(All Amounts in US Dollars Unless Otherwise Stated)
McEwen Mining Inc. (NYSE:MUX)(TSX:MUX) is pleased to provide a
summary of the Company's Q2 operating results. During the quarter
the Company delivered record production at lower costs.
Q2 Summary Highlights
-- Gold equivalent production increased to 35,955 ounces (20,988 gold
ounces and 778,308 silver ounces). This is approximately 44% higher than
Q2 2012 and 20% higher than Q1 2013.
-- On target to produce 130,000 gold equivalent(i) ounces in 2013.
-- Total cash costs and all-in sustaining costs were $744 and $1,108 per
gold equivalent ounce. Total cash costs were 9% lower than Q2 2012 and
22% lower than Q1 2013. All-in sustaining costs were 33% lower than Q1
2013.
-- El Gallo 1 and 2 Measured and Indicated gold equivalent resources
increased by 34% to 2.1 million ounces (48.2 million tonnes at 1.37 gpt
AuEvq).
-- At June 30, 2013 Financials: $39.3 million in liquid assets and no debt.
-- The Company recorded a non-cash impairment charge of $123.6 million
related to the decline in metal prices and an associated tax being
proposed in Argentina.
(i) Gold equivalent calculated by converting silver into gold
using a 52:1 exchange ratio. This ratio was established on January
30, 2013 and was used to budget the company's 2013 gold equivalent
production. The silver/gold ratio does not take into account
metallurgical recoveries.
"Our two mines performed well in Q2. Production was up and costs
were down. We are expecting similar performance during the second
half of the year and remain on target to reach our 2013 production
goals. All of our permits for El Gallo 2 have been submitted (for
the mill scenario outlined in the El Gallo 2 section below) and we
expect approval by the end of 2013. In addition, our exploration in
Mexico continues to grow the size of the resource with a 34%
increase in the Measured and Indicated categories at El Gallo 1 and
2," stated Rob McEwen, Chief Owner.
Balance Sheet
At June 30, 2013, McEwen Mining had cash and liquid assets of
$39.3 million, comprised of cash totaling $34.8 million with gold
and silver bullion valued at $4.5 million. The Company remains debt
free. In addition, McEwen Mining is owed $9.0 million from the
Mexican government in the form of a tax refund. It is anticipated
that a majority of this amount will be received by Q4.
The Company did not receive any dividends from its 49% owned San
Jose mine in Argentina due to low precious metal prices. The El
Gallo 1 mine generated $2.4 million in operating cash flow, after
sustaining capital expenses.
The decline in metal prices and potential costs associated with
a proposed mineral reserve tax in the Santa Cruz province in
Argentina has caused the Company to perform an impairment test on
its 49% interest in the San Jose mine and other mineral property
interests in Argentina. As a result the Company recorded an after
tax non-cash charge of $123.6 million. Of that amount $95.9 and
$27.7 million was related to the carrying value of the San Jose
mine and mineral property interests in Santa Cruz province,
Argentina, respectively.
San Jose Mine, Argentina (49%)
Production results for McEwen Mining's share in San Jose during
Q2 was 12,549 gold ounces and 771,967 silver ounces, representing
27,394 gold equivalent ounces (converting silver into gold using a
52:1 ratio). During the first six months of 2013, San Jose produced
50,452 gold equivalent ounces. Production during the second half of
2013 is forecasted to be slightly higher than in the first half of
2013. The mine is on track to meet its 2013 production guidance of
102,700 gold equivalent ounces.
Gold equivalent total cash costs equaled $751 per ounce. This is
9% less than Q2 2012 and 29% lower than Q1 2013. Total cash costs
were lower for several reasons: 1) it was the first full quarter
operating the mill at its expanded rate of 1,650 tonnes per day
(versus 1,500 tonnes) and 2) cost savings initiatives being
deployed at the mine. Total cash costs for Q2 were inline with full
year guidance of between $725 and $825 per gold equivalent
ounce.
All-in sustaining costs were lower than Q1 2013 by 35% at $972
per gold equivalent ounce. All-in sustaining costs were lower due
to lower total cash costs (outlined above), more ounces sold during
the quarter than produced, which reduced the cost on a per ounce
basis and is the opposite to what occurred in Q1 (development costs
in a quarter are expensed against ounces sold and not produced) and
reduced exploration drilling.
San Jose Mine Production Comparison
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Q2 2013 Q1 2013 Q2 2012 Total 2013
San Jose - 100%(i) YTD
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Ore production (tonnes) 140,816 108,379 128,803 249,195
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Average grade gold (gpt) 6.34 6.87 5.98 6.57
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Average head silver (gpt) 407 459 430 430
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Average gold recovery (%) 89.3 88.1 88.6 88.7
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Average silver recovery (%) 85.5 84.4 84.2 85.0
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Gold produced (ounces) 25,610 21,078 21,946 46,688
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Silver produced (ounces) 1,575,442 1,350,847 1,499,580 2,926,289
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Gold sold (ounces) 31,974 12,817 17,661 44,791
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Silver sold (ounces) 1,991,030 889,078 1,146,187 2,880,108
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Co-product total cash cost Au 878 1,089 887 936
(US$)(ii)
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Co-product total cash cost Ag 12.40 19.82 14.81 14.73
(US$)(ii)
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Gold equivalent total cash cost 751 1,055 822 842
(US$)(ii)
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Co-product all-in sustaining cash 1,137 1,550 1,341 1,257
cost Au (US$)(iii)
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Co-product all-in sustaining cash 16.06 28.21 22.40 19.79
cost Ag (US$)(iii)
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Gold equivalent co-product all-in 972 1,502 1,243 1,131
sustaining cash cost (US$)(iii)
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McEwen Mining - 49% Share
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Gold produced (ounces) 12,549 10,328 10,754 22,877
----------------------------------------------------------------------------
Silver produced (ounces) 771,967 661,915 735,000 1,433,882
----------------------------------------------------------------------------
Gold equivalent(1) produced (ounces) 27,394 23,057 24,888 50,452
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) McEwen Mining holds a 49% attributable interest in the San Jose mine.
(ii) In the second quarter of 2013, the Company revised its allocation of
general and administrative expenses to total cash costs to conform to the
Gold Institute Production Cost standard. Prior period figures have been
adjusted to conform to the current methodology.
(iii) In the second quarter of 2013, the Company adopted the new guidance on
all-in sustaining and all-in costs published by the World Gold Council on
June 27, 2013. Prior period figures have been adjusted to conform to the
current methodology.
El Gallo 1 Mine, Mexico (100%)
On January 1st, 2013, El Gallo 1 declared commercial production.
In Q2 the mine produced 8,439 gold ounces and 6,341 silver ounces,
representing 8,561 gold equivalent ounces. During the first six
months of 2013, El Gallo 1 produced 15,342 gold equivalent ounces.
The mine remains on track to produce 27,300 gold equivalent ounces
in 2013.
Gold equivalent total cash costs equaled $713 per ounce. Total
cash costs were lower than full year guidance of $750-$850 per
ounce and 7% lower than Q1 2013.
All-in sustaining costs totaled $1,183 per gold equivalent ounce
in Q2, which was 19% lower than Q1. All-in sustaining costs were
lower due to lower total cash costs (outlined above) and lower
pre-stripping during the quarter.
During Q2 the company continued with its optimization program at
El Gallo 1, designed to maximize the mines profitability. Lower
prices for cyanide (-30%), explosives (-20%) and exploration
drilling (-10%) were successfully negotiated. The full benefit of
these lower prices will not be realized until the second half of
the year due to existing inventory that was purchased at higher
prices. In addition, ore tonnes processed and gold grades improved
18% and 22%, respectively, versus Q1. Waste tonnes were also
reduced by 12%.
El Gallo 1 is currently being expanded from 3,000 to 4,500
tonnes per day for a nominal expenditure of $5 million. The
increased capacity, combined with higher grades, is expected to
expand production from 27,300 gold equivalent ounces in 2013 to
75,000 gold equivalent ounces by 2015. Preliminary engineering
drawings have been completed and the expansion is expected to be
operational by mid-2014.
El Gallo Phase 1 Mine Production Results
----------------------------------------------------------------------------
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Q2 Q1
2013 2013
----------------------------------------------------------------------------
Ore production (tonnes) 346,896 295,173
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Average grade gold (gpt) 1.34 1.10
----------------------------------------------------------------------------
Gold produced (ounces) 8,439 6,673
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Silver produced (ounces) 6,341 5,640
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Gold equivalent produced (ounces) 8,561 6,781
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Gold sold (ounces) 7,897 8,085
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Silver sold (ounces) 6,400 7,800
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Gold equivalent total cash cost (US$) (ii) 713 770
----------------------------------------------------------------------------
Gold equivalent co-product all-in sustaining cash cost 1,183 1,465
(US$) (iii)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Gold recoveries are projected to reach 70% through on-going leaching.
(ii) In the second quarter of 2013, the Company revised its allocation of
general and administrative expenses to total cash costs to conform to the
Gold Institute Production Cost standard. Prior period figures have been
adjusted to conform to the current methodology.
(iii) In the second quarter of 2013, the Company adopted the new guidance on
all-in sustaining and all-in costs published by the World Gold Council on
June 27, 2013. Prior period figures have been adjusted to conform to the
current methodology.
El Gallo 2, Mexico (100%)
In order to lower capital costs associated with construction,
McEwen Mining began follow-up tests to help determine if heap
leaching is a viable process alternative for silver at El Gallo 2.
Heap leaching would substantially reduce the estimated initial
capital to approximately $30 million from $180 million under a
milling scenario. Though capital costs would be reduced, it would
also decrease production from an estimated 105,000 gold equivalent
ounces to approximately 60,000 gold equivalent ounces. Test results
are expected during Q4.
The company has continued to advance the construction of the El
Gallo 2 ball mill to ensure both process alternatives remain viable
without incurring significant costs or delays.
The three remaining permits to begin construction and operations
under the mill process have been submitted to the applicable
Mexican authorities. Although approval and timing are outside of
McEwen Mining's control, the Company is targeting between Q3 and
year-end for approval. Should the Company decide that the heap
leach scenario is the preferred process alternative, modifications
to the permits will be required.
Los Azules Copper Project, Argentina (100%)
Los Azules is one of the world's largest and highest grade
undeveloped copper porphyry deposits. McEwen Mining is working on
an updated Preliminary Economic Assessment (PEA), which is expected
to be completed in Q3 this year. The updated PEA will be based on a
significantly larger mineral resource. It will evaluate the
possibility of (1) increasing the daily throughput; (2) producing
copper cathode instead of a concentrate and (3) processing
low-grade mineralized material not previously considered, via a
heap leach. The advantage of being able to produce a copper cathode
is that it would eliminate the contemplated slurry pipeline through
Chile and would reduce Argentina's current export tax on
concentrate.
Gold Bar Project, Nevada (100%)
McEwen Mining continues to advance the Gold Bar permitting
process in order to begin construction and production. Gold Bar is
forecasted to produce 50,000 ounces gold per year. The project is
located primarily on public lands managed by the Bureau of Land
Management (BLM). The BLM and the Nevada Division of Environmental
Protection (NDEP) are the primary government agencies responsible
for approving the permits that would allow the Company to begin
construction. The Company expects to submit its Plan of Operations
report in the second half of 2013.
Q2 Conference Call Details
McEwen Mining will be hosting a conference call to discuss the
Q2 results and project developments on August 12, 2013 at 2 pm
EST.
WEBCAST: http://www.gowebcasting.com/4784
TELEPHONE:
Participant dial-in number(s):
416-695-6616 / 800-446-4472
REPLAY:
Dial-in number(s): 905-694-9451 / 800-408-3053
Pass code: 2278899
ABOUT MCEWEN MINING (www.mcewenmining.com)
The goal of McEwen Mining is to qualify for inclusion in the
S&P 500 by creating a high growth gold producer focused in the
Americas. McEwen Mining's principal assets consist of the San Jose
mine in Santa Cruz, Argentina (49% interest); the El Gallo complex
in Sinaloa, Mexico; the Gold Bar project in Nevada, US; the Los
Azules project in San Juan, Argentina and a large portfolio of
exploration properties in Argentina, Mexico and Nevada.
McEwen Mining has 297,114,359 shares issued and outstanding at
August 6, 2013. Rob McEwen, Chairman, President and Chief Owner,
owns 25% of the shares of the Company (assuming all outstanding
Exchangeable Shares are exchanged for an equivalent amount of
Common Shares).
TECHNICAL INFORMATION
This news release has been reviewed and approved by William
Faust, PE, McEwen Mining's Chief Operating Officer, who is a
Qualified Person as defined by National Instrument 43-101 ("NI
43-101).
El Gallo: for additional information about the El Gallo complex
see the technical report titled "El Gallo Complex Phase II project,
NI 43-101 Technical Report Feasibility Study, Mocorito
Municipality, Sinaloa, Mexico" with an effective date of September
10, 2012, prepared by M3 Engineering along with a team of
associates (the "Phase II Report"). The authors of the Phase 2
Report, Stan Timler - M3 Engineering, Mike Hester - Independent
Mining Consultants (Reserves), Dawn Garcia - SRK Consulting
(Environmental), Richard Kehmeier and Brian Hartman - Pincock Allen
& Holt (El Gallo Deposit Resource), John Read - McEwen Mining
consultant (Palmarito Insitu, Historic Waste Dumps and Historic
tailings Resource), are each qualified persons and all of whom but
John Read are independent of McEwen Mining, each as defined by NI
43-101. Los Azules: for information about the current Los Azules
Mineral Resource, see the Company's news release titled "McEwen
Mining Continues to Expand Los Azules' Large, High-Grade, Mineral
Resource, dated February 5, 2013. The mineral resource estimate
referenced in this news release was prepared in January 2013 by
Robert Sim, P.Geo. and Bruce Davis, PhD, FAusIMM, each a qualified
person and independent of McEwen Mining, each as defined by NI
43-101. For additional information about the Los Azules project see
the technical Report titled "Los Azules Porphyry Copper Project,
San Juan Province, Argentina" dated August 1, 2012, with an
effective date of June 15, 2012, prepared by D. Ernest Winkler, PE,
Robert Sim, PGeo, Bruce Davis, PHD, FAUSIMM and James K. Duff,
PGeo, all of whom are qualified persons and all of whom but James
K. Duff are independent of McEwen Mining, each as defined by NI
43-101. Tonkin Project: For information about the Tonkin project
see the technical report titled "Technical Report on Tonkin
Project" dated and with an effective date of May 16, 2008. The
report was prepared by Alan C. Noble, P.E., Ore Reserves
Engineering and Richard Gowans, Micon International, and Steven
Brown (then US Gold Corporation) all of whom are qualified persons
and all of whom but Mr. Brown are independent of McEwen Mining,
each as defined by NI 43-101.Gold Bar: For information about the
Gold Bar project see the technical report titled "NI 43-101
Technical Report on Resources and Reserves Gold Bar Project, Eureka
County, Nevada" dated February 24, 2012 with an effective date of
November 28, 2011, prepared by J. Pennington, C.P.G., MSc., Frank
Daviess, MAusIMM, Registered SME, Eric Olin,, MBA, RM-SME, MSc,
Herb Osborn, P.E, Joanna Poeck, MMSA, B. Eng., Kent Hartley P.E.
Mining, SME, BSc, Mike Levy, P.E, P.G, MSc., Evan Nikirk, P. E.,
Mark Allan Willow, M.Sc, C.E.M. and Neal Rigby, CEng, MIMMM, PhD,
all of whom are qualified persons and all of whom are independent
of McEwen Mining, each as defined by NI 43-101.
The foregoing news release and technical reports are available
under the Corporation's profile on SEDAR (www.sedar.com).
There are significant risks and uncertainty associated with
commencing production or changing production plans without a
feasibility, pre-feasibility or scoping study. The proposed
expansion to El Gallo Phase 1 has not and may not be explored,
developed or analyzed in sufficient detail to complete an
independent feasibility or pre-feasibility study and may ultimately
be determined to lack one or more geological, engineering, legal,
operating, economic, social, environmental, and other relevant
factors reasonably required to serve as the basis for a final
decision to complete the expansion of all or part of this
project.
RELIABILITY OF INFORMATION REGARDING THE SAN JOSE MINE
Minera Santa Cruz S.A., the owner of the San Jose mine, is
responsible for and has supplied to the Company all reported
results from the San Jose 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. As the Company is
not the operator of the San Jose mine, there can be no assurance
that production information reported to the Company by MSC is
accurate, the Company has not independently verified such
information and readers are therefore cautioned regarding the
extent to which they should rely upon such information.
CAUTIONARY NOTE REGARDING NON-GAAP MEASURES
In this report, we have provided information prepared or
calculated according to 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.
Total cash costs consist of mining, processing, on-site general
and administrative costs, community and permitting costs related to
current explorations, royalty costs, refining and treatment charges
(for both dore and concentrate products), sales costs, export taxes
and operational stripping costs. All-in sustaining cash costs
consist of total cash costs (as described above), plus
environmental rehabilitation costs, mine site exploration and
development costs, and sustaining capital expenditures. In order to
arrive at our consolidated all-in sustaining costs, we also include
corporate general and administrative expenses. Depreciation is
excluded from both total cash costs and all-in sustaining cash
costs. Total cash cost and all-in sustaining cash cost per ounce
are calculated on a co-product basis by dividing the respective
proportionate share of the total cash costs and all-in sustaining
cash costs for the period attributable to each metal by the ounces
of each respective metal sold. A reconciliation to the nearest U.S.
GAAP measure is provided in McEwen Mining's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2013.
CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE
ESTIMATION
McEwen Mining 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 generally
permitted in reports filed with the SEC. Under NI 43-101, McEwen
Mining reports measured, indicated and inferred resources,
measurements, which are generally not permitted in filings made
with the SEC. The estimation of measured resources 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.
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, factors associated
with 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, 2012 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.
Contacts: McEwen Mining Inc. Sheena Scotland Investor Relations
(647) 258-0395 ext 410 or Toll Free: (866) 441-0690 (647) 258-0408
(FAX) McEwen Mining Inc. Mailing Address 181 Bay Street Suite 4750
Toronto, ON M5J 2T3 PO box 792info@mcewenmining.com McEwen Mining
Inc. Facebook: www.facebook.com/mcewenrob Twitter:
www.twitter.com/mcewenmining Store: www.mcewenmining.com/store
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