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Overig advies 17/03/2020 07:27
TORONTO, March 16, 2020 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today reported fourth quarter and full year results for the period ended December 31, 2019.
•For the full year 2019, production was 174,420 gold equivalent ounces(1) (GEOs)(see Table 1), compared to 175,640 GEOs in 2018.
•Our three 100% owned mines generated a cash gross profit of $33.7 million(2) in 2019, and a gross profit of $9.0 million. Cash gross profit, is a new non-GAAP measure used for the first time in our Form 10-K, and is intended to evaluate our ability to generate cash flow. Cash gross profit is calculated by adding back depletion and depreciation to gross profit, which is a GAAP measure.
•We received $8.9 million in dividends from our interest in the San José mine in 2019 (49% owned).
•We invested $47.3 million on advanced projects and exploration in 2019, which contributed to our consolidated net loss of $59.7 million, or $0.17 per share.
•We performed 132 miles (213 km) of drilling in 2019, with approximately 90% completed at the Black Fox Complex, and the balance at the Gold Bar Property.
•A review of the Gold Bar reserve estimate is ongoing, and a downward revision of the reserve estimates is anticipated (see the Gold Bar Mine section below for further details).
•The Grey Fox project Indicated resource estimate increased 33% (see Table 2.4).
•Exploration delivered many high-grade drill intersections on extensions of the Black Fox Mine, in the Grey Fox area, and on the Stock Property, where drilling led to the discovery of a new gold mineralized zone at Stock West.
•Our year-end conference call will take place tomorrow, Tuesday, March 17th at 2pm EDT. Details are provided below.

Operations Update

San José Mine, Argentina (49% Interest)

Our attributable production from San José in 2019 was 51,684 gold ounces and 3,354,487 silver ounces, for a total of 91,654 GEOs. Compared to 2018, gold and silver production increased 9% and 11%, respectively, primarily due to approximately 10% higher average metal grades of processed ore. For 2019, total cash costs(2) and all-in sustaining costs (AISC)(2) were $867 and $1,140 per GEO, respectively. During 2019, we received $8.9 million in dividends from our interest in San José, compared to $10.4 million in dividends received during 2018.

Production guidance for 2020 on a 49% basis is 45,700 gold ounces and 3,200,000 silver ounces, for a total of 82,000 GEOs. For 2020, cash costs and AISC are projected to be between $950-$1,000 and $1,200-$1,250 per GEO, respectively.

In addition to exploration drilling at the mine itself, exploration of the San José land package is planned to include a Titan deep penetrating geophysical survey, drilling at the Telken target close to Newmont’s Cerro Negro mine, and an assessment of other regional opportunities in the southern part of the property.

The mineral resource and reserve estimates for the San José mine have been updated (Tables 1.1 and 1.2) to reflect mine depletion and additions from exploration.

Black Fox Mine, Canada (100% Interest)

Production from Black Fox in 2019 was 35,721 GEOs. Compared to 2018, gold production decreased by 27%, due to operational challenges in the year and depleting reserves. For 2019, total cash costs and AISC were $825 and $1,225 per GEO, respectively.

Our exploration activities during 2019 included 489,000 feet (149,000 m) of surface-staged diamond drilling, and 57,000 feet (17,500 m) of underground-based exploration drilling. We invested $25.5 million in 2019 on exploration across the Black Fox Complex, compared to $22.0 million in 2018.

Development of underground access to the Froome ore body, located approximately 3,000 ft (900 m) away from the Black Fox open pit, commenced in December 2019. Mining from Froome is scheduled to begin in Q4 2021, and continue to 2023.

A feasibility study examining the development of the Grey Fox deposit by open pit mining methods is being started, and is expected to be complete in Q4 2020. Additionally, to further expand future production potential, we are considering dewatering the Stock Mine to enable us to drill the Stock West discovery and the depth extension of the mine from underground.

Production guidance for 2020 is 35,000-40,000 GEOs at cash costs and AISC of between $1,000-$1,150 and $1,150-$1,250 per GEO, respectively. Higher cash costs reflect the impact of development and related costs being expensed over the short mine life.

The mineral resource and reserve estimates for the Black Fox mine have been updated (Tables 2.1 to 2.4) to reflect mine depletion, additions from exploration, and the deletion of certain resource blocks that are deemed inaccessible due to prior mining activity. The mineral resource for the Stock East and Grey Fox projects were updated and increased.

Gold Bar Mine, USA (100% Interest)

Gold Bar produced 30,712 GEOs in 2019. The ramp-up to commercial production saw delays that adversely impacted our gold production in the first half of 2019. Gold Bar production increased during Q3, while production in Q4 was impacted by lower throughput at the crushing plant and lower grades as mining transitioned to the Gold Pick West open pit. In 2019, cash costs and AISC were $1,101 and $1,282 per GEO, respectively.

With respect to our operational experience at Gold Bar, the majority of material mined during 2019 was from the Cabin Creek pits, which has reconciled positively to our block model for both gold grade (+18%) and contained gold ounces (+8%), but negatively for ore tons (-8%). The recent transition to mining from the Gold Pick West pit has returned lower ore tons, gold grade and contained ounces from the upper benches as compared to the block model. This appears to be due to greater structural control of the mineralization than was previously expected, but which is now exposed in the newly developed pit. In light of the significant differences recently observed between the modeled (expected) and mined (actual) ore tonnage and gold grade from the Gold Pick West pit, the reserve estimate for the Gold Pick deposit as at December 31, 2018 and the future mine plan is being evaluated.

Remodeling of the Gold Pick deposit is underway by independent engineers and preliminary iterations suggest that a significant reduction in ore tonnage, partially offset by an increase in ore grade, and a resulting significant reduction in contained gold ounces from the 2018 reserve estimate is likely.

The impact on our operations for 2020 is that we expect to place fewer gold ounces than originally planned on the heap leach pad, reducing our planned production for the year.

We will publish the revised mineral reserve estimate as soon as it is completed, and a new mine plan, if necessary, will be implemented thereafter. At this time, we do not have sufficient information to provide accurate 2020 production or cost guidance for Gold Bar.

In 2019, we spent $7.2 million on exploration activities at the Gold Bar Complex, compared to $5.2 million spent in 2018. The mineral resource estimate for the Gold Bar South satellite deposit has been updated (Table 3.1).

We are working to complete the permitting and engineering work required to bring Gold Bar South into the mine plan. Additional drilling is planned over the north and south extensions of the deposit, which remain open.

El Gallo Project, Mexico (100% Interest)

Production from El Gallo in 2019 was 16,333 GEOs from residual leaching of the heap leach pad. Beginning with Q4 2019, we have ceased relying on, and disclosing, cash costs and AISC per GEO as key metrics for El Gallo because those measures include the expensing of accumulated heap leach pad inventory costs, which are not informative when accessing the current economics of residual leaching. We estimate that residual leaching will continue for as long as incremental revenue exceeds incremental costs. During 2019, residual leaching costs were $11.6 million, or $688 per GEO sold.

For 2020, we expect to recover 12,000 GEOs from residual leaching of the heap leach pad.

Table 1 below provides production and cost results for Q4 and the full year 2019, with comparative results from 2018.
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