McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported its third quarter (Q3) results for the period ended
September 30th, 2020.
- Cash and liquid assets(1) and
working capital at September 30th, 2020 were
$18.8
million(2) and positive
$21.6 million,
respectively.
- Production rebounded during Q3
after the successful restart of all four of our operations, which
were temporarily suspended during Q2, largely due to actions taken
to prevent the spread of COVID-19 amongst our workers, business
partners, and communities. Production for Q3 2020 was
23,100 gold ounces and 575,000
silver ounces, or 30,400 gold equivalent
ounces(3)(GEOs), at the average gold:silver price ratio for the
quarter of 79:1.
- For Q3 we spent $8.5
million on exploration and advanced projects, and are
reporting a net loss of $9.8
million, or
($0.02) per share, compared to a
net loss of $11.5 million, or ($0.03) per share, in Q3 2019.
- At Black Fox, development of the
access to the Froome underground deposit has advanced
47% by the end of the quarter. We are on track to
reach the deposit in the second quarter of 2021 and complete the
necessary development work. Commercial production is expected by
the fourth quarter of 2021.
- On September 10th we closed a
private placement of flow-through common shares at a price of
$1.65 per share (representing a premium of
21% over the share price) for
gross proceeds of $10.4 million. These funds will
be used exclusively for exploration activities in the Timmins
region over the next 12 to 24 months.
- Consolidated production guidance
for Q4 2020 is 31,500-34,000 GEOs(4).
- Anna Ladd-Kruger has joined the
Company as our Chief Financial Officer. Anna is an accomplished
mining executive with over 20 years of experience in leading mining
organizations.
- Our quarterly webcast will take
place tomorrow, Friday, October
30th at
11 am EDT. Details are provided below.
“I am feeling much better this year than
I did last year at this
time because the bad news is
behind us. Our operations are starting to turn around and improve;
the financial pressure on our balance sheet has been alleviated;
and our future growth is becoming much brighter. Investment capital
is still in the early stages of moving into precious metals. There
are a number of companies that are still being largely ignored but
appear to have considerable upside potential. I believe McEwen
Mining is one of those companies whose share price has a lot of
catching up to do. Yes, last year was a nightmare and as
shareholders we all suffered great frustration and confusion over
the large loss of share value at a time when the price of gold was
climbing ever higher. Our problems were many, some
were due to non-recurring events and others were
operational. Our senior management at both head office and at our
mines are focused on improving operating efficiencies and profit
margins. Over the next several quarters we expect to deliver better
operating results along with exploration news that we hope will
start to close the price performance
gap,” commented Rob McEwen, Chairman
& Chief Owner.
Operations Update
San José Mine,
Argentina (49%
Interest)
Our attributable production from San José in Q3
was 8,600 gold ounces and 571,000
silver ounces, for a total of 15,900 GEOs(5). For
Q3, total cash costs(1) and all-in sustaining costs (AISC)(1) were
$1,269 and
$1,538 per GEO, respectively.
During Q3, government-imposed COVID-19 travel restrictions limited
the mobilization of personnel resulting in the mine continuing to
operate below normal capacity.
Black Fox Mine,
Canada (100%
Interest)
Production from Black Fox was
5,800 GEOs in Q3, at cash costs
and AISC of $1,581 and
$1,644 per GEO, respectively. The
operation is benefitting from the additional development work
completed during Q2, which increased mining flexibility. We expect
production to continue to trend higher during Q4, and mining from
Black Fox to continue into Q1 2021, while we transition to mining
the Froome deposit.
Black Fox – Underground
Drilling
Delineation and definition drilling around the
240 m and 280 m level stoping areas in the central and west part of
the Black Fox Mine has recently returned impressive grades
including:
|
On the 240 Level 85.1
g/t Au over 4.8 m
including 218.8
g/t Au over 1.8
m from hole 240-B226-11
14.7 g/t Au
over 2.5 m including 19.8
g/t Au over 1.7 m from
hole 240-B206-09 15.1 g/t Au
over 1.7 m from hole 240-B196-08On the 280
Level 19.3 g/t Au over
3.0 m including 71.6 g/t Au over
0.8 m from hole 280-F790-12 |
The positive results from these drill programs
are being fast-tracked and evaluation for potential additions to
mine planning inventory is ongoing.
A complete summary of new underground drilling results from
Black Fox is available here:
http://mcewenmining.com/files/doc_news/archive/2020/20201029_ug_comp_cog3.xlsx
Froome –
Development
Development of the underground access to the
Froome deposit, located a half mile (800 m) west of the Black Fox
mine, is on track, having advanced
47% by the end of the quarter. We
plan to reach the main deposit in Q2 2021 and expect to achieve
commercial production from Froome in Q4 2021. Froome offers several
benefits compared to Black Fox such as a straighter, more efficient
haulage route and wider, more consistent mineralization that is
amenable to lower cost bulk mining methods. We are targeting an
average annualized production rate of 40-45,000
GEOs from Froome over a period of approximately 2.5 years.
Fox Complex Expansion – Economic
Study
We have engaged an independent engineering group
to complete a Preliminary Economic Assessment (PEA) for the Fox
Complex that includes Grey Fox, Black Fox, Stock and Lexam
resources all utilizing our existing or potentially expanded
central milling capacity. The PEA results are expected to be
available in Q4 2020 and will suggest the optimal business case on
which to complete a feasibility study in 2021. Combined, the Fox
Complex deposits host nearly 3.0 million gold ounces in Measured
and Indicated resources, and an additional 1.0 million gold ounces
in Inferred resources(6). The objective of the upcoming PEA is to
develop a plan for the Fox Complex to grow to an annual production
of 100-150,000 ounces of gold, at a 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.
Grey Fox and Stock – 2020
Exploration
On September 10th we completed a flow-through
financing, which provides US$10 million for exploration activities
in the Timmins region over the next 12 to 24 months. The initial
focus is on two high-potential targets within 2 miles (3.2 km) of
our existing operations at the Fox Complex: Stock
West and Whiskey Jack. Both of these
targets returned very encouraging results during the 2018-2019
drilling campaigns, and we are looking forward to continued
exploration programs at these exciting discoveries, with the
objective of defining additional resources.
Whiskey Jack – Surface
Drilling
Exploration drilling at Whiskey Jack continued
to generate encouraging high grade results since our last update,
from October 16th, 2020 (for press release click here). Visible
gold was observed in 8 of the 15 shallow holes drilled to date.
Highlights of two new drill holes at the Whiskey Jack target are as
follows:
|
31.2 g/t Au over 2.7 m and
6.0 g/t Au over 8.0 m from hole
20GF-132312.7 g/t Au over 11.2 m
including 68.2 g/t Au over 2.0 m
from hole 20GF-1325 |
A complete summary of new drilling results from
Whiskey Jack is available here:
http://mcewenmining.com/files/doc_news/archive/2020/20201029_wj_comp_cog1.xlsx
Gold Bar Mine, USA (100%
Interest)
Gold Bar produced
6,800 GEOs in Q3
at cash costs and AISC of $1,585
and $1,769 per GEO, respectively.
Operations at Gold Bar continued to ramp up during September, and
savings from operational improvement initiatives are taking effect.
For example, the combined average contractor and owner unit mining
costs per ton of ore and waste moved decreased from $3.42/t in Q2
to $2.45/t in Q3, for a 28% decrease quarter on quarter. We expect
costs to continue to trend lower in future quarters.
Evaluation of the resource estimate continued in
Q3. We expect to have new resource and reserve estimates and an
updated feasibility study in Q4.
El Gallo Project,
Mexico (100% Interest)
El Gallo
produced 1,900 GEOs
from residual leaching of the heap leach pad, compared to 1,900
GEOs in Q2 2020. Incremental residual leaching costs for Q3 were
$3.1 million(7), or $1,505 per
GEO. An updated feasibility study for the Fenix Project is being
finalized, and we expect to release the results in late Q4.
Table 1 below provides
production and costs for Q1, Q2, Q3 and 9 months ending September
30, 2020 and comparative results from 2019:
Table
1: Production and
Costs
|
Q1 |
Q2 |
Q3 |
9 Months
to Sept 30 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
Total Production |
|
|
|
|
|
|
|
|
Gold (oz) |
27,000 |
29,200 |
36,200 |
15,700 |
35,000 |
23,100 |
98,200 |
68,000 |
Silver (oz) |
703,200 |
553,200 |
850,500 |
359,400 |
947,100 |
575,000 |
2,500,800 |
1,487,600 |
GEOs(3) |
36,300 |
35,000 |
45,900 |
19,200 |
45,900 |
30,400 |
128,100 |
84,600 |
San José Mine, Argentina
(49%)(5) |
|
|
|
|
|
|
|
|
Gold (oz) |
10,600 |
9,000 |
13,500 |
5,500 |
13,600 |
8,600 |
37,700 |
23,100 |
Silver (oz) |
701,300 |
551,900 |
848,300 |
358,700 |
943,000 |
571,000 |
2,492,600 |
1,481,600 |
GEOs(3) |
19,900 |
14,900 |
23,200 |
9,000 |
24,500 |
15,900 |
67,500 |
39,800 |
Cash Costs ($/GEO)(1)(3) |
749 |
1,138 |
960 |
1,280 |
915 |
1,269 |
883 |
1,232 |
AISC ($/GEO)(1)(3) |
1,115 |
1,592 |
1,207 |
1,476 |
1,204 |
1,538 |
1,179 |
1,536 |
El Gallo Mine, Mexico |
|
|
|
|
|
|
|
|
GEOs(1)(7) |
5,400 |
2,700 |
5,400 |
1,900 |
3,000 |
1,900 |
13,800 |
6,500 |
Black Fox Mine, Canada |
|
|
|
|
|
|
|
|
GEOs(3) |
8,900 |
8,300 |
9,400 |
2,200 |
7,400 |
5,800 |
25,800 |
16,300 |
Cash Costs ($/GEO)(1)(3) |
805 |
838 |
837 |
3,121 |
941 |
1,581 |
859 |
1,440 |
AISC ($/GEO)(1)(3) |
1,454 |
1,339 |
1,196 |
3,332 |
1,363 |
1,644 |
1,326 |
1,750 |
Gold Bar Mine, Nevada |
|
|
|
|
|
|
|
|
GEOs(3) |
(8) |
9,100 |
7,900(8) |
6,100 |
11,000 |
6,800 |
21,000 |
22,000 |
Cash Costs ($/GEO)(1)(3) |
- |
1,887 |
901 |
1,772 |
1,088 |
1,585 |
1,014 |
1,762 |
AISC ($/GEO)(1)(3) |
- |
2,177 |
1,088 |
2,462 |
1,235 |
1,769 |
1,200 |
2,132 |
Notes:
- 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 "NonGAAP 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 three months ended September 30, 2020 and for the year
ended December 31, 2019 contained in our Form 10-Q and 10-K,
respectively.
- All amounts are reported in US
dollars unless otherwise stated.
- 'Gold Equivalent Ounces' are
calculated based on a gold to silver price ratio of 75:1 for Q1
2019, 88:1 for Q2 2019, 87:1 for Q3 2019, 94:1 for Q1 2020,104:1
for Q2 2020 and 79:1 for Q3 2020.
- Consolidated production guidance
for Q4 2020 assumes an average gold:silver ratio of 80:1.
- Represents the portion attributable
to us from our 49% interest in the San José Mine.
- Resources and Reserves for all the McEwen Mining projects can
be found on our website at:
https://www.mcewenmining.com/operations/reserves-and-resources/default.aspx
- 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 key metrics for this
operation.
- Gold Bar commercial production was
attained on May 23, 2019, with cash costs and AISC reported from Q2
2019. Pre-commercial production at Gold Bar during Q1 2019 was
2,030 GEOs.
Conference Call and Webcast
We invite you to join our conference call, where
management will discuss our Q3 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.
Friday,October
30th, 2020
at 11:00 am EDT |
To call into the conference call over the phone, please
register
here:http://www.directeventreg.com/registration/event/8496507 |
Audience
URL:https://event.on24.com/wcc/r/2626382/F6EB601267855511C284ED941E9AF3C6 |
For SEC Form 10-Q Financial Statements and MD&A refer to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
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.
Technical InformationThe
technical contents of this news release has been reviewed and
approved by G. 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."
Technical information pertaining to Fox Complex
geology and exploration contained in this news release has been
prepared under the supervision of Ken Tylee, P.Geo. Mr. Tylee
is Qualified Person as defined by Canadian Securities
Administrators National Instrument 43-101 "Standards of Disclosure
for Mineral Projects."
CAUTIONARY NOTE REGARDING
NON-GAAP FINANCIAL
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 Quarterly Report on Form 10-Q for
the quarter ended September 30, 2020.
Liquid AssetsThe term liquid assets used in this
report is a nonGAAP financial measure. We report this measure to
better understand our liquidity in each reporting period. Liquid
assets are 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 Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020.
CAUTIONARY NOTE TO US INVESTORS
REGARDING RESOURCE ESTIMATIONMcEwen Mining Inc. is
required to prepare reports under the Securities Exchange Act of
1934 and the Canadian Securities Administrators’ National
Instrument 43101 “Standards of Disclosure for Mineral
Projects” (“NI 43101”), under the Canadian securities laws
because we are listed on the Toronto Stock Exchange (“TSX”) and
therefore subject to Canadian securities laws. Standards under NI
43-101 are materially different than the standards generally
permitted in reports filed with the United States (“U.S.”)
Securities and Exchange Commission (“SEC”).
Under NI 43101, we report measured,
indicated and inferred resources, which are measurements that 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 under Industry
Guide 7. 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, the SEC
only permits issuers to report “mineralized material” in tonnage
and average grade without reference to contained ounces. Under U.S.
regulations, 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 43101, and to
comply with applicable disclosure requirements.
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, contain McEwen Mining Inc.'s (the "Company") estimates,
forecasts, projections, expectations or beliefs as to future events
and results. Forward-looking statements and information are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant business, economic and competitive uncertainties,
risks and contingencies, and there can be no assurance that such
statements and information will prove to be accurate. Therefore,
actual results and future events could differ materially from those
anticipated in such statements and information. Risks and
uncertainties that could cause results or future events to differ
materially from current expectations expressed or implied by the
forward-looking statements and information include, but are not
limited to, effects of the COVID-19 pandemic, fluctuations in the
market price of precious metals, mining industry risks, political,
economic, social and security risks associated with foreign
operations, the ability of the corporation to receive or receive in
a timely manner permits or other approvals required in connection
with operations, risks associated with the construction of mining
operations and commencement of production and the projected costs
thereof, risks related to litigation, the state of the capital
markets, environmental risks and hazards, uncertainty as to
calculation of mineral resources and reserves, and other risks.
Readers should not place undue reliance on forward-looking
statements or information included herein, which speak only as of
the date hereof. The Company undertakes no obligation to reissue or
update forward-looking statements or information as a result of new
information or events after the date hereof except as may be
required by law. See McEwen Mining's Annual Report on Form 10-K for
the fiscal year ended December 31, 2019 and other filings with the
Securities and Exchange Commission, under the caption "Risk
Factors", for additional information on risks, uncertainties and
other factors relating to the forward-looking statements and
information regarding the Company. All forward-looking statements
and information made in this news release are qualified by this
cautionary statement.
The NYSE and TSX have not reviewed and do not
accept responsibility for the adequacy or accuracy of the contents
of this news release, which has been prepared by management of
McEwen Mining Inc.
ABOUT MCEWEN MINING
McEwen Mining is a diversified gold and silver
producer and explorer with operating mines in Nevada, Canada,
Mexico and Argentina. It also owns a large copper deposit in
Argentina. McEwen Mining’s goal is to create a profitable gold and
silver producer focused in the Americas.
McEwen Mining has approximately 409 million
shares outstanding. Rob McEwen, Chairman and Chief Owner, owns 20%
of the shares.
CONTACT INFORMATION: |
Investor Relations:(866)-441-0690 Toll
Free(647)-258-0395Mihaela Iancu ext.
320info@mcewenmining.com |
Website: www.mcewenmining.comFacebook: facebook.com/mcewenminingFacebook: facebook.com/mcewenrobTwitter: twitter.com/mcewenminingTwitter: twitter.com/robmcewenmuxInstagram: instagram.com/mcewenmining |
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1J9 |
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