McEwen
Mining Inc. (NYSE: MUX) (TSX: MUX) is
pleased to provide summary results from the Fox Complex Preliminary
Economic Assessment ("
Fox PEA" or
"
PEA"), which outlines a mine life of over twelve
(12) years, generating average annual production of 71,980 gold
ounces, at average cash costs and all-in sustaining costs
("
AISC") per ounce under $800 and $1,225,
respectively.(1)(2) Peak annual gold production of approximately
100,000 ounces occurs in Years 6 to 10 of the mine life.
"The Fox PEA is an important step
forward for us. It translates our exploration success into a
business case that increases mine life and production rates and
lowers costs per ounce! It also provides a clearer picture of where
future exploration should be focused to add value.
Our commitment and investment in
exploration has provided the foundation for this study, and ongoing
exploration success continues to further enhance the expansion
potential at Fox. While the PEA is an encouraging first iteration,
continuing exploration success, improved economics, and a shorter
payback period is required before we decide to advance the
project.
I am also pleased that the Froome mine
was successfully brought into production in 2021, is performing as
planned, and is expected to continue for at least another three
years while our expansion plans and drilling progress,"
commented Rob McEwen, Chairman and Chief Owner.
McEwen engaged Wood Canada Limited
(https://www.woodplc.com) ("Wood") to assist in
evaluating and developing a business strategy to unlock the value
of our Fox Complex properties ("Fox") in Canada's
Timmins mining district. The PEA was prepared by Wood in accordance
with the requirements of Canadian National Instrument 43-101
"Standards of Disclosure for Mineral Projects" ("NI
43-101"). The NI 43-101 technical report summarizing the
PEA report will be published on SEDAR within 45 days from the date
of this news release.
Fox is an active mining operation with gold
production from the Froome mine, which was developed in 2020-2021
and started commercial production in September 2021 using the
pre-existing Fox mill facility. The PEA evaluates the economics of
Fox in two ways: Case A - Fox including Froome,
and Case B - Fox excluding Froome. Case B is
intended to show the incremental return on investment provided by
the expansion of the Fox mill to 2,400 tonnes per day and the
development of mines at Stock West, Grey Fox and Fuller deposits
(the "Expansion Project").
Table 1 presents a summary of
results for Case A. In this case, the internal rate of return and
payback period are not meaningful metrics because of Froome's
initial positive operating earnings.
Table 1: Case A – Fox Financial Results
(US Dollars)(2)
Financial & Operating Metrics
(After-tax): |
Life of Mine (LoM) |
12.3 years |
LoM Gold Production |
885,400 oz |
Average Annual Gold Production - LoM |
71,980 oz |
Average Cash Costs per oz. - LoM (1) |
$797 |
Average AISC per oz. - LoM (1) |
$1,224 |
Gold Price Sensitivity: |
Downside Case $1,500/oz Au |
Base Case $1,650/oz Au |
Upside Case $1,800/oz Au |
Net Present Value (5% discount) (NPV5%)(3)(4) |
$108 million |
$175 million |
$240 million |
Table 2 presents a summary of
results for Case B. Table 2 is the only instance in this news
release where Froome is excluded from the information
presented.
Table 2: Case B - Expansion Project
Financial Results(2)(5)
Financial & Operating Metrics
(After-tax): |
Life of Mine (LoM) |
9.3 years |
LoM Gold Production |
751,700 oz |
Average Annual Gold Production - LoM |
80,800 oz |
Average Cash Costs per oz. - LoM (1) |
$769 |
Average AISC per oz. - LoM (1) |
$1,246 |
Gold Price Sensitivity: |
Downside Case $1,500/oz Au |
Base Case $1,650/oz Au |
Upside Case $1,800/oz Au |
Net Present Value (5% discount) (NPV5%)(4)(6) |
$81 million |
$137 million |
$192 million |
Internal Rate of Return (IRR%) |
15% |
21% |
26% |
Payback Period (years) |
6.5 |
5.9 |
5.4 |
Most of the funding required for capital
expenditures to implement the Expansion Project comes from
internally generated project cash flow. Table 3
shows the total projected capital (initial and sustaining) and the
amount and timing of external funding required to realize the PEA
business case. While the PEA shows encouraging results for
expansion at Fox, it is not McEwen
Mining’s intention to finance or construct the Expansion Project
based on this PEA. The execution strategy is to seek
further opportunities to reduce the funding requirements and
improve the payback period concurrent with additional drilling and
studies.
Table 3: Fox Capital Expenditure and
Potential Funding Requirements (2)(7)
Year of Project |
Total Capital
Expenditure($M) |
Amount and Timing of Funding Required
Above Project Generated Cash Flow |
Downside Case $1,500/oz
Au($M) |
Base Case $1,650/oz
Au($M) |
Upside Case $1,800/oz Au($M) |
Year 1 (2022) |
$10 |
- |
- |
- |
Year 2 (2023) |
$49 |
$70 |
$52 |
$35 |
Year 3 (2024) |
$76 |
$41 |
$37 |
$34 |
Year 4 to 13 (2025-2034) |
$223 |
- |
- |
- |
Total LoM |
$358 |
$111 |
$89 |
$69 |
Readers are cautioned that the PEA is
preliminary in nature. It includes Inferred mineral
resources that are considered too speculative geologically to have
applicable economic considerations that would enable them to be
categorized as mineral reserves. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. There
is no certainty that the PEA will be realized.
PEA Overview
The PEA is based on the sequential underground
development and mining of the Froome, Stock West, Grey Fox, and
Fuller mineral resources. Our other resources at Black Fox, Stock
East, Davidson-Tisdale, Buffalo Ankerite, Paymaster, and Tamarack
represent potential sources of additional production and require
further exploration and study.
The PEA includes upgrading the Fox mill, located
at the Stock property, to increase throughput capacity to 2,400
tonnes per day and to allow the simultaneous processing of material
from multiple deposits. The impact of the increased mill throughput
on annual gold production capacity can be seen in Figure
1 starting in Year 5.
The Fox project is partly funded by operating
earnings from ongoing operations at Froome, some of which occur
before the Expansion Project is started. In addition, exploration
will continue at Stock Main and Stock West to develop additional
resources that may provide opportunities for earlier revenue and a
quicker payback period. Drilling is also anticipated at Grey Fox to
evaluate additional opportunities for resource extensions and
definition.
As shown in Figure 3, the
cumulative cash flow is initially positive because of Froome
operations. Subsequent capital expenditures for project expansion
drive cumulative cash flow negative starting in Year 3 until
becoming positive again in Year 7. Total capital for the life of
mine is $358 million, of which $89 million is not addressed
internally from project cash flow ($52 million in Year 2 and $37
million in Year 3)(see Table 3). The Company is
evaluating possible opportunities to mitigate this funding
requirement, including enhancing near-term production opportunities
at the Stock property and Froome with ongoing exploration drilling
in 2022.
Figure 1 summarizes the
projected gold production profile for Fox. Figure
2 provides the components of the estimated annual cash
flow. Figure 3 shows the modelled cumulative cash
flow (undiscounted and discounted at 5%).
Trade-Off Analysis
The mining team performed a trade-off analysis
on each property to evaluate the mining method that created the
highest value. Following these analyses, a set of detailed mine
designs and schedules were created and used to determine the
optimal mineral resources to target as part of the business
strategy for the PEA.
The PEA is based on Measured, Indicated, and
Inferred Mineral Resources (as defined in 2014 CIM Definition
Standards), providing direction for our team to focus exploration,
permitting, and development work required to advance the individual
deposits to production.
Exploration and Project Development Update
The PEA provides a sound basis for identifying
where best to leverage exploration and delineation spending.
Management remains confident that mineral resources can be expanded
in the Stock area with targeted drilling within 400 meters from the
surface at Stock West and Stock Main.
Recent exploration drilling has identified the
host lithology (green carbonate unit) and similar mineralization to
the Stock West deposit nearer to surface, between the historical
Stock mine infrastructure and the Destor-Porcupine Fault Zone.
Evaluation of the extent of this unit and its mineralization is
currently underway. Successfully delineating potentially economic
mineralization near surface, close to the proposed decline at Stock
and adjacent to the Fox Mill could significantly improve near-term
project economics and payback. While aggressive drilling continues,
steps to prepare for permitting a new decline at Stock are
underway.
Want to stay up to date on our exploration
results?Subscribe to our email list by clicking
here: https://www.mcewenmining.com/contact-us/#section=followUs
Mineral Resource Estimates
The following Fox mineral resource models were
updated to reflect the PEA's current economic assumptions and
underground mining scenarios. All mineral resources are constrained
by stope shapes defining reasonable prospects for eventual economic
extraction by underground mining methods.
Figures in the tables below may not sum due to
rounding.
Tables 4 to 7 present mineral
resource estimates for Froome (update), Stock West (initial), Grey
Fox (update), and Fuller (update).
Table 4: Froome - Mineral Resource
Estimate, Effective Date July 16, 2021(8)
Classification |
Cut-off Grade Gold (g/t) |
Quantity (‘000 tonnes) |
Gold Grade(g/t) |
Contained Gold (‘000 oz) |
Measured |
2.35 |
790 |
4.47 |
113 |
Indicated |
2.35 |
641 |
3.92 |
81 |
Total Measured & Indicated |
2.35 |
1,432 |
4.22 |
194 |
Inferred |
2.35 |
276 |
3.32 |
29 |
Table 5: Grey Fox - Mineral Resource
Estimate, Effective Date January 31, 2021(9)
Classification |
Cut-off Grade Gold (g/t) |
Quantity (‘000 tonnes) |
Gold Grade(g/t) |
Contained Gold (‘000 oz) |
Measured |
2.30 |
- |
- |
- |
Indicated |
2.30 |
7,566 |
4.80 |
1,168 |
Total Measured & Indicated |
2.30 |
7,566 |
4.80 |
1,168 |
Inferred |
2.30 |
1,685 |
4.35 |
236 |
Table 6: Stock West - Mineral Resource
Estimate, Effective Date July 30, 2021(10)
Classification |
Cut-off Grade Gold (g/t) |
Quantity (‘000 tonnes) |
Gold Grade(g/t) |
Contained Gold (‘000 oz) |
Measured |
1.95 |
- |
- |
- |
Indicated |
1.95 |
1,171 |
3.83 |
144 |
Total Measured & Indicated |
1.95 |
1,171 |
3.83 |
144 |
Inferred |
1.95 |
1,049 |
3.30 |
111 |
Table 7: Fuller - Mineral Resource
Estimate, Effective Date April 30, 2021(11)
Classification |
Cut-off Grade Gold (g/t) |
Quantity (‘000 tonnes) |
Gold Grade(g/t) |
Contained Gold (‘000 oz) |
Measured |
2.30 |
- |
- |
- |
Indicated |
2.30 |
1,149 |
4.25 |
157 |
Total Measured & Indicated |
2.30 |
1,149 |
4.25 |
157 |
Inferred |
2.30 |
693 |
3.41 |
76 |
Notes:
- This press release includes
non-GAAP financial measures, such as Average Cash Costs per oz and
Average All-in Sustaining Costs (AISC) per oz. In the gold mining
industry, these are common performance measures but do not have any
standardized meaning under U.S. GAAP and are considered non-GAAP
measures. We use these measures in evaluating our business and
believe that certain investors use such non-GAAP measures to
evaluate our performance and ability to generate cash flow.
Accordingly, they are intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. There are
limitations associated with the use of such non-GAAP measures.
- All amounts are in U.S. Dollars
(USD) unless otherwise indicated. PEA assumes a CDN:USD exchange
rate of 1.22. "oz" means Troy ounce(s) of gold (Au).
- NPV5% is discounted to Dec 31, 2021
for Case A.
- After-tax cash flow incorporates
available tax credits as at Dec 31, 2021. Tax credits may expire if
not used by a specific time.
- Gold production and cash flow from
Case B is not additive to Case A (Case B is a subset of Case
A).
- NPV5% is discounted to Dec 31, 2022
for Case B.
- Funding is assumed to be needed
during the year prior to the year in which it is spent.
- Mineral Resources are reported
above an economic cut-off grade of 2.35 g/t gold assuming
underground extraction methods and based on a mining cost of
C$80/t, process cost of C$24.34/t, G&A cost of C$10.50/t,
haulage cost of C$4.70/t, refining cost of C$1.82/oz, metallurgical
recovery of 87%, royalty buyout of C$1.21/t, dilution of 15%, and
realized gold price of US$1,632/oz (after Sandstorm Stream).
- Mineral Resources are reported
above an economic cut-off grade of 2.30 g/t gold assuming
underground extraction methods and based on a mining cost of
C$80/t, process cost of C$24.34/t, G&A cost of C$10.50/t,
haulage cost of C$5.64/t, refining cost of
C$1.82/oz, metallurgical recovery of 85%, royalty NSR of
2.65%, dilution of 15%, and gold price of US$1,725/oz.
- Mineral Resources are reported
above an economic cut-off grade of 1.95 g/t gold assuming
underground extraction methods and based on a mining cost of
C$80/t, process cost of C$24.34/t, G&A cost of C$10.50/t,
refining cost of C$1.82/oz, metallurgical recovery of
94%, dilution of 15%, and gold price of US$1,725/oz.
-
Mineral Resources are reported above an economic cut-off grade of
2.30 g/t gold assuming underground extraction methods and based on
a mining cost of C$90/t, process cost of C$24.55/t, G&A cost of
C$10.50/t, haulage cost of C$6.64/t, metallurgical recovery of 88%,
10% Net Profits Interest (NPI) royalty, dilution of 10% and gold
price of US$1,725/oz.
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, 2021.
CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE
ESTIMATION
The Fox PEA and related resource estimates
contained in this release have been prepared 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
permitted in reports filed with the SEC under Industry Guide 7
("Guide 7") or under SEC S-K 1300 (defined below).
Under NI 43-101, we report Measured,
Indicated and Inferred resources, which are measurements that are
generally not permitted in filings made with the SEC under Guide 7.
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, under
Guide 7, the SEC only permits issuers to report "mineralized
material" in tonnage and average grade without reference to
contained ounces. Under Guide 7, 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 43-101, and to comply with applicable disclosure
requirements.
The SEC has adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for
issuers engaged in the mining industry and which are required to
file reports with the SEC under the Securities Exchange Act of 1934
(“Exchange Act”). These amendments became effective February 25,
2019 (“SEC S-K 1300”) and, commencing for registrants with their
first fiscal year beginning on or after January 1, 2021, SEC S-K
1300 replaces the historical property disclosure requirements
included in SEC Industry Guide 7. SEC S-K 1300 includes the
adoption of terms describing mineral reserves and mineral resources
that are “substantially similar” to the corresponding terms under
the CIM Definition Standards. As a result of the adoption of SEC
S-K 1300, the SEC now recognizes estimates of “measured mineral
resources”, “indicated mineral resources” and “inferred mineral
resources”. In addition, the SEC has amended its definitions of
“proven mineral reserves” and “probable mineral reserves” to be
“substantially similar” to the corresponding CIM Definitions. U.S.
investors are cautioned that while the above terms are
“substantially similar” to CIM Definitions, there are differences
in the definitions under SEC S-K 1300 and the CIM Definition
Standards. Accordingly, there is no assurance any mineral reserves
or mineral resources that the Company may report as “proven mineral
reserves”, “probable mineral reserves”, “measured mineral
resources”, “indicated mineral resources” and “inferred mineral
resources” under NI 43-101 would be the same had the Company
prepared the reserve or resource estimates under the standards
adopted under SEC S-K 1300. U.S. investors are also cautioned that
while the SEC recognizes “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources” under SEC S-K
1300, investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to its existence and feasibility than mineralization
that has been characterized as reserves. Accordingly, investors are
cautioned not to assume that any measured mineral resources,
indicated mineral resources, or inferred mineral resources that the
Company reports are or will be economically or legally mineable.
Under Canadian securities laws, estimates of “inferred mineral
resources” may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. For the above reasons, the mineral
reserve and mineral resource estimates and related information in
this release may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder.
TECHNICAL INFORMATIONThe
technical content of this news release has been reviewed and
approved by Peter Mah, P.Eng., COO of McEwen Mining and a Qualified
Person as defined by NI 43-101.
The technical information in this news release
related to geology and exploration has been prepared under the
supervision of Ken Tylee, P.Geo., McEwen Mining's Exploration
Manager and a Qualified Person as defined by NI 43-101.
The technical information in this news release
related to resource estimates has been prepared under the
supervision of Luke Willis, P.Geo., McEwen Mining's Director of
Resource Modelling and Qualified Person as defined by NI
43-101.
All of the Qualified Persons listed have visited
Fox and reviewed technical information relevant to their experience
and area of responsibility.
CAUTION CONCERNING FORWARD-LOOKING
STATEMENTSThis news release contains certain
forward-looking statements and information, including
"forward-looking information" and "forward-looking statements"
within the meaning of applicable Canadian and United States
securities legislation. The forward-looking statements and
information expressed, as at the date of this news release, include
mineral resource estimates, the results of the PEA, including,
without limitation NPV, IRR, payback period, LoM, production, cash
costs and AISC, cash flows and other financial and operational
metrics, as well as other 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 and/or the Qualified Persons, 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, uncertainties inherent
to preliminary economic assessments, which by their nature are
subject to a number of key assumptions, risks and uncertainties,
the effects of the COVID-19 pandemic, fluctuations in the market
price of precious metals, mining industry risks, 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 estimation 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.
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. 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.com |
Website:
www.mcewenmining.comFacebook:
facebook.com/mcewenminingFacebook:
facebook.com/mcewenrob Twitter:
twitter.com/mcewenminingTwitter:
twitter.com/robmcewenmuxInstagram:
instagram.com/mcewenmining |
150 King Street WestSuite 2800, P.O. Box 24Toronto, ON, CanadaM5H
1J9 |
Photos accompanying this announcement are available
at:https://www.globenewswire.com/NewsRoom/AttachmentNg/626b7c7a-45b8-4b85-bd59-cca803888bd3
https://www.globenewswire.com/NewsRoom/AttachmentNg/c50026ae-47a7-4cbd-b56e-70b880d8a6a6
https://www.globenewswire.com/NewsRoom/AttachmentNg/b670c4ee-fba2-47ed-be8d-b14d3bc2d1ab
McEwen Mining (NYSE:MUX)
Historical Stock Chart
From Apr 2024 to May 2024
McEwen Mining (NYSE:MUX)
Historical Stock Chart
From May 2023 to May 2024