Invesco Canada blog

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Norman MacDonald | May 27, 2016

Gold miner worth the wait

Earlier this month, I attended the opening ceremony of a gold mine in Mexico, along with the governor of Guerrero state, several federal cabinet ministers and the chairman and the CEO of Torex Gold Resources Inc., the company launching the mine. I’ve been investing in commodities for many years, and my focus has always been on high-quality assets run by high-quality people. For me, Torex fits the bill.

Investing in commodities means inhabiting a world of near-constant market noise – in one day, we may see some market watchers negative on gold, others positive on oil, still others negative on copper. And the next day it can all shift. We try to put the noise aside and focus on long-term commodity prices and buying high-quality companies at a significant discount to net asset value. Torex is a great example of a long-term investment that has recently come to fruition.

We were seed investors in the company when we made our first investment back in Q3, 2010. Torex purchased a large property south of Mexico City from Canadian giant Teck Resources Ltd. during the 2008 downturn when Teck was shedding assets. At that time, Torex wasn’t much more than a presentation and a vision. My investment thesis was built on confidence in the management team’s ability to make the most of the great asset they’d been able to acquire. The nature of the Morelos Gold Property is such that the mines have the potential to become some of the lowest-cost producers in the industry. In addition, the property remains 75% unexplored, so there is potential for growth with additional deposits.*


From 2010 through to today, with a focus on good capital allocation and a well-thought-out drilling campaign, the company has delivered on its vision. Torex faced many obstacles during the building of this mine, but dealt with each one head-on in a very professional fashion. The management team is fast earning the respect of industry giants for its ability to build the mine, but more so for the social license they have developed in one of the most violent states in Mexico. The project has improved the living standards of hundreds of families, royalties from the project are flowing directly to the community and many residents are now employed at the mine.


This has been a profitable investment for Trimark Resources Fund since we purchased it in 2010, and it is an example of the investment discipline that we have employed for many years. Torex is an 11% weighting in the Fund, as at April 29, 2016, and I believe that once at full production, the company’s project in the Morelos Gold Property has strong growth potential and should result in robust performance for the company.

* Source:
Trimark Resources Fund, Series A provided the following performance returns as at April 30, 2016: 1-year, -19.30%; 3-year, -7.10%; 5-year, -9.37%; and 10-year, -0.61%; Since inception, 7.96%.

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