TORONTO, Feb. 29, 2024 (GLOBE NEWSWIRE) — McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) today reported its fourth quarter (“Q4”) and full year 2023 financial and operational results. Net income for the year was $54.7 million or $1.15 per share versus a 2022 net loss of $81.1 million or $1.71 per share! Gold production at the Fox Complex and Gold Bar mine came in just above the low end of guidance and San José just below guidance. However, cash costs(1) and AISC(1) per ounce remain 12-18% higher than guided and need more attention.
Growth Plans for 2024
“Our biggest single asset with the greatest near-term potential to increase our share value is our 48% owned subsidiary McEwen Copper. Its 2nd and 3rd largest shareholders are global giants, Rio Tinto and Stellantis, the world’s 2nd largest mining company and the world’s 4th largest automaker, owning 14.5% and 19.4% of McEwen Copper, respectively. McEwen Copper is driving hard, with 22 drills operating on site, to complete the necessary work to deliver a bankable Feasibility Study in Q1 2025.
“Compared to conventional copper mines, Los Azules is designed with a much lighter impact on the environment, initially emitting one third (1/3) of the CO2-e emissions and progressing to net-zero carbon by 2038, utilizing one quarter (1/4) the water, powered by 100% renewable electricity, and producing sustainable copper cathode.
“At our Canadian and Mexican mines we are advancing two important development projects. At the Fox Complex, the construction of the underground ramp access to the Stock orebodies will start in Q1. The Stock West deposit will become the primary source of production following the completion of mining at the Froome deposit in 2026. At the Fenix project, construction is expected to start in H2. Both of these projects are designed to extend the mine lives by over 9 years,” said Rob McEwen, Chairman and Chief Owner.
Individual Mine Performance and Growth (see Table 1 and 2)
Fox Complex, Timmins, Canada
Fox performed well in 2023, achieving its annual production guidance. Mill throughput achieved a record average of 1,300 tonnes per day in Q4, the highest since our acquisition in 2017. As a result, mill throughput in Q4 was 36% higher than in Q4 2022. This is an important achievement by our team in Canada, as we aim to continue to increase mining productivity and mill throughput capacity during 2024 in preparation for production from our Stock West project. While we work to develop our ramp access to Stock West in 2024, with completion expected by the end of 2025, we also intend to conduct exploration activities at Stock East and Stock Main. We see operational improvements and cost savings at Stock as compared to Froome due to the close proximity of the Stock Mill (expected savings of $7 per tonne), softer material enabling higher mill throughput, and deposits which are not encumbered by a meaningful royalty or a stream (Froome’s 2023 stream cost estimated at $108 per ounce produced). Exploration activities are also underway with our Grey Fox project where we see significant long-term growth potential. In 2023, cash costs(1) of $1,157 per GEO sold were higher than our annual guidance of $1,020 per GEO sold due to moving to contractor crushing in early 2023, however AISC(1) of $1,351 per GEO sold came in below guidance of $1,465 per GEO sold, as a result of reduced sustaining capital expenditure requirements enabled by the productivity improvements achieved by contractor crushing.
Gold Bar, Nevada, USA
Despite weather conditions in early 2023 that led to flooding and a slowdown of production at Gold Bar, our team ramped up gold production significantly through Q4, as planned, and achieved its annual production guidance. Cash costs(1) of $1,565 per GEO sold and AISC(1) of $1,891 per GEO sold were 12% and 13% higher than annual guidance of $1,400 and $1,680 per GEO sold, respectively, but improved compared to 2022 as a result of mine contractor and crushing crew productivity, as well as the expansion of our heap leach pad, which was completed on time and on budget. Our Q4 unit costs were significantly below annual guidance at cash costs(1) of $1,253 and AISC(1) of $1,467, and we expect similar trends during H1 2024.
San José, Santa Cruz, Argentina(4)
San José had a difficult start to 2023 as seen in our Q1 results. The team at San José was quick to respond by implementing operational changes that resulted in consistent quarterly improvements to production and unit costs. This was achieved through mining and processing more tonnes containing higher average gold and silver grades compared to Q1. As a result, San José achieved annual production of 65,800 GEOs(2) in 2023, slightly under the production guidance range of 66,000 to 74,000 GEOs(2). Annual cash costs(1) of $1,413 per GEO sold and AISC(1) of $1,840 per GEO sold remained 12% and 18% higher than guidance of $1,250 and $1,550 per GEO sold, respectively, as a result of lower than expected metal grades. By Q4, cash costs(1) of $1,228 per GEO sold and AISC(1) of $1,573 per GEO sold were achieved, which was in line with annual guidance. With the investment in improving the mine plan in mid-2023 and recent exploration results indicating better than expected grades on portions of 2024 production targets, we expect operations to continue to improve. Early 2024 production and financial results have exceeded expectations to date.
Table 1: Comparative production and cost per oz results for Q4 and full year 2023 and 2022, and 2023 guidance:
Q4
Full year
Full Year 2023
Guidance Range
2022
2023
2022
2023
Consolidated Production
Gold (oz)
28,970
42,400
102,680
128,650
123,000-139,000
Silver (oz)
702,000
635,650
2,598,230
2,166,850
2,300,000-2,600,000
GEOs(2)
37,280
49,850
133,300
154,600
150,000-170,000
Gold Bar Mine, Nevada
GEOs(2)
7,940
19,800
26,620
43,700
42,000-48,000
Cash Costs/GEO(1)
1,083
1,345
1,622
1,565
$1,400
AISC/GEO(1)
1,395
1,506
1,989
1,891
$1,680
Fox Complex, Canada
GEOs(2)
9,870
10,200
36,650
44,450
42,000-48,000
Cash Costs/GEO(1)
1,137
1,253
1,020
1,157
$1,000
AISC/GEO(1)
1,606
1,467
1,465
1,351
$1,320
San José Mine, Argentina (49%)(4)
Gold production (oz)
11,170
11,700
38,610
39,700
39,000-43,000
Silver production (oz)
700,850
635,650
2,593,300
2,166,850
2,300,000-2,600,000
GEOs(2)
19,420
19,150
69,130
65,650
66,000-74,000
Cash Costs/GEO(1)
$1,321
$1,228
$1,306
$1,413
$1,250
AISC/GEO(1)
$1,701
$1,573
$1,714
$1,840
$1,550
Table 2: 2024 Production & Costs per GEO Guidance
2024
Guidance
100% Owned Mines (Gold Bar and Fox)
GEOs(2)
80,000-85,000
Cash Costs/GEO(1)
$1,350-1,450
AISC/GEO(1)
$1,550-1,650
Gold Bar Mine, Nevada
GEOs(2)
40,000-43,000
Cash Costs/GEO(1)
$1,450-1,550
AISC/GEO(1)
$1,650-1,750
Fox Complex, Canada
GEOs(2)
40,000-42,000
Cash Costs/GEO(1)
$1,225-1,325
AISC/GEO(1)
$1,450-1,550
San José Mine, Argentina (49%)
GEOs(2)
50,000-60,000
Cash Costs/GEO(1)
$1,300-1,500
AISC/GEO(1)
$1,500-1,700
Advances in Q4 2023
McEwen Copper: Financings with Stellantis and Nuton (Rio Tinto) were closed in Q4, raising ARS $42 billion and $10.0 million, respectively, at a value of $26.00 per share, implying a market value of $800 million for McEwen Copper. Concurrently with these transactions, McEwen Mining sold 232,000 common shares of McEwen Copper in return for $6.0 million. After the closing of these transactions, Stellantis and Nuton own 19.4% and 14.5%, respectively, of McEwen Copper, while the Company’s ownership decreased to 47.7%.
Safety at all of our operations was excellent with no lost-time incidents.
Gold Bar: During Q4, we achieved new daily, monthly, and quarterly production records as a result of the improvements in mining productivity, the addition of crushing crews and the completion of the heap leach pad expansion.
Fox Complex: We achieved the highest average daily mill throughput on record since acquisition in 2017, reaching 1,300 tonnes per day during Q4, and are currently reviewing improvements in 2024 to mining productivity and processing flowsheets to continue to increase throughput levels.
In December, the Company completed a private placement offering of 1,903,000 flow-through common shares for gross proceeds of $16.1 million (CAD $22.0 million) to be used exclusively to support exploration and development work at the Fox Complex, which includes the development of the Stock ramp.
We continue to invest heavily in exploration and the results have been most encouraging, particularly at Los Azules, where the resource base increased by 27%, and at the Fox Complex, where the results allow us to see the potential for significant increase in mine life at Stock and Grey Fox.
Financial Results
McEwen Mining ceased being the majority owner of McEwen Copper after the October 2023 financing (moving from 51.9% to 47.7% ownership), therefore for the fourth quarter and moving forward the Company’s financial statements no longer consolidates McEwen Copper on a 100% basis, and instead accounts for McEwen Copper as an equity investment. As a result of the deconsolidation of McEwen Copper, we recognized a gain of $224 million and an investment value of $384 million based on the value per share achieved in our October financing.
Notice to reader: Under US GAAP, McEwen Mining consolidates 100% of the accounts of its fully owned and majority owned subsidiaries in its reported financial results. Entities over which we exert significant influence but do not control (such as Minera Santa Cruz S.A. (“MSC”), the operator of the San José mine, and McEwen Copper, the owner of the Los Azules copper project) are presented as equity investments on our balance sheet.
Net income for full year 2023 was $54.7 million, or $1.15 per share, compared to net loss of $81.1 million, or $1.71 per share for full year 2022. Our net income for full year 2023 improved primarily as a result of the $224.0 million accounting gain recognized on the deconsolidation of McEwen Copper. Net income for Q4 was $137.9 million, or $2.88 per share, compared with a net loss of $37.4 million, or $0.79 per share for Q4 2022.
Liquidity and Capital Resources
We reported consolidated cash and cash equivalents of $23.0 million and consolidated working capital of $22.7 million as at December 31, 2023, compared to the respective numbers at December 31, 2022, of $39.8 million and negative $2.5 million. The reported consolidated cash balance at December 31, 2023 does not include cash balances held by McEwen Copper given the deconsolidation recognized in Q4 2023; while our cash and cash equivalents balance of $39.8 million included $38.1 million attributable to McEwen Copper.
During 2023, we decreased our total debt by $25 million or 38% to $40 million and entered into the Third Amended and Restated Credit Agreement effective May 23, 2023.
The Company also holds a portfolio of royalties including a 1.25% net smelter royalty at both our Los Azules and Elder Creek properties, together with other royalties on properties in Nevada, Yukon, Canada and in Santa Cruz, Argentina.
Exploration
Exploration results from the Stock deposits at the Fox Complex were published in a separate press release on February 28th. Highlights include a 31% increase in gold resources compared to 2022. Drilling in the Stock East deposit area returned high grade intersections up to 121.5 grams per tonne (3.91 oz/t) in an orientation that suggests that earlier drilling may have missed other possible high-grade occurrences.
Gold Bar exploration activities are currently focused on discovering near mine resources. Additional drilling targets have been identified at our Pick and Cabin pits to expand upon results from our 2023 drilling.
McEwen Copper
New metallurgical and exploration results from Los Azules were published in news releases dated February 22nd and 26th. Metallurgical highlights include a 76% expected average copper recovery (3.2% higher compared to the 2023 NI 43-101 Preliminary Economic Assessment (“PEA”)) during the 27-year life of mine and 8.3% lower acid consumption, resulting in a potential increase in the project after-tax NPV(8%) of $262 million(3). Exploration highlights included 446 m of 0.76% including 76 m of 0.92% (hole AZ23228MET). Our 2023-2024 drilling season began in October 2023; during Q4 we completed over 74,000 feet (22,627 meters) of drilling out of a full season target of 203,000 feet (62,000 meters). A full complement of 22 drill rigs is operating on site to reach this target.
Confirmatory metallurgical testing and a large drilling campaign to upgrade resources, as well as geotechnical, hydrological, and geohydrological works are well underway to support the delivery of the feasibility study by early 2025.
We own a 47.7% interest in McEwen Copper Inc., which holds a 100% interest in the Los Azules copper project in San Juan, Argentina, and the Elder Creek exploration project in Nevada, USA. The last financings completed by McEwen Copper with Stellantis and Nuton (Rio Tinto) gave the Company a market value of $800 million. This translates to $384 million for McEwen Mining shareholders’ 47.7% ownership.
Management Conference Call
Management will discuss our Q4 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.
Friday
Mar 1, 2024
at 10:00 AM EST
Toll Free (US & Canada):
(888) 210-3454
Toll Free Dial-In Other Countries:
https://events.q4irportal.com/custom/access/2324/
Toll Dial In:
(646) 960-0130
Conference ID Number:
3232920
Event Registration Link:
https://events.q4inc.com/attendee/876515509
An archived replay of the webcast will be available approximately 2 hours following the conclusion of the live event. Access the replay on the Company’s media page at https://www.mcewenmining.com/media.
Notes:
Cash gross profit, cash costs per ounce, all-in sustaining costs (AISC) per ounce, adjusted net income or loss and adjusted net income or loss per share are non-GAAP financial performance measures with no standardized definition under U.S. GAAP. For definition and reconciliation of the non-GAAP measures see “Non-GAAP Financial Measures” section in this press release and the unaudited Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Income below.
‘Gold Equivalent Ounces’ are calculated based on a gold to silver price ratio of 85:1 for Q4 2023, 83:1 for 2023, 85:1 for Q4 2022 and 84:1 for 2022. 2023 and 2024 production guidance is calculated based on 85:1 gold to silver price ratio.
This disclosure should not be taken to modify or update the conclusions of the PEA.
Please refer to the “Reliability of Information Regarding San José” section in this press release.
MCEWEN MINING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31,
(unaudited, in thousands of U.S. dollars, except per share amounts)
2023
2022
2021
Revenue from gold and silver sales
$
166,231
$
110,417
$
136,541
Production costs applicable to sales
(119,230
)
(91,260
)
(119,223
)
Depreciation and depletion
(29,221
)
(19,701
)
(23,798
)
Gross profit (loss)
17,780
(544
)
(6,480
)
OTHER OPERATING EXPENSES:
Advanced projects – Los Azules
(80,038
)
(61,148
)
(5,019
)
Advanced projects – Other
(6,292
)
(5,580
)
(7,420
)
Exploration
(20,167
)
(14,973
)
(22,604
)
General and administrative
(15,449
)
(11,890
)
(11,435
)
Loss from investment in McEwen Copper Inc.
(60,084
)
—
—
Loss (income) from investment in Minera Santa Cruz S.A.(4)
(281
)
2,776
(7,533
)
Depreciation
(1,086
)
(733
)
(339
)
Reclamation and remediation
(2,693
)
(3,345
)
(3,450
)
(186,090
)
(94,893
)
(57,800
)
Operating loss
(168,310
)
(95,437
)
(64,280
)
OTHER INCOME (EXPENSE):
Interest and other finance income (expenses), net
36,918
(7,789
)
(6,200
)
Other (expense) income
(29,925
)
22,938
6,281
Gain on deconsolidation of McEwen Copper Inc.
224,048
—
—
Total other income
231,041
15,149
81
Income (loss) before income and mining taxes
62,731
(80,288
)
(64,199
)
Income and mining tax recovery (expense)
(31,873
)
(5,806
)
7,315
Net income (loss) after income and mining taxes
62,731
(86,094
)
(56,884
)
Net loss attributable to non-controlling interests
23,872
5,019
172
Net income (loss) and comprehensive income (loss) attributable to McEwen shareholders
$
54,730
$
(81,075
)
$
(56,712
)
Net income (loss) per share:
Basic and diluted
$
1.15
$
(1.71
)
$
(1.25
)
Weighted average common shares outstanding (thousands):
Basic and diluted
47,544
47,427
45,490
MCEWEN MINING INC.
CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31,
(unaudited, in thousands of U.S. dollars and shares)
December 31,
December 31,
2023
2022
ASSETS