a majority of the votes cast at this meeting. I move that the resolution to confirm the amendments to the company's By-Law No. 1, the full text of which is set forth on Page 2 of the circular, be approved.

I second the motion.

Thank you, Mary. The next item of business is to consider, and if deemed appropriate, to pass with or without variation, a resolution of the company confirming certain amendments to the company's By-Law No. 2 as set forth in the circular. To be effective, the resolution to confirm the amendments to the company By-Law No. 2 must be approved by a majority of the votes cast at the meeting. I move that the resolution to confirm the amendments of the company's By-Law No. 2, the full text of which is set forth on Page 3 of the circular, be approved.

I second the motion.

Thank you, Mary. The next item of business is to consider, and if deemed appropriate, to approve an ordinary resolution to amend, reconfirm and approve the company's amended and restated shareholder rights plans. The detail regarding the amended and restated shareholder rights plan, including a summary of the plan and the text of the amendments are set out in the circular. The resolution must be passed by a majority of the votes cast at this meeting. I move that the resolution to amend, reconfirm and approve the company's amended and restated shareholder rights plan, the full text of which is set out on Page 5 of the circular, be approved.

I second the motion.

Thank you, Mary. The next and final item of business is the approval of the company's approach on executive compensation, often referred to as say-on-pay advisory resolution. The move that the say-on-pay advisory resolution, the full text of which is set forth on Page 6 of the circular, be approved.

I second the motion.

] Thank you. Are there any questions on any of the motions before the meeting?

Terry, there are no questions.

Thank you, Mary. As there are no questions, we will move on to the vote. If you haven't voted already, please register your votes by accessing the voting page and selecting the For or Withhold buttons next to the name of each proposed director, and next to the resolution for the appointment of KPMG LLP charter professional accountants as the company's auditor. For the other items of business, register your votes by selecting the For or Against buttons next to the resolution to confirm the amendments of the company's By-Law No. 1; the resolution to confirm the amendments to the company's By-Law No. 2; the resolution to amend, reconfirm and approve the company's amended and restated shareholder rights plan; and the approval on the say-on-pay advisory resolution. We will provide registered shareholders and duly appointed proxy holders approximately 20 seconds to complete their electronic ballots. [Voting]

Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. I have been advised that all the resolutions have passed. I ask that the scrutineer compile the report regarding the results of the voting on all business matters and the results will be published on SEDAR and by press release. I also direct that the results of the poll be included with the minutes of this meeting. The formal items of business as set out in the notice of meeting have now been dealt with. And as there are no further business to come before the meeting, I declare the formal part of the meeting to be concluded. Before passing the meeting over to Fred for his closing remarks, I would like to say a few words as the retiring Chairperson of the company. It has been my great pleasure to be Chairperson of Torex since I co-founded the company in 2009. Over the period of time since then, the Board, Fred and his team and all of the Torex employees and contractors and many Mexican officials have worked together tirelessly to make Torex the great socially and environmentally and caring company it is today. Torex has made a great difference to many, many lives, and I am very proud to be part of that process. The last time Fred and I walked around the ELG site in Mexico, we put our arms around each other and looked around the vast mine and production facilities and we're in awe and amazement of the fabulous infrastructure built by Torex and the contribution Torex has made to the local community, the state and to Mexico, all the while maintaining the highest standards of honesty and integrity. We are all very proud of Torex's safety record of over an incredible 6.5 million hours without a lost time accident. Thank you, Fred, for the job you have done and allowing me to be part of it -- be part of this great success. I welcome Jody as our new CEO and leader, and I wish her, Fred in his new role and all of Torex, all the best in the future. Thank you very much.

Thank you very much, Terry. Those are fun memories, and I'll say a few of my own. I would like to start by expressing a big thank you for the entire Torex team, to our 3 retiring directors: Bill Shaver, Jim Crombie and Terry MacGibbon. Your contributions over the years have set the foundation for what has become a very successful company. Our incoming directors, Jody Kuzenko, Robin Bienenstock, Roy Slack and Rick Howes, have big shoes to fill and will benefit from the strong base that you've created. On this significant day in the history of Torex Gold, I would like to especially convey some words of thanks to Terry MacGibbon, our Co-Founder and Chairman. Terry, as you know, our relationship started more than 11 years ago. I was living in [ the suburbs ] and had recently retired from Vale. Late one morning, there was a knock on the door, and I opened it to see you standing there. He had a clutch of exploration maps and a memorable recruiting approach that started with, "It's time you get off your backside, come on over for lunch." Over lunch, you shared your vision for what could be done with this unloved asset in [ Tex ] portfolio. It was located in Guerrero state, a place I had never heard of. There have been ongoing community blockade for 2 years. But what geological potential you knew it had, if we could just sort out the social issues. You believe that we could and that a very successful business could be built around this asset. After you used a few more legendary and unconventional recruiting moves, we, along with Co-Founder, Michael Murphy, and the rest of the Board, started down the path to turn our intention into reality. 11 years later, with that leadership and the commitment of the entire Torex team, your vision has indeed translated into an extraordinarily successful and socially responsible business. In 2019, that unloved asset in Guerrero state generated $181 million in free cash flow, while at the same time, providing good jobs and making a very positive difference in neighboring communities. We have also realized the exploration upside that you envisioned so many years ago, which will keep us generating cash for decades to come. Over the years, you have been a strategic thinker, a believer in doing things differently, a coach, a mentor, a sounding Board and indeed, a friend. You have been generous with your knowledge, your time, your piercing insight and your sharing of recognition. You've stayed calm under pressure and there's naturally been a bit of that. Through your leadership, you have provided space and confidence for the Board and management to deal with that pressure. For me, since that faithful knock on my door 11 years ago, it has been a journey of growth, development and purpose. You made that journey possible, and I truly thank you for it. There's been a lot of growth since. I've heard shareholders but have never seen one. As you know, step back in your well-deserved retirement, I, too, will have very big shoes to fill. You have prepared me well, and I look forward to your continued mentorship as we seek to grow and leverage our social, commercial and technical foundations. I'm sure that we have a great deal to talk about. In closing, after that meeting, there will be many more that want to say thank you. In these COVID times, it will have to be virtual, but we all have many Terry stories to share and tell. Best wishes to you and Cynthia for a long and rewarding retirement. And again, a sincere thank you from myself and the entire Torex team.

Thank you very much, Fred.

Thank you.

This concludes the meeting. You may now disconnect.