McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) is pleased
to report consolidated financial results for the first quarter
ended March 31, 2017. Increased investments in exploration and
project development, particularly related to our Los Azules copper
project, were the key feature of the quarter. As a result, the
Company reported a net loss of $3.0 million or $0.01 per share and
negative cash flow of $8.6. million or $0.03 per share. During the
quarter McEwen Mining achieved consolidated production of 29,733
gold equivalent ounces(1). The Company remains on track to
meet production and cost guidance for 2017. The El Gallo mine
produced 9,808 gold equivalent ounces(1) and reported earnings from
mining operations of $8.2 million(2)(4) and the San José mine
produced 19,925 gold equivalent ounces(1) and reported earnings
from mining operations of $5.7 million(2)(4).
Our quarterly management conference call will
take place today at 11 am, EDT. Webcast and call-in details are
provided at the end of this news release.
Q1 2017 Operating & Financial
Highlights
Comparative production and cost results for the
first quarter, the same period last year, and our guidance for the
full year 2017 are shown in the table below. Cost guidance is
disclosed on an individual mine basis due to regulatory
requirements.
For our SEC Form 10-Q Financial Statements and
MD&A refer to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
|
Q1 2017 |
Q1 2016 |
Guidance2017 |
Corporate Total |
|
|
|
Gold
ounces produced |
|
20,096 |
|
28,975 |
|
99,700 |
Silver
ounces produced |
|
722,767 |
|
673,767 |
|
3,324,000 |
Gold
equivalent ounces produced(1) |
|
29,733 |
|
37,958 |
|
144,000 |
El Gallo Mine - Mexico |
|
|
|
Gold
ounces produced |
|
9,730 |
|
20,015 |
|
49,700 |
Silver
ounces produced |
|
5,794 |
|
6,448 |
|
24,000 |
Gold
equivalent ounces produced(1) |
|
9,808 |
|
20,101 |
|
50,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ 564 |
$ 432 |
$ 760 |
Gold
equivalent co-product AISC ($/oz)(1)(4) |
$ 668 |
$ 532 |
$ 900 |
San José Mine(3) - Argentina |
|
|
|
Gold
ounces produced |
|
10,366 |
|
8,960 |
|
50,000 |
Silver
ounces produced |
|
716,973 |
|
667,319 |
|
3,300,000 |
Gold
equivalent ounces produced(1) |
|
19,925 |
|
17,857 |
|
94,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ 915 |
$ 762 |
$ 780 |
Gold
equivalent co-product AISC ($/oz)(1)(4) |
$ 1,165 |
$ 936 |
$ 990 |
|
|
|
|
|
|
|
- Silver production is presented as a gold equivalent. The silver
to gold ratio used for 2016 and 2017 is 75:1.
- All amounts are reported in US dollars unless otherwise
stated.
- Includes portion attributable to us from our 49% interest in
the San José Mine.
- Earnings from mining operations, total cash costs per ounce,
and all-in sustaining costs (AISC) per ounce 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.
TreasuryAs of March 31st, 2017
we had $55.1 million in cash, investments and
precious metals valued at the spot prices; and no debt. This
compares to liquid assets of $58.8 million and no debt at the end
of Q4 2016.
Ounces ProducedConsolidated
gold equivalent production in Q1 2017 totaled
29,733 ounces, which consists of 9,808 gold
equivalent ounces from the El Gallo mine, and
19,925 gold equivalent ounces attributable to us
from our 49% interest in the San José mine.
Production Costs For our
El Gallo mine in Q1 2017, total cash costs and all-in sustaining
cash costs were $564 and $668 per
gold equivalent ounce, respectively. For our San José mine in Q1
2017, total cash costs and all-in sustaining costs were
$915 and $1,165 per gold
equivalent ounce, respectively.
Earnings from Mining
OperationsIn Q1 2017, earnings from mining operations from
our El Gallo mine were $8.2 million, compared to
$12.4 million in the same period in 2016; and earning from mining
operations from our 49% interest in the San José mine were
$5.7 million, compared to $7.0 million in the same
period in 2016.
Net Income/ LossOur
consolidated net loss for Q1 2017 was $3.0
million, or $0.01 per share, compared to
a net income of $13.0 million, or $0.04 per share for the same
period in 2016. The net loss was mainly due to a $6.4 million
decrease in sales of gold and silver by our El Gallo mine; coupled
with a $6.7 million increase in exploration costs, mostly related
to the drilling campaign performed at the Los Azules project,
compared to the same period during 2016.
Cash FlowNet cash used in
operations was $6.9 million in Q1 2017, compared
to net cash provided by operations of $14.7 million for the same
period in 2016. In Q1 2017, our El Gallo mine contributed
$14.8 million in gold and silver sales to
operating cash flow, compared to $20.3 million in the same period
in 2016. The significant change in cash flow quarter over quarter
related mainly to a reduction in the number of ounces sold from the
El Gallo mine, coupled with lower VAT collection from our Mexican
operations and the increase in metals inventory. In Q1, 2017 our
49% interest in the San José mine contributed $2.5
million in dividends to operating cash flows, compared to
$2.6 million in the same period in 2016.
Average Realized PricesAverage
realized prices in Q1 2017 were $1,220 per ounce
of gold sold, and $17.54 per ounce of silver sold
at our El Gallo mine; and $1,253 per ounce of gold
sold and $18.18 per ounce of silver sold for the
San Jose mine. In comparison, the average realized prices in the
same period in 2016 were $1,171 per ounce of gold sold, and $14.64
per ounce of silver sold at El Gallo mine; and $1,257 per ounce of
gold sold and $15.29 per ounce of silver sold for the San Jose
mine.
Return of CapitalThe 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.
Production GuidanceProduction
for 2017 is expected to be 49,700 ounces of gold and 24,000 ounces
of silver from the El Gallo mine, and 50,000 ounces of gold and
3,300,000 ounces of silver from the San José 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.
Strategic Acquisition of Timmins
Projects
On April 26, 2017 the acquisition of Lexam VG
Gold Inc. was completed. This represents a strategic acquisition of
former producing mine properties (brownfield sites) in the heart of
the world class Timmins gold mining district in Canada. Situated
within a mile radius around our newly acquired assets are large
former and currently producing mines with past gold production in
excess of 55 million ounces.
Our Timmins brownfield sites have good access to
roads, power and nearby experienced workforce. Some of the
properties have mine infrastructure in place, such as existing
shafts, ramps and pits from previous mining activities. This should
reduce future development costs. The current NI 43-101 resources
are: 1.5 million gold ounces in the Measured and Indicated
categories, and 1 million gold ounces in the Inferred category. For
2017, we have budgeted $3.0 million for exploration and development
related activities in Timmins. Of particular interest are the high
grade drill intercepts of past exploration programs.
Operations & Projects
Mexico
El Gallo Gold Mine (100%)
Production at the El Gallo Gold mine for Q1 2017
declined quarter over quarter by 51% to 9,808 gold equivalent
ounces, due to slower than planned access to higher grade ore.
However, the mine is on track to meet our 2017 production guidance
of 50,000 gold equivalent ounces. The El Gallo gold mine is a
mature operation that has mined and depleted most of its oxide
resources. While ore grades processed during Q1 2017 averaged 1.28
gpt gold, compared to 3.62 gpt gold in Q1 2016, the grade is
projected to increase to 2.5 gpt in the second half of 2017.
Optimization work is ongoing to maximize the profit in light of the
decreasing production profile.
Exploration efforts are now focused on defining
resources in sulfide and transitional mineralization that could
extend the asset life, and, as such, we have budgeted a total of
$1.8 million for exploration activities at the El Gallo mine, and
$2.0 million for sustaining capital expenditures for 2017.
El Gallo Silver Project
(100%)
During Q1 2017, work continued on the El Gallo
silver project to identify opportunities to reduce the initial
capital investment required to start the project and reduce its
projected operating cost. Our 2017 budget for El Gallo Silver is
approximately $7.8 million, comprised of $4.8 million for
exploration and $3.0 million for development.
Argentina
San José Mine (49%)
Gold and silver production attributable to us
from our 49% interest in the San José mine for Q1 2017 increased
quarter over quarter by 12% to 19,925 gold equivalent ounces.
During Q1 2017 we received $2.5 million in dividends from the San
José mine.
For the remainder of 2017 we expect to continue
to receive dividends from our 49% interest in San José. We
anticipate receiving dividends totaling $10.0 million or more, with
the final amount being determined by the mine’s profitability,
treasury position, and decisions on capital and exploration
investments.
Los Azules Project (100%)
During Q1 2017 we spent $6.3 million at the Los
Azules project on a combination of infill and exploration drilling,
significant advances were made in determining the best logistics,
power and infrastructure options and further economic and
engineering modeling of the production. Results from the drilling
campaign are expected to be finalized during the second half of
2017.
Gold Bar Project, Nevada, U.S.
(100%) – Advancing Towards
Construction
During the quarter, the US Bureau of Land
Management (“BLM”) published the Draft Environmental Impact
Statement in the Federal Register on March 3rd, 2017 and
subsequently closed the 45-day public comment period. Comments
received during the public comment period are now being addressed
and will be incorporated in the final Environmental Impact
Statement. Gold Bar permitting continues to move forward and
remains on schedule to receive a Record of Decision from the BLM in
the third quarter of 2017 enabling project construction to
start.
During Q1 2017 we spent $0.9 million on various
requirements to complete our permitting process for Gold Bar. We
also expect to spend an additional $1.1 million in permitting
activities during the remainder of 2017.
|
McEwen Mining will be hosting a conference call to discuss the |
Q1 2017 results and project developments |
|
Q1 2017 Conference Call Details |
|
Thursday, May 4, 2017 at 11:00 am EDT |
|
WEBCAST: |
http://edge.media-server.com/m/p/j7quncwr |
|
TELEPHONE: |
Participant Dial-in numbers: (844) 630-9911 (North
America) / (210) 229-8828 (International) |
Conference ID: 16037372 |
|
REPLAY: |
Dial-in numbers: (855) 859-2056 (North America) /
(404) 537-3406 (International) |
Conference ID: 16037372 |
From 05/04/2017 14:00 EDT to 05/11/2017 14:00 EDT |
|
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 Gold mine and El Gallo
Silver project in Sinaloa, Mexico, the Gold Bar project in Nevada,
USA, the Timmins projects in Ontario, Canada and the Los Azules
copper project in San Juan, Argentina.
McEwen Mining has a total of 312 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".
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. 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 on 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 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017.
(2) Earnings from mining operations
The 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 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017.
(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 Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017.
(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 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017.
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 |
Christina
McCarthyDirector of Corporate Development
(647) 258-0395 ext 390cd@mcewenmining.com |
150 King Street
WestSuite 2800,P.O. Box 24Toronto, ON, Canada, M5H 1J9(866)
441-0690 |
|
|
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Websitewww.mcewenmining.com |
Facebookfacebook.com/mcewenrob |
Twittertwitter.com/mcewenmining |
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