McEwen Mining Inc. (NYSE:MUX)(TSX:MUX) is pleased to announce the
results of an updated Preliminary Economic Assessment ("PEA") on
its 100% owned Los Azules Copper Project (the "Project") in San
Juan Province, Argentina. The results from the PEA demonstrate that
Los Azules has the potential to become one of the largest, lowest
cost copper mines in the world. In addition, there remains
excellent exploration potential to further expand the size of the
existing mineral resource. Highlights from the PEA are shown
below:
PEA Study Highlights(i)
($3.00/lb Copper and $1,300/oz Gold)
-- Pre-tax Net Present Value ("NPV") of $3.0 billion (8% discount rate) and
an Internal Rate of Return ("IRR") of 17.6%.
-- After-tax NPV of $1.7 billion (8% discount rate) and an IRR of 14.3%.
-- Annual copper production during years 1-5 to average 255,000 tonnes (563
million lbs), which would have placed it in the top 3%1 of copper mines
in the world during 2012. Life of mine ("LOM") annual copper production
to average 171,000 tonnes (377 million lbs) over 35 years.
-- Cash operating costs during years 1-5 to average $0.87/lb copper (net of
gold by-product), placing it in the bottom 14%(1 ) in the world during
2012. Cash operating costs over entire mine life to average $1.08/lb
copper (net of gold by-product).
-- Indicated resource of 5.4 billion pounds of copper and 0.8 million
ounces of gold and Inferred resource of 14.3 billion pounds of copper
and 2.6 million ounces of gold (please see Table 2 below for resource
details).
-- Initial capital costs to construct the mine and a 120,000 tonnes per day
("tpd") process plant have been estimated at $3.9 billion.
-- Capital payback on a pre-tax basis has been estimated at 3.8 years at
$3.00/lb copper and $1,300/oz gold.
(1) Based on internal market data.
"Our updated PEA is the result of a very successful exploration
program which has significantly increased our resources. Combined
with a change in the process method the estimated mine life has
increased by 37%, total copper production by 44%, and production
costs per pound of copper remain low. The new PEA includes plans
for producing a copper cathode at site, which will greatly reduce
export taxes and project risk by eliminating the need for a slurry
pipeline," stated Rob McEwen, Chief Owner.
The updated PEA contemplates the construction of a mine and
process plant operating over a 35 year mine life at a throughput of
120,000 tonnes per day. The mine would produce a copper cathode via
a pressure oxidative leach process, in addition to heap leaching
the lower grade mineralized material. Compared to the previous PEA
released in December 2010, there have been two significant
improvements to the project:
1. Resource Size: Indicated and Inferred resources have increased by 184%
and 55% respectively, which were slightly offset with decreases in
respective grades of 14% and 12%. Overall, this has led to a 37%
increase in mine life and 44% increase in total copper production.
2. Process Methodology: The current PEA plans to produce copper cathode at
site whereas the 2010 PEA contemplated producing copper concentrate and
transporting it via pipeline through Chile. The main advantages of
producing copper cathode at site are that it eliminates this previously
planned pipeline through Chile, which was a substantial risk for the
project, as well as an overall increase in recovered metal, both copper
and gold. Additional benefits include: i) a reduction in export taxes
(5% payable on cathode versus 10% on concentrate) and, ii) the removal
of treatment and refining charges from the smelting process.
Table 1: Pertinent Details of the PEA
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Pre-tax NPV ($3.00/lb Cu, 8% discount rate) $3.02 billion
----------------------------------------------------------------------------
After-tax NPV $1.68 billion
----------------------------------------------------------------------------
Pre-tax IRR 17.6%
----------------------------------------------------------------------------
After-tax IRR 14.3%
----------------------------------------------------------------------------
Initial Capital Expenditure $3.92 billion
----------------------------------------------------------------------------
LOM Sustaining Capital $1.47 billion
----------------------------------------------------------------------------
LOM Average Operating Costs $8.65/t ore
----------------------------------------------------------------------------
First 5 Years Average C-1(1) Cash Costs (net of by-
product credits) $0.87/lb Cu
----------------------------------------------------------------------------
LOM Average C-1 Cash Costs (net of by-product credits) $1.08/lb Cu
----------------------------------------------------------------------------
Nominal Mill Capacity 120,000 tpd
----------------------------------------------------------------------------
Average Tonnes of Mineralized Material Processed
Annually - Mill 43 million tonnes
----------------------------------------------------------------------------
Average Tonnes of Mineralized Material Processed
Annually - Heap Leach 6 million tonnes
----------------------------------------------------------------------------
Mine Life 34.9 years
----------------------------------------------------------------------------
LOM Strip Ratio 0.76
----------------------------------------------------------------------------
LOM average annual copper production 171,000t or 377m lbs
----------------------------------------------------------------------------
First 5 years average annual copper production 255,000t or 563m lbs
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) C-1 cash costs include at-mine cash operating costs, treatment and
refining charges, mine reclamation and closure costs, and copper cathode and
gold dore transportation and freight costs.
In comparing the economics to the 2010 PEA, the pre-tax NPV
discounted at 8% has increased from $2.8 billion to $3.0 billion
and the IRR has decreased from 21.4% to 17.6%. In addition, the
payback of pre-production capital has increased from 3.1 years to
3.8 years from the start of production. The previous PEA did not
include economics that were calculated on an after-tax basis.
The PEA contains a cash flow model based upon the geological and
engineering work completed to date and technical and cost inputs
developed by Samuel Engineering, Inc., Ausenco Vector, WLR
Consulting, Inc., and MTB Project Management Professionals, Inc.
The base case was developed using long term forecast metal prices
of $3.00/lb for copper and $1,300/oz for gold. The Canadian
National Instrument 43-101 ("NI 43-101") technical report
summarizing the results of the updated PEA will be filed on SEDAR
and the Company's website within 45 days of this press release.
Table 2: Los Azules Mineral Resource Estimate
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Tonnage Au Grade
Cut-off Grade (million Cu Grade Cu lbs (grams per Au Oz
(Cu%) tonnes) (%) (billions) tonne) (millions)
----------------------------------------------------------------------------
Indicated Resource
----------------------------------------------------------------------------
0.35 389 0.63 5.39 0.07 0.84
----------------------------------------------------------------------------
Inferred Resource
----------------------------------------------------------------------------
0.35 1,397 0.46 14.3 0.06 2.58
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) The PEA is preliminary in nature and includes the use of
inferred resources which are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Thus, there is no certainty that
the results of the PEA will be realized. Actual results may vary,
perhaps materially. The level of accuracy for the estimates
contained within the PEA is approximately +/- 35%.
The following chart shows the sensitivity of the base case's
pre-tax NPV (8% discount rate) and IRR to changes in the copper
price: http://media3.marketwire.com/docs/MUXChart1.pdf.
The following chart shows the sensitivity to copper price,
operating costs, and capital costs. The graph shows that the
project pre-tax NPV is much more sensitive to copper price than to
capital or operating costs:
http://media3.marketwire.com/docs/MUXChart-2.pdf.
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 1 mine
and El Gallo 2 project 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
September 13, 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
The information presented in this press release has been
reviewed and approved by Richard Kunter, FAusIMM CP, QP, Steven
Pozder, PE, Robert Sim, P.Geo., Bruce Davis, PhD, FAusIMM, James K.
Duff, P.Geo., William Rose, PE, and Scott Elfen, PE, all of whom
are qualified persons and all of whom but James K. Duff are
considered independent of McEwen Mining, as defined by Canadian
National Instrument 43-101 "Standards of Disclosure for Mineral
Projects" ("NI 43-101"). The PEA has been prepared in accordance
with the standards set out in NI 43-101 and was prepared by the
following consortium of independent professionals and technical
firms:
----------------------------------------------------------------------------
Consultant Contribution
----------------------------------------------------------------------------
PEA study manager, provided input on project
infrastructure, owner's costs, mine capital
and operating costs (in collaboration with
MTB Project Management William Rose of WLR Consulting), and cash
Professionals, Inc. flow modeling.
----------------------------------------------------------------------------
Richard Kunter of Samuel Review of metallurgical testing and mineral
Engineering, Inc. processing.
----------------------------------------------------------------------------
Review of cash flow modeling, project
Steven Pozder of Samuel infrastructure, operating costs and economic
Engineering, Inc. evaluation.
----------------------------------------------------------------------------
Robert Sim of SIM Geological,
Inc.
Bruce Davis of BD Resource
Consulting Mineral resource estimate.
----------------------------------------------------------------------------
Bruce Davis of BD Resource Quality control for the assaying of the Los
Consulting Azules drill core.
----------------------------------------------------------------------------
William Rose of WLR Consulting, Development of the mine plan and production
Inc. schedule.
----------------------------------------------------------------------------
Project infrastructure, geotechnical
facilities design, capital and operating
Scott Elfen of Ausenco Vector costs.
----------------------------------------------------------------------------
Information about the geology and
mineralization, exploration, and
environmental liabilities, studies and
James K. Duff permitting.
----------------------------------------------------------------------------
All drill core samples were collected in accordance with
industry standards. Splits from the drill core samples were
submitted to the ACME sample preparation laboratory in Mendoza,
Argentina, and then transferred to ACME's laboratory in Santiago,
Chile for fire assay and ICP analysis. Accuracy of results is
tested through the systematic inclusion of standards, blanks and
check assays.
For further 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, as defined by NI 43-101.
The foregoing mineral resource estimate was employed in the
preparation of the PEA that is the subject matter of this news
release and is the current mineral resource on the Los Azules
Copper Project. For additional non-resource 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, P.Geo., Bruce Davis, PhD, FAusIMM
and James K. Duff, P.Geo., 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.
The foregoing news release and technical report are available
under the Corporation's profile on SEDAR (www.sedar.com).
The 2010 PEA is included for comparative purposes as it
represents the most recent economic analysis completed on the Los
Azules Copper Project prior to the PEA disclosed herein. Readers
are cautioned that the 2010 PEA was superseded by the technical
report and news release referenced immediately above. Historic
information pertaining to the economic analysis disclosed in the
2010 PEA should not be relied upon. The 2010 PEA was disclosed in a
technical report titled "Canadian National Instrument 43-101
Technical Report Updated Preliminary Assessment, Los Azules
Project, San Juan Province, Argentina" with an effective date of
December 1, 2010 (released December 16, 2010) was prepared by
Kathleen Altman, Ph.D., PE, Robert Sim, P.Geo,. Bruce Davis, PhD,
FAusIMM, Richard Jemielita, Ph.D., MIMMM, William Rose, PE, and
Scott Elfen, PE. Each of the authors was at the time of publication
independent of Minera Andes Inc. (now McEwen Mining Inc.) and
Qualified Persons, as defined by NI 43-101. The 2010 PEA is
available under the Minera Andes Inc.'s (acquired by McEwen Mining
Inc. in 2012) profile on SEDAR (www.sedar.com).
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) Mailing Address McEwen Mining Inc. 181 Bay Street Suite 4750
Toronto, ON M5J 2T3 PO box 792info@mcewenmining.com Facebook:
www.facebook.com/mcewenrob Twitter: www.twitter.com/mcewenmining
www.mcewenmining.com
McEwen Mining (TSX:MUX)
Historical Stock Chart
From Apr 2024 to May 2024
McEwen Mining (TSX:MUX)
Historical Stock Chart
From May 2023 to May 2024
