McEwen Mining Inc. (NYSE: MUX) (TSX: MUX)
announces its results for the third quarter ended September 30,
2019 (“
Q3”). Total production during Q3 was
35,042 gold ounces and
947,145
silver ounces, or
45,930 gold equivalent
ounces(1)(“GEOs”) using the average gold:silver price ratio for Q3
of 87:1. Our four producing mines generated Earnings From Mining
Operations of
$9.4 million(2)(3) during the
quarter. We continued to invest in exploration and development,
spending
$15.8 million on advanced projects during
Q3, which contributed to our consolidated net loss of
$11.5
million, or
$0.03 per share.
Q4 2019 and 2020 Outlook
During Q4 2019, we expect to produce between
42,000-46,000 GEOs, placing us near the midpoint
of our guidance range for the year. Cash costs and AISC(1)(2) will
be elevated at Gold Bar due to improvements and repairs to the
conveying systems and process plant. Cash costs at Black Fox are
expected to return to the levels we guided for the year, and AISC
is expected to remain above guidance due to additional sustaining
capital expenditures.
For 2020, we expect an overall improvement in
GEOs produced and our global cost per GEO compared to 2019, as Gold
Bar is forecast to produce 65,000-70,000 gold
ounces during the year. Production and cost guidance for 2020 will
be provided with our Q4 results.
Operations Update
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 Q3 was 13,575 gold
ounces and 943,037 silver ounces, for a total of
24,415 GEOs, compared to 21,676 GEOs in 2018. Cash
costs and all-in sustaining costs (AISC) were $915
and $1,204 per GEO, respectively, in line with our
guidance for the year. During Q3 we received $2
million, and subsequent to the end of the quarter we
received a further $3 million, in dividends from
our interest in the San José Mine.
Black Fox Mine, Canada (100% Interest)
In Q3, Black Fox produced 7,427
gold ounces, compared to 11,618 gold ounces in 2018. Cash costs and
AISC were $941 and $1,363,
respectively. AISC was above our guidance primarily due to lower
than expected gold production.
Our 2019 exploration budget for the Black Fox
Complex is $18 million. For detailed
information about our ongoing exploration at the Black Fox Complex,
refer to our news release dated July 10th & 25th, September
4th, 10th & 30th, and Oct. 28th.
Gold Bar Mine, USA (100%
Interest)
Q3 was the first full quarter of commercial
production at Gold Bar. Production during Q3 was
11,030 gold ounces. Cash costs and AISC were above
guidance at $1,088 and $1,235 per
GEO, respectively, primarily due to operational challenges during
the first half of the year.
Our 2019 exploration budget for the Gold Bar
property is $5 million. Drilling focused on
Gold Bar South in order to advance permitting, with the objective
of having development begin in late 2020. We also drilled two deep
holes to test the potential of the property for Carlin-type gold
deposits. For detailed information about our Nevada exploration
program, refer to our news releases date August 20th, and October
15th.
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. During Q3, the mine produced 3,057 gold
equivalent ounces. Cash costs and AISC were $1,153
and $1,177 per GEO, respectively. Production from
residual leaching decreased due to depletion of the leachable gold
content and the normal impact of the wet season. We are evaluating
several methods of enhancing and extending the existing
operation.
Work on the Fenix Project feasibility study and
permitting is progressing. During Q3 environmental permits were
received for Phase 1 plant development and in-pit tailings
storage.
Los Azules Project, Argentina (100%
Interest)
During Q3, we continued to advance permitting efforts,
preliminary engineering and cost estimating for the proposed low
altitude all year access route.
Table 1 below provides production and cost
results for Q1, Q2 and Q3 2019 and comparative results from 2018
along with production and cost guidance for the full year 2019.
Table 1: Production and
Costs
|
Q1 |
Q2 |
Q3 |
Full Year2019 Guidance |
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
Total
Production |
|
|
|
|
|
|
|
Gold (oz) |
35,068 |
26,938 |
36,959 |
36,216 |
33,806 |
35,042 |
131,000-138,000 |
Silver (oz) |
695,651 |
703,219 |
772,432 |
850,525 |
745,172 |
947,145 |
3,225,000 |
GEOs(1) |
44,344 |
36,315 |
47,258 |
45,881 |
43,742 |
45,930 |
169,000-176,000 |
San José Mine, Argentina (49%)(4) |
|
|
|
|
|
|
|
Gold (oz) |
10,822 |
10,559 |
12,139 |
13,518 |
11,768 |
13,575 |
49,000 |
Silver (oz) |
692,052 |
701,341 |
769,197 |
848,268 |
743,100 |
943,037 |
3,225,000 |
GEOs(1) |
20,049 |
19,910 |
22,395 |
23,157 |
21,676 |
24,415 |
87,000 |
Cash Costs ($/GEO)(1)(2) |
934 |
749 |
806 |
960 |
856 |
915 |
860 |
AISC
($/GEO)(1)(2) |
1,148 |
1,115 |
1,065 |
1,207 |
1,028 |
1,204 |
1,120 |
El Gallo Mine, Mexico |
|
|
|
|
|
|
|
GEOs(1) |
12,217 |
5,432 |
10,808 |
5,354 |
10,448 |
3,057 |
16,000 |
Cash Costs ($/GEO)(1)(2) |
691 |
967 |
783 |
926 |
671 |
1,153 |
875 |
AISC
($/GEO)(1)(2) |
753 |
989 |
816 |
939 |
683 |
1,177 |
915 |
Black Fox Mine, Canada |
|
|
|
|
|
|
|
GEOs(1) |
12,078 |
8,943 |
14,055 |
9,430 |
11,618 |
7,427 |
36,000-40,000 |
Cash Costs ($/GEO)(1)(2) |
849 |
805 |
771 |
837 |
932 |
941 |
905 |
AISC
($/GEO)(1)(2) |
1,188 |
1,454 |
1,056 |
1,196 |
1,285 |
1,363 |
1,080 |
Gold Bar Mine, Nevada |
|
|
|
|
|
|
|
GEOs(1) |
- |
2,030(5) |
- |
7,940(5) |
- |
11,030 |
30,000-33,000 |
Cash Costs ($/GEO)(1)(2) |
- |
- |
- |
901 |
- |
1,088 |
930 |
AISC
($/GEO)(1)(2) |
- |
- |
- |
1,088 |
- |
1,235 |
975 |
Notes:
- 'Gold Equivalent Ounces' are calculated based on a 75:1 gold to
silver price ratio for periods up to and including Q1 2019, 88:1
for Q2 2019, and 87:1 for Q3. 2019 GEO and costs guidance is stated
using a 85:1 ratio.
- Earnings from mining operations, cash costs per ounce, all-in
sustaining costs (AISC) per ounce, and liquid assets are non-GAAP
financial performance measures with no standardized definition
under U.S. GAAP. See “Cautionary Note Regarding Non-GAAP Measures”
for additional information, including definitions of these
terms.
- All amounts are reported in US dollars unless otherwise
stated.
- Represents the portion attributable to us from our 49% interest
in the San José Mine.
- Pre-commercial production at Gold Bar during Q1 2019 was 2,030
GEOs, cash costs and AISC were not reported. Gold Bar started
commercial production on May 23, 2019.
Table 2 below provides financial highlights for
Q3 and Q3 YTD 2019 and comparative results from 2018.
Table 2: Financial Highlights
|
Q3 2018 |
Q3 2019 |
Q3 YTD 2018 |
Q3 YTD 2019 |
Treasury |
|
|
|
|
Liquid Assets ($
millions)(2) |
54.0 |
18.5 |
54.0 |
18.5 |
Working Capital ($ millions) |
37.9 |
16.5 |
37.9 |
16.5 |
Debt (Term loan) ($
millions) |
50.0 |
50.0 |
50.0 |
50.0 |
Earnings (Loss) from Mining Operations(2) |
|
|
|
|
Black Fox Mine ($ millions) |
(0.3) |
0.1 |
6.9 |
1.9 |
San José Mine (49%) ($ millions) |
(1.7) |
6.4 |
3.7 |
9.6 |
El Gallo Mine ($ millions) |
6.8 |
1.1 |
24.5 |
4.9 |
Gold Bar Mine ($
millions) |
- |
1.8 |
- |
3.9 |
Consolidated Net Income |
|
|
|
|
Net (Loss) ($ millions) |
(13.3) |
(11.5) |
(23.9) |
(34.6) |
Net (Loss) per Share
($) |
(0.04) |
(0.03) |
(0.07) |
(0.10) |
Cash Flow |
|
|
|
|
Cash Provided By (Used
In) Operating Activities ($ millions) |
(1.4) |
(12.8) |
(0.8) |
(21.9) |
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
Conference Call and Webcast
We invite you to join our conference call, where
management will discuss our Q3 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, October 30, 2019 11:00 am
EDT |
Toll Free US & Canada: |
1 (866) 211-4128 |
Outside US & Canada: |
1 (647) 689-6724 |
Conference ID Number: |
3788346 |
Webcast Link: |
Click Here |
Management will reference slides from this presentation
during the conference call:
http://mcewenmining.com/files/doc_presentations/20191030_q3_conf_call.pdf
ABOUT MCEWEN MINING
McEwen Mining is a diversified gold and silver
producer and explorer with operating mines in Nevada, Canada,
Mexico and Argentina. It also owns a large copper deposit in
Argentina. McEwen’s goal is to create 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 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-in
sustaining costs on a per ounce 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 September 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, Gold
Bar mine, Black Fox mine, and our 49% attributable share of the San
José mine’s revenues from gold and silver sales, less their
respective production costs applicable to sales and depreciation
and depletion. 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 September 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,
restricted cash, investments, trade receivable and ounces of 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 September 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.
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:
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