McEwen Mining Inc. (NYSE: MUX) (TSX: MUX)
(“McEwen” or the “Company”) is pleased to announce
the filing of an updated technical report prepared in accordance
with National Instrument 43-101 – Standards of Disclosure for
Mineral Projects (“NI 43-101”), for the Gold Bar Mine (the
“Feasibility Study” or “FS”). The technical report is available on
SEDAR under the Company's profile at www.sedar.com.
Financial Analysis
The FS Base Case using a gold price assumption
of $1,500/oz generates a life-of-mine (LoM) discounted
after-tax value of $55.2 million at an 8% discount rate. A
summary of key economic metrics is provided in Table
1.
Table 1. After-Tax Economic Sensitivity
(2020 FS)
|
Base Case$1,500/oz gold |
Upside Case$1,800/oz gold |
NPV (8% Discount
Rate)(1) |
$55.2 million |
$125.7 million |
Average Annual Cash Flow |
$14.4 million |
$28.8 million |
Average Operational Margin $/oz Au |
$407 |
$707 |
Total Cash Costs $/oz Au |
$1,093 |
All-In Sustaining Costs (AISC) $/oz Au |
$1,213 |
Over the 6-year mine life, production will total
17.2 million tons of ore at a diluted gold grade of 0.025 oz/t
(0.84 g/t) for a total payable gold of 302,000 oz as at Dec. 1st,
2020. A summary of the gold production for the 6-year mine life
included in the FS is described in Table 2.
Table 2. Estimated Gold Production by
Year (2020 FS)
Gold Production(2) |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
FY2025 |
FY2026 |
FY2027 |
Total (,000 oz Au) |
37.5 |
38.2 |
51.2 |
37.6 |
47.6 |
60.1 |
25.0 |
Background
In Q1 2020, the Company reported that a
significant reduction in contained ounces at Gold Bar was likely.
Since that time significant work, as described below, has been
completed to determine the extent of the reduction and mitigate
it. To provide perspective on the changes that have occurred
at Gold Bar, consider that in 2019, when we started mining, the
Reserve estimate was 430,000 gold ounces. Cumulative mine
production through December 2020 was 58,600 gold ounces, and the
Reserve estimate announced today is 302,000 gold ounces. The net
reduction of 16%(3) is driven by improvements to the geologic
model, metallurgical recovery, additional drilling information, and
higher gold prices.
Work completed in 2020 to arrive at the updated
resource and reserve estimates:
- 110,500 feet (33,700 m) of drilling
and additional metallurgical testing was incorporated into the
Resource and Reserve estimates. The drilling program included
64,000 feet (19,500 m) at the Pick deposit and 35,000 feet (10,700
m) at Gold Bar South (“GBS”). An ongoing drill program at the Gold
Ridge deposit (“Ridge”) with 13,000 feet (4,000 m) drilled to date
will be incorporated in a future resource update.
- The Pick, Ridge, Cabin, and GBS
geological models and resource estimates were updated by McEwen
Mining technical staff. The geologic interpretations were updated
to include structural modeling for all deposits. All resource and
reserve estimates were subject to independent third-party review
for quality assurance.
- Experts in the field of heap leach
technology were engaged to review ore processing and recommended
improvements based on test work and site observations, which
include ending agglomeration, revised recovery estimates for all
resources, and categorization of resources based on metallurgical
attributes and clay content.
- Metallurgical testing is underway
to assess an expected increase in leaching of run-of-mine (ROM)
ores and its potential to improve the economics.
Mining and Processing
The FS calls for oxide ore to be mined from
three open pits and transported by 100-ton haul trucks to be
processed, either by crushing and conveying to the heap leach pad,
or by using trucks to place run-of-mine (ROM) ore on the heap leach
pad. The study assumes the continued use of a contract mining
fleet. The existing adsorption-desorption recovery (ADR) carbon
plant will continue to produce a final gold-silver doré
product.
A summary of the design criteria for the FS are
provided in Table 3.
Table 3. Metallurgical and Operating
Cost Estimates Used
|
2020 FS Update |
Gold Price ($/oz Au) |
$1,500 Reserves$1,725 Resources |
Overall Process Recovery |
72%(4) |
Mining Cost |
$2.28/t moved |
Process Cost |
$4.32/ton ore |
G&A Cost |
$3.27/ton ore |
Sales Cost |
$2.01/oz Au sold |
Explanation of Variances
The 2020 FS update generates an NPV@8%
of $55.2 million using a gold price of $1,500/oz and
of $149.2 million for a gold price of $1,900/oz(5). The
NPV estimates provided on January 7th, 2021 were in the range
of $62 to $76 million using a gold price of $1,500/oz and
of $150 to $170 million for a gold price of
$1,900/oz. The estimates provided on January 7th were
based on the most accurate and complete information available to
management at the time. The FS economic model was adjusted,
including a reduction of 1,500 oz in the planned placed ounces,
and an increase of $0.09/ton in fuel cost based on haulage
simulations.
Resources and Reserves
Updated Resource and Reserve Estimates are
provided in Tables 4 to 6.
Table 4. Indicated Resource
Estimate(6)(7)
($1,725 per Ounce Gold, Effective Dec
1st, 2020)
Pit |
kTons |
Gold (oz/ton) |
Gold Grade (g/t) |
Recoverable Grade (g/t) |
Contained (k-oz) |
Recoverable (k-oz) |
Pick |
13,950 |
0.027 |
0.91 |
0.67 |
370.2 |
270.7 |
GBS |
2,573 |
0.029 |
0.99 |
0.60 |
74.4 |
45.4 |
Ridge |
1,527 |
0.026 |
0.88 |
0.68 |
39.3 |
30.5 |
Cabin |
420 |
0.024 |
0.81 |
0.60 |
9.9 |
7.4 |
Total |
18,470 |
0.027 |
0.92 |
0.66 |
493.7 |
353.9 |
Table 5. Inferred Resource
Estimate(7)(8)
($1,725 per Ounce Gold, Effective Dec
1st, 2020)
Pit |
kTons |
Gold (oz/ton) |
Gold Grade (g/t) |
Recoverable Grade (g/t) |
Contained (k-oz) |
Recoverable (k-oz) |
Pick |
1,080 |
0.025 |
0.85 |
0.64 |
26.6 |
20.0 |
Ridge |
751 |
0.019 |
0.65 |
0.50 |
14.3 |
11.0 |
GBS |
362 |
0.031 |
1.06 |
0.65 |
11.2 |
6.9 |
Total |
2,193 |
0.024 |
0.82 |
0.59 |
52.1 |
37.8 |
Table 6. Probable Reserve
Estimate(7)(9)
($1,500 per Ounce Gold, Effective Dec
1st, 2020)
Pit |
kTons |
Gold (oz/ton) |
Gold Grade (g/t) |
Recoverable Grade (g/t) |
Contained (k-oz) |
Recoverable (k-oz) |
Pick |
13,927 |
0.024 |
0.81 |
0.59 |
327.3 |
238.5 |
Ridge |
1,186 |
0.025 |
0.87 |
0.68 |
30.2 |
23.4 |
GBS |
2,135 |
0.031 |
1.05 |
0.64 |
65.7 |
40.1 |
Total |
17,249 |
0.025 |
0.84 |
0.60 |
423.1 |
302.0 |
Notes: |
1) |
|
NPV is discounted to December 1, 2020. |
2) |
|
Table 2
excludes production in Dec. 2020 and from residual leaching in
2028. |
3) |
|
Mine Past
Production (58,600 oz Au) + Current Reserves (302,000 oz Au) =
360,600 oz Au is 16.1% lower than 430,000 oz Au |
4) |
|
2020 FS
assumes 78% for crushed oxide, 50% for crushed mid-carb., 72% for
Pick/Ridge ROM, and 61% for GBS ROM. |
5) |
|
Upside
Case gold price used in the 2020 FS is $1,800/oz. NPV at $1,900/oz
gold is provided for comparison to the Jan. 7th, 2021 disclosure
only. |
6) |
|
Mineral
Resources were estimated at a price of $1,725/ounce Au and are
inclusive of Mineral Reserves. Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability. There is
no certainty that any part of the Mineral Resources estimated will
be converted into a Mineral Reserves estimate. Mineral Resources
were estimated using the guidelines set out in the CIM Definition
Standards for Mineral Resources. Mineral Resources as stated are
contained within an optimised pit shell that demonstrates
reasonable prospects for eventual economic extraction. |
7) |
|
Numbers
in the tables have been rounded to reflect the accuracy of the
estimates and may not sum due to rounding. |
8) |
|
The
Inferred Mineral Resource in these estimates has a lower level of
confidence than that applied to an Indicated Mineral Resource and
must not be converted to a Mineral Reserve. It is reasonably
expected that the majority of the Inferred Mineral Resource could
be upgraded to an Indicated Mineral Resource with continued
exploration. Quantity and grade of reported Inferred resources are
uncertain in nature and there has been insufficient exploration to
classify these Inferred resources as Measured or Indicated. |
9) |
|
Reserves
were estimated at a price of $1,500/ounce Au and are contained
within an engineered pit design based on a Lerch Grossman
Algorithm. |
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.
TECHNICAL INFORMATIONThe
technical content of this news release has been reviewed and
approved by 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."
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, 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.
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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