TORONTO, Nov. 08, 2023 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports its results for the third quarter (Q3) and nine months ended September 30th, 2023.
Operational and Financial Highlights
Consolidated GEO production in Q3 improved by 8% compared to both Q2/23 and Q3/22. We produced 38,500 GEOs(1) in Q3, and 104,400 GEOs for the nine months ended September 30th. We reiterate our consolidated production guidance is at the lower end of our range of 150,000 to 170,000 GEOs for the year (see Table 1).
We continue to meet safety standards at our 100% owned operations. During Q3, we had no lost-time incidents at our Fox Complex, Gold Bar Mine, and El Gallo operations.
In Q3, our Fox Mine Complex performed well, producing 11,200 ounces (oz) gold and remains on track to meet guidance of 42,000 to 48,000 oz gold for the year. Cash costs(4) and AISC per GEO(4) sold for the Fox Complex were $1,078 and $1,288, respectively . We expect annual cash costs(4) per GEO(4) sold to be 10% above of our 2023 guidance. Figure 1 highlights the turnaround in production at Fox that has occurred since 2021.
In Q3, the Gold Bar Mine produced 9,500 oz of gold, an increase of 20% compared to Q2/23. Production continues to increase quarterly, though delays from extreme weather and labor constraints during 2023 have impacted our annual outlook. We now expect production from Gold Bar to be between 36,500 to 40,000 oz gold. Cash costs(4) and AISC per GEO(4) sold for the Gold Bar mine were $1,529 and $2,160, respectively. AISC was affected by a $4.5 million sustaining capital investment in a heap leach pad expansion, which was substantially completed during the quarter. Additional mining crews and the completion of our heap leach expansion are expected to result in increased production in Q4/23 (see Figure 2), allowing Gold Bar to quickly realize recoveries on material stockpiled during the last quarter. While this should reduce costs per ounce in the fourth quarter, we still expect the average costs for the year to be 10% to 15% higher than our 2023 guidance.
In Q3, the San José Mine produced 17,800 GEOs, an increase of 3% compared to Q2/23 due to a modest improvement in processed tonnes. Our joint venture partner and mine operator, Hochschild Mining, reiterates production guidance of 66,000 to 74,000 GEOs for the year. Cash costs(4) and AISC per GEO(4) sold for San José were $1,445 and $1,953, respectively. We expect costs to remain approximately 15% above 2023 guidance due to additional capital development costs associated with the operator’s revised mine plan.
We continue to advance our exploration program at Los Azules aiming to deliver all information required for the feasibility study. During Q3, we completed planning and preparation work for the 2023-2024 drilling campaign, which has a target of 157,000 feet (48,000 meters) and includes additional exploration, infill, geotech, hydrological and hydrogeological drilling. 14 out of a total of 18 to 20 planned drill rigs are currently operating and we have drilled 19,600 feet (6,000 meters) to date. We invested $18.5 million in our Los Azules copper projectduring Q3 primarily to build a winter camp, further improve our road access, and to construct a logistics facility in San Juan.
Subsequent to the quarter end, McEwen Copper closed financings with Stellantis and Nuton, a Rio Tinto Venture, raising ARS$42 billion (Argentine Pesos) and $10.0 million, respectively, at a price of $26 per share, which implies a market value of $800.0 million for McEwen Copper. As part of these private placements, McEwen Mining received $6.0 million from the sale of 232,000 McEwen Copper common shares. McEwen Copper’s share ownership structure is now: McEwen Mining 47.7%, Stellantis 19.4%, Nuton 14.5%, Rob McEwen 12.9% and 5.5% other shareholders. The implied market value represents a value accretion of $207 million for McEwen Mining (from $175 million to $382 million of implied ownership value), representing a value of $7.48 per fully diluted McEwen Mining share.
Consolidated cash and cash equivalents were $49.1 million (of which $47.5 million is to be used towards advancing the Los Azules copper project) and consolidated working capital $72.3 million as of September 30, 2023. We also reported investments of $40.8 million, which consist of liquid securities held in Argentina to mitigate inflation and devaluation risks.
In Q3, we reported a gross profit of $3.8 million and cash gross profit(4) of $11.9 million from our 100% owned precious metal operations , compared to a gross profit of $1.5 million and cash gross profit(4) of $5.8 million in Q3/22. Higher revenues driven by a 34% increase in GEOs sold and a 10% increase in realized gold prices led to improvements in gross profit and cash gross profit(4). Including our 49% ownership of the San José Mine, we reported a total cash gross profit(4) of $22.3 million compared with a total cash gross profit(4) of $13.8 million in Q3/22.
In Q3, we reported a net loss of $18.5 million, or $0.39 per share, compared to a net loss of $10.5 million, or $0.21 per share in Q3/22. Compared to our gross profit, our net loss was the result of higher year-over-year exploration and advanced project expenditures, including an $18.5 million investment in exploration activities at our Los Azules copper project.
In Q3, we reported an adjusted net loss(4) of $4.2 million compared to an adjusted net income(4) of $6.4 million in Q3/22. Adjusted net loss(4) excludes the expenses of McEwen Copper and our interest in the San José mine, a metric that we believe best represents the results of our 100% owned precious metal operations. Compared to our cash gross profit(4) of $11.9 million, the adjusted net loss(4) includes $6.6 million in exploration and advanced project expenditures at our Fox Complex, Gold Bar mine and Fenix Project operations, $8.5 million in non-cash depreciation, and $3.7 million in general and administrative expenses.
Revenues of $38.4 million were reported from the sale of 20,620 GEOs from our 100% owned operations at an average realized price(4) of $1,920 per GEO . Including our 49% ownership of San José Mine, Q3 revenue would have increased by $31.6 million. This compares to Q3/22 revenues of $26.0 million from the sale of 15,400 GEOs from our 100% owned operations at a realized price of $1,742 per GEO. Including our 49% ownership of San José Mine, Q3/22 revenue would have increased by $32.0 million.
It is important to note that because of the recent McEwen Copper financing, MUX’s ownership in McEwen Copper is below 50%, and we expect to no longer consolidate the financials of McEwen Copper. From Q4/23 onward we expect to begin to account for McEwen Copper as an equity investment . The Company expects to conclude soon on the accounting impacts of our recent financing. The resulting impact on our financials on a go-forward basis, should McEwen Copper be deconsolidated, will be noticeable. Specifically, the carrying value of our investment in McEwen Copper ownership may increase significantly in line with the recent financings, and we expect that our cash and liquid assets and expenses will decline markedly.
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