McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today
reported its second quarter (
Q2) and first half
(
H1) results for the period ended June 30th, 2021.
- Our operations delivered strong
production results in line with our expectations, and we are on
track to meet our 2021 production guidance of 141,000 to
160,400 GEOs.
- We continue to execute on our
turnaround strategy and have made significant progress both from an
operational and a financial perspective (see Tables
1-3 below). We expect this trend to continue to the
remainder of 2021, as the Froome mine at the Fox Complex reaches
commercial production in Q4.
- On July 6, 2021, we announced that
a subsidiary that holds 100% of the Los Azules copper project will
be raising financing for the continued development of that project,
as well as to fund a modest exploration program for its Elder Creek
copper exploration property in Nevada. McEwen Copper is seeking to
raise up to $80 million in a private offering and Rob McEwen has
committed the first $40 million dollars.
- Our quarterly webcast will take
place on Thursday, August 5th
at 2 pm EDT. Please see the details below.
Table 1. Production and costs Q2 &
H1 2021 ended June 30th, 2021 compared Q2 & H1
2020
% Increase (Decrease)2021 vs. 2020 |
Production (GEOs)(1) |
Cash Costs ($/GEO)(2) |
AISC ($/GEO)(2) |
|
Q2 |
H1 |
Q2 |
H1 |
Q2 |
H1 |
Gold Bar Mine, Nevada |
131 |
% |
41 |
% |
(17 |
%) |
(13 |
%) |
(34 |
%) |
(25 |
%) |
Fox Complex, Canada |
223 |
% |
17 |
% |
(71 |
%) |
(22 |
%) |
(67 |
%) |
(29 |
%) |
San José Mine, Argentina(3) |
102 |
% |
46 |
% |
(14 |
%) |
(9 |
%) |
2 |
% |
(8 |
%) |
El Gallo Project, Mexico |
(32 |
%) |
(46 |
%) |
Residual leaching(4) |
Table 2. Liquidity at June 30th, 2021 and
December 31st, 2020
(Millions of Dollars) |
Q2 2021 endedJune 30th, 2021 |
Q4 2020 endedDec 31st, 2020 |
Cash and cash equivalents |
42.2 |
20.8 |
Liquid assets |
48.9 |
25.9 |
Working capital |
30.0 |
7.9 |
Long-term debt principal |
50.0 |
50.0 |
Table 3. Financial results Q2 & H1
2021 ended June 30th, 2021 compared Q2 & H1 2020
(Millions of Dollars) |
2021 |
2020 |
|
Q2 |
H1 |
Q2 |
H1 |
Revenue |
40.7 |
|
64.5 |
|
18.3 |
|
49.7 |
|
Cash gross profit (loss) |
9.6 |
|
9.7 |
|
(4.1 |
) |
(1.1 |
) |
Gross profit (loss) |
4.1 |
|
(0.9 |
) |
(8.9 |
) |
(12.6 |
) |
Net loss |
(6.0 |
) |
(18.5 |
) |
(19.8 |
) |
(119.0 |
) |
Net loss per share |
(0.01 |
) |
(0.04 |
) |
(0.05 |
) |
(0.30 |
) |
Operations Update
Gold Bar Mine, USA (100%
Interest)
Gold Bar
produced 14,100 GEOs in Q2 at total cash
costs(2) and all-in sustaining costs (AISC)(2)
of $1,463 and $1,619 per
GEO sold, respectively. This compares to 6,100 GEOs in Q2 2020 at
total cash costs and AISC
of $1,772 and $2,462 per GEO, respectively. The
cost decrease is driven by the increase in production and by the
significant operational improvements we have been continuing to
work through over the past year. We expect to see this trend
continue into the second half of 2021.
Exploration is focusing on testing near-mine
targets and further defining oxide resources on the neighboring
Tonkin property. During the quarter we incurred exploration
expenses of $1.3 million of a total $5.0 million budget for
2021.
Fox Complex, Canada (100%
Interest)
Black Fox
produced 7,100 GEOs in Q2 at total cash
costs and AISC
of $917 and $1,088 per
GEO sold, respectively. This compares to 2,200 GEOs in Q2 2020 at
total cash costs and AISC of $3,121 and $3,332 per
GEO, respectively. Mining has transitioned to the Froome deposit
and is performing to plan, commercial production expected in Q4
2021.
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. During the quarter we incurred exploration expenses of
$3.5 million of a total $9.0 million budget for 2021.
A Preliminary Economic Assessment (PEA) to
expand the production from the Fox Complex is expected to be
released in the second half of the year, following additional
drilling and resource estimate updates at the Stock and Grey Fox
properties.
San José Mine, Argentina (49%
Interest)
Our attributable production from San José in Q2
was 9,300 gold ounces and 607,000
silver ounces, for a total of 18,200 GEOs(3). For
Q2, total cash costs and AISC were $1,105 and
$1,500 per GEO sold, respectively. This compares
to 9,000 GEOs in Q2 2020 at total cash costs and AISC
of $1,280 and $1,476 per GEO, respectively. In
Q2 2020, operations at San José were adversely impacted by
government-imposed COVID-19 restrictions.
We received $2.6 million and $7.6 million in
dividends in Q2 and H1, respectively, compared to $0.3 million
dividends received during the same periods in 2020.
El Gallo Project, Mexico (100%
Interest)
In Q2, El Gallo
produced 1,300 GEOs from residual
leaching of the heap leach pad. Incremental residual leaching cost
for the period was $2.7 million(4). The residual leaching
activities at El Gallo are expected to wind down in early 2022.
Los Azules Copper Project, Argentina
(100% Interest)
On July 6, 2021, we announced the formation of a
wholly-owned subsidiary to hold the Los Azules Copper project
(“McEwen Copper”) and to raise financing to advance the project to
a preliminary feasibility study and to construct a road to the
project providing year-round access compared to the current 5-month
seasonal access window. McEwen Copper will hold the Los Azules
assets as well as the Elder Creek exploration project in Nevada.
McEwen Copper is seeking to raise up to $80 million in a private
offering.
Table 4 below provides
production and cost results for Q1, Q2 and H1 2021 and comparative
results from 2020:
|
Q1 |
Q2 |
H1 |
FY2021Guidance Range |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
Total Production |
|
|
|
|
|
|
|
Gold (oz) |
23,300 |
29,200 |
31,700 |
15,700 |
55,000 |
44,900 |
110,500 – 127,900 |
Silver (oz) |
493,200 |
553,200 |
611,700 |
359,400 |
1,104,900 |
912,600 |
2,300,000 – 2,450,000 |
GEOs(1) |
30,600 |
35,100 |
40,700 |
19,200 |
71,300 |
54,200 |
141,000 – 160,400 |
Gold Bar Mine,
Nevada |
|
|
|
|
|
|
|
GEOs(1) |
7,400 |
9,100 |
14,100 |
6,100 |
21,500 |
15,200 |
37,000 – 45,000 |
Cash Costs ($/GEO)(1)(3) |
1,865 |
1,887 |
1,463 |
1,772 |
1,598 |
1,840 |
|
AISC
($/GEO)(1)(3) |
1,934 |
2,177 |
1,619 |
2,462 |
1,725 |
2,293 |
|
Fox Complex, Canada |
|
|
|
|
|
|
|
GEOs(1) |
5,200 |
8,300 |
7,100 |
2,200 |
12,300 |
10,500 |
27,500 – 32,500 |
Cash Costs ($/GEO)(1)(3) |
1,262 |
838 |
917 |
3,121 |
1,066 |
1,369 |
|
AISC
($/GEO)(1)(3) |
1,560 |
1,339 |
1,088 |
3,332 |
1,282 |
1,803 |
|
San José Mine,
Argentina (49%)(4) |
|
|
|
|
|
|
|
Gold (oz) |
9,500 |
9,000 |
9,300 |
5,500 |
18,800 |
14,500 |
41,500 – 44,500 |
Silver (oz) |
492,300 |
551,900 |
607,000 |
358,700 |
1,099,600 |
910,600 |
2,300,000 – 2,450,000 |
GEOs(1) |
16,700 |
14,900 |
18,200 |
9,000 |
34,800 |
23,900 |
72,000 – 77,000 |
Cash Costs ($/GEO)(1)(3) |
1,088 |
1,138 |
1,105 |
1,280 |
1,097 |
1,207 |
|
AISC
($/GEO)(1)(3) |
1,328 |
1,592 |
1,500 |
1,476 |
1,418 |
1,535 |
|
El Gallo Project, Mexico |
|
|
|
|
|
|
|
GEOs(1)(6) |
1,300 |
2,700 |
1,300 |
1,900 |
2,500 |
4,600 |
4,500 – 5,900 |
Notes:
- Gold Equivalent Ounces (GEOs) are
calculated based on a gold to silver price ratio of 68:1 for Q1 and
Q2 2021, 94:1 for Q1 2020, 104:1 for Q2 2020, and 75:1 for full
year 2021 Production Guidance.
- 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 a description 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 31st, 2020 filed on EDGAR and SEDAR.
- 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
Management will discuss our Q2 2021 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 5th,
2021at 2:00 pm EDT |
To call into the
conference call over the phone, please register here:
http://www.directeventreg.com/registration/event/8736718 Audience
URL:https://event.on24.com/wcc/r/3196783/B8184C2B5BFBD82CE09D9A0FF3149FB8 |
The webcast will be archived on McEwen Mining's website at
https://www.mcewenmining.com/media following the call.
COVID-19All our operations have
implemented rigorous health and safety measures to prevent the
spread of the COVID-19 virus. Currently, the COVID-19 pandemic is
not materially affecting our operations, or our future plans and
objectives.
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 have 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."
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 Quarterly Report on Form 10-Q for
the quarter ended June 30, 2021.
Cash Gross ProfitCash gross profit is a non-GAAP
financial measure and does not have any standardized meaning under
GAAP. 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 or loss. Cash gross profit is calculated by adding
back the depreciation and depletion expense to gross profit or
loss. A reconciliation to gross profit, the nearest U.S. GAAP
measure is provided in McEwen Mining's Quarterly Report on Form
10-Q for the quarter ended June 30, 2021.
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 Quarterly Report on Form 10-Q for the quarter ended
June 30, 2021.
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.
This news release and the information
included herein do not constitute an offer to buy or the
solicitation of an offer to subscribe for or to buy any of the
securities described herein, nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction.
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 the 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.
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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