McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported its third quarter (
Q3) results for the
period ended September 30th, 2021.
- We continue to execute our
turnaround strategy and have made significant progress
both from an operational and a financial perspective (see
Tables 1-3 below). We expect this trend to
continue with the ongoing production ramp-up from the Froome
deposit at the Fox Complex.
- Our operations delivered
production results in line with our expectations, and we
are on track to meet our 2021 production guidance of
141,000 to 160,400 GEOs.
- Cash and liquid
assets(1) and working
capital at September 30th, 2021 were $72.7
million(2) and
positive $45.8 million,
respectively, including $40 million of cash raised by our McEwen
Copper subsidiary to advance the Los Azules project.
- Continued to aggressively
invest $6.2 million in exploration and $4 million in advanced
projects, primarily focused on the Fox Complex.
- These investments in our future
growth and profitability accounted for a large part of our reported
net loss of $17.4 million, or
($0.04) per share, compared to a net loss of $9.8
million, or ($0.02) per share in Q3 2020.
- Commercial production at
the Froome deposit was reached on September 19th. Froome
is the newest production area at the Fox Complex and has several
advantages compared to Black Fox mine, such as a straighter,
shorter, and more efficient underground haulage route, and wider
more consistent mineralization that is amenable to lower-cost bulk
mining methods.
- Results of the Fox Complex
Expansion PEA are expected by the end of Q4 2021. The
study will incorporate the 2021 exploration and resource definition
drilling results and will highlight the exciting development plans
for the Grey Fox and Stock deposits.
- Our quarterly webcast will
take place on Thursday, November 4th
at 2 pm EDT. Please see the details further
below.
Table 1. Production and costs Q3 &
Nine Months Ended September 30th
(9M), 2021, compared to Q3 &
9M 2020.
2021 vs. 2020% Increase (+) or Decrease (-) |
Production(GEOs)(1) |
Cash Costs($/GEO)(2) |
AISC ($/GEO)(2) |
|
Q3 |
9M |
Q3 |
9M |
Q3 |
9M |
Gold Bar Mine, Nevada |
+82% |
+54% |
-2% |
-10% |
-9% |
-21% |
Fox Complex, Canada |
+43% |
+26% |
-27% |
-23% |
-13% |
-23% |
San José Mine, Argentina(3) |
+36% |
+43% |
-13% |
-11% |
-5% |
-6% |
Table 2. Liquidity on September
30th,
2021 and December 31st, 2020.
(Millions of Dollars) |
Q3 2021 endedSep.
30th, 2021 |
Q4 2020 endedDec 31st, 2020 |
|
Cash and cash equivalents |
63.1 |
20.8 |
Liquid assets |
72.7 |
25.9 |
Working capital |
45.8 |
7.9 |
Debt principal |
50.0 |
50.0 |
Table 3. Financial results Q3 & 9M
2021, compared to Q3 & 9M 2020.
|
2021 |
2020 |
(Millions of Dollars) |
Q3 |
9M |
Q3 |
9M |
Revenue |
37.1 |
101.6 |
27.4 |
77.1 |
Cash gross profit (loss) |
6.4 |
16.1 |
3.9 |
2.8 |
Gross profit (loss) |
0.3 |
(0.6) |
(0.7) |
(13.3) |
Net loss |
(17.4) |
(35.9) |
(9.8) |
(128.8) |
(Dollars) |
|
|
|
|
Net loss per share |
(0.04) |
(0.08) |
(0.02) |
(0.32) |
Operations Update
Gold Bar Mine, USA (100%
Interest)
Gold Bar production for Q3 and 9M was
82% and 54% better, respectively,
compared to Q3 and 9M 2020. While cash costs(2) and all-in
sustaining costs (AISC)(2) for the 9M period dropped by
10% and 21%, respectively,
compared to 9M 2020.
12,400 GEOs were produced
in Q3 at total cash costs and AISC of $1,553
and $1,618 per GEO sold, respectively.
This compares to 6,800 GEOs in Q3 2020 at total cash costs and AISC
of $1,585 and $1,769 per GEO, respectively.
AISC was positively impacted by less capital investment in
processing equipment in 2021 versus 2020.
Exploration is focusing on near-mine targets and
further defining oxide resources on the neighboring Tonkin property
that could potentially be processed at Gold Bar. During the
quarter, we incurred exploration expenses of $1 million.
Encouraging results at the Tonkin Rooster deposit included drill
intercepts up to 1.0 g/t gold over 57.9
m and a cyanide solubility(3) of 74% and 3.2
g/t gold over 38.1 m (including
14.7 g/t over 6.1 m) with an 11%
cyanide solubility that occur within a complex structural
framework. An ongoing program of remapping, relogging historic
drill holes and producing an updated geologic model by year-end
will establish a basis for continued exploration at the Tonkin
Property in 2022.
Fox Complex, Canada (100%
Interest)
Fox production for Q3 and 9M was
43% and 26% better, respectively,
compared to Q3 and 9M 2020. Cash costs and AISC for the 9M period
both dropped by 23%, compared 9M 2020.
8,300 GEOs were produced
in Q3 at total cash costs and AISC
of $1,154 and $1,423 per
GEO sold, respectively. This compares to 5,800 GEOs in Q3 2020 at
total cash costs and AISC of $1,581 and $1,644 per
GEO, respectively. The increase in production and the corresponding
decrease in costs were attributed to improved efficiencies realized
from production at the Froome deposit. In September, commercial
production was achieved at Froome, three months ahead of schedule.
Mining from Froome is expected to bridge production while the Grey
Fox and Stock projects will be advanced in the production
pipeline.
At the Stock property, we see the opportunity to
further expand the Stock West footprint beyond the grade-thickness
contours shown below (see Figure 1). Of particular
interest is hole S21-202, which returned 4.4 g/t
gold over 21.0 m estimated true width, 200 m above
hole S19-95, which returned 27.2 g/t gold over
7.0 m. These holes are located at the projected
intersection of the Stock West shallow eastern plunge and the
historically steep Stock Mine plunge, and they command further
drilling in 2022.
Figure 1. Longitudinal section of Stock
West and Stock Mine profiling hole S21-202
intercepthttps://mcewenmining.com/files/doc_news/archive/2021/20211103_Fig_1.pdf
We remain focused on our principal exploration
goal of cost-effectively discovering and extending gold deposits
adjacent to our existing operations to contribute to near-term gold
production growth. During the quarter, we incurred exploration
expenses of $4.2 million in relation to this
program.
The Preliminary Economic Assessment (PEA) for
the Fox Complex expansion will be released later this quarter. It
is based on the Grey Fox, Froome, Stock, and Fuller resources,
which are envisioned to be mined and then processed at an upgraded
centralized mill at Stock. The objective of the PEA is to outline a
low-cost, near-term business case that increases production and
mine life for the Fox Complex.
San José Mine, Argentina (49%
Interest)
San José attributable production(4) for Q3 and
9M was 36% and 43% better,
respectively, compared to Q3 and 9M 2020. While cash costs and AISC
for the 9M period dropped by 11% and
6%, respectively, compared 9M 2020.
Attributable production was
10,800 gold ounces and 790,000
silver ounces, for a total of 21,600 GEOs(3). For
Q3, total cash costs and AISC were $1,100 and
$1,466 per GEO sold, respectively. This compares
to 15,900 GEOs in Q3 2020 at total cash costs and AISC
of $1,269 and $1,538 per GEO, respectively.
In 2021, we have received $10 million in
dividends from our interest in San José.
Exploration drilling in the mine area at San
José returned encouraging results including: 6.3 m
of 44.4 g/t gold in the Betania vein, 1.9
m of 14.5 g/t gold and 342
g/t silver in the Jimena vein, and 4.3 m
of 14.9 g/t gold and 1,381 g/t
silver in the Amelia vein.
McEwen Copper
Activity at McEwen Copper’s Los Azules project
is moving ahead quickly. The exploration road has been reopened,
three work camp sites have been established, an expanded local
labor force and preparations are underway for starting a 10-drill,
174,000-foot (53,000 m) drilling program. Drilling will focus on
conversion of Inferred mineral resources to the Indicated category,
as well as deeper exploration targets, where drilling ended in
strong copper mineralization. Drills are expected to turn towards
the end of November and continue through the end of Q2 2022.
Construction of the new access road for
providing the necessary year-round access to the project is
advancing as planned. As part of our ongoing involvement with local
communities and businesses, local contractors are being sourced for
the construction.
The contract for delivery of a pre-feasibility
study (PFS) is at the tender stage and work is expected to begin in
Q4. Whittle Consulting has been engaged to assist in identifying
opportunities to improve the project that will be investigated
during the PFS preparation.
Table 4 Production and cost
results for Q3 & 9M 2021 and comparative
results from 2020:
|
Q3 |
9M |
FY 2021Guidance Range |
2021 |
2020 |
2021 |
2020 |
Total Production |
|
|
|
|
|
Gold (oz) |
32,100 |
23,100 |
87,100 |
68,000 |
110,500 – 127,900 |
Silver (oz) |
792,000 |
575,000 |
1,897,000 |
1,487,600 |
2,300,000 – 2,450,000 |
GEOs(1) |
42,900 |
30,400 |
114,200 |
84,600 |
141,000 – 160,400 |
Gold Bar Mine, Nevada |
|
|
|
|
|
GEOs(1) |
12,400 |
6,800 |
33,900 |
22,000 |
37,000 – 45,000 |
Cash Costs ($/GEO)(1)(3) |
1,553 |
1,585 |
1,582 |
1,762 |
|
AISC
($/GEO)(1)(3) |
1,618 |
1,769 |
1,685 |
2,132 |
|
Fox Complex, Canada |
|
|
|
|
|
GEOs(1) |
8,300 |
5,800 |
20,600 |
16,300 |
27,500 – 32,500 |
Cash Costs ($/GEO)(1)(3) |
1,154 |
1,581 |
1,102 |
1,440 |
|
AISC
($/GEO)(1)(3) |
1,423 |
1,644 |
1,339 |
1,750 |
|
San José Mine, Argentina (49%)(4) |
|
|
|
|
|
Gold (oz) |
10,800 |
8,600 |
29,700 |
23,100 |
41,500 – 44,500 |
Silver (oz) |
790,000 |
571,000 |
1,889,600 |
1,481,600 |
2,300,000 – 2,450,000 |
GEOs(1) |
21,600 |
15,900 |
56,600 |
39,700 |
72,000 – 77,000 |
Cash Costs ($/GEO)(1)(3) |
1,100 |
1,269 |
1,098 |
1,232 |
|
AISC
($/GEO)(1)(3) |
1,466 |
1,538 |
1,441 |
1,536 |
|
Our El Gallo project produced 560 GEO during the
quarter and 2,500 GEO for the 9M 2021, residual heap leaching
continues.
Notes:
- Gold Equivalent Ounces (GEOs) are
calculated based on a gold to silver price ratio of 73:1 for Q3
2021, 68:1 for Q1 and Q2 2021, 94:1 for Q1 2020, 104:1 for Q2 2020,
79:1 for Q3 2020 and 75:1 for full year (FY) 2021 Production
Guidance.
- Cash gross profit, 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. For a description of the non-GAAP
measures see "Non-GAAP Financial Measures" section in
this press release; for the reconciliation of the non-GAAP measures
to the closest U.S. GAAP measures, see the Management Discussion
and Analysis for the year ended December 31st, 2020 filed on EDGAR
and SEDAR.
- Cyanide solubility is defined as
the ratio of gold grade measured by A) a cyanide shake flask test,
and B) conventional fire assay. A/B*100=Cyanide solubility %
- Represents the portion attributable
to us from our 49% interest in the San José Mine.
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
Management will discuss our Q3 2021 financial
results and project developments and follow with a
question-and-answer session. Questions can be asked directly by
participants over the phone during the webcast.
Thursday, November 4th,
2021at 2:00 pm ET |
To call into the
conference call over the phone, please register here:
http://www.directeventreg.com/registration/event/9134137
Audience
URL:https://event.on24.com/wcc/r/3404659/E87751D72BA57EBA0875CDA9F344E3D1 |
The webcast will be archived on McEwen Mining's website at
https://www.mcewenmining.com/media following the call.
COVID-19All our operations have
implemented rigorous health and safety measures to prevent the
spread of the COVID-19 virus. Currently, the COVID-19 pandemic is
not materially affecting our operations, or our future strategic
plans and objectives.
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, other than
exploration-related disclosure, have been reviewed and approved by
G. Peter Mah, P.Eng., COO of McEwen Mining and a Qualified Person
as defined by Canadian Securities Administrators National
Instrument 43-101 "Standards of Disclosure for Mineral
Projects."
Technical information pertaining to Stock
project exploration contained in this news release has been
prepared under the supervision of Ken Tylee, P.Geo., a
Qualified Person as defined by Canadian Securities Administrators
National Instrument 43-101 "Standards of Disclosure for Mineral
Projects."
Technical information pertaining to Gold Bar
exploration contained in this news release has been prepared under
the supervision of Kevin Kunkel, P.Geo., 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 release, we have provided information
prepared or calculated according to United States Generally
Accepted Accounting Principles ("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
amortization. All-in sustaining costs consist of cash costs (as
described above), plus accretion of retirement obligations and
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. 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
production costs applicable to sales, the nearest U.S. GAAP measure
is provided in McEwen Mining's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2021.
Cash Gross ProfitCash gross profit is a non-GAAP
financial measure and does not have any standardized meaning under
GAAP. We use cash gross profit to evaluate our operating
performance and ability to generate cash flow; we disclose cash
gross profit as we believe this measure provides valuable
assistance to investors and analysts in evaluating our ability to
finance our ongoing business and capital activities. The most
directly comparable measure prepared in accordance with GAAP is
gross profit or loss. Cash gross profit is calculated by adding
back the depreciation and depletion expense to gross profit or
loss. A reconciliation to gross profit, the nearest U.S. GAAP
measure is provided in McEwen Mining's Quarterly Report on Form
10-Q for the quarter ended September 30, 2021.
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 the Balance Sheet line items of
cash and cash equivalents, restricted cash and investments, plus
ounces of doré held in precious metals inventories valued at the
London PM Fix spot price at the corresponding period. 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, 2021.
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, effects of the COVID-19 pandemic, 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, 2020 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 the management of
McEwen Mining Inc.
ABOUT MCEWEN MINING
McEwen Mining is a diversified gold and silver producer and
explorer focused in the Americas with operating mines in Nevada,
Canada, Mexico and Argentina.
CONTACT INFORMATION: |
Investor Relations:(866)-441-0690 Toll
Free(647)-258-0395Mihaela Iancu ext.
320info@mcewenmining.com |
Website:
www.mcewenmining.comFacebook: facebook.com/mcewenminingFacebook: facebook.com/mcewenrobTwitter:
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1J9 |
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