McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) reports
its consolidated financial results for the third quarter ending
September 30, 2017.
During Q3 2017 the El Gallo mine had earnings
from mining operations of $5.1 million(2)(4) and the San José mine
had earnings from mining operations of $4.5 million(4). The Company
experienced increased cost and reduced income as a consequence of
an unexpected drop in production at the El Gallo mine due to an
equipment failure. Our portion of income from the San José
mine was also reduced on lower production. As a result, the Company
reported a net loss of $8.1 million or $0.03 per share.
“During the third quarter we faced some
challenges with our operations that resulted in disappointing
performance. Production was approximately 17,500 gold equivalent
ounces(5) in the month of October. This improved
production level puts us on track for a stronger fourth
quarter” said Rob McEwen, Chairman and Chief Owner.
Our quarterly management conference call will
take place on November 3, 2017 at 11:00 am, EDT. Webcast and
call-in details are provided at the end of this news release.
Q3 2017 Operating & Financial
Highlights
Comparative production and cost results are
shown in the table below. For our SEC Form 10-Q Financial
Statements and MD&A refer to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
|
Q3 2017 |
Q3 2016 |
Year to Date 2017 |
|
Guidance2017 |
Corporate Total |
|
|
|
|
|
Gold
ounces produced(3) |
|
19,051 |
|
24,281 |
|
61,338 |
|
|
99,700 |
Silver
ounces produced(3) |
|
749,749 |
|
916,168 |
|
2,252,003 |
|
|
3,324,000 |
Gold
equivalent ounces produced(1)(3) |
|
29,047 |
|
36,496 |
|
91,364 |
|
|
144,000 |
El Gallo Mine – Mexico |
|
|
|
|
|
Gold
ounces produced |
|
7,189 |
|
11,754 |
|
26,633 |
|
|
49,700 |
Silver
ounces produced |
|
1,789 |
|
7,151 |
|
12,549 |
|
|
24,000 |
Gold
equivalent ounces produced(1) |
|
7,213 |
|
11,849 |
|
26,801 |
|
|
50,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ |
832 |
$ |
598 |
$ |
695 |
|
$ |
760 |
Gold
equivalent co-product AISC ($/oz)(1)(4) |
$ |
946 |
$ |
680 |
$ |
813 |
|
$ |
900 |
San José Mine(3) - Argentina |
|
|
|
|
|
Gold
ounces produced |
|
11,862 |
|
12,527 |
|
34,705 |
|
|
50,000 |
Silver
ounces produced |
|
747,960 |
|
909,017 |
|
2,239,454 |
|
|
3,300,000 |
Gold
equivalent ounces produced(1) |
|
21,834 |
|
24,647 |
|
64,563 |
|
|
94,000 |
Gold
equivalent total cash cost ($/oz)(1)(4) |
$ |
850 |
$ |
707 |
$ |
896 |
|
$ |
780 |
Gold
equivalent co-product AISC ($/oz)(1)(4) |
$ |
1,065 |
$ |
850 |
$ |
1,109 |
|
$ |
990 |
Notes:1. Silver production is
presented as a gold equivalent. The silver to gold ratio used for
2016 and 2017 is 75:1.2. All amounts are reported
in US dollars unless otherwise stated.3. Includes
portion attributable to us from our 49% interest in the San José
Mine.4. 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.5. Production figures for October
2017 are preliminary and may change upon final reconciliation.
|
At Sept. 30th |
At Oct 31st |
Treasury: |
2016 |
2017 |
2017 |
Cash,
Investments and Precious Metals at Spot Price ($ millions) |
62.5 |
82.3 |
51.0 |
Debt |
nil |
nil |
nil |
Earnings from Operations(4): |
|
|
|
El Gallo
Mine ($ millions) |
7.6 |
5.1 |
|
San José
Mine (49%) ($ millions) |
11.2 |
4.5 |
|
Consolidated Net Income: |
|
|
|
Net
Income (Loss) ($ millions) |
4.2 |
(8.1) |
|
Net
Income (Loss) per Share ($) |
0.01 |
(0.03) |
|
Cash Flow: |
|
|
|
Net Cash Flow ($
millions) |
2.1 |
44.2 |
|
Gold & Silver Sales Prices: |
|
|
|
El Gallo
Mine - Gold ($/oz) |
1,335 |
1,269 |
|
San José
Mine - Gold ($/oz) |
1,323 |
1,281 |
|
San José
Mine - Silver ($/oz) |
20.13 |
16.70 |
|
Q3 & Subsequent Events
Ounces ProducedQ4 2017 has a
strong start with approximately 17,500 gold equivalent ounces(5)
produced in the month of October from El Gallo, San José and Black
Fox mines.
Net LossThe net loss in Q3 2017
was mainly due to a $2.2 million increase in production costs at
our El Gallo mine, a $5.2 million decrease in income from our San
José mine, and a $1.5 million increase in general and
administrative expenses.
Cash FlowThe significant change
in cash flow in Q3 2017 related to the equity financing completed
for net proceeds of $43.2 million.
Return of CapitalA return of
capital installment of a ½ cent per share was paid to shareowners
on August 17, 2017.
Operations & Projects
El Gallo Mine, Mexico –
On-track For Better Performance in Q4
Production in Q3 was below our forecast as a
result of a serious mechanical failure at the end of July that
removed the crushing circuit from operation. As a result we were
unable to crush and place fresh ore to leach on the leach pad which
accounted for the drop in gold production. The crusher was fully
repaired in September, and with the addition of a supplemental
mobile crusher, there is currently almost twice the normal crushing
capacity available. El Gallo operations were significantly improved
during the month of October, with approximately
5,100 gold equivalent ounces(5) produced. We
anticipate that production in Q4 will partially compensate for the
shortfall experienced to date.
San José
Mine, Argentina (49%(3)) – Improving Production in
Q4
Production during the month of October was
improved, with approximately 8,700 gold equivalent
ounces(5) attributable to us.
Black Fox, Timmins – Enhanced Growth
Strategy
Our growth strategy in
the Timmins region, which started in April
2017 with the acquisition of Lexam VG Gold, reached a
second important milestone on October 6, 2017 with the
purchase of the Black Fox Complex. The Black Fox mine is
operating as expected, with production during the month of October
of approximately 3,700 gold equivalent
ounces(5).
Gold Bar, Nevada – Major Permitting
Milestone
The Gold Bar Project has achieved a major
milestone in the permitting process with the publication by the
Environmental Protection Agency (EPA) of the Notice of Availability
of the Final Environmental Impact Statement (EIS) in the Federal
Register. Following a regulated waiting period, a signed Record of
Decision will be delivered and published, signifying the completion
of the National Environmental Policy Act (NEPA) process. The Record
of Decision is expected in early November this year and development
of Gold Bar is planned to begin upon receipt, in line with our
earlier estimates. Gold Bar is expected to contribute an average of
65,000 ounces to our annual gold production
beginning in 2019.
Los Azules, Argentina – Robust Economics
in New PEA
The results of the 2017 PEA demonstrate that Los
Azules could become a robust, high margin, rapid pay-back, and
long-life open pit mine at current copper, gold and silver prices.
Financial highlights from the 2017 PEA, assuming a $3.00 per pound
copper price, are: 1) $2.2 billion after-tax net
present value (NPV@8%), 2) an internal rate of return (IRR) of
20.1%, and 3) a payback period of 3.6
years and a total mine-life of 36 years.
Estimated average annual copper production is 415 million
lbs. at a cash cost of $1.14/lb. during
the first 13 years of mining operations. The PEA report is
available for review on our website
(www.mcewenmining.com/operations/los-azules-exploration) and SEDAR
(www.sedar.com).
Q3 Results Conference Call
We invite you to join our conference call, where
management will discuss the Q3 2017 results and follow with a
question and answer session. Questions can be asked directly by
participants over the telephone or can be emailed in advance to
info@mcewenmining.com
Friday, Nov 3rd, 2017 11:00 AM
(ET) |
Toll Free US & Canada: |
(844)-630-9911 |
Outside US & Canada: |
(210)-229-8828 |
Conference ID Number: |
4286358 |
Webcast Link: |
https://edge.media-server.com/m6/p/txj3wnsf |
An archived replay of the webcast will be
available for one week after it takes place. Access the replay
using the link https://edge.media-server.com/m6/p/txj3wnsf or
calling (855)-859-2056 (North America) / (404)-537-3406
(International), Conference ID Number 4286358.
About McEwen Mining
(www.mcewenmining.com)
McEwen has the goal to qualify for inclusion in
the S&P 500 Index by creating a profitable 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.
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 September 30, 2017.
(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 Quarterly Report on Form 10-Q for the quarter
ended September 30, 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 September 30, 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 September 30, 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 |
Websitewww.mcewenmining.com
Facebookfacebook.com/mcewenrob
Twittertwitter.com/mcewenmining |
150 King Street WestSuite
2800,P.O. Box 24Toronto, ON, Canada, M5H 1J9(866) 441-0690 |
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