McEwen Mining Inc. (NYSE: MUX) (TSX: MUX)
announces its results for the second quarter and first half ended
June 30, 2019 (“
Q2” and
“H1”).
Total production during Q2 was
36,216 gold
ounces and
850,525 silver ounces,
or
45,881 gold equivalent
ounces(1) (“GEOs”) using the average gold:silver price ratio
during Q2 of
88:1. Our San José and El Gallo
mines
exceeded our production targets during
the quarter. Our other two operations, the Gold Bar and Black Fox
mines, performed better than in Q1, but below our production and
earnings forecasts. This contributed to our consolidated net loss
during Q2 of
$13.0 million(2), or
$0.04 per share.
Rob McEwen, Chairman and Chief Owner commented:
“Q2 was better than Q1 2019, but clearly not where we
wanted it to be. Financially Q2 and H1 2019 were weak relative to
the respective periods in 2018. The good news is that the balance
of the year is looking much better. Q2 marked the start of our 2019
exploration drilling program in Timmins and Nevada. Early assay
results from Black Fox and Grey Fox have been very encouraging.
Gold Bar only declared commercial production one month before the
end of Q2 and is gaining momentum. Production rates and grades at
all operations have improved in Q3. At Los Azules we achieved a
critical milestone in the project’s valuation by validating a new
access route that will provide year round access, rather than the
current 4-5 months. We are looking forward to increasing production
and lowering costs in H2.”
Our quarter end conference call will take place on
Wednesday, July 31st at 1:30 pm EDT. Call
1 (844) 630-9911 (US/CAN) Conference ID:
8248849 or Click Here to connect to the
Webcast. More details are provided below.
Table 1 below provides production and cost
results for Q1, Q2 and H1 2019 and comparative results from 2018
along with production and cost guidance for the full year 2019.
Table 1: Production and
Costs
|
Q1 |
Q2 |
H1 |
Full Year2019 Guidance |
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
Total Production |
|
|
|
|
|
|
|
Gold (oz) |
35,068 |
26,938 |
36,959 |
36,216 |
72,027 |
63,154 |
152,000 |
Silver (oz) |
695,651 |
703,219 |
772,432 |
850,525 |
1,468,083 |
1,553,744 |
3,225,000 |
GEOs(1) |
44,344 |
36,315 |
47,258 |
45,881 |
91,602 |
82,196 |
190,000 |
San José Mine, Argentina (49%)(3)
|
|
|
|
|
|
|
|
Gold (oz) |
10,822 |
10,559 |
12,139 |
13,518 |
22,961 |
24,077 |
49,000 |
Silver (oz) |
692,052 |
701,341 |
769,197 |
848,268 |
1,461,249 |
1,549,609 |
3,225,000 |
GEOs(1) |
20,049 |
19,910 |
22,395 |
23,157 |
42,444 |
43,067 |
87,000 |
Cash Costs ($/GEO)(1)(4) |
934 |
749 |
806 |
960 |
868 |
865 |
860 |
AISC
($/GEO)(1)(4) |
1,148 |
1,115 |
1,065 |
1,207 |
1,106 |
1,165 |
1,120 |
El Gallo Mine, Mexico |
|
|
|
|
|
|
|
GEOs(1) |
12,217 |
5,432 |
10,808 |
5,354 |
23,025 |
10,786 |
16,000 |
Cash Costs ($/GEO)(1)(4) |
691 |
967 |
783 |
926 |
724 |
961 |
875 |
AISC
($/GEO)(1)(4) |
753 |
989 |
816 |
939 |
776 |
977 |
915 |
Black Fox Mine, Canada |
|
|
|
|
|
|
|
GEOs(1) |
12,078 |
8,943 |
14,055 |
9,430 |
26,133 |
18,373 |
45,000 |
Cash Costs ($/GEO)(1)(4) |
849 |
805 |
771 |
837 |
806 |
826 |
905 |
AISC
($/GEO)(1)(4) |
1,188 |
1,454 |
1,056 |
1,196 |
1,115 |
1,311 |
1,080 |
Gold Bar Mine, Nevada |
|
|
|
|
|
|
|
GEOs(1) |
- |
(5) |
- |
7,940(5) |
- |
9,970(5) |
42,000 |
Cash Costs ($/GEO)(1)(4) |
- |
- |
- |
901 |
- |
924 |
930 |
AISC
($/GEO)(1)(4) |
- |
- |
- |
1,088 |
- |
1,157 |
975 |
Notes:
- 'Gold Equivalent Ounces' are calculated based on a 75:1 gold to
silver price ratio for periods up to and including Q1 2019, and
88:1 for Q2 2019. Going forward, McEwen has adopted a variable
gold:silver ratio for reporting that approximates the average
during each fiscal quarter. 2019 GEO and costs guidance has been
restated at an 85:1 ratio.
- All amounts are reported in US dollars unless otherwise
stated.
- Represents the portion attributable to us from our 49% interest
in the San José Mine.
- Earnings from mining operations, cash costs per ounce, all-in
sustaining costs (AISC) per ounce, and liquid assets are non-GAAP
financial performance measures with no standardized definition
under U.S. GAAP. See “Cautionary Note Regarding Non-GAAP Measures”
for additional information, including definitions of these
terms.
- Pre-commercial production at Gold Bar during Q1 2019 was 2,030
GEOs, cash costs and AISC were not reported. Gold Bar started
commercial production on May 23, 2019.
For the SEC Form 10-Q Financial Statements and MD&A refer
to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
Table 2 below provides financial highlights for
Q1, Q2 and H1 2019 and comparative results from 2018 and
comparative results for 2018.
Table 2: Financial Highlights
|
Q2 2018 |
Q2 2019 |
H1 2018 |
H1 2019 |
Treasury |
|
|
|
|
Liquid Assets ($ millions)(4) |
34.5 |
|
31.8 |
|
34.5 |
|
31.8 |
|
Working Capital ($ millions) |
19.2 |
|
30.9 |
|
19.2 |
|
30.9 |
|
Debt (Term loan) ($
millions) |
nil |
|
50.0 |
|
nil |
|
50.0 |
|
Earnings from Mining Operations(4) |
|
|
|
|
Black Fox Mine ($ millions) |
4.1 |
|
1.3 |
|
7.2 |
|
1.8 |
|
San José Mine (49%) ($ millions) |
3.3 |
|
1.4 |
|
5.4 |
|
3.2 |
|
El Gallo Mine ($ millions) |
5.6 |
|
2.6 |
|
17.7 |
|
3.9 |
|
Gold Bar Mine ($
millions) |
- |
|
1.9 |
|
- |
|
2.1 |
|
Consolidated Net Income |
|
|
|
|
Net (Loss) ($ millions) |
(5.4 |
) |
(13.0 |
) |
(10.6 |
) |
(23.2 |
) |
Net (Loss) per Share
($) |
(0.02 |
) |
(0.04 |
) |
(0.03 |
) |
(0.07 |
) |
Cash Flow |
|
|
|
|
Cash Provided By (Used
In) Operating Activities ($ millions) |
(5.6 |
) |
1.7 |
|
0.6 |
|
(9.2 |
) |
San José Mine, Argentina (49%
Interest)
The mine is on-track to achieving our full year
guidance for 2019 of 49,000 gold ounces and
3,225,000 silver ounces. Our attributable
production from San José in Q2 was 13,518 gold
ounces and 848,268 silver ounces, for a total of
23,157 GEOs, compared to 22,395 GEOs in 2018. Cash
costs and all-in sustaining costs (AISC) were $960
and $1,207 per GEO, respectively. Our cost
guidance for 2019 has been adjusted to reflect the change in the
gold:silver price ratio from 75:1 to 85:1, the impact was an
increase in cash costs and AISC of $30 and $60 per GEO,
respectively.
El Gallo Mine, Mexico (100%
Interest)
The mine is on-track to achieving our full year
production guidance for 2019 of 16,000 gold ounces
at a cash cost and AISC of $875 and
$915 per GEO, respectively. During Q2, the mine
produced 5,354 gold equivalent ounces, compared to
10,786 gold equivalent ounces in 2018. Cash costs
and AISC were $926 and $939 per
GEO, respectively. Production was down quarter over quarter due to
the transition from mining to residual leaching that will continue
for as long as it is economic to do so.
Fenix Project
Work on the Fenix Project feasibility study and
permitting is progressing. We expect the permit to be approved and
the feasibility study to be completed in Q3 2019.
Black Fox Mine, Canada (100% Interest)
During Q2, a number of mines across the province
of Ontario, where Black Fox is located, experienced large inflows
of water as a result of heavy spring snow melt coupled with heavy
precipitation. At Black Fox operations were affected by water
infiltration when the western part of the mine was flooded
temporarily. This reduced production by limiting access to some
mining areas for a period of six weeks, but is now resolved. In Q2,
Black Fox produced 9,420 gold ounces, compared to
14,042 gold ounces in 2018. Cash costs and AISC were
$837 and $1,196,
respectively.
Our 2019 exploration budget for the Black Fox
Complex is $18 million and includes
surface and underground drilling. Drilling started in April and we
are actively exploring some exciting targets on the Black Fox and
Stock properties.
On May 23, 2019 we released
positive gold drill results from the Black Fox Mine and from the
Grey Fox Area. We followed up with more high-grade drill result
from Grey Fox on July 10, 2019, and again with a
resource estimate increase for the area on July 25,
2019, see news
release: https://www.mcewenmining.com/investor-relations/press-releases/default.aspx
Gold Bar Mine, USA (100%
Interest)
Gold production is increasing, and we expect
better performance in the second half of 2019. In late Q2, Gold Bar
achieved commercial production. Pre-commercial and commercial
production during Q2 totalled 7,940 gold ounces.
Cash costs and AISC were $901 and
$1,088 per GEO, respectively.
The revised 2019 mining plan is to
produce 15,000 gold ounces
in Q3 and 17,000 gold ounces
in Q4. Guidance for 2019 has been
reduced
from 50,000 to 42,000 gold
ounces as a result of the slower than expected ramp-up.
Our 2019 exploration budget for the Gold Bar
property is $5 million. Drilling started
mid-May with an initial focus on Gold Bar South in order to advance
permitting, with the objective to have development begin in late
2020. Drilling is currently underway on an initial deep hole to
test the potential of the property for Carlin-type gold
deposits.
Los Azules Project, Argentina (100%
Interest)
Last year, we identified a critical value-adding
milestone for Los Azules - a new low altitude all-year access route
(Northern access route). Currently access is only possible 4-5
months of the year. The Northern access route was explored by
overland expedition during March 2019 and confirmed to be viable
for access and also for the proposed electrical transmission line.
Preliminary engineering, cost and schedule estimates are in
progress. Work will begin on the road later this year.
During Q2, we continued to advance permitting
efforts. We are targeting the submission of the Environmental
Impact Assessment by the end of the year and expect the
Environmental Impact Declaration to be received during 2020.
Conference Call and Webcast
We invite you to join our conference call, where
management will discuss our Q2 financial results and project
developments and follow with a question and answer session.
Questions can be asked directly by participants during the webcast.
The webcast will be archived on the McEwen website following the
call.
Wednesday, July 31, 2019 1:30 pm
EDT |
Toll Free US & Canada: |
1 (844) 630-9911 |
Outside US & Canada: |
1 (210) 229-8828 |
Conference ID Number: |
8248849 |
Webcast Link: |
Click Here |
ABOUT MCEWEN MINING
McEwen Mining is a diversified gold and silver
producer with operating mines in Nevada, Canada, Mexico and
Argentina. It also owns a large copper deposit in Argentina.
McEwen’s goal is to qualify for inclusion in the S&P 500 Index
by creating a profitable gold and silver producer focused in the
Americas.
McEwen has approximately 362 million shares
outstanding. Rob McEwen, Chairman and Chief Owner, owns 22% of the
shares.
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.
Technical InformationThe
technical contents of this news release has been reviewed and
approved by Chris Stewart, P.Eng., President & COO of McEwen
Mining and a Qualified Person as defined by Canadian Securities
Administrators National Instrument 43-101 "Standards of Disclosure
for Mineral Projects."
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.
Cash Costs and All-in Sustaining CostsCash costs
consist of mining, processing, on-site general and administrative
costs, community and permitting costs related to current
operations, royalty costs, refining and treatment charges (for both
doré and concentrate products), sales costs, export taxes and
operational stripping costs, and exclude depreciation and
depletion. All-in sustaining cash costs consist of cash costs (as
described above), plus environmental rehabilitation costs,
amortization of the asset retirement costs related to operating
sites, sustaining exploration and development costs, sustaining
capital expenditures, and sustaining lease payments. Both cash
costs and all-in sustaining costs are divided by the gold
equivalent ounces sold to determine cash costs and all all-in
sustaining costs on a gold equivalent basis. For both cash costs
and all-in sustaining costs we exclude our attributable share of
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.
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 Quarterly Report on Form
10-Q for the quarter ended June 30, 2019.
Earnings from mining operationsThe term earnings
from mining operations is a Non-GAAP financial measure. We use and
report this metric 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
revenue from gold and silver sales from our El Gallo Project and
Black Fox 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 depreciation and depletion 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 exclude this
expense in order to arrive at depreciation and depletion that only
includes depreciation and amortization expense incurred at the mine
site level. A reconciliation to the nearest US GAAP measure,
revenue from gold and silver sales, production costs applicable to
sales and depreciation and depletion is provided in the Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019.
Liquid assetsThe term liquid assets used in this
report is a non‑GAAP financial measure. We report this measure to
better understand our liquidity in each reporting period. Liquid
assets is calculated as the sum of cash and cash equivalents,
investments, trade receivable and ounces of bullion/doré held in
precious metals inventories, with precious metals valued at the
London PM Fix spot price at the corresponding period. A
reconciliation to the most directly comparable U.S. GAAP measure is
provided in McEwen Mining's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2019.
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, 2018 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: |
Investor Relations:(866)-441-0690 Toll Free(647)-258-0395
Christina McCarthy ext. 390Mihaela
Iancu ext. 320 info@mcewenmining.com |
Website: www.mcewenmining.com
Facebook:
facebook.com/mcewenminingFacebook:
facebook.com/mcewenrob Twitter:
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instagram.com/mcewenmining |
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1J9 |
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