McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is
pleased to announce the highlights of a positive Feasibility Study
(FS) for its 100%-owned Fenix Project, which is located in the
State of Sinaloa, Mexico.
“The Fenix Feasibilty Study envisions a
9.5-year mine life with an attractive after-tax IRR of 28% using
$1,500/oz gold and $17/oz silver. At current gold and silver
prices, the project’s after-tax IRR almost doubles and the NPV more
than triples versus the base case.
The project will incorporate an
environmentally progressive method of tailings management, using
inpit storage that creates multiple benefits, most importantly a
secure containment of tailings enabling better reclamation
results.
Average annual production is projected
at 26,000(1) oz
gold in Phase 1 and
4,200,000(4)
oz silver equivalent in Phase 2. The critical path
environmental permits are in hand for the first phase of
production. Our next steps will involve detailed engineering,
assessment of procurement options, and the evaluation of financing
alternatives,” said Rob McEwen, Chairman and Chief
Owner.
Fenix FS Highlights
|
|
Base Case(1)$1,500/oz
Gold, $17/oz Silver |
Upside Case$1,900/oz Gold, $25/oz
Silver |
After-Tax IRR |
28% |
55% |
After-Tax NPV (8% discount) |
$32 million |
$98 million |
After-Tax Payback Period |
3.6 years |
2.8 years |
Average After-Tax Cash Flow per Year of Full Production |
$12 million |
$25 million |
|
The FS for project Fenix development involves two phases: |
|
|
|
Phase 1: Years 1 to 6, Gold Production |
|
- Average Annual Gold Production 26,000 oz
Au
- $42 million initial capex
- $1,035 cash cost(2) and $1,042
AISC(3) per oz Au
|
|
|
|
Phase 2: Years 7 to 9.5, Silver
Production |
|
- Average Annual Silver Production 4,200,000 oz
AgEq.(4)
- $24 million incremental capex in Year 6.
- $14.20 cash cost(2) and $14.28
AISC(3) per oz AgEq.(4)
|
Feasibility Study Report
The complete Fenix Project FS NI 43-101
Technical Report will be available on www.sedar.com and
www.mcewenmining.com within 45 days. The FS was prepared by GR
Engineering Services Limited (“GRES”) of Belmont, Western
Australia, in accordance with the requirements of Canadian National
Instrument 43-101 “Standards of Disclosure for Mineral Projects”
(“NI 43-101”) and SEC Industry Guide 7.
Permits
The current operation at El Gallo Gold is a
fully permitted site; permit for the Phase 1 was granted by the
Federal Environmental Authority (SEMARNAT) in September 2019, for
the addition of a mill and leach circuit in the location of the
existing facilities for the reprocessing of the heap leach pad
material. The permit amendment also includes the backfilling of a
previously mined pit with mill tailings, as part of an integrated
concurrent closure plan for the El Gallo Gold Mine.
Further project advancement for Phase 2 is
subject to permit approvals. Phase 2 project permitting will
require authorization to expand the process plant footprint at El
Gallo Gold and the haul road, and to augment the tailings volume to
be deposited at the depleted pit.
The Fenix Project has CONAGUA approval for the
extraction of groundwater and land-use permits for the construction
of wells required for the life of Fenix Project.
Resource Estimates
Estimated resources for the Fenix Project are
comprised only of material within the boundaries of conceptual pit
shells, except for the El Gallo heap leach pad, which is considered
completely available for reprocessing.
For the purposes of mine scheduling, the
contained gold ounces in the Heap Leach Material has been depleted
from the resource model estimate defined by drilling by an amount
of 23 koz Au, to account for the production from heap leach
operations and gold in circuit assessments between the timing of
the resource estimate up until December 2020.
Table 1: Fenix Project Resources
Estimate(5)(6)
Heap Leach Material(7) |
Tonnes |
|
Silver Grade |
|
Silver |
|
Gold Grade |
|
Gold |
|
Potential COG = 0 g/t Au |
Mt |
|
(g/t) |
|
koz |
|
(g/t) |
|
koz |
|
Measured |
8.8 |
|
1.59 |
|
451 |
|
0.59 |
|
167 |
|
Indicated |
1.2 |
|
1.74 |
|
67 |
|
0.60 |
|
23 |
|
Measured and Indicated |
10.0 |
|
1.61 |
|
518 |
|
0.59 |
|
190 |
|
Inferred |
0.1 |
|
1.64 |
|
7 |
|
0.66 |
|
3 |
|
El Gallo Silver |
|
|
|
|
|
|
|
|
|
|
In Optimized Pit Shell |
Tonnes |
|
Silver Grade |
|
Silver |
|
Gold Grade |
|
Gold |
|
Potential COG = 58 g/t Ag |
Mt |
|
(g/t) |
|
koz |
|
(g/t) |
|
koz |
|
Measured |
1.0 |
|
155.38 |
|
4,791 |
|
0.08 |
|
3 |
|
Indicated |
3.5 |
|
126.55 |
|
14,228 |
|
0.13 |
|
15 |
|
Measured and Indicated |
4.5 |
|
132.76 |
|
19,019 |
|
0.12 |
|
18 |
|
Inferred |
0.1 |
|
128.92 |
|
286 |
|
0.14 |
|
0.3 |
|
COMBINED RESOURCES |
|
|
|
|
|
|
|
|
|
|
In Optimized Pit Shells |
Tonnes |
|
Silver Grade |
|
Silver |
|
Gold Grade |
|
Gold |
|
Potential COGs variable |
Mt |
|
(g/t) |
|
koz |
|
(g/t) |
|
koz |
|
Measured |
9.8 |
|
16.68 |
|
5,242 |
|
0.54 |
|
170 |
|
Indicated |
4.7 |
|
94.58 |
|
14,295 |
|
0.25 |
|
38 |
|
Measured and Indicated |
14.5 |
|
41.98 |
|
19,536 |
|
0.45 |
|
208 |
|
Inferred |
0.2 |
|
46.50 |
|
293 |
|
0.48 |
|
3 |
|
Table 2: Fenix Project Reserves
Estimate(8)
Heap Leach Material |
Tonnes |
|
Silver Grade |
|
Silver |
|
Gold Grade |
|
Gold |
|
Mt |
|
(g/t) |
|
koz |
|
(g/t) |
|
koz |
|
Proven |
8.8 |
|
1.59 |
|
451 |
|
0.59 |
|
167 |
|
Probable |
1.3 |
|
1.57 |
|
67 |
|
0.54 |
|
23 |
|
Proven + Probable |
10.1 |
|
1.58 |
|
517 |
|
0.58 |
|
190 |
|
El Gallo Silver |
|
|
|
|
|
|
|
|
|
|
Proven |
0.7 |
|
165.71 |
|
3,708 |
|
0.05 |
|
1 |
|
Probable |
3.7 |
|
126.61 |
|
15,017 |
|
0.13 |
|
16 |
|
Proven + Probable |
4.4 |
|
132.82 |
|
18,725 |
|
0.12 |
|
17 |
|
COMBINED RESERVES |
|
|
|
|
|
|
|
|
|
|
Proven |
9.5 |
|
13.60 |
|
4,159 |
|
0.55 |
|
168 |
|
Probable |
5.0 |
|
93.46 |
|
15,084 |
|
0.24 |
|
39 |
|
Proven + Probable |
14.5 |
|
41.19 |
|
19,243 |
|
0.44 |
|
207 |
|
Table 3: Assumptions for Heap Leach Pad
and El Gallo Silver Pit Optimization Phase 2
(6)(9)
Assumptions for In-Pit Resource Shells |
Deposits |
Values |
Gold Price |
All |
$1,300/oz |
Silver Price |
All |
$16.00/oz |
Mining Cost |
Heap Leach Pad |
$0.53/t |
|
El
Gallo Silver |
$12.06/t |
Processing and G&A |
Heap Leach Pad |
$12.88/t |
|
El Gallo Silver – Oxides |
$26.90/t |
|
El
Gallo Silver– Sulfides |
$25.93/t |
Recovery - Au |
Heap Leach Pad |
85.90% |
|
El
Gallo Silver |
79.40% |
Recovery - Ag |
Heap Leach Pad |
45.0% |
|
El Gallo Silver – Oxides |
82.5% |
|
El
Gallo Silver– Sulfides |
88.1% |
Cut-Off Grade |
Heap Leach Pad |
0 g/t Au |
|
El
Gallo Silver |
58 g/t Ag |
Inter-Ramp Pit Slope Angle |
El Gallo Silver |
45 degrees |
FOOTNOTES (1) The Base Case
utilizes the three-year moving average prices for gold and silver
(approximate value). Estimated 26,000 oz Au per annum production
assumes full production from years 2023 to 2027. Average after-tax
cash flow per annum from full production years 2023 to 2031 is
approximately $12 million per annum. Average after-tax cash flows
per annum for the period from start-up of production to closure
(2022 to 2032) is approximately $8.6 million per annum. These cash
flows assume the use of all eligible tax loss carry forwards from
the El Gallo Gold Mine.(2) Cash cost is calculated by dividing
total life-of-mine production costs, general and administrative
expenses and royalties by total ounces produced.(3) All-in
sustaining costs (AISC) are calculated by dividing the sum of all
cash costs plus sustaining capital and reclamation costs by total
ounces produced.(4) All references to AgEq are based on an 88 Ag oz
to 1 Au oz ratio. For Phase 1 silver accounts for <2% of total
production. For Phase 2 gold accounts for approximately 9% of total
production. Average annual AgEq production is from years 2028 to
2031.(5) Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability. There is no certainty that all or
any part of the Mineral Resources estimated will be converted into
Mineral Reserves. Numbers in the table have been rounded to reflect
the accuracy of the estimate and may not sum due to rounding.(6)
Resources stated as contained within a potentially economically
minable open pit; pit optimization parameters are, USD$1,300/oz Au,
and USD$16.00/oz Ag. In-pit resource estimates have been developed
based on gold and silver recoveries from both historical and recent
testwork programs. Resource estimates are effective as of Oct 31,
2018. Resources are inclusive of reserves.(7) The heap leach pad
spent ore resource number assumes a cut-off grade that permits
processing of the entire pad, whereas blocks within the leach pad
model will be mobilized while mining, which will make them
difficult to segregate; sub-cut-off leach pad material will
inherently have potential acid generating sulfide liabilities if
placed in our waste dumps and so it will be prudent to process the
entire leach pad and place tailings in a previously mined pit at an
overall environmental and economic benefit.(8) The reserves stated
here satisfy the requirements of the CIM Definition Standards, and
the CIM Estimation of Mineral Resources and Mineral Reserves Best
Practice Guidelines of November 2019, and have been converted
only from those portions of the Mineral Resources that are
classified as Measured or Indicated Mineral Resource categories
after having been evaluated with consideration of all known
modifying factors affecting economic viability.(9) Cut-off grades
vary by pit according to economic, recovery and metallurgical
parameters.
The 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."
The technical information in this news release
related to resource and reserve estimates has been reviewed and
approved by Luke Willis, P.Geo., McEwen Mining’s Director of
Resource Modelling and Qualified Person as defined by Canadian
Securities Administrators National Instrument 43-101 "Standards of
Disclosure for Mineral Projects."
CAUTIONARY NOTE TO US INVESTORS
REGARDING RESOURCE ESTIMATIONMcEwen 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
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 focused in the Americas with operating mines
in Nevada, Canada, Mexico and Argentina. It also owns a large
copper deposit in Argentina.
CONTACT INFORMATION: |
|
Investor Relations:(866)-441-0690 Toll
Free(647)-258-0395Mihaela Iancu ext.
320info@mcewenmining.com |
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