Q3 2015 Operating and Financial Results
Toronto, Nov 6, 2015 AEST (ABN Newswire) - McEwen Mining Inc. (
NYSE:MUX) (TSE:MUX) is pleased to report record quarterly production of 43,390 gold equivalent ounces(1) and earnings from mining operations of $13.4 million(2)(4) for the three months ended Sept. 30th, 2015. The El Gallo Mine in Mexico was the star performer in the quarter, producing at total cash costs and all-in sustaining costs (AISC) per gold equivalent ounce of $454 and $570, respectively.
Net cash flow generated in the quarter was $8.5 million. At Sept. 30th, the Company had cash, cash equivalents and precious metals of approximately $36 million.
Operating & Financial Highlights
Production Costs
Consolidated total cash costs, all-in sustaining costs (AISC) and all-in costs per gold equivalent ounce sold in Q3 were $674, $914 and $1,008, respectively. At the El Gallo Mine total cash costs and AISC were $454 and $570 per gold equivalent ounce, respectively; and at the San José Mine total cash costs and AISC were $876 and $1,134 per gold equivalent ounce, respectively. The year-over-year decrease in total cash costs per gold equivalent ounce sold is due to a higher average gold grade processed at the El Gallo Mine.
Production
Gold equivalent production has increased year-over-year by 34%. Production in Q3 totaled 43,390 gold equivalent ounces, which includes 23,832 gold equivalent ounces attributable to us from our 49% interest in the San José Mine, and 19,558 gold equivalent ounces from our El Gallo Mine.
Earnings from Operations
Earnings from mining operations for Q3 was $13.4 million or $0.04 per share, compared to a loss of $0.8 million or nil per share for Q3 2014, as a result of increased production at the El Gallo Mine.
Cash Flow
Net cash flow generated was $8.5 million or $0.03 per share for Q3, compared to net cash flow generated of $2.5 million or $0.01 per share in Q3 2014. The key driver was increased sales of gold and silver of $22.5 million from the El Gallo Mine.
Net Income
Consolidated net income was $2.6 million or $0.01 per share for Q3, compared to a net loss of $13.0 million or $0.04 per share for Q3 2014.
Adjusted Net Income
Adjusted net income for Q3, which removes the impact of impairment of mineral properties, foreign exchange fluctuations and income tax recoveries, was $0.3 million or nil per share. This compares to an adjusted net loss of $8.3 million or $0.03 per share in Q3 2014.
Ounces Sold
Q3 sales totaled 41,829 gold equivalent ounces, which includes 21,789 gold equivalent ounces attributable to us from our 49% interest in the San José Mine, and 20,040 gold equivalent ounces from the El Gallo Mine.
Average Realized Prices
The average realized prices of gold and silver sold during Q3 were $1,106 and $14.05 per ounce, respectively.
Production and Cost Guidance
We increased our 2015 production guidance during the quarter to 108,500 gold ounces and 3.12 million silver ounces, or 150,000 gold equivalent ounces, at total cash costs and AISC of $725 and $1,125 per gold equivalent ounce, respectively.
Treasury
We ended Q3 with $36.2 million in cash, cash equivalents, and precious metals; and a $5.2 million outstanding debt against our Mexican IVA (VAT tax) receivable, which is drawn in Mexican Pesos. This short term debt will be retired in due course as we receive our IVA refunds during the year.
Distribution
We paid the first semi-annual return of capital distribution of ½¢ per share on August 17th, 2015, for an aggregate total of $1.5 million.
Stock Repurchase Program
We intend to commence a share repurchase program, under which we may purchase up to a maximum of 15 million shares of our common stock beginning in the days following this news release and ending one year later. Purchases of common stock may be made from time to time in the open market, in compliance with applicable U.S. and Canadian laws. The timing and amounts of any purchase will be based on market conditions and other factors including share price, regulatory requirements and capital availability.
El Gallo Mine, Mexico (100%)
The El Gallo Mine continued to perform very well in Q3, producing 19,558 gold equivalent ounces, compared to 6,814 gold equivalent ounces in Q3 2014. Total cash costs and AISC in Q3 were $454 and $570 per gold equivalent ounce, respectively. Production guidance for 2015 was revised higher in the quarter to 62,200 gold equivalent ounces. For the nine months ended Sept. 30th, 2015 we produced 52,274 gold equivalent ounces at total cash costs and AISC of $429 and $578 per equivalent ounce, respectively.
Our budget for sustaining capital and capital expenditures for 2015 is $3.2 million, including an estimated $1.4 million to be spent on the expansion of our leach pads, and $1.3 million for other operational improvement projects. For the three and nine months ended Sept. 30th, 2015 we spent $0.6 million and $1.0 million on capital expenditures, respectively.
The 2015 exploration budget for Mexico is $4.7 million. In the nine months ended Sept. 30th, 2015 approximately $3.7 million was spent on exploration.
San José Mine, Argentina (49%)
Production at San José in the quarter was 23,832 gold equivalent ounces, compared to 21,304 gold equivalent ounces in Q3 2014. Total cash costs in Q3 was $876 per gold equivalent ounce, this compares to $873 per gold equivalent ounce in Q3 2014. Costs have remained level during the past year despite difficult economic conditions in Argentina, which is a result of prudent management by our partner Hochschild Mining plc.
The San José Mine remains on target to produce 46,500 ounces of gold and 3.1 million ounces of silver in 2015. This equates to 87,800 gold equivalent ounces at total cash costs and AISC of $825 and $1,225 per gold equivalent ounce, respectively.
Gold Bar Development Project, Nevada, U.S. (100%)
Positive results of a new Feasibility Study for the Gold Bar Project were released on Oct. 21, 2015. Key outcomes include: Initial capital cost of $60 million; internal rate of return of 20% at $1,150/oz gold price; average annual gold production of 65,000 oz; estimated average cash costs of $728 per ounce gold. The complete report will be published in early December and will be available on the Company's website.
We continue to advance the permitting process for construction and production at Gold Bar. Formal notice from the Bureau of Land Management states our Record of Decision (ROD) for the Gold Bar Environmental Impact Statement (EIS) is expected in January, 2017. The Company expects that all other applicable State and local permits will also be acquired within this timeframe. Once the ROD and permits are received, the Company can begin mine construction, which is expected to take approximately 10-12 months to complete.
El Gallo 2 Development Project, Mexico (100%)
Work to update the development plans for El Gallo 2 is ongoing. We expect to release a new economic study during Q2 2016. For the three and nine months ended Sept. 30th, 2015, expenditures on the El Gallo 2 project totaled $0.1 millions and $0.4 million respectively.
Los Azules Project, Argentina (100%)
For 2015, we have budgeted $0.7 million for Los Azules. We continue to advance the project with baseline environmental studies and optimization studies. For the three and nine months ended Sept. 30th, 2015, expenditures on the Los Azules project totaled $0.1 million and $0.4 million respectively.
Q3 2015 Conference Call Details
McEwen Mining will be hosting a conference call to discuss the Q3 2015 results
and project developments on:
Friday, Nov 6th, 2015 11:00 am ET
WEBCAST:
http://www.gowebcasting.com/lobby/7092
TELEPHONE:
Participant Dial-in numbers:
(877) 291-4570 (North America) /
(647) 788-4922 (International)
Conference ID: 75196305
REPLAY:
Dial-in numbers:
(800) 585-8367 (North America) /
(416) 621-4642 (International)
Conference ID: 75196305
06/11/2015 14:00 ET - 13/11/2015 23:59 ET
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 Inc
McEwen Mining (NYSE:MUX) (TSE:MUX) has the goal to qualify for inclusion in the S&P 500 Index by creating a profitable gold and silver producer focused in the Americas. McEwen's principal assets consist of: the San José mine in Santa Cruz, Argentina (49% interest); the Black Fox mine in Timmins, Canada; the Fenix Project in Mexico; the Gold Bar mine in Nevada, currently under construction; and the large Los Azules copper project in Argentina, advancing towards development.
McEwen has approximately 345 million shares outstanding. Rob McEwen, Chairman and Chief Owner, owns roughly 23% of the shares.
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