McEwen Mining Inc. (NYSE:MUX) (TSX:MUX)
(“
McEwen”) is pleased to announce the closing of
the purchase of the Black Fox Complex (“Black Fox”) from Primero
Mining Corp. (“Primero”), which consists of:
1)
the fully operational Black Fox underground gold mine that is
forecast to produce 50,000 ounces (oz) in 2018,
2)
the Black Fox-Stock mill with a capacity of 2,400 tonnes per day
(tpd),
3) an experienced workforce, and
4) the nearby Grey Fox and Froome development
projects. All these assets are located in the world-famous gold
mining region of Timmins, Canada.
The initial purchase price for Black Fox was
US$35 million, subject to closing adjustments. The
transaction that closed today consists of a cash payment of
US$27.5 million after making certain price
adjustments. The recent financing completed on September 22nd
provided the funds to secure this purchase, supplements our
treasury for future capital projects and exploration at Black Fox,
and may be used for general corporate purposes.
“We view this purchase as an important
strategic step towards our goal of entering the S&P 500 Index;
#1 It increases our forecast 2018 annual production by 20% to
185,000 gold equivalent ounces; #2 It allows us to accelerate
development towards production of the Lexam VG properties we bought
earlier this year; #3 It provides us with a base of
operations, an experienced workforce, and multiple exploration
targets in one of the world’s best gold mining districts, Timmins,
Canada; #4 The purchase price was very attractive, given the
significant investment made by the previous owner; and #5 The
purchase includes large tax pools that will be used to shelter
future income,” said Rob McEwen, Chairman and Chief
Owner.
Management Conference Calls
Please join our conference call today, when the
Company will discuss the attractiveness of the Black Fox purchase,
the recent financing and other corporate developments, followed by
a question and answer session.
Friday, October 6th, 20172:00 pm
(ET) |
Toll Free (US & Canada): |
(844)-630-9911 |
Outside US & Canada: |
(210)-229-8828 |
Conference ID Number: |
97465147 |
Webcast Link: |
http://edge.media-server.com/m/p/9gxtsax4 |
If you cannot make it for today’s conference call, we invite you to
join us for a second conference call on
Tuesday, October 10th, 2017 11:00 am (ET) |
Toll Free (US & Canada): |
(844)-630-9911 |
Outside US & Canada: |
(210)-229-8828 |
Conference ID Number: |
95109551 |
Webcast Link: |
http://edge.media-server.com/m/p/6d4ugtj9 |
A corporate presentation that will be referenced during these
calls is available at:
http://www.mcewenmining.com/Presentation/MUX-Presentation/default.aspx.
Archived replays of the webcasts will be available for one week
after they take place.
Access the October 6th webcast using the link
http://edge.media-server.com/m/p/9gxtsax4 orcalling (855)-859-2056
(North America)/ (404)-537-3406 (International), Conference ID
Number 97465147.
Access the October 10th webcast using the link
http://edge.media-server.com/m/p/6d4ugtj9 orcalling (855)-859-2056
(North America)/ (404)-537-3406 (International), Conference ID
Number 95109551.
Information on Black Fox
Attractive Purchase Price
The purchase price of US$35
million is attractive given the high-grade gold
production expected from Black Fox and the significant exploration
potential of the properties. Additionally, replacement value of
only the fully permitted 2,400 tpd mill and tailings facility is
well above the purchase price. Since 2014 capital investment and
exploration at Black Fox totalled over US$120
million(1). As part of the acquisition, we will also gain
access to US$150 million of development
and exploration pools that can be applied to reduce taxable income
generated from within Ontario.
Declining Production Cost per Ounce
Production costs at Black Fox have declined over
the past twelve (12) months as a result of higher grades mined
underground, cost cutting measures, and operational improvements
(see table below). Our goal is to maintain a profitable cost
structure at the mine with the expectation that capital investments
will be required in the short to medium term.
Three Months Ended Results(1) |
Cash Cost US$/oz |
AISCUS$/oz |
Q2 2017 |
$637 |
$827 |
|
Q1 2017 |
$859 |
$1,233 |
|
Q4 2016 |
$828 |
$1,101 |
|
Q3 2016 |
$926 |
$1,286 |
|
Q2 2016 |
$870 |
$1,362 |
|
Historical Production
The combined production from the purchased
properties totals over 950,000 ounces of gold. The Black Fox mine
was initially operated from 1997 to 2001. It was re-commissioned in
2009 and has operated continuously since then, producing a total of
821,000 ounces(1) of gold from an open pit and
underground mine.
The property surrounding the Black Fox-Stock
mill is also the site of the former Stock Mine (“Stock”), which
produced 137,000 ounces of gold from an underground operation
between 1989-2005.
Exploration Potential
The Black Fox property is located along a prime
4.5 mile (7 km) section of the Destor-Porcupine Fault, which is
host to many world-class gold deposits. The property is already
well-endowed with gold mineralization and has very attractive
geological potential.
The objective of the current underground
exploration and definition drilling programs is to upgrade and
expand resources in the Deep Central, High Quartz Vein, Far West
and Far East Zones, at depths ranging from approximately 500 to 850
meters (m). Exploration drilling will also focus on expanding the
gold resources to depth at the Black Fox mine and the Froome
deposit, which is located 800 m West of the mine. The Froome
deposit is currently drilled to a depth of 350 m and remains open
at depth.
Multiple other exploration targets exist on the
Black Fox and Stock properties. These targets will be ranked during
Q4 2017 for drilling in 2018.
Future Development
Opportunities
Our project pipeline in the Timmins region has
six potential development projects, those acquired with Black Fox:
Froome and Grey Fox; and those acquired with Lexam VG Gold: Fuller,
Davidson Tisdale, Buffalo Ankerite, and Paymaster. Having access to
the Black Fox-Stock mill definitely enhances the value of these
assets and significantly shortens the time required to reach
production.
Existing Gold Stream
There is a pre-existing gold streaming agreement
with Sandstorm Gold Ltd. (“Sandstorm”) on the Black Fox and Froome
deposits. As a result of this agreement we will sell 8% of the gold
produced on these specific properties to Sandstorm for
US$531/ounce. The current cost of the stream assuming a $1,300/oz
gold price is a reduction in realized revenue from Black Fox of
approximately 4.7% compared to if no stream existed. The Grey Fox
deposit and the Stock property are not subject to any streaming
agreements.
Footnotes: (1) Source: Primero public
filings
About McEwen Mining
McEwen 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’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 Mexico, the Black
Fox mine in Timmins, Canada, the Gold Bar project in Nevada, and
the Los Azules copper project in Argentina.
McEwen has a total of 333 million shares
outstanding. Rob McEwen, Chairman and Chief Owner, owns 24%
of McEwen.
QUALIFIED PERSON
Technical information pertaining to production
guidance for the Black Fox Complex contained in this news
release has been prepared under the supervision of Mr. Nathan
Stubina. Technical information pertaining to geology and
exploration contained in this news release has been prepared under
the supervision of Mr. Sylvain Guerard. Both Mr. Stubina and
Mr. Guerard, are officers of the Company who are a "qualified
person" within the meaning of NI 43-101.
CAUTION CONCERNING FORWARD-LOOKING
STATEMENTS
This 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 related to fluctuations in mine production
rates, 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 |
Website:
www.mcewenmining.com Facebook:
facebook.com/mcewenrob Twitter:
twitter.com/mcewenmining |
150
King Street WestSuite 2800, P.O. Box 24Toronto, Ontario, CanadaM5H
1J9(866)-441-0690 |
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