McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported its second quarter (Q2) results for the period ended June
30th, 2022.
- Fox Complex performed well,
producing 11,200 GEOs, the highest quarterly
production in over three years, at cash costs of
$985 per GEO and AISC of $1,290
per GEO.
- Average cash costs(2) per GEO sold
from our 100%-owned mines in Q2 was $1,169,
15% below our guidance midpoint of $1,380 per GEO.
Average all-in sustaining costs ("AISC")(2) per
GEO sold from our 100%-owned mines was $1,549,
11% below our guidance midpoint of $1,740 per
GEO.
- Production was
27,600 gold ounces and 704,600
silver ounces, or 36,100 gold equivalent ounces(1)
(GEOs)(see Table 1), compared to 40,700 GEOs
during Q2 2021.
- San José mine
delivered solid results producing 19,600 GEOs at
cash costs and AISC per GEO sold of $1,144 and
$1,468, respectively.
- Gold Bar mine
progressed the development of the Gold Bar South deposit, which is
expected to contribute to lower-cost production later this year and
through 2023.
- Our consolidated net loss in Q2 was
$12.4 million, or $0.26 per share
(giving effect to the 1-for-10 reverse share split on July 28th),
which relates primarily to $14.4 million
investment in our Los Azules copper project, $4.8
million in other exploration and advanced projects, and a
gross profit of $4.2 million from our
operations.
- Our 100%-owned mines generated a
cash gross profit(2) of $7.7 million in Q2 and a
gross profit of $4.2 million. Cash gross profit is
calculated by adding back depletion and depreciation to gross
profit.
- Cash and cash equivalents at June
30th, 2022, totaled $47.8 million.
- We are saddened to announce that
Dr. Donald R. M. Quick, a Director of the Company and its
predecessors since 2008, passed away in July following a brief
illness. Dr. Quick made important contributions to the boards of
McEwen Mining and Minera Andes during his 14 years with the
companies. Among his many qualities, he was a great friend and
colleague, and will be dearly missed.
- A webcast will be held on
Thursday, Aug 11th at
11:00 am EDT. Please see the details further below.
Operations Update
Fox Complex, Canada (100%
interest)
Fox produced 11,200 GEOs
in Q2 at total cash costs and AISC
of $985 and $1,290 per
GEO sold, respectively. This compares to 7,100 GEOs at total cash
costs and AISC of $917 and $1,088 per GEO sold,
respectively, in Q2 2021.
Fox achieved the highest quarterly production
since Q3 2018 of 11,200 GEOs, as the mine
rebounded from a slow start to 2022, resulting from mechanical
issues at the mill and a COVID-related labour shortage. Fox
production benefitted from the large stockpile accumulated during
Q1 and increased during Q2, and the effects of the ongoing mill
debottlenecking process. Mill throughput is expected to continue to
improve during the remainder of the year resulting in strong H2
production. Drilling below the mineral resources envelop at Froome
has been successful and is expected to extend the mine life.
In Q2, we incurred $2.6 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 complete up to 39,000 m (128,000 ft)
of drilling and will focus on:
-
Continuing delineation and expansion of the Stock West deposit,
particularly toward the West;
- Expansion
of shallow mineralization identified near the Stock Mine;
- Test
areas of high grade from 2021 drilling at the Gibson and Whiskey
Jack targets at Grey Fox to potentially expand the resource;
- Follow up
on deeper priority targets at the Stock property, where attractive
results from initial drilling show significant potential.
The objective of all our work is to continue to
improve upon the Preliminary Economic Assessment (PEA) for the Fox
Complex (see news release dated January 26, 2022). 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
Froome. The economic analysis estimates an after-tax IRR of 21% at
a gold price of $1,650 per ounce and average cash costs and AISC
per ounce of gold sold of $769 and $1,246, respectively. Ongoing
exploration is designed to reduce the funding requirements and
improve the payback period by delineating additional resources in
strategic locations to facilitate a greater degree of internal
funding.
Recent encouraging drill results at the Stock
Property that may support improvement to the PEA include:
• 5.47 g/t Au over 7.7
m true width (TW) |
(Hole SM22-070) |
• 6.62
g/t Au over 8.3 m TW |
(Hole SM22-090) |
• 5.62
g/t Au over 11.4 m
TW |
(Hole SM22-089) |
Holes SM22-070 and SM22-090 intercepted shallower footwall green
carbonate mineralization between 250 m to 300 m (800 to 1,000 ft)
below the surface. Hole SM22-089 intersected mineralization 457 m
(1,500 ft) below surface in the separate footwall grey carbonate
host unit.
Gold Bar Mine, USA (100%
interest)
Gold Bar produced 5,100
GEOs in Q2 at total cash costs and AISC
of $1,562 and $2,108 per
GEO sold, respectively. This compares to 14,100 GEOs at total cash
costs and AISC of $1,463 and $1,619 per GEO
sold, respectively, in Q2 2021.
Gold production continued to be below
expectations due to the presence of carbonaceous material that is
being treated as waste and lower contract mining rates resulting
from a staffing shortage. During the quarter, 505,000 tonnes of
mineralized material was mined but only 171,000 tonnes was
processed, compared to 646,000 tonnes mined and 727,000 tonnes
processed during the same period of 2021. However, heap leach
recovery rates are outperforming our model, resulting in a
potential increase in the leach pad inventory and assumed gold
recovery. Drilling conducted at the Central Zone of the Pick
deposit, designed to evaluate the presence of carbonaceous
material, has encountered significantly less carbon; further
metallurgical testing is underway.
On April 1st, 2022, we received regulatory
approval to amend the plan of operations to include the Gold Bar
South (GBS) deposit. We are planning to start construction of the
access road in Q3, and GBS is expected to contribute to production
in Q4. GBS has positive attributes compared to the current mining
areas, such as a much lower waste tripping ratio, oxide
mineralization with no carbonaceous material, and a higher average
gold grade partially offset by lower heap leach recovery. Most of
the ore mined in 2023 is expected to be sourced from GBS.
In Q2, we spent $1.2 million
for exploration and conducted some 3,660 m (12,000 ft) of drilling,
with a focus on drilling around the Pick and Atlas pits. At Pick,
drilling targeted in-fill of the Phase 2 pit to improve the
confidence in non-carbonaceous oxide mineralization. In addition,
drilling targeted extensions of mineralization at the North pit
wall along the controlling faults. At Atlas, drilling included a
sonic program to evaluate mineral potential within the historic
Atlas waste dump and targeted three attractive areas around the
historic open pit.
San José Mine, Argentina (49%
interest)
San José attributable production for Q2 was
11,100 gold ounces and 704,600
silver ounces, for a total of 19,600 GEOs. Total
cash costs and AISC for the quarter were $1,144
and $1,468 per GEO sold, respectively. This
compares to 18,200 GEOs at total cash costs and AISC
of $1,105 and $1,500 per GEO sold,
respectively, in Q2 2021.
San José production recovered from
COVID-19-related issues experienced in Q1. 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 Q2, 3,600 m (11,800 ft) of exploration
drilling were completed around the mine area (Agostina and Ayelen
SE veins), and 700 m (2,300 ft) were completed at the Ciclon
project. Drilling highlights include 7.5 g/t gold
and 84 g/t silver over 4.1 m
(hole SJD-2468) and 6.9 g/t gold and 648
g/t silver over 1.5 m (hole SJM-594). An
additional 2,000 m (6,600 ft) of exploration drilling is planned in
Q3.
McEwen Copper (76%
interest)
The Los Azules project, located in San Juan,
Argentina, is one of the world's largest undeveloped open-pit
copper porphyry deposits. Surface drilling at Los Azules concluded
in late May, with some 13,500 m (44,300 ft) completed to date in
2022. Three primary objectives of the program include:
- Improve confidence in the resource
by converting Inferred mineral resources to the Indicated
category;
- Accelerate project advancement with
metallurgical, hydrological and geotechnical drilling and
- Test the limits of the depth
extension of the higher-grade mineralization.
Results from this drilling program will be used
to update the 2017 Preliminary Economic Assessment (PEA). In the
PEA, estimated Indicated and Inferred mineral resources were 10.2
and 19.3 billion lbs. of copper, respectively. Extensive enterprise
optimization work is underway on potential larger scale, lower cost
and lower carbon footprint alternatives. The updated study is
planned to be released in Q1 2023.
Future drilling will evaluate the potential to
expand the deposit at depth. While the median depth of drill
holes within the Los Azules resource database is 175 m (575 ft), it
is not uncommon for porphyry copper mineralization to extend well
beyond 1,000 m (3,280 ft) of depth. Numerous drill holes at Los
Azules have encountered strong copper grades below the 2017 PEA pit
bottom, with all three holes drilled to a depth of over one
kilometer ending in copper mineralization.
McEwen Copper spent $14.4
million in Q2 to advance the Los Azules project. On June
21st, 2022, McEwen Copper announced the closing of the second
tranche of a private placement offering comprised of a $10 million
investment by the Victor Smorgon Group advised by Arete Capital
Partners, both of Australia, and $5 million from other investors,
for total gross proceeds of $15.0 million. The amount raised in the
first and second tranches of the private placement now stands at
$55.0 million.
McEwen Copper has built an experienced
management team in Argentina to advance to a feasibility level of
technical study after completion of the updated preliminary
economic assessment. Planning is underway for the next drilling
season that will start in Q4 2022.
NYSE Listing
On July 28th a 1-for-10 reverse split of the
Company’s common stock became effective on the NYSE and TSX
exchanges. As a result, the Company has regained compliance with
the NYSE’s continued listing standards.
Table 1 below provides
production and cost results for Q2 & H1 2022 with comparative
results for Q2 & H1 2021 and our guidance range for 2022.
|
Q2 |
H1 |
Full Year 2022Guidance Range |
2022 |
2021 |
2022 |
2021 |
Consolidated Production |
|
|
|
|
|
Gold (oz) |
27,600 |
31,700 |
48,450 |
55,000 |
118,000-133,000 |
Silver (oz) |
704,600 |
611,700 |
1,039,500 |
1,104,900 |
2,520,000-2,800,000 |
GEOs(1) |
36,100 |
40,700 |
61,200 |
71,300 |
153,000-172,000 |
Gold Bar Mine, Nevada |
|
|
|
|
|
GEOs(1) |
5,100 |
14,100 |
11,400 |
21,500 |
38,000-44,000 |
Cash Costs ($/GEO)(1) |
1,562 |
1,463 |
1,951 |
1,598 |
|
AISC ($/GEO)(1) |
2,108 |
1,619 |
2,377 |
1,725 |
|
Fox Complex, Canada |
|
|
|
|
|
GEOs(1) |
11,200 |
7,100 |
18,900 |
12,300 |
44,000-49,000 |
Cash Costs ($/GEO)(1) |
985 |
917 |
1,066 |
1,066 |
|
AISC ($/GEO)(1) |
1,290 |
1,088 |
1,460 |
1,282 |
|
San José Mine, Argentina (49%) |
|
|
|
|
|
Gold production (oz)(3) |
11,100 |
9,300 |
17,550 |
18,800 |
34,500-38,500 |
Silver production (oz)(3) |
704,600 |
607,000 |
1,039,500 |
1,099,600 |
2,520,000-2,800,000 |
GEOs(1)(3) |
19,600 |
18,200 |
30,300 |
34,800 |
69,500-77,500 |
Cash Costs ($/GEO)(1) |
1,144 |
1,105 |
1,351 |
1,097 |
|
AISC ($/GEO)(1) |
1,468 |
1,500 |
1,737 |
1,418 |
|
Our El Gallo project produced 200 GEOs in Q2
2022, 600 GEOs in H1 2022, 1,300 GEOs in Q2 2021, and 2,500 GEOs in
H1 2021. Residual heap leaching ceased in July 2022.
Notes:
- 'Gold Equivalent Ounces' are
calculated based on a gold to silver price ratio of 83:1 for Q2
2022, 78:1 for Q1 2022 and 68:1 for Q1 & Q2 2021. 2022
production guidance is calculated based on 72:1 gold to silver
price ratio.
- Cash gross profit, 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 (as amended)
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 Q2 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 August
11th, 2022 at 11:00 am
EDT |
Webcast URL: |
https://events.q4inc.com/attendee/976450200 |
Call into the conference over the phone: |
Please register here:https://conferencingportals.com/event/ZSafhHZi
Participants who cannot access the internet can dial-in using the
numbers below:Participant Toll-Free Dial-In Number: 1 (888)
330-2398Participant Toll Dial-In Number: 1 (240) 789-2709
Conference ID: 67121 |
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 William (Bill) Shaver, 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.
Hole ID |
Azimuth |
Dip |
Length (m) |
UTM North (m) |
UTM East (m) |
Elevation (m) |
SM22-070 |
316̊ |
-61̊ |
363 |
5377411 |
517959 |
267 |
SM22-089 |
337̊ |
-55̊ |
651 |
5377204 |
528073 |
272 |
SM22-090 |
272̊ |
-50̊ |
384 |
5377515 |
518063 |
267 |
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 June
30th, 2022.
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 Form 10-Q for the period ended June
30th, 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/A 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
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150 King Street WestSuite 2800, P.O. Box 24Toronto, ON,
Canada M5H 1J9 |
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