McEwen Mining Q1 2014 Financial & Operating Results
TORONTO, ONTARIO--(Marketwired - May 8, 2014) - McEwen Mining
Inc. (NYSE:MUX)(TSX:MUX) - (All Amounts in US Dollars Unless
Otherwise Stated) -
McEwen Mining Inc. is pleased to provide a summary of the
Company's Q1 2014 financial and operating results.
Q1 2014 Highlights
- The Company reported net income of $17.9 million or $0.06 per
share in Q1 2014. Net income includes $24.7 million, or $0.08 per
share, of deferred income tax recoveries due to the decline in the
Argentine peso relative to the U.S dollar. Removing the impact
of this foreign currency gain, adjusted net loss* for the
quarter ended March 31, 2014 was $6.2 million, or $(0.02) per
share.
- Earnings from mining operations* during Q1 totaled
$11.4 million. This is up from $7.0 million in Q1 2013 and $6.5
million in Q4 2013. The increase compared to Q1 2013 is primarily
due to a higher number of ounces sold from the San José mine, as
well as lower costs due to the devaluation of the Argentine
peso.
- Gold equivalent production** totaled 32,146 ounces
(20,062 gold ounces and 725,025 silver ounces). This is 14% higher
than Q1 2013 and 8% lower than Q4 2013. Production was lower than
Q4 2013 due to fewer days in the quarter and traditional ramp-up in
Argentina after year-end holidays.
- The Company is on track to meet full-year production
guidance of 135,000 to 140,000 gold equivalent ounces.
- Total cash costs* and all-in sustaining costs* were
$790 and $1,100 per gold equivalent ounce. Total cash costs were
21% lower than Q1 2013 and 1% lower than Q4 2013. All-in sustaining
costs were 37% lower than Q1 2013 and 6% lower than Q4 2013. Costs
were lower versus the two comparable quarters due to 1) devaluation
of the Argentine peso and 2) less mine site exploration and mine
development.
- El Gallo 1 mine expansion is now complete and
commissioning is underway. The final cost of the expansion was
under budget.
- A new reserve and resource estimate for the San José
mine increased the size of the proven and probable reserve by 12%,
gold grades by 9% and silver grades by 10%, confirming San José as
one of the highest grade precious metal mines in the
America's.
- At March 31, 2014, the Company had $21.5 million in
liquid assets and no debt.
*Adjusted net loss, earnings from mine operations, total cash
costs, all-in sustaining costs, and all-in costs are financial
performance measures with no standardized definition under
generally accepted accounting principles in the United States of
America ("Non-GAAP measure"). See "Cautionary Note Regarding
Non-GAAP Measures" for additional information. |
** Gold equivalent calculated by converting silver into gold
using a 60:1 exchange ratio. In 2013, 52:1 exchange ratio was used
to calculate gold equivalent production and costs. Figures from
2013, including total cash costs, all-in sustaining costs, and
all-in costs on a per gold equivalent ounce basis, have been
adjusted to 60:1 for comparison purposes. |
Financial Highlights
During Q1 2014 McEwen Mining reported net income of $17.9
million $0.06 per share versus a loss of $11.0 million $(0.04) per
share in the comparable period in 2013 and a loss of $11.3 million
$(0.04) per share in Q4 2013. Net income during the quarter
included $7.0 in income on investment in MSC, and a $24.7 million
gain due to the recovery of deferred income taxes relating to the
decline in the Argentine peso relative to the U.S. dollar.
Removing the impact of this foreign currency gain, adjusted net
loss* for the quarter ended March 31, 2014 was $6.2 million, or
$(0.02) per share.
Earnings from mining operations during the quarter totaled $11.4
million versus $7.0 million in Q1 2013 and $6.5 million in Q4 2013.
Earnings from mining operations were up compared to Q1 2013 due to
a higher number of ounces sold from the San José mine, in addition
to lower costs due to the devaluation of the Argentine peso.
At March 31, 2014, McEwen Mining had cash and liquid assets of
$21.5 million, comprised of cash totaling $19.5 million and gold
and silver bullion of $2.0 million. The Company remains debt free.
During Q1, McEwen Mining received $3.9 million in dividends from
Argentina with the majority having been repatriated back to the
Company's head office in Canada. In addition, McEwen Mining is
awaiting payment from the Mexican government for a $13.1 million
tax refund.
Major expenditures in Q1 2014 included $0.9 million for the El
Gallo 1 mine expansion, $1.6 million in development costs for El
Gallo 2, $2.7 million in exploration costs and $3.2 million in
general and administrative expenses.
San José Mine, Argentina (49%)
Production for McEwen Mining's share in the San José mine during
Q1 2014 was 22,781 gold equivalent ounces (converting silver into
gold using a 60:1 ratio), consisting of 10,767 gold ounces and
720,830 silver ounces. This was 6% higher than the comparable
period in 2013 and 16% lower than Q4 2013. Production was lower
than Q4 2013 due to fewer days in the quarter and ramp-up after
year-end holidays. Historically Q1 is the lowest production quarter
at the mine.
Gold equivalent total cash costs in Q1 2014 equaled $816 per
ounce. This is 29% lower than Q1 2013 and 1% higher than Q4 2013.
Cash costs fell versus Q1 2013 mainly due to the devaluation of the
Argentine peso and the cash flow optimization program implemented
by at the mine. Production costs in Q1 2013 were also affected by a
10-day production stoppage at the mine. There was no similar
stoppage in the same period in 2014.
All-in sustaining costs totaled $992 per gold equivalent ounce
and was 39% lower than Q1 2013 and 10% lower than Q4 2013. The
decrease in all-in sustaining costs are due to the change in total
cash costs noted above and fluctuations in exploration,
pre-development, capital expenditures and ounces sold during the
quarter. The average realized prices for gold and silver during Q1
2014 were $1,337 oz. and $20.15/oz., respectively.
Production guidance for San José in 2014 remains 97,500 gold
equivalent ounces. Cash costs and all-in sustaining costs are
estimated at $750 and $1,100 per gold equivalent ounce in 2014.
An updated reserve and resource estimate for the San José mine
was published during Q1. Proven and probable gold and silver
reserves increased by 12%, to 409,400 ounces gold and 30.1 million
ounces silver, contained in 1.8 million tonnes and gold grades
increased by 9% to 7.03 gpt and silver grades increased by 10% to
515 gpt. Measured and Indicated gold and silver resources increased
by 6% and 7% respectively, with 1.05 million ounces gold and 72.8
million ounces silver, contained in 4.4 million tonnes and gold and
silver grades increased by 6% to 7.45 gpt gold and 515 gpt silver.
Inferred gold and silver resources were down by 13% and 16%
respectively from 2012 with 430,500 ounces gold and 27.1 million
ounces silver, contained in 1.9 million tonnes and gold grades
decreased by 2% to 7.23 gpt and silver grades decreased by 4% to
455 gpt.
San José Mine Production Results
San José - 100%* |
Q1 2014 |
Q4 2013 |
Q1 2013 |
Full-Year 2013 |
Ore production (tonnes processed) |
134,589 |
156,150 |
108,379 |
536,937 |
Average grade gold (gpt) |
5.77 |
6.03 |
6.87 |
6.42 |
Average head silver (gpt) |
391 |
399 |
459 |
425 |
Average gold recovery (%) |
88.1 |
87.6 |
88.1 |
89.2 |
Average silver recovery (%) |
86.9 |
87.0 |
84.4 |
86.7 |
Gold produced (ounces) |
21,974 |
26,529 |
21,078 |
98,827 |
Silver produced (ounces) |
1,471,081 |
1,741,275 |
1,350,847 |
6,356,801 |
Gold sold (ounces) |
22,298 |
25,254 |
12,817 |
94,758 |
Silver sold (ounces) |
1,492,687 |
1,742,030 |
889,078 |
6,277,837 |
Co-product total cash cost Au (US$/oz) |
872 |
832 |
1,089 |
876 |
Co-product total cash cost Ag (US$/oz) |
12.75 |
13.15 |
19.82 |
13.71 |
Gold equivalent total cash cost (US$/oz) |
816 |
809 |
1,142 |
848 |
Co-product all-in sustaining cash cost Au (US$/oz) |
1,060 |
1,129 |
1,550 |
1,182 |
Co-product all-in sustaining cash cost Ag (US$/oz) |
15.51 |
17.84 |
28.21 |
18.49 |
Gold equivalent co-product all-in sustaining cash cost
(US$/oz) |
992 |
1,098 |
1,626 |
1,144 |
|
|
|
|
|
McEwen Mining - 49% Share |
|
|
|
|
Gold produced (ounces) |
10,767 |
12,999 |
10,328 |
48,425 |
Silver produced (ounces) |
720,830 |
853,225 |
661,915 |
3,114,833 |
Gold equivalent produced (ounces) |
22,781 |
27,219 |
21,360 |
100,338 |
* McEwen Mining holds a 49% attributable interest in the San
José mine. |
El Gallo 1 Mine, Mexico (100%)
In Q1 2014 the El Gallo 1 mine set a production record,
producing 9,365 gold equivalent ounces, consisting of 9,295 gold
ounces and 4,195 silver ounces. This was 38% higher than Q1 2013
and 21% higher than Q4 2013. The increased production is the result
of more tonnes being processed versus the comparable quarters.
Total cash costs in Q1 2014 equaled $720 per gold equivalent
ounce, 7% lower than Q1 2013 and 6% lower than Q4 2013. All-in
sustaining costs totaled $1,046 per gold equivalent ounce in Q1
2014, which was 27% lower than Q1 2013 and 3% lower than Q4 2013.
The average realized prices for gold and silver during Q1 2014 were
$1,296/oz. and $20.26/oz., respectively.
In 2014, El Gallo 1 is forecasted to produce 37,500 gold
equivalent ounces (converting silver into gold using a 60:1 ratio).
Total cash costs and all-in sustaining costs have been estimated at
$750 and $1,100 per gold equivalent ounce.
The El Gallo 1 expansion from 3,000 to 4,500 tonnes per day is
now complete. The expansion was completed ahead of schedule. The
increased capacity, combined with higher grades as mining moves
deeper in the pit, is expected to increase production from 37,500
gold equivalent ounces in 2014, to 75,000 gold equivalent ounces in
2015. Cash costs and all-in sustaining costs are forecasted to fall
from $750 to $575 per gold equivalent ounce and $1,100 to $850 per
gold equivalent ounce in 2015 respectively.
El Gallo 1 Mine
Production Results
|
Q1 2014 |
Q4 2013 |
Q1 2013 |
Full-Year 2013 |
Ore production (tonnes processed) |
359,402 |
323,863 |
295,173 |
1,255,314 |
Average grade gold (gpt) |
1.16 |
1.17 |
1.10 |
1.22 |
Gold produced (ounces) |
9,295 |
7,687 |
6,673 |
30,733 |
Silver produced (ounces) |
4,195 |
3,786 |
5,640 |
20,635 |
Gold equivalent produced (ounces) |
9,365 |
7,750 |
6,767 |
31,077 |
Gold sold (ounces) |
8,563 |
7,980 |
8,085 |
32,705 |
Silver sold (ounces) |
1,600 |
5,500 |
7,800 |
22,700 |
Gold equivalent total cash cost (US$) |
720 |
766 |
772 |
750 |
Gold equivalent co-product all-in sustaining cash cost (US$) |
1,046 |
1,073 |
1,432 |
1,166 |
* Gold recoveries are projected to reach 70% through on-going
leaching. |
El Gallo 2, Mexico (100%)
On January 21, 2014, the Company announced that the Secretariat
of Environment and Natural Resources (SEMARNAT) for the State of
Sinaloa, Mexico had approved McEwen Mining's Change of Land Use
permit for El Gallo 2. El Gallo 2 is projected to produce an
average of 95,000 gold equivalent ounces per year (5.2 million
ounces of silver and 6,100 ounces of gold) at an approximate cash
cost of $750 per gold equivalent ounce (including all pre-strip and
Mexican royalties). All-in sustaining costs have been estimated at
approximately $800 per gold equivalent ounce (including an
estimated $5 million per year on exploration). Gold equivalent
ounces have been calculated by converting silver into gold using a
60:1 exchange ratio.
The Company has made a decision to defer the construction of El
Gallo 2 due to low silver prices. The Company believes silver
prices would have to be closer to $25 per ounce before the rate of
return would be high enough to move forward with construction. In
order to prepare for a possible construction decision later this
year, the Company has been evaluating possible debt financing
alternatives while advancing the construction of the ball mill,
which is the longest lead time item associated with the project.
The ball mill is 60% complete and expected to be delivered in Q3
2014.
The feasibility study for El Gallo 2 (September 2012) has been
reviewed and we have identified opportunities to reduce estimated
capital expenditures by approximately $20 million. The savings are
expected in the following areas: 1) reduction in leach tanks, 2)
smaller process plant / refinery, 3) modular crushers, and 4)
reduction in transformers. These changes are expected to have
minimal impact on annual production. To date $10 million of the
final construction cost has been spent. Provided the Company
realizes on these projected savings and factoring in the funds that
have been spent to date, approximately $150 million would be
required in order to complete the mine.
Gold Bar Project, Nevada (100%)
McEwen Mining continues to advance the Gold Bar permitting
process for construction and production. Gold Bar is forecasted to
produce 50,000 ounces gold per year for 8 years at a cash cost of
$700 per ounce and an all-in sustaining cost of $850 per ounce.
McEwen Mining submitted the Plan of Operations permit application
during the fourth quarter of 2013, and received a completeness
determination from the Bureau of Land Management in April 2014. A
subsequent determination of the level of National Environmental
Policy Act and commencement will occur after review and approval of
baseline documents for the associated land actions. This is
expected in May. McEwen Mining is hopeful to receive approval for
mine construction by the end of Q2 2015.
Nevada Exploration Activities
In Q1 2014, McEwen Mining entered into a joint venture with
partner, Kinetic Gold for their South Roberts Project. The property
is located in the Cortez trend 10 miles (16 km) south-east of the
Gold Bar deposit. Recent and historical geochemical and geophysical
work has identified a number of untested near surface targets.
McEwen Mining was granted the right to earn a 70% interest over
four years by spending a minimum of $4 million in exploration and
development expenditures. The $4 million spending requirement must
include a minimum drilling of 15,000 ft. (4,500m).
McEwen Mining will be the operator of the exploration program.
The program will consist of five drill holes totaling 7,500 ft.
(2,300m) during 2014.
Q1 2014 Conference Call Details
McEwen Mining will be hosting a conference call to discuss the
Q1 2014, results and project developments on Thursday May 8, 2014
11 am EDT.
WEBCAST: |
http://www.gowebcasting.com/lobby/5535 |
|
TELEPHONE: |
Participant dial-in number(s): 416-340-9432 / 800-446-4472 |
|
REPLAY: |
Dial-in
number(s): 905-694-9451 / 800-408-3053 |
Pass
code: 5528197 |
ABOUT MCEWEN MINING (www.mcewenmining.com)
The goal of McEwen Mining is to qualify for the S&P 500 by
creating a high growth gold/silver producer focused in the
Americas. McEwen Mining's principal assets consist of the San José
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, USA, and the Los Azules copper project in San Juan,
Argentina.
As of May 8, 2014 McEwen Mining has an aggregate of 297,159,359
shares of common stock outstanding and issuable upon the exchange
of the exchangeable shares. Rob McEwen, Chairman 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 "Resource Estimate for the El Gallo
Complex, Sinaloa State, Mexico" dated August 30, 2013 with an
effective date of June 30, 2013, prepared by John Read, C.P.G., and
Luke Willis, P. Geo. Mr. Read and Mr. Willis are not considered
independent of the Company 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 expansion to El
Gallo 1 has not and may not be explored, developed or analyzed in
sufficient detail to complete an independent feasibility or
pre-feasibility study. Further, although the subject of a 2012
feasibility study, the Company does not have a current feasibility
study on the El Gallo 2 project. As such, each of the foregoing 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 JOSÉ MINE
Minera 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.
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.
(1) Total Cash Costs and All-in Sustaining
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 doré 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. We use and report these measures to
provide additional information regarding operational efficiencies
both on a consolidated and an individual mine basis, and believe
these measures provide investors and analysts with useful
information about our underlying costs of operations. 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
March 31, 2014.
(2) Adjusted net income (loss)
Adjusted net income (loss) excludes the following items from net
income (loss): impairment charges, net of tax; foreign currency
gains and losses, including the impact of the devaluation Argentine
peso relative to the U.S. dollar; other non-recurring items, if
applicable. We use and report this measure because we believe it
provides investors and analysts with a useful measure of the
underlying operating performance of our core mining business. 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
March 31, 2014.
(3) Earnings from mining operations
Earnings from mining operations consists of gold and silver
revenues from our El Gallo 1 mine and our 49% attributable share
from the San José mine, and deducts Production Costs Applicable to
Sales. It also includes depreciation and amortization expense
incurred at the mining operations, but does not include
amortization expense related to the fair value increments on
historical business acquisitions (fair value paid in excess of the
carrying value of the underlying assets and liabilities assumed on
the date of acquisition). We use and report this measure because we
believe it provides investors and analysts with a useful measure of
the underlying earnings from our mining operations. 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
March 31, 2014.
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, 2013 and
Quarterly Report on Form 10-A for the quarter ended March 31, 2014
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.
Mailing Address |
150 King Street West |
Suite 2800,P.O. Box 24 |
Toronto, Ontario, Canada |
M5H 1J9 |
McEwen Mining Inc.Sheena ScotlandDirector, Investor
Relations(647) 258-0395 ext 410 or Toll Free: (866) 441-0690(647)
258-0408info@mcewenmining.comwww.mcewenmining.comFacebook:
www.facebook.com/mcewenrobTwitter: www.twitter.com/mcewenmining
McEwen Mining (TSX:MUX)
Historical Stock Chart
From May 2024 to Jun 2024
McEwen Mining (TSX:MUX)
Historical Stock Chart
From Jun 2023 to Jun 2024