McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) is pleased
to report consolidated financial results for the fourth quarter and
year ended December 31, 2016. During the year McEwen Mining
achieved production of
145,530 gold equivalent
ounces(1). Net cash flow generated from operating activities in
2016 was
$25.2 million.(2) On February 27, 2017,
the Company had cash, cash equivalents and precious metals of
approximately $55.2 million and no debt. Our year end conference
call will occur tomorrow at 11am, EST. Details are provided at the
end of this news release.
“On many important fronts, 2016 was a
good year for McEwen Mining. We generated significantly higher cash
flow and earnings per share despite producing 6% fewer ounces. We
grew our treasury by 84% without resorting to equity financing, or
sale of metal streams, or royalties, or taking on debt.
Looking forward into 2017, our next chapter of growth begins.
Pending government approval we are ready to start construction in
Nevada at our Gold Bar deposit late this year. In Mexico, we are
reconfiguring our El Gallo Silver project to improve its economics.
In addition, we are testing new exploration targets. In Argentina,
our Los Azules project is getting more attention as a result of the
improving copper price. Finally, when completed our proposed
friendly acquisition of Lexam VG Gold will enhance our development
and production pipeline with several high grade gold projects
in Timmins, Canada, one of the world’s largest gold
districts,” said Rob McEwen, Chairman and Chief Owner.
The table below provides production and cost
results for the fourth quarter and year ended December 31, 2016,
comparative results from last year, and our production and cost
guidance for 2017. Going forward cost guidance will be
disclosed on an individual mine basis and will not be consolidated.
Consolidated cost guidance is being discontinued due to regulatory
requirements related to the calculation of costs in our 49% owned
interest in the San Jose mine and the required accounting treatment
of that investment. For our SEC Form 10-K Financial Statements and
MD&A refer to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
|
Q4 2015 |
Q4 2016 |
Full Year 2015 |
Full Year2016 |
Guidance2017 |
Consolidated Total(3) |
|
|
|
|
|
Gold
ounces produced |
|
25,452 |
|
|
20,337 |
|
|
110,320 |
|
|
101,482 |
|
|
99,700 |
Silver
ounces produced |
|
981,693 |
|
|
838,768 |
|
|
3,315,667 |
|
|
3,303,709 |
|
|
3,324,000 |
Gold
equivalent ounces produced(1) |
|
38,541 |
|
|
31,521 |
|
|
154,529 |
|
|
145,530 |
|
|
144,000 |
El Gallo Mine – Mexico |
|
|
|
|
|
Gold
ounces produced |
|
11,028 |
|
|
7,622 |
|
|
62,967 |
|
|
54,929 |
|
|
49,700 |
Silver
ounces produced |
|
4,814 |
|
|
3,922 |
|
|
29,917 |
|
|
25,336 |
|
|
24,000 |
Gold
equivalent ounces produced(1) |
|
11,092 |
|
|
7,675 |
|
|
63,366 |
|
|
55,265 |
|
|
50,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ |
496 |
|
$ |
699 |
|
$ |
440 |
|
$ |
524 |
|
$ |
760 |
Gold
equivalent co-product AISC ($/oz)(1)(4)
|
$ |
595 |
|
$ |
832 |
|
$ |
581 |
|
$ |
610 |
|
$ |
900 |
San José Mine(3) - Argentina |
|
|
|
|
|
Gold
ounces produced |
|
14,424 |
|
|
12,714 |
|
|
47,353 |
|
|
46,553 |
|
|
50,000 |
Silver
ounces produced |
|
976,879 |
|
|
834,846 |
|
|
3,285,750 |
|
|
3,278,373 |
|
|
3,300,000 |
Gold
equivalent ounces produced(1) |
|
27,449 |
|
|
23,845 |
|
|
91,163 |
|
|
90,264 |
|
|
94,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ |
765 |
|
$ |
729 |
|
$ |
865 |
|
$ |
760 |
|
$ |
780 |
Gold
equivalent co-product AISC ($/oz)(1)(4) |
$ |
970 |
|
$ |
970 |
|
$ |
1,111 |
|
$ |
954 |
|
$ |
990 |
|
- Silver production is presented as a gold equivalent. Gold
equivalent calculations are based on prevailing spot prices at the
beginning of the year. The silver to gold ratio used for 2015, 2016
and 2017 is 75:1.
- All amounts are reported in US dollars unless otherwise
stated.
- Represents the portion attributable to us from our 49% interest
in the San José Mine.
- Earnings from mining operations, total cash costs, all-in
sustaining costs (AISC), and average realized prices are non-GAAP
financial performance measures with no standardized definition
under U.S. GAAP. See “Cautionary Note Regarding Non-GAAP Measures”
for additional information, including definitions of these
terms.
Financial & Operating Highlights
TreasuryAt December 31, 2016 we
had $58.8 million in cash, investments and
precious metals valued at the spot prices and no debt. In
comparison, we ended 2015 with $32.0 million in cash, investments
and precious metals valued at the spot prices, and $3.4 million in
short-term bank indebtedness. As of February 27, 2017 we held cash,
investments, and precious metals valued at spot prices of $55.2
million.
Net IncomeOur consolidated net
income for 2016 was $21.1 million, or
$0.07 per share, compared to a net loss of $20.5
million, or $0.07 per share in 2015. The net income in 2016 was the
result of the strong financial performance achieved at both our
mines.
Cash FlowNet cash provided by
operations for 2016 increased to $25.2 million
compared to $15.6 million in 2015. For 2016, our 49% interest in
the San José mine contributed $17.7 million in
dividends to operating cash flows, compared to $0.5 million in
2015; and our El Gallo mine contributed $59.5
million in gold and silver sales to operating cash flow,
compared to $70.2 million in 2015.
Earnings from Mining
OperationsFor 2016, earnings from mining operations from
our El Gallo mine was $34.1 million, compared to
$39.3 million in 2015; and earning from mining operations from our
49% interest in the San José mine was $30.5
million, compared to $13.5 million in 2015.
Production Costs For our
El Gallo mine in 2016, total cash costs and all-in sustaining cash
costs were $524 and $610 per gold
equivalent ounce, respectively.
For our San José mine in 2016, total cash costs
and all-in sustaining costs were $760 and
$954 per gold equivalent ounce, respectively.
Ounces ProducedConsolidated
gold equivalent production in 2016 totaled 145,530
ounces, which consists of 90,264 gold equivalent
ounces attributable to us from our 49% interest in the San José
mine, and 55,266 gold equivalent ounces from the
El Gallo mine.
Ounces SoldConsolidated gold equivalent ounces
sold in 2016 totaled 144,048 ounces, which
consists of 48,902 gold equivalent ounces from El
Gallo mine 95,146 gold equivalent ounces
attributable to us from our 49% interest in the San José mine.
Average Realized
PricesConsolidated average realized prices for the year
2016 were $1,239 per ounce of gold sold, and
$17.03 per ounce of silver sold. In comparison,
the consolidated average realized prices in 2015 were $1,146 per
ounce of gold sold, and $15.06 per ounce of silver sold.
Production GuidanceProduction
for 2017 is expected to be 50,000 ounces of gold and 3,300,000
ounces of silver from the San José mine, and 49,700 ounces of gold
and 24,000 ounces of silver from the El Gallo mine. Using a silver
to gold ratio of 75:1 for the year 2017, this represents projected
consolidated production of 144,000 gold equivalent ounces.
Cost
GuidanceFor 2017, total cash costs and all-in
sustaining costs at the El Gallo mine are forecast to be $760 and
$900 per gold equivalent ounce, respectively; and total cash costs
and all-in sustaining costs at the San José mine are forecast at
$780 and $990 per gold equivalent ounce, respectively. Our guidance
is based on an average silver to gold ratio of 75:1.
Return of CapitalThe second and
third semi-annual return of capital installments of 1/2¢ per common
share were paid on February 12, 2016 and August 29, 2016. The
fourth return of capital installment of 1/2¢ per common share was
paid on February 14, 2017. To date a total of $6 million has been
returned to share owners.
Stock Repurchase ProgramOn
October 1, 2015, our Board of Directors authorized a plan to
repurchase up to 5.4% of our outstanding common stock, or up to $15
million in aggregate purchases, whichever is less. During 2015, we
repurchased for cancellation 1,896,000 shares of our common stock
at a total cost of $1.8 million ($0.93 per share). During 2016 we
repurchased 558,000 shares of our common stock at a total cost of
$0.6 million ($1.04 per share). The share repurchase program
expired on September 30, 2016.
Operations & Projects
Mexico
El Gallo Gold Mine
(100%)
Production at the El Gallo mine for 2016
declined from 2015 by 13% to 55,266 gold equivalent ounces, but met
our 2016 production guidance of 55,000 gold equivalent ounces. Ore
grades processed during 2016 averaged 2.14 g/t gold, compared to
3.41 g/t gold in 2015.
For 2017, we have budgeted a total of $1.5
million for exploration activities at the El Gallo Gold Mine, and
$3.4 million for sustaining capital expenditures.
El Gallo Silver Project
(100%)
During 2016 we spent $1.2 million furthering
studies on the feasibility and development of the El Gallo Silver
project. These studies are intended to identify opportunities
to reduce the initial capital investment required to start the
project. Our 2017 budget for El Gallo Silver is approximately $6.0
million, including $3.0 million for exploration and $3.0 million
for development.
Argentina
San José Mine (49%)
Gold equivalent production for 2016, on a 100%
basis, was 184,213 gold equivalent ounces, from which the 49% share
attributable to us was approximately 90,264 ounces. 2016 production
slightly exceeded our 2016 guidance of 89,000 gold equivalent
ounces.
For 2017, we expect to continue receipt of
dividends from our 49% interest in San José. We anticipate
receiving dividends in excess of $10.0 million, with the final
amount being determined by the profitability, treasury position,
and decisions on capital and exploration investments.
Los Azules Project (100%)
During 2016 we spent $1.6 million in further
baseline environmental and optimization studies, and related
activities at Los Azules. The 2017 drilling season was started with
an initial budget of $6.4 million to be spent in the first quarter
with further drilling dependent on weather and results. In addition
to drilling, we plan to spend $3.2 million on further studies and
other works to advance the Los Azules project.
Gold Bar Project, Nevada, U.S.
(100%)
During 2016 we spent $2.7 million on
environmental studies and other requirements to complete the
permitting process for an open pit heap leach mine. Key areas of
development include an updated mine plan leading to
operational improvements, completion of additional metallurgical
work which confirmed previous gold recovery assumptions, and
awarding the contract for detailed design to M3 Engineering, a
leading engineering and infrastructure firm based in Arizona,
USA.
The Draft Environmental Impact Statement (DEIS)
for the Gold Bar Project will be published on March 3, 2017 by the
U.S. Bureau of Land Management (BLM) in the Federal Register. This
initiates the 45-day public comment period that will end April 17,
2017. The BLM and McEwen Mining will address public comments
received prior to the approval of the Final EIS and the awarding of
a Record of Decision.
Under the assumption of receiving a favorable
decision, we have budgeted expenditures of approximately $38.7
million for 2017, which include $1.5 million for permitting and
$37.2 million for initial stage construction, expect to commence
during the fourth quarter of 2017.
Lexam VG Gold Acquisition
Please refer to our news release announcing details of the
proposed transaction, available here:
http://www.mcewenmining.com/Media-Events/News-Releases/News-Releases-Details/2017/McEwen-Mining-Announces-Friendly-Acquisition-of-Lexam-VG-Gold/default.aspx
San José Resource and Reserve Update
The following are the audited mineral reserve
and mineral resource estimates calculated by Hochschild Mining Plc
(“Hochschild”), our joint venture partner, for the San José mine as
at December 31, 2016. They do not account for depletion from 2017
production, or reserves delineated during 2017.
These figures, reported on a 100% basis, were
prepared by Hochschild and audited by P&E Mining Consultants
Inc. whose audit letter dated February 15, 2017, concluded that the
estimates for the San José mine prepared by Hochschild at December
31, 2016 provide a reliable estimation of reserves and resources.
The reserves as presented are in-situ and include mining dilution
and mining losses, however do not include allowances for mill or
smelter recoveries.
The tables below summarize the Mineral Reserve
and Mineral Resource estimates for the San José Mine.
San José Mine - Mineral Reserve Estimate,
December 31, 2016 |
Reserve Category |
Tonnes (000's) |
Gold Grade (g/t) |
Silver Grade (g/t) |
Contained Gold (K oz) |
Contained Silver (M oz) |
Proven |
1,163 |
7.34 |
502 |
274 |
18.8 |
Probable |
654 |
6.57 |
401 |
138 |
8.4 |
Proven & Probable
|
1,817 |
7.06 |
465 |
412 |
27.2 |
San José Mine - Mineral Resource Estimate,
December 31, 2016 |
Resource Category |
Tonnes (000's) |
Gold Grade (g/t) |
Silver Grade (g/t) |
Contained Gold (K oz) |
Contained Silver (M oz) |
Measured |
1,648 |
8.20 |
564 |
434 |
29.9 |
Indicated |
1,891 |
6.26 |
404 |
381 |
24.6 |
Measured & Indicated |
3,539 |
7.16 |
479 |
815 |
54.5 |
Inferred |
1,038 |
6.40 |
404 |
214 |
13.5 |
|
- Mineral resources are inclusive of mineral reserves.
- Reserves and resources are stated on a 100% basis. McEwen
Mining Inc. has a 49% attributable interest in the San José
mine.
- Mineral resources which are not mineral reserves, do not have
demonstrated economic viability.
- The quantity and grade of reported Inferred resources are
uncertain in nature and there has been insufficient exploration to
classify these Inferred resources as Measured or Indicated, however
it is reasonably expected that a significant portion of Inferred
resources may be upgraded to the Indicated or Measured category
with infill drilling.
- Mineral reserves were estimated by Hochschild Mining Plc using
the CIM Standards on Mineral Resources and reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve
Definitions. P&E Mining Consultants Inc. have audited the
reserve estimates and found that they meet the requirements for
disclosure as reserves under Canadian National Instrument 43-101
(NI 43-101) and the Joint Ore Reserves Committee of the Australian
Institute of Mining and Metallurgy ("JORC") as well as the US
Securities and Exchange Commission Industry Guide 7.
- Mineral Resources were estimated by Hochschild Mining Plc using
the CIM Standards on Mineral Resources and Reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve
Definitions. P&E Mining Consultants Inc. have audited the
resource estimates and found that they meet both the requirements
for Canadian disclosure under NI 43-101 and JORC.
- Resource estimations utilized inverse distance and ordinary
kriging methods depending upon data density.
- Metal prices used were US$1,200/oz for gold and US$16.50/oz for
silver.
- For reserves average internal dilution was 5%, average mining
and geotechnical dilution was 26% and mine extraction was 59%.
- Resources for 2016 were defined at a cut-off grade of 214 gpt
silver equivalent, which is equivalent to a cut-off value of
US$88.60/tonne.
- For additional information about the San José mine refer to the
NI 43-101 technical report titled: "Technical Report on San José
Silver-Gold Mine, Santa Cruz, Argentina" dated August 15, 2014 with
an effective date of December 31, 2013.
|
2016 Full Year and Q4 Conference Call Details |
McEwen Mining will be hosting a conference call to discuss the 2016
resultsand project developments on: |
Thursday, March 2, 2017 at 11:00 am EST |
|
WEBCAST: |
http://edge.media-server.com/m/p/hvsqw9on |
|
TELEPHONE: |
Participant Dial-in numbers: (844) 630-9911 (North
America) / (210) 229-8828
(International)Conference ID: 81304828 |
|
REPLAY: |
Dial-in numbers: (855) 859-2056 (North America) / (404) 537-3406
(International) |
Conference ID: 8130482803/02/2017 14:00 to
03/09/2017 14:00 EST |
About McEwen Mining
(www.mcewenmining.com)
McEwen Mining has the goal to qualify for
inclusion in the S&P 500 Index by creating a high growth gold
and silver producer focused in the Americas. McEwen Mining's
principal assets consist of the San José Mine in Santa Cruz,
Argentina (49% interest), the El Gallo Mine and El Gallo Silver
project in Sinaloa, Mexico, the Gold Bar project in Nevada, USA,
and the Los Azules copper project in San Juan, Argentina.
McEwen Mining has a total of 300 million shares
outstanding. Rob McEwen, Chairman and Chief Owner, owns 25% of the
Company.
Technical InformationThe
technical contents of this news release has been reviewed and
approved by Nathan M. Stubina , Ph.D., P.Eng., FCIM, Managing
Director and a Qualified Person as defined by Canadian Securities
Administrators National Instrument 43-101 "Standards of Disclosure
for Mineral Projects".
Technical Information for San
JoséThe technical content of this news release has
been reviewed and approved by Eugene Puritch P. Eng., President of
P&E Mining Consultants Inc. Under the direction of Mr. Puritch,
Al Hayden P. Eng., James L. Pearson P. Eng., David Burga P. Geo.,
and Fred H. Brown CPG PrSciNat, P.Geo. performed an independent
audit of the December 31, 2016 resource and reserve estimates. Each
of the foregoing is a Qualified Person and independent of the
Corporation, in each case, within the meaning of NI 43-101 and
Competent Persons under JORC. A site visit to the San José mine was
carried out by two of these individuals on January 9th and 10th,
2017. No issues with the mineral reserve or mineral resource
estimate were identified during or since the site visit.
Reliability of Information
Regarding San JoséMinera
Santa Cruz S.A., the owner of the San José Mine, is responsible for
and has supplied to the Company all reported results from the San
José Mine. McEwen Mining’s joint venture partner, a subsidiary of
Hochschild Mining plc, and its affiliates other than MSC do not
accept responsibility for the use of project data or the adequacy
or accuracy of this release.
Cautionary Note Regarding Non-GAAP
MeasuresIn this report, we have provided information
prepared or calculated according to U.S. GAAP, as well as provided
some non-U.S. GAAP ("non-GAAP") performance measures. Because the
non-GAAP performance measures do not have any standardized meaning
prescribed by U.S. GAAP, they may not be comparable to similar
measures presented by other companies.
(1) Total Cash Costs and All-in Sustaining
CostsTotal cash costs consist of mining, processing, on-site
general and administrative costs, community and permitting costs
related to current explorations, royalty costs, refining and
treatment charges (for both doré and concentrate products), sales
costs, export taxes and operational stripping costs. All-in
sustaining cash costs consist of total cash costs (as described
above), plus environmental rehabilitation costs, amortization of
the asset retirement costs related to operating sites, sustaining
exploration and development costs, and sustaining capital
expenditures. In order to arrive at our consolidated all-in
sustaining costs, we also include corporate general and
administrative expenses. Depreciation is excluded from both total
cash costs and all-in sustaining cash costs. For both total cash
costs and all-in sustaining costs we include our attributable share
of total cash costs from operations where we hold less than a 100%
economic share in the production, such as MSC, where we hold a 49%
interest. Total cash cost and all-in sustaining cash cost per
ounce sold are calculated on a co-product basis by dividing the
respective proportionate share of the total cash costs and all-in
sustaining cash costs for the period attributable to each metal by
the ounces of each respective metal sold. We use and report these
measures to provide additional information regarding operational
efficiencies both on a consolidated and an individual mine basis,
and believe that these measures provide investors and analysts with
useful information about our underlying costs of operations. A
reconciliation to the nearest U.S. GAAP measure is provided in
McEwen Mining's Annual Report on Form 10-K for the year ended
December 31, 2016.
(2) Earnings from mining operationsThe term Earnings from Mining
Operations used in this report is a non-GAAP financial measure. We
use and report this measure because we believe it provides
investors and analysts with a useful measure of the underlying
earnings from our mining operations. We define Earnings from Mining
Operations as Gold and Silver Revenues from our El Gallo Mine and
our 49% attributable share of the San José Mine's Net Sales, less
their respective Production Costs Applicable to Sales. To the
extent that Production Costs Applicable to Sales may include
depreciation and amortization expense related to the fair value
increments on historical business acquisitions (fair value paid in
excess of the carrying value of the underlying assets and
liabilities assumed on the date of acquisition), we deduct this
expense in order to arrive at Production Costs Applicable to Sales
that only include depreciation and amortization expense incurred at
the mine-site level. The San José Mine Net Sales and Production
Costs Applicable to Sales are presented, on a 100% basis, in Note 5
of McEwen Mining's Annual Report on Form 10-K for the year ended
December 31, 2016.
(3) Average realized pricesThe term average
realized price per ounce used in this report is also a non-GAAP
financial measure. We report this measure to better understand the
price realized in each reporting period for gold and silver.
Average realized price is calculated as sales of gold and silver
(excluding commercial deductions) over the number of ounces sold in
the period (net of deduction units). A reconciliation to the most
directly comparable U.S. GAAP measure, Sales of Gold and Silver, is
provided in McEwen Mining's Annual Report on Form 10-K for
the year ended December 31, 2016.
(4) Cash, investments and precious metalsThe
term cash, investments and precious metals used in this report is a
non‑GAAP financial measure. We report this measure to better
understand our liquidity in each reporting period. Cash,
investments and precious metals is calculated as the sum of cash,
investments and ounces of doré held in inventory, valued at the
London P.M. Fix spot price at the corresponding period. A
reconciliation to the most directly comparable U.S. GAAP measure,
Sales of Gold and Silver, is provided in McEwen Mining's
Annual Report on Form 10-K for the year ended December 31,
2016.
CAUTION CONCERNING FORWARD-LOOKING
STATEMENTSThis news release contains certain forward-looking
statements and information, including "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. The forward-looking statements and information expressed,
as at the date of this news release, McEwen Mining Inc.'s (the
"Company") estimates, forecasts, projections, expectations or
beliefs as to future events and results. Forward-looking statements
and information are necessarily based upon a number of estimates
and assumptions that, while considered reasonable by management,
are inherently subject to significant business, economic and
competitive uncertainties, risks and contingencies, and there can
be no assurance that such statements and information will prove to
be accurate. Therefore, actual results and future events could
differ materially from those anticipated in such statements and
information. Risks and uncertainties that could cause results or
future events to differ materially from current expectations
expressed or implied by the forward-looking statements and
information include, but are not limited to, factors associated
with fluctuations in the market price of precious metals, mining
industry risks, political, economic, social and security risks
associated with foreign operations, the ability of the corporation
to receive or receive in a timely manner permits or other approvals
required in connection with operations, risks associated with the
construction of mining operations and commencement of production
and the projected costs thereof, risks related to litigation, the
state of the capital markets, environmental risks and hazards,
uncertainty as to calculation of mineral resources and reserves,
and other risks. The Company’s dividend policy will be reviewed
periodically by the Board of Directors and is subject to change
based on certain factors such as the capital needs of the Company
and its future operating results. Readers should not place undue
reliance on forward-looking statements or information included
herein, which speak only as of the date hereof. The Company
undertakes no obligation to reissue or update forward-looking
statements or information as a result of new information or events
after the date hereof except as may be required by law. See McEwen
Mining's Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 and other filings with the Securities and
Exchange Commission, under the caption "Risk Factors", for
additional information on risks, uncertainties and other factors
relating to the forward-looking statements and information
regarding the Company. All forward-looking statements and
information made in this news release are qualified by this
cautionary statement.
The NYSE and TSX have not reviewed and do not accept
responsibility for the adequacy or accuracy of the contents of this
news release, which has been prepared by management of McEwen
Mining Inc.
CONTACT
INFORMATION: |
|
Mihaela IancuInvestor Relations(647) 258-0395 ext
320info@mcewenmining.com
Websitewww.mcewenmining.com |
|
|
|
Christina McCarthyDirector of Corporate
Development(647) 258-0395 ext
390corporatedevelopment@mcewenmining.com
Facebookfacebook.com/mcewenrob |
|
|
|
150 King Street WestSuite 2800,P.O. Box 24Toronto, Ontario,
CanadaM5H 1J9(866) 441-0690
Twittertwitter.com/mcewenmining |
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