McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported fourth quarter and full year results for the period ended
December 31, 2020, along with the outlook for 2021.
“2020 was a brutal year but we more than
survived and have come out stronger from it. The ‘Going Concern
Note’ has been removed from our financial statements; we released
two feasibility studies that shows the potential to extend the life
of our Mexican operations by 9.5 years, and outlines a 6-year life
for our Gold Bar mine, which recovered from what was tantamount to
a near-death experience for the operation in early 2020. The future
of our Fox Complex is becoming more visible. Access to the Froome
deposit is nearly complete and commercial production is planned to
start in Q4. This will extend the life of the Black Fox mine by 2.5
years, providing a bridge to our second phase of growth at Fox,
which we will unveil in Q2. Given our large gold resource base in
the Timmins area, we expect it to support a potential ten-year mine
life with annual production of 100-150,000 ounces of
gold.
Our recent financings in late 2020 and
early 2021 were met with huge market demand and more importantly
have supplied us with adequate funds for our key development
projects and exploration programs in 2021. We currently have liquid
assets of $49 million! Finally, we extended the maturity date of
our debt from August 2021 to August 2023, with a supportive lending
partner.
Beneficial developments that we
welcomed, but were beyond our control, were the massive increases
in the prices of silver and copper and the resultant increase in
the values of our silver and copper assets. For example, using the
current price of copper in the financial model from our 2017
Preliminary Economic Assessment of Los Azules, we arrive at a Net
Present Value, discounted at 8%, of approximately $5 billion. In
respect of the potential value of our silver assets, if we combine
the San José mine and the Fenix Project, it could potentially
represent a medium-sized silver producer. One investment banker we
spoke to suggested the value of such a company could be a minimum
of $140 million. We believe that there is significant value to be
realized by spinning these assets out in two separate vehicles. In
this manner we could raise the necessary capital to advance these
properties, while maintaining a large shareholding. I believe that
the shares of these new companies will grow in value along with the
growth in demand for these metals, on the back of the green
technology movement. Specifically, the electrification of
transportation, renewable energy technologies and the continuing
urbanization of Asia and Africa.
While I am deeply pained by our awful
financial performance in 2019 and 2020, I recognize that those
years are behind us and the past cannot be changed, but we can and
are shaping a better future. This year will not be stellar as we
continue to fix operating issues and continue to invest in
exploration and business systems - the foundations for a strong
mining company. Looking beyond this year, myself and our entire
senior management team, many of which are new hires, feel very
optimistic about the company’s growth and are committed to
delivering it to you!
Let me leave you with one last thought.
As you know our stock symbol is MUX and here is what we are
striving to make it mean – Motivated, United,
Xceptional” commented Rob McEwen, Chairman &
Chief Owner.
If you would like to be immediately contacted
with our progress, please provide me with your contact details via
my personal assistant Tara Saratsiotis. Her email is
tsaratsiotis@mcewenmining.com
- For the full year 2020, production
was 114,800 gold equivalent ounces(1)
(GEOs)(see Table 1), compared to
174,400 GEOs in 2019.Our consolidated net loss in 2020 of
$152.3 million, or $0.38 per
share (see Table 2) relates primarily to the
impairment for the Gold Bar Mine of $83.8 million;
investment of $27.5 million on advanced projects
and exploration; a gross loss of $27 million from
our operations; and general and administrative costs of $9
million.
- Our three 100%-owned mines
generated a cash gross loss of $4.0 million(2) in
2020, and a gross loss of $27 million. Cash gross
profit (loss) is calculated by adding back depletion and
depreciation to gross profit (loss).
- We are forecasting our 2021 gold
equivalent production to be in the range
of 141,000 to 160,400
GEOs(1) a 23% to 40% increase
over 2020.
- At Black Fox, development of the
vent drive that will provide initial access to the Froome
underground deposit has
advanced 95% by the end
of February 2021. We are on track to reach the main deposit before
the end of March, and complete the necessary development work to
allow for commercial production to be achieved by the fourth
quarter of 2021.
- Gold Bar Feasibility Study Update
was filed in February 2021. Using a $1,500/oz gold price the
NPV(8%) is $55.2 million, over a 6-year mine life.
Probable gold reserves estimated at December 31, 2020 were 300,000
oz (Table 3.2). Exploration programs are ongoing
with the objective of extending the mine life beyond 6 years.
- Fenix Feasibility Study was filed
in February 2021. Using a $1,500/oz gold price and $17/oz silver
price the NPV(8%) is $32 million, over a 9.5-year
mine life. Fenix has the key permits towards construction.
- The Grey Fox project’s Indicated
resource estimate was updated in April 2020, increasing
43% to 888,000 oz Au at
7.1 g/t (see Table 2.4). An
independent preliminary economic study on expanding production at
the Fox Complex is expected to be completed by the end of Q2.
- In 2020, we completed
43,000 feet (13,000 meters) of drilling at Black
Fox, and 111,000 feet (34,000 meters) of drilling
at Gold Bar.
- Cash and liquid assets(2) at March
10th, 2021 was $49 million.
- Our year-end conference call will
take place today, Thursday, March
11th at 11am EST.
Details are provided below.
Operations Update
Black Fox Mine, Canada (100%
Interest)
Production from Black Fox in
2020 was 24,400 GEOs. Total cash
costs and AISC were $1,397 and
$1,650 per GEO, respectively.
We incurred $6.5 million in 2020 for exploration
initiatives, compared to $25.8 million in 2019. 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.
The Froome deposit, which is part of the Fox
Complex, is accessed from two declines starting at the Black Fox
pit and is situated approximately one-half mile west of the Black
Fox mine. The mineralized material from Froome will be hauled
approximately 20 miles (32 km) to the Stock Mine mill, where it
will be processed. Development of the vent drive that will provide
initial access to the Froome underground deposit has
advanced 95% by the end
of February 2021. We are on track to reach the main deposit before
the end of Q1 and to complete the necessary development work
required to achieve commercial production by the fourth quarter of
2021.
The Stock exploration area sits adjacent to our
Stock mill, which currently processes ore from our Black Fox mine.
The Stock West mineralized zone was discovered in mid-2019; in 2020
five drill rigs completed 53,600 feet (16,350 meters) of follow-up
drilling. Initial results suggest the potential to define a
significant new zone of mineralization 800m (1/2 mile) from our
Stock processing facility. The majority of our 2020 drilling was
designed to infill the gaps between our encouraging 2019
intercepts. This will increase the density of the data needed to
develop a 3D model and the Company expects to generate an initial
resource estimate while drilling continues. Four contracted drill
rigs completed a total of 58,600 feet (17,900 meters) by year-end.
Drilling resumed in early January 2021. Assuming this drilling is
successful in identifying sufficient gold to support a decision to
re-open the historic Stock Mine, we are well positioned to act
quickly and begin dewatering the mine in the second half of 2021.
Previously the mine was dewatered in just 4 months.
In April 2020, the Indicated resource estimate
for Grey Fox project increased 43% to 888,000 oz Au at 7.1 g/t. We
have engaged an independent engineering group to complete a
Preliminary Economic Assessment (PEA) on the Grey Fox - Black Fox,
Stock and Timmins resources utilizing our existing central milling
capacity. We plan to grow annual production at the Fox Complex to
100-150,000 ounces of gold, at a targeted cash
cost of $800/oz and an all-in sustaining cost
(AISC) of $1,100/oz, over a +10-year life, with
production envisioned to start ramping up from 2022. The PEA’s
completion is expected in Q2, and will support the optimal business
case on which to further complete a feasibility study. Mining from
the Froome deposit, as described above, is expected to bridge gold
production, providing cash flow while we continue to drill and
assess additional potential resources at the Black Fox, Grey Fox,
Stock and Timmins projects for future development towards expanded
production.
Gold Bar Mine, USA (100%
Interest)
Gold Bar produced 28,000 GEOs
in 2020. Total cash costs and AISC were
$2,106 and $2,459 per GEO,
respectively.
The outbreak of the COVID-19 pandemic had a
significant impact on 2020 production, as the Gold Bar operation
shut down in Q2 and isolation quarantine protocols reduced
operating shifts in Q4 after site personnel tested positive for
COVID-19. The slower ramp up to full mining rates following the
shutdown was primarily due to delays related to mining contractor
rehiring of operators.
In 2020, we spent $5.1 million on exploration
activities in and around the Gold Bar mine, which included 110,500
feet (33,700 m) of drilling and metallurgical testing to support
the updated reserve estimates. Drilling at Gold Bar South has
successfully advanced the project and is expected to contribute to
Gold Bar mine’s future production. Subject to the receipt of permit
approvals as planned, the mining of Gold Bar South could begin as
early as Q1 2022.
In January 2021, updated resource model and
resource and reserve estimates were completed, providing us with a
more accurate model to plan from moving forward. Remodeling of
these deposits has been completed in-house and reviewed by an
independent third-party mining consultant. Optimization of the
reserve will continue into 2021, to improve ore deliveries to the
pad.
San José Mine, Argentina (49%
Interest)
Our attributable production from San José in
2020 was 31,800 gold ounces and
2,013,000 silver ounces, for a total of
54,500 GEOs. Total cash costs(2) and all-in
sustaining costs (AISC)(2) were $1,233 and
$1,514 per GEO, respectively.
Gold and silver production decreased
significantly in 2020 as a result of suspensions of mining
activities due to COVID-19 combined with operating below capacity
during ongoing countrywide travel restrictions.
In 2021, our partner Hochschild Mining is
planning a significant exploration program at San José. Towards the
end of 2020 drilling started to return encouraging results in the
Saavedra area close to where mining takes place. During Q1 2021,
6,500 ft (2,000 m) of resource drilling is planned at the Betania
and Isabel veins, with campaigns also continuing at the
Telken zone close to Newmont’s Cerro Negro mine and at
Aguas Vivas, north-west of San José.
El Gallo Project, Mexico (100%
Interest)
Production from El Gallo in 2020 was
8,000 GEOs from residual leaching of the heap
leach pad. During 2020, residual leaching costs were $11.4
million, or $1,409 per GEO sold.
For 2021, we expect to recover
4,500-5,900 GEOs from residual leaching of the
heap leach pad.
COVID-19 Update
McEwen Mining continues to maintain wide-ranging
prevention measures for its workforce and neighboring communities,
including screening, physical distancing, travel restrictions,
contact tracing and avoiding exposure for at-risk individuals.
Table 1 below provides
production and cost results for Q4 and the full year 2020, with
comparative results from 2019.
|
Q4 |
Full Year |
2021Guidance |
2019 |
2020 |
2019 |
2020 |
Consolidated Production |
|
|
|
|
|
Gold (oz) |
36,100 |
24,100 |
134,300 |
92,100 |
110,500-127,900 |
Silver (oz) |
865,000 |
532,400 |
3,365,800 |
2,020,000 |
2,300,000-2,450,000 |
GEOs(1) |
46,300 |
30,100 |
174,400 |
114,800 |
141,000-160,400 |
Gold Bar Mine, Nevada(3) |
|
|
|
|
|
GEOs(1) |
9,713 |
6,000 |
30,712 |
28,000 |
37,000-45,000 |
Cash Costs ($/GEO)(1) |
1,281 |
3,439 |
1,101 |
2,106 |
|
AISC ($/GEO)(1) |
1,452 |
3,726 |
1,282 |
2,459 |
|
Black Fox Mine, Canada |
|
|
|
|
|
GEOs(1) |
9,921 |
8,000 |
35,721 |
24,400 |
27,500-32,500 |
Cash Costs ($/GEO)(1) |
729 |
1,307 |
825 |
1,397 |
|
AISC ($/GEO)(1) |
934 |
1,439 |
1,225 |
1,650 |
|
El Gallo Mine, Mexico |
|
|
|
|
|
GEOs(1) |
2,490 |
1,500 |
16,333 |
8,000 |
4,500-5,900 |
|
|
(5) |
|
(5) |
|
San José Mine, Argentina (49%) |
|
|
|
|
|
Gold production (oz)(4) |
14,000 |
8,700 |
51,700 |
31,800 |
41,500-44,500 |
Silver production (oz)(4) |
861,800 |
531,500 |
3,354,500 |
2,013,000 |
2,300,000-2,450,000 |
GEOs(1)(4) |
24,200 |
14,600 |
91,700 |
54,500 |
72,000-77,000 |
Cash Costs ($/GEO)(1) |
826 |
1,234 |
867 |
1,233 |
|
AISC ($/GEO)(1) |
1,034 |
1,455 |
1,140 |
1,514 |
|
Table 2 below provides
financial highlights for Q4 and full year 2020, with comparative
results from 2019.
|
Q4 2019 |
Q4 2020 |
Full Year2019 |
Full Year2020 |
Treasury |
|
|
|
|
Liquid Assets ($ millions)(2) |
|
|
49.7 |
|
25.9 |
|
Cash ($ millions) |
|
|
46.5 |
|
20.8 |
|
Working Capital ($ millions) |
|
|
43.2 |
|
7.9 |
|
Debt (Term loan) ($ millions) |
|
|
50.0 |
|
50.0 |
|
Gross Profit (Loss) |
|
|
|
|
Black Fox Mine ($ millions) |
4.1 |
|
0.2 |
|
5.7 |
|
(4.1 |
) |
San José Mine (49%) ($ millions) |
6.9 |
|
9.1 |
|
16.6 |
|
25.0 |
|
El Gallo Project ($ millions) |
(0.5 |
) |
(1.8 |
) |
4.0 |
|
(1.5 |
) |
Gold Bar Mine ($ millions) |
(2.3 |
) |
(12.1 |
) |
(0.7 |
) |
(21.4 |
) |
Cash Gross Profit (Loss) |
|
|
|
|
Black Fox Mine ($ millions) |
6.8 |
|
3.8 |
|
18.9 |
|
6.8 |
|
San José Mine (49%) ($ millions) |
16.7 |
|
12.9 |
|
50.9 |
|
39.6 |
|
El Gallo Project ($ millions) |
(0.4 |
) |
(1.8 |
) |
4.6 |
|
(1.3 |
) |
Gold Bar Mine ($ millions) |
2.1 |
|
(8.8 |
) |
10.2 |
|
(9.6 |
) |
Consolidated Operating Results |
|
|
|
|
Net (Loss) ($ millions) |
(25.1 |
) |
(23.5 |
) |
(59.7 |
) |
(152.3 |
) |
Net (Loss) per Share ($) |
(0.07 |
) |
(0.06 |
) |
(0.17 |
) |
(0.38 |
) |
Cash Flow |
|
|
|
|
Cash Provided By (Used In) Operating Activities ($ millions) |
(17.6 |
) |
(2.6 |
) |
(39.5 |
) |
(27.9 |
) |
Notes:
- 'Gold Equivalent Ounces' are calculated based on a gold to
silver price ratio of 85:1 for Q4 2019, 77:1 for Q4 2020, 84:1 for
2019, and 89:1 for 2020. 2021 production and cost guidance is
calculated based on 75:1 gold to silver price ratio.
- 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 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, 2020 filed on Edgar and SEDAR.
- Gold Bar started commercial
production on May 23, 2019.
- Represents the portion attributable
to us from our 49% interest in the San José Mine.
- Both cash costs and AISC per GEO no longer represent key
metrics used by management to evaluate residual leaching at the El
Gallo Project. For this reason, the Company has ceased relying on,
and disclosing, cash costs and all-in-sustaining costs per ounce as
a key metric.
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 Q4 and year-end 2020 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.
The webcast will be archived on McEwen Mining’s website at
https://www.mcewenmining.com/media following the call.
Thursday,March
11th, 2021at
11:00 am EST |
To call into the conference call over the phone, please
register here:
http://www.directeventreg.com/registration/event/4266439 |
Audience
URL:https://event.on24.com/wcc/r/2948535/322FE1DE7B9003D0125B7DAA2B27B02E |
Resource and Reserve Updates
The following statements apply to information
contained in the resource and reserve tables below:
- Mineral
Resources 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;
- Numbers in the
tables have been rounded to reflect the accuracy of the estimates
and may not sum due to rounding;
- 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;
- Mineral
Resources and Reserves were estimated using the guidelines set out
in the CIM Definition Standards for Mineral Resources and Reserves
prepared by the CIM Standing Committee on Reserve Definitions,
reserves estimates are also compliant with SEC Industry Guide
7;
San José Mine
Hochschild Mining Plc (“Hochschild”), our joint
venture partner, prepared the mineral resource and mineral reserve
estimates for the San José mine as at December 31, 2020.
These figures, reported on a 100% basis, were
prepared by Hochschild and audited by P&E Mining Consultants
Inc. whose audit letter dated February 8, 2021, concluded that the
estimates for the San José mine prepared by Hochschild at December
31, 2020 provide a reliable estimation of reserves and resources.
The reserves as presented are in-situ and include mining dilution
and mining losses, however they do not include allowances for mill
or smelter recoveries.
Table 1.1: San José Mine - Mineral Reserve Estimate,
December 31, 2020 – 100% basis
Classification |
Quantity(‘000 t) |
Gold Grade(g/t) |
Silver Grade(g/t) |
Contained Gold(‘000 oz) |
Contained Silver(M oz) |
Proven |
815 |
6.73 |
409 |
176 |
10.7 |
Probable |
187 |
5.46 |
354 |
33 |
2.1 |
Total Proven & Probable |
1,002 |
6.49 |
399 |
209 |
12.8 |
Table 1.1 Notes:
• Reserves are stated on a 100% basis.
McEwen Mining Inc. has a 49% attributable interest in the San José
mine.• Mineral reserves were estimated by Hochschild Mining
Plc; P&E Mining Consultants Inc. have audited the resource and
reserve estimates and found that they meet the requirements for
disclosure under Canadian National Instrument 43-101 (NI 43-101)
and the Joint Ore Reserves Committee of the Australian Institute of
Mining and Metallurgy ("JORC") as well as the US Securities and
Exchange Commission Industry Guide 7 for reserves.• Metal
prices used for reserve estimation US$1,800/oz for gold and
US$20.00/oz for silver.• For reserves average internal
dilution was 7%, average mining and geotechnical dilution was 43%
and mine extraction was 30%.• Reserve cut-off grades: Cut and
fill = 285 gpt AgEq., Long hole = 228 gpt AgEq. [AgEq = (Au x 86) +
Ag].
Table 1.2: San José Mine - Mineral Resource Estimate,
December 31, 2020 – 100% basis
Classification |
Quantity(‘000 t) |
Gold Grade(g/t) |
Silver Grade(g/t) |
Contained Gold(‘000 oz) |
Contained Silver(M oz) |
Measured |
1,752 |
7.89 |
484 |
444 |
27.3 |
Indicated |
1,000 |
5.68 |
335 |
183 |
10.8 |
Total Measured & Indicated |
2,752 |
7.09 |
429 |
627 |
38.0 |
Total Inferred |
1,861 |
5.58 |
345 |
334 |
20.6 |
Table 1.2 Notes:
• Resources are stated on a 100% basis.
McEwen Mining Inc. has a 49% attributable interest in the San José
mine.• Mineral resources were estimated by Hochschild Mining
Plc; P&E Mining Consultants Inc. have audited the resource and
reserve estimates and found that they meet the requirements for
disclosure under Canadian National Instrument 43-101 (NI 43-101)
and the Joint Ore Reserves Committee of the Australian Institute of
Mining and Metallurgy ("JORC") as well as the US Securities and
Exchange Commission Industry Guide 7 for reserves.• Resource
estimations utilized inverse distance and ordinary kriging methods
depending upon data density.• Metal prices used for resource
estimation US$1,800/oz for gold and US$20.00/oz for
silver.• Resources for 2020 were defined at a cut-off grade of
285 gpt silver equivalent [AgEq = (Au x 86) + Ag].
Fox Complex
The mineral resource estimate for the Black Fox
Mine and Grey Fox area was carried out by McEwen Mining; the
mineral reserve for the Black Fox Mine was developed by the site
engineering team. All resource and reserve statements are as at
December 31, 2020.
Table 2.1: Black Fox Mine - Mineral
Resource Estimate, December 31, 2020
Classification |
Quantity(‘000 tonnes) |
Grade Gold(g/t) |
Contained Gold(‘000 oz) |
Measured |
374 |
5.35 |
64 |
Indicated |
118 |
5.06 |
19 |
Total Measured & Indicated |
492 |
5.28 |
84 |
Inferred |
242 |
5.32 |
41 |
Table 2.1 Notes:• Resources are reported at a cut-off grade
of 3.0 g/t Au, assuming an underground extraction scenario, a gold
price of US$1,500/oz and a metallurgical recovery of 96
percent.
Table 2.2: Black Fox Mine - Mineral
Reserve Estimate, December 31, 2020
Classification |
Quantity(‘000 tonnes) |
Grade Gold(g/t) |
Contained Gold(‘000 oz) |
Proven |
33 |
3.96 |
4 |
Probable |
72 |
4.10 |
10 |
Total Probable |
105 |
4.05 |
14 |
Table 2.2 Notes:• Reserves are based on a cut-off value of
3.64 g/t Au assuming a gold price of US$1,650/oz.• Reserves
are stated at a mill feed reference point and include for diluting
materials and mining losses.
Table 2.3: Grey Fox Property - Mineral
Resource Estimate, December 31, 2020
Classification |
|
Quantity (‘000 t) |
Grade Gold (g/t) |
Contained Gold (‘000 oz) |
|
Indicated Mineral Resource |
|
|
|
Underground |
Contact Zone |
1,212 |
6.76 |
263 |
|
|
147 Zone |
1,028 |
7.65 |
253 |
|
|
147 NE Zone |
467 |
7.79 |
117 |
|
|
South Zone |
708 |
7.16 |
163 |
|
|
Gibson Zone |
502 |
5.70 |
92 |
|
Total Indicated |
|
3,917 |
7.05 |
888 |
|
Inferred Mineral Resource |
|
|
|
Underground |
Contact Zone |
173 |
7.02 |
39 |
|
|
147 Zone |
144 |
7.05 |
33 |
|
|
147 NE Zone |
47 |
8.34 |
13 |
|
|
South Zone |
98 |
6.64 |
21 |
|
|
Gibson Zone |
356 |
5.92 |
68 |
|
Total Inferred |
|
818 |
6.58 |
173 |
|
Table 2.4 Notes:
- All figures rounded to reflect the relative accuracy of the
estimates. Composites were capped where appropriate. Mineral
resources reported at a cut-off grade of 3.6 g/t Au
|
Gold Bar Mine
The mineral resource estimate for the Gold Bar Mine was carried
out by McEwen Mining.
Table 3.1: Gold Bar - Mineral Resource Estimate,
December 31, 2020
Classification |
Quantity(‘000 t) |
Grade Gold(oz/ton) |
Grade Gold(Metric g/t) |
Contained Gold(‘000 oz) |
Indicated |
16,698 |
0.027 |
0.91 |
491 |
Inferred |
1,982 |
0.024 |
0.82 |
52 |
Table 3.1 Notes:
- Mineral resources are based on the
following economic input parameters: $3.19/ore ton mining cost,
$1.99/waste tone mining cost, $4.91/ore ton crushed process cost,
$3.77/ore ton ROM process cost, $3.16/ore ton G&A cost,
$0.475/toz gold refining charge, $1.538/toz transport & sales
cost, 99.95% payable gold, 1% royalty at GBS only, 78% crushed
oxide recovery at Pick & Ridge, 50% mid-carbon recovery at Pick
& Ridge, 72% ROM oxide recovery at Pick & Ridge, 61% ROM
oxide recovery at GBS, 0% ROM mid-carbon recovery;
- Resources are reported using gold
variable cutoff grades depending on rock type, mining area, carbon
content, clay content and process response.
- Resources stated in the table above
are contained within a $1,725/oz Gold sales price Lerchs-Grossmann
(LG) pits.
The reserve estimate for the Gold Bar mine as at
December 31, 2020 was prepared by Joseph McNaughton, P.E.,
Senior Mining Engineers, Partner, Independent Mining Consultants
and reviewed by Jeff Choquette and Todd Wakefield of Mine Technical
Services Ltd.
Table 3.2: Gold Bar - Mineral Reserve Estimate, February
12, 2021
Classification |
Quantity(‘000 t) |
Grade Gold(oz/ton) |
Grade Gold(Metric g/t) |
Contained Gold(‘000 oz) |
Recoverable(‘000 oz) |
Probable |
15,570 |
0.024 |
0.84 |
420 |
300 |
Table 3.2 Notes:
- Resources stated as contained
within a potentially economically minable open pit using the
following optimization parameters: US$1,500/oz Au, $3.19 per ore
ton mining cost, $1.99 per waste ton mining cost, $4.91 per ton
crushed process cost, $3.77 per ore ton run-of-mine (ROM) process
cost, $3.16 per ore ton G&A cost, $0.475 per ton gold refining
charge, $1.538 per ounce transport and sales cost, 99.95% payable
gold, 1% royalty on Gold Bar South, 78% crushed oxide recovery at
Pick and Ridge, 50% mid-carbon recovery at Pick and Ridge, 72%
run-of-mine oxide recovery at Pick and Ridge, 61% ROM oxide
recovery at Gold Bar South, 0% ROM mid-carbon recovery.
- Reserves are based on variable
cutoff grades depending on rock type, mining area, carbon content,
clay content and process response.
- Reserves are contained within an engineered pit design between
the $1,250/oz and $1,400 gold sales price Lerchs-Grossmann pit
shells.
- Based on end of December 2020 topography.
Technical InformationThe
technical contents 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."
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 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.
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 Annual Report on Form 10-K for the
year ended December 31, 2019.
Cash Gross ProfitCash 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 Annual Report on Form 10-K for the year
ended December 31, 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 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 Annual Report on Form 10-K for the year ended
December 31, 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, 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 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: |
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