McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) (“McEwen” or the
“Company”) is pleased to announce the filing of a
technical report prepared in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects (“NI
43-101”), for its 100%-owned Fenix Project (the “Project”), which
is located in the State of Sinaloa, Mexico. The technical report is
available on SEDAR under the Company's profile
at www.sedar.com.
“The Fenix Feasibility Study envisions a
9.5-year mine life with an attractive after-tax IRR of 28% using
$1,500/oz gold and $17/oz silver. At $1,800/oz
gold and $25/oz silver the project generates a 51% After-Tax IRR
and a $91 million NPV@8%.
The project will incorporate an
environmentally progressive method of tailings management, using
in-pit storage that creates multiple benefits such as improved
safety, smaller environmental footprint, lower capital and
operating costs, and improved reclamation outcomes.
Average annual production is projected
at 26,000(1) oz
gold in Phase 1 and
4,500,000(4) oz
silver equivalent in Phase 2. The critical path
environmental permits are in hand for the first phase of
production. In addition, the El Gallo Complex infrastructure
remains in place, as well as an established, well-experienced local
workforce. Our next steps will involve detailed
engineering, assessment of procurement options, and the evaluation
of financing alternatives,” said Rob McEwen, Chairman and
Chief Owner.
Fenix FS Highlights
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Base
Case(1)$1,500/oz
Gold,$17/oz Silver |
Spot Case$1,800/oz Gold,$25/oz
Silver |
Upside Case$1,900/oz Gold,$25/oz
Silver |
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After-Tax IRR |
28% |
51% |
56% |
|
After-Tax NPV (8% discount) |
$32 million |
$91 million |
$98 million |
|
After-Tax Payback Period |
3.6 years |
2.9 years |
2.8 years |
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Average After-Tax Cash Flow per Year of Full Production |
$12 million |
$25 million |
$26 million |
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The FS for
project Fenix development involves two phases: |
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Phase 1: Years 1 to 6, Gold Production |
|
• |
Average Annual Gold Production 26,000 oz Au |
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• |
$42 million initial capex |
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• |
$1,037 cash cost(2) and $1,045
AISC(3) per oz Au |
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Phase 2: Years 7 to 9.5, Silver Production |
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• |
Average Annual Silver Production 4,500,000 oz
AgEq.(4) |
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• |
$24 million incremental capex in Year 6. |
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• |
$14.22 cash cost(2) and $14.30
AISC(3) per oz AgEq.(4) |
Feasibility Study Report
The complete Fenix Project FS NI 43-101
Technical Report is available on www.sedar.com and
www.mcewenmining.com. The FS was prepared by GR Engineering
Services Limited (“GRES”) in accordance with the requirements of
Canadian National Instrument 43-101 “Standards of Disclosure for
Mineral Projects” (“NI 43-101”) and SEC Industry Guide 7.
Permits
The current operation at El Gallo Gold is a
fully permitted site; permit for the Phase 1 was granted by the
Federal Environmental Authority (SEMARNAT) in September 2019, for
the addition of a mill and leach circuit in the location of the
existing facilities for the reprocessing of the heap leach pad
material. The permit amendment also includes the backfilling of a
previously mined pit with mill tailings, as part of an integrated
concurrent closure plan for the El Gallo Gold Mine. In-pit tailings
storage provides a number of key benefits to the project,
including:
- Lower construction
and operating cost compared to a conventional tailings dam or
dry-stack facility.
- Much improved
safety and long-term tailing and pit stability.
- Reduced footprint
minimizes surface disturbance and maximizes reclamation
results.
- Promotes the re-use
of process water, reducing groundwater demand.
- Reduces reclamation
and management costs.
Further project advancement for Phase 2 is
subject to permit approvals. Phase 2 project permitting will
require authorization to expand the process plant footprint at El
Gallo Gold and the haul road, and to augment the tailings volume to
be deposited at the depleted pit.
The Fenix Project has CONAGUA approval for the
extraction of groundwater and land-use permits for the construction
of wells required for the life of Fenix Project.
Resource Estimates
Estimated resources for the Fenix Project are
comprised only of material within the boundaries of conceptual pit
shells, except for the El Gallo heap leach pad, which is considered
completely available for reprocessing.
For the purposes of mine scheduling, the
contained gold ounces in the Heap Leach Material have been depleted
from the drill-defined resource model estimate by an amount of 23
koz Au, to account for the production from heap leach
operations and gold in circuit assessments between the timing of
the resource estimate up until the reserve estimate date of
December 2020.
Table 1: Fenix Project Resources
Estimate(5)(6)
Heap Leach
Material(7) |
Tonnes |
Silver Grade |
Silver |
Gold Grade |
Gold |
Potential COG = 0 g/t Au |
Mt |
(g/t) |
koz |
(g/t) |
koz |
Measured |
8.8 |
2 |
451 |
0.59 |
167 |
Indicated |
1.2 |
2 |
67 |
0.60 |
23 |
Measured and Indicated |
10.0 |
2 |
518 |
0.59 |
190 |
Inferred |
0.1 |
2 |
7 |
0.66 |
3 |
El Gallo Silver |
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|
|
|
|
In Optimized Pit Shell |
Tonnes |
Silver Grade |
Silver |
Gold Grade |
Gold |
Potential COG = 58 g/t Ag |
Mt |
(g/t) |
koz |
(g/t) |
koz |
Measured |
1.0 |
155 |
4,791 |
0.08 |
3 |
Indicated |
3.5 |
127 |
14,228 |
0.13 |
15 |
Measured and Indicated |
4.5 |
133 |
19,019 |
0.12 |
18 |
Inferred |
0.1 |
129 |
286 |
0.14 |
0.3 |
COMBINED RESOURCES |
|
|
|
|
|
In Optimized Pit Shells |
Tonnes |
Silver Grade |
Silver |
Gold Grade |
Gold |
Potential COGs variable |
Mt |
(g/t) |
koz |
(g/t) |
koz |
Measured |
9.8 |
17 |
5,242 |
0.54 |
170 |
Indicated |
4.7 |
95 |
14,295 |
0.25 |
38 |
Measured and Indicated |
14.5 |
42 |
19,536 |
0.45 |
208 |
Inferred |
0.2 |
47 |
293 |
0.48 |
3 |
Table 2: Fenix Project Reserves Estimate
December 31, 2020
(8)
Heap Leach Material |
Tonnes |
Silver Grade |
Silver |
Gold Grade |
Gold |
Mt |
(g/t) |
koz |
(g/t) |
koz |
Proven |
8.9 |
2 |
451 |
0.52 |
149 |
Probable |
1.2 |
2 |
67 |
0.52 |
20 |
Proven + Probable |
10.1 |
2 |
518 |
0.52 |
170 |
El Gallo Silver |
|
|
|
|
|
Proven |
0.7 |
166 |
3,708 |
0.05 |
1 |
Probable |
3.7 |
127 |
15,017 |
0.13 |
16 |
Proven + Probable |
4.4 |
133 |
18,725 |
0.12 |
17 |
COMBINED RESERVES |
|
|
|
|
|
Proven |
9.6 |
13 |
4,159 |
0.48 |
150 |
Probable |
4.9 |
95 |
15,084 |
0.23 |
36 |
Proven + Probable |
14.5 |
41 |
19,243 |
0.39 |
187 |
Table 3: Assumptions for Heap Leach Pad
and El Gallo Silver Pit Optimization Phase 2
(6)(9)
Assumptions for Resource Pit Shell
Optimizations |
Deposits |
Values |
Gold Price |
All |
$1,300/oz |
Silver Price |
All |
$16.00/oz |
Mining Cost |
Heap Leach Pad |
$0.53/t |
|
El Gallo Silver |
$12.06/t |
Processing and G&A |
Heap Leach Pad |
$12.88/t |
|
El Gallo Silver – Oxides |
$26.90/t |
|
El Gallo Silver– Sulfides |
$25.93/t |
Recovery - Au |
Heap Leach Pad |
85.90% |
|
El Gallo Silver |
79.40% |
Recovery - Ag |
Heap Leach Pad |
45.0% |
|
El Gallo Silver – Oxides |
82.5% |
|
El Gallo Silver– Sulfides |
88.1% |
Cut-Off Grade |
Heap Leach Pad |
0 g/t Au |
|
El Gallo Silver |
58 g/t Ag |
Inter-Ramp Pit Slope Angle |
El Gallo Silver |
45 degrees |
FOOTNOTES |
(1) |
The Base Case utilizes the three-year moving average prices for
gold and silver (approximate value). Estimated 26,000 oz Au per
annum production assumes full production from years 2023 to 2027.
Average after-tax cash flow per annum from full production years
2023 to 2031 is approximately $12 million per annum. Average
after-tax cash flows per annum for the period from start-up of
production to closure (2022 to 2032) is approximately $8.5 million
per annum. These cash flows assume the use of all eligible tax loss
carry forwards from the El Gallo Gold Mine. |
(2) |
Cash cost is calculated by dividing total life-of-mine production
costs, general and administrative expenses and royalties by total
ounces produced. |
(3) |
All-in sustaining costs (AISC) are calculated by dividing the sum
of all cash costs plus sustaining capital and reclamation costs by
total ounces produced. |
(4) |
All references to AgEq are based on an 88 Ag oz to 1 Au oz ratio.
For Phase 1 silver accounts for <2% of total production. For
Phase 2 gold accounts for approximately 9% of total production.
Average annual AgEq production is from years 2028 to 2031. |
(5) |
Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability. There is no certainty that all or
any part of the Mineral Resources estimated will be converted into
Mineral Reserves. Numbers in the table have been rounded to reflect
the accuracy of the estimate and may not sum due to rounding. |
(6) |
Resources stated as contained within a potentially economically
minable open pit; pit optimization parameters are, USD$1,300/oz Au,
and USD$16.00/oz Ag. In-pit resource estimates have been developed
based on gold and silver recoveries from both historical and recent
testwork programs. Resource estimates are effective as of Oct 31,
2018 for the Heap Leach Material and June 1, 2019 for El Gallo
Silver. Resources are inclusive of reserves. |
(7) |
The heap leach pad spent ore resource number assumes a cut-off
grade that permits processing of the entire pad, whereas blocks
within the leach pad model will be mobilized while mining, which
will make them difficult to segregate; sub-cut-off leach pad
material will inherently have potential acid generating sulfide
liabilities if placed in our waste dumps and so it will be prudent
to process the entire leach pad and place tailings in a previously
mined pit at an overall environmental and economic benefit. |
(8) |
The reserves stated here satisfy the requirements of the CIM
Definition Standards, and the CIM Estimation of Mineral Resources
and Mineral Reserves Best Practice Guidelines of November 2019,
and have been converted only from those portions of the
Mineral Resources that are classified as Measured or Indicated
Mineral Resource categories after having been evaluated with
consideration of all known modifying factors affecting economic
viability. The reserves cut-off grade and cashflow models are based
on $1,500/oz Au, and USD$17.00/oz Ag. |
(9) |
Cut-off grades vary by pit according to economic, recovery and
metallurgical parameters. |
|
|
The technical contents of this news release has
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."
The technical information in this news release
related to resource and reserve estimates has been reviewed and
approved by Luke Willis, P.Geo., McEwen Mining’s Director of
Resource Modelling and Qualified Person as defined by Canadian
Securities Administrators National Instrument 43-101 "Standards of
Disclosure for Mineral Projects."
CAUTIONARY NOTE TO US INVESTORS
REGARDING RESOURCE ESTIMATIONMcEwen Mining presently
prepares its resource estimates in accordance with standards of the
Canadian Institute of Mining, Metallurgy and Petroleum referred to
in Canadian National Instrument 43-101 (NI 43-101). These standards
are different from the standards permitted in reports filed with
the SEC under Industry Guide 7 (“Guide 7”). Under NI 43-101, McEwen
Mining reports measured, indicated and inferred resources,
measurements which are generally not permitted in filings made with
the SEC under Guide 7. The estimation of measured and indicated
resources involve greater uncertainty as to their existence and
economic feasibility than the estimation of proven and probable
reserves. U.S. investors are cautioned not to assume that any part
of measured or indicated resources will ever be converted into
economically mineable reserves. The estimation of inferred
resources involves far greater uncertainty as to their existence
and economic viability than the estimation of other categories of
resources. Inferred Mineral Resources could be upgraded to
Indicated Mineral Resources with continued exploration. Therefore,
U.S. investors are also cautioned not to assume that all or any
part of inferred resources exist, or that they can be legally or
economically mined.
Canadian regulations permit the disclosure of
resources in terms of “contained ounces” provided that the tonnes
and grade for each resource are also disclosed; however, under
Guide 7, the SEC only permits issuers to report “mineralized
material” in tonnage and average grade without reference to
contained ounces. Under Guide 7, the tonnage and average grade
described herein would be characterized as mineralized material. We
provide such disclosure about our properties to allow a means of
comparing our projects to those of other companies in the mining
industry, many of which are Canadian and report pursuant to NI
43-101, and to comply with applicable disclosure requirements.
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, contain 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, 2019 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 owns a large
copper deposit in Argentina.
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CONTACT INFORMATION: |
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Investor Relations: |
Website:
www.mcewenmining.com |
150 King Street West |
(866)-441-0690 Toll Free |
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Suite 2800, P.O. Box 24 |
(647)-258-0395 |
Facebook:
facebook.com/mcewenmining |
Toronto, ON, Canada |
|
Facebook:
facebook.com/mcewenrob |
M5H 1J9 |
Mihaela Iancu ext. 320 |
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Twitter:
twitter.com/mcewenmining |
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info@mcewenmining.com |
Twitter:
twitter.com/robmcewenmux |
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Instagram:
instagram.com/mcewenmining |
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