McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported its first quarter (Q1) results for the period ended March
31st, 2022.
- Production was
20,850 gold ounces and 336,500
silver ounces, or 25,100 gold equivalent ounces(1)
(GEOs)(see Table 1), compared to 30,600 GEOs
during Q1 2021.
- Average cash costs(2) per GEO sold
from our 100%-owned mines in Q1 was $1,696, below
our guidance of $1,940 to 2,100 per GEO. Average all-in sustaining
costs ("AISC")(2) per GEO sold from our 100%-owned
mines was $2,146, below our guidance of $2,340 to
2,560 per GEO.
- Management continues to work
diligently to address operational challenges and reduce costs,
while continuing to invest in exploration and the advancement of
McEwen Copper’s Los Azules project.
- Our consolidated net loss in Q1 was
$19.3 million, or $0.04 per
share, which relates primarily to $14.4 million
invested in exploration and advanced projects and a gross loss of
$6.0 million from our operations.
- Our 100%-owned mines generated a
cash gross loss of $2.3 million(2) in Q1 and a
gross loss of $6.0 million. Cash gross profit
(loss) is calculated by adding back depletion and depreciation to
gross profit (loss).
- Cash, cash equivalents and
restricted cash at March 31, 2022 was $70.4
million, of which $35.6 million is
attributable to McEwen Copper.
- We completed a flow-through equity
financing on March 2nd for gross proceeds of $15.1
million, and a debt financing by way of an unsecured
subordinate promissory note for $15 million
(please see news releases dated March 2nd and April 5th).
- Dr. Merri Sanchez has been
appointed to the Board of Directors. Dr. Sanchez has over 40 years
of spaceflight engineering and operations experience, and
previously served as the Chief Scientist of the U.S. Air Force
Space Command.
- A webcast will be held on
Friday, May 13th at 12:00
pm EDT. Please see the details further below.
Operations Update
Fox Complex, Canada (100%
interest)
Fox produced 7,700 GEOs in
Q1 at total cash costs and AISC
of $1,193 and $1,729 per
GEO sold, respectively. This compares to 5,200 GEOs at total cash
costs and AISC of $1,262 and $1,560 per GEO
sold, respectively, in Q1 2021.
The higher production level and lower cash costs
quarter over quarter were primarily due to mining at the new Froome
mine versus the Black Fox mine in Q1 2021. During Q1, the solid
performance in the mine was offset by a labour shortage due to
COVID-19, coupled with equipment failures at the Stock mill.
Approximately 11,700 oz of gold was mined during the quarter from
the Froome deposit, which would have resulted in production of
10,500 oz of gold if the mill had been able to process all the
material as planned. Our team is in the process of implementing
long-term solutions such as replacing aging equipment and
de-bottlenecking to improve reliability going forward.
We announced the results of our Preliminary
Economic Assessment (PEA) for the Fox Complex. The PEA presents
estimates for a positive business case for the Fox Complex
expansion project, with potential average gold production of 80,800
gold ounces per year over nine (9) years, after the depletion of
the current resources at Froome. The economic analysis estimates an
after-tax IRR of 21% at a gold price of $1,650 per oz, and average
cash costs and AISC per ounce of gold of $769 and $1,246,
respectively. Additional exploration work on the Fox Complex
properties will be conducted throughout 2022 to support the ongoing
studies necessary to advance the expansion project.
In Q1, we incurred $1.7 million
for exploration. Our exploration spend at Fox for 2022 & 2023
is forecasted to be $10.0 million and
$15.0 million, respectively. During the remainder
of 2022, exploration will focus on:
-
Stock property, where we expect to improve the business case for
development of an underground ramp access to the Stock West and
Stock East deposits; and
-
Grey Fox property, where the Whiskey Jack exploration target area
returned high-grade intercepts in 2021, including 7.29
g/t gold over 15.35 m (hole 21GF-1350)
and 4.75 g/t gold over 25.20
m (hole 21GF-1333) (please see news release dated
April 25th, 2022).
Gold Bar Mine, USA (100%
interest)
Gold Bar produced 6,300
GEOs in Q1 at total cash costs and AISC
of $2,284 and $2,633 per
GEO sold, respectively. This compares to 7,400 GEOs at total cash
costs and AISC of $1,865 and $1,934 per GEO
sold, respectively, in Q1 2021.
Mining from the Pick open pit was 44% below
target in Q1 due to mining contractor employee turnover, lower
blasting productivity, and the segregation of potentially
preg-robbing carbon in mineralized material which could not be heap
leached; further metallurgical testing is underway. Heap leach and
process plant operations partially offset the deficit of ore mined
by achieving 13% higher gold recovery and 8% higher gold grade than
the corresponding targets for the quarter. We are evaluating if
carbon will remain an issue during the current and future phases of
mining at Pick.
Near-mine exploration drilling is underway
around the Pick pit with encouraging oxide drill results,
including: 1.93 g/t gold over 38.6
m (126.5 ft) in hole GBSW002, and 0.93
g/t gold over 19.5 m (64 ft) in hole
GBSW006. This mineralization remains open along a trend to the
southwest (please see news release dated April 25th, 2022).
We received regulatory approval to amend the
plan of operations to include the Gold Bar South (GBS) deposit on
April 1st, 2022. We are planning to start construction of the
access road and heap leach pad expansion to accommodate the
expected gold production starting in Q4 2022.
In Q1, we spent $1.5 million on
exploration activities. One drill rig is currently operating at
targets designed to extend the Pick deposit. Drilling is also
planned at the Atlas pit, where drilling in 2021 returned
3.10 g/t gold over 27.4 m (90 ft)
(please see news release dated April 25th, 2022).
San José Mine, Argentina (49%
interest)
San José attributable production for Q1 was
6,450 gold ounces and 335,500
silver ounces, for a total of 10,700 GEOs. Total
cash costs(2) and all-in sustaining costs (AISC)(2) for the quarter
were $1,589 and $2,103 per GEO
sold, respectively. This compares to 16,700 GEOs at total cash
costs and AISC of $1,088 and $1,328 per GEO
sold, respectively, in Q1 2021.
San José production was impacted by
COVID-19-related employee absences, which resulted in fewer tonnes
of ore processed during the quarter. Despite the slow start to the
year, the San José mine is expected to meet production guidance of
69,500 to 77,500 GEOs (49%).
In Q1, 2,050 m (6,720 ft) of exploration
drilling was completed around the mine area and the Saavedra vein.
Drilling highlights include 6.0 g/t gold and
236 g/t silver over 1.5 m (hole
SJD-2451) and 8.3 g/t gold and 561
g/t silver over 1.2 m (hole SJD-2453) in
the Celina vein; and 2.8 g/t gold and 546
g/t silver over 1.1 m (also hole
SJD-2453) in the Celina Piso vein. An additional 2,000 m of
resource delineation drilling is planned in Q2.
McEwen Copper (81%
interest)
The Los Azules project, located in San Juan,
Argentina, is one of the world's largest undeveloped open-pit
copper porphyry deposits.
During Q1 2022, approximately 5,340 m (17,500
ft) of drilling was completed in ten holes, and by the 10th of
May 2022 approximately 10,780 m (35,360 ft) had been drilled.
Drilling rates were impacted by equipment availability,
productivity and reliability of drills assigned to the project.
Drill contractor mobilization of crews, equipment, and parts supply
were adversely affected by COVID-19 and industry-wide shortages of
labor. Steps to remedy these challenges are resulting in improved
performance during April and May. Seven drills are currently
active, and good turnaround time for results is currently being
maintained by the assay lab. The drill program will continue in Q2,
weather permitting, followed by a winter break during the months of
June to August. Drilling is expected to re-start in October.
Additional drilling is confirming the
mineralization size and grade compared to historic intercepts used
to estimate the 2017 PEA mineral resource estimate. To date,
the results from core logging and sample analysis are very
encouraging. In many holes, drilling was allowed to continue beyond
the planned length where visible copper mineralization was
observed. Often, primary mineralization in the hole was still
apparent when drilling was stopped. Hole AZ22142
intersected 419.1
m of 0.79% copper,
including an interval comprising 104.0
m of 1.00% copper in the
supergene enriched zone and 46
m of 1.59% copper in the
hypogene copper zone. Importantly, our updated geological model
will reflect the sub-vertical structures and rock types that are
thought to be key features controlling the distribution of
mineralization. This points directly to the potential for
significant mineralization to be discovered with additional
drilling to depth (please see news release dated May 4th,
2022).
The critical issue of road access to the site
has been resolved. We have developed a second road at a lower
altitude that will allow for year-round access to the site. Our
access will be extended, making it safer, less expensive and faster
to advance and complete our fieldwork.
Whittle Consulting's Enterprise Optimization
work, which will be outlined in our forthcoming updated PEA
expected in Q1 2023. Their analysis has provided important focus
and direction for the detailed work underway, including guidance
for drilling programs, metallurgical test work and trade-off
studies for mining, processing and infrastructure.
McEwen Copper spent $9.8
million in Q1 to advance the Los Azules project.
Director Appointment
Dr. Merri Sanchez was appointed to the
Board of Directors effective February 25, 2022. She is a
Technical Fellow with The Aerospace Corporation where she provides
technical and strategic advice on matters concerning civil,
commercial, and government spaceflight programs. She has more than
40 years of spaceflight engineering and operations experience.
She previously served as the Chief Scientist of the U.S. Air Force
Space Command, as a senior executive for the National Aeronautics
and Space Administration, and as Senior Director of a commercial
space company. She received a Bachelor of Science in Aerospace
Engineering from Texas A&M University, a Master of Science in
Physical Sciences (Planetary Geology) from the University of
Houston — Clear Lake, a Master of Mechanical Engineering from the
University of Houston, and a Doctor of Philosophy in Industrial
Engineering (Human Factors) from the University of Houston. Our
Board believes that Ms. Sanchez’s expertise in cutting edge
science and technology as well as her experience in operations,
engineering, safety, risk management and decision making for both
human and robotic spaceflight makes her an asset to our Board.
NYSE Listing
On January 5th, the Company was notified by the
NYSE that the average price of its common stock for the previous 30
trading days was below $1.00 per share. Under NYSE
regulations we had six months to bring the share price and 30-day
average closing share price back above $1.00. The Board of
Directors have not approved a reverse share split and will
therefore seek other means of remaining on the NYSE. Should the
Company become delisted it will continue to trade on the Toronto
Stock Exchange ("TSX"). Additionally, the Company is exploring
transitioning to an alternate exchange or quotation system in the
United States.
Table 1 below provides
production and cost results for Q1 2022 with comparative results
for Q1 2021 and our guidance range for 2022.
|
Q1 |
Full Year 2022Guidance Range |
2022 |
2021 |
Consolidated Production |
|
|
|
Gold (oz) |
20,850 |
23,300 |
118,000-133,000 |
Silver (oz) |
336,500 |
493,200 |
2,520,000-2,800,000 |
GEOs(1) |
25,100 |
30,600 |
153,000-172,000 |
Gold Bar Mine, Nevada |
|
|
|
GEOs(1) |
6,300 |
7,400 |
38,000-44,000 |
Cash Costs ($/GEO)(1) |
2,284 |
1,865 |
|
AISC ($/GEO)(1) |
2,633 |
1,934 |
|
Fox Complex, Canada |
|
|
|
GEOs(1) |
7,700 |
5,200 |
44,000-49,000 |
Cash Costs ($/GEO)(1) |
1,193 |
1,262 |
|
AISC ($/GEO)(1) |
1,729 |
1,560 |
|
San José Mine, Argentina (49%) |
|
|
|
Gold production (oz)(3) |
6,450 |
9,500 |
34,500-38,500 |
Silver production (oz)(3) |
335,500 |
492,300 |
2,520,000-2,800,000 |
GEOs(1)(3) |
10,700 |
16,700 |
69,500-77,500 |
Cash Costs ($/GEO)(1) |
1,589 |
1,088 |
|
AISC ($/GEO)(1) |
2,103 |
1,328 |
|
Our El Gallo project produced 470 GEOs during Q1
and 1,300 GEOs for Q1 2021. Residual heap leaching is expected to
cease by the end of June 2022.
Notes:
- 'Gold Equivalent Ounces' are calculated based on a gold to
silver price ratio of 78:1 for Q1 2022 and 68:1 for Q1 2021. 2022
production guidance is calculated based on 72:1 gold to silver
price ratio.
- Cash gross loss, cash costs per ounce sold, all-in sustaining
costs (AISC) per ounce sold are non-GAAP financial performance
measures with no standardized definition under U.S. GAAP. For
definition 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 31, 2021 filed on Edgar and SEDAR.
- 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 Q1 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.
Friday, May
13th, 2022at
12:00 pm EDT |
To call into the
conference call over the phone, please register here:
http://www.directeventreg.com/registration/event/1556038 Audience
URL:
https://event.on24.com/wcc/r/3731513/8B1AF5DA6C7E1C2409D5EB4DDF445357 |
The webcast will be archived on McEwen Mining's website at
https://www.mcewenmining.com/media following the call.
Technical InformationThe
technical content of this news release related to financial
results, mining and development projects has been reviewed and
approved by Peter Mah, P.Eng., COO of McEwen Mining and a Qualified
Person as defined by SEC S-K 1300 and the Canadian Securities
Administrators National Instrument 43-101 "Standards of Disclosure
for Mineral Projects."The technical content of this news release
related to geology, exploration and drilling results has been
reviewed and approved by Stephen McGibbon, P.Geo, SVP Exploration
of McEwen Mining and a Qualified Person as defined by NI
43-101.
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
MEASURES
In 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 Form 10-Q for the period ended
March 31st, 2022.
Cash Gross Profit (Loss)Cash gross profit is a
non-GAAP financial measure and does not have any standardized
meaning. 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. Cash gross profit is calculated by adding depletion
and depreciation to gross profit. A reconciliation to gross profit,
the nearest U.S. GAAP measure is provided in McEwen Mining's Form
10-Q for the period ended March 31st, 2022.
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, 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, 2021 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.
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. It also has a large
exposure to copper through its subsidiary McEwen Copper, owner of
the Los Azules copper deposit in Argentina.
CONTACT INFORMATION: |
Investor Relations:(866)-441-0690 Toll
Free(647)-258-0395Mihaela Iancu ext.
320info@mcewenmining.comJoin our email list for
updates: https://www.mcewenmining.com/contact-us/ |
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1J9 |
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