Reports 2015 Second Quarter Operating & Financial Results
Toronto, Aug 6, 2015 AEST (ABN Newswire) - McEwen Mining Inc. (
NYSE:MUX) (TSE:MUX) ("McEwen Mining" or the "Company") is pleased to report our financial and operating results for the three months ended June 30th, 2015(1). The Company had record quarterly production of 39,164 gold equivalent ounces and reported cash flow from operations of approximately $6 million or $0.02 per share. The El Gallo Mine in Mexico was the key performer in the quarter, producing at a cash costs and all-in sustaining costs (AISC) per gold equivalent ounce of $351 and $546, respectively.
As of August 4th, the Company has cash, cash equivalents and precious metals of $32 million.
Operating and Financial Highlights
Production Costs
Total cash costs, all-in sustaining costs (AISC) and all-in costs per gold equivalent ounce sold for Q2 2015 on a consolidated basis were $713, $1,048 and $1,151 per ounce, respectively. Total cash costs and AISC at our El Gallo Mine totaled $351 and $546 per gold equivalent ounce respectively. Total cash costs and AISC at the San José Mine were $933 and $1,215 per gold equivalent ounce, respectively. The year over year decrease in total cash costs per gold equivalent ounce sold is due to higher average gold grade mined and processed at the El Gallo Mine and improved processing efficiencies.
Production
Gold equivalent production in Q2 2015 totaled 39,164 ounces, which includes 21,839 gold equivalent ounces attributable to us from our 49% interest in the San José Mine in Argentina, and 17,325 gold equivalent ounces from the El Gallo Mine in Mexico. Production increased year-over-year due to higher grades and better recoveries at the El Gallo Mine.
Earnings from Operations
Earnings from operations for Q2 2015 were $13.4 million, compared to $6.6 million for Q2 2014. The increase was attributable to an increase in gold and silver sales, resulting from increased production at the El Gallo Mine.
Cash Flow
Net cash flow generated from operations was $6 million or $0.02 per share for Q2 2015, compared to net cash used by operations of $7 million or $0.02 in Q2 2014. The higher cash flow is reflective of an increased number of ounces sold during the quarter. Our El Gallo Mine contributed $37.7 million in gold and silver sales compared to $22.8 million in Q2 2014.
Net Loss
Consolidated net loss was $14.1 million or $0.05 per share for Q2 2015, compared to a net loss of $104.0 million or $0.35 per share for Q2 2014. The net loss was attributable to an impairment of $28.5 million on certain mineral properties in Nevada which we decided to drop. After related deferred income tax recoveries the after-tax impairment was $18.5 million.
Adjusted Net Income
Adjusted net income for Q2 2015, which removes the impact of impairment of mineral properties, foreign exchange fluctuations and income tax recoveries, was $1.8 million or $0.01 per share. This compares to an adjusted net loss of $8.6 million or $0.03 per share in Q2 2014.
Ounces Sold
Gold equivalent ounces sold in Q2 2015 totaled 36,016 ounces, which includes 22,439 gold equivalent ounces attributable to us from our 49% interest in the San José Mine, and 13,577 gold equivalent ounces from the El Gallo Mine.
Average Realized Prices
The average realized price of gold and silver sold during Q2 was $1,172 and $15.34 per ounce respectively.
Production and Cost Guidance
We maintain our 2015 production guidance of 96,500 gold ounces and 3.1 million silver ounces, at a cash cost and AISC of $725 and $1,125 per gold equivalent ounce, respectively.
Treasury
We ended the quarter with $28.9 million in cash, cash equivalents, and precious metals; and a $5.8 million outstanding debt against our Mexican IVA (local VAT tax) receivable, which is drawn in Mexican Pesos. This short term debt will be retired in due course as and when we receive our IVA refunds during the year.
Distribution
As a result of improving operational performance and growing cash reserves, the Company started an annual distribution to shareholders of $0.01 per share. The distribution will be paid on a semi-annual basis, with the first installment of $0.005 payable on August 17th, 2015 to shareholders of record on July 31st, 2015. Our distribution is generally not taxable for residents of the United States and Canada because it is considered a return of capital. You are advised to speak to a financial professional should you have any questions or concerns about taxation.
El Gallo Mine, Mexico (100%)
The El Gallo Mine continues to outperform, having exceeded guidance in Q1 by 17% and Q2 by 15% as a result of higher grades and improved process efficiencies. Production in Q3 has so far been above expectations.
Our budget for sustaining capital and capital expenditures for 2015 is $3.2 million, including an estimated $1.4 million to be spent in the expansion of our leach pads, and $1.3 million for other operational improvement projects. In the six months ended June 30th, 2015 we spent $0.4 million on capital expenditures.
The 2015 exploration budget for Mexico is $4.7 million. In the six months ended June 30th, 2015 approximately $2.9 million was spent on exploration.
San José Mine, Argentina (49%)
Production in the quarter was 21,839 gold equivalent ounces, compared to 20,576 gold equivalent ounces in Q2 2014. Total cash costs in Q2 was $933 per gold equivalent ounce compared to $938 in Q2 2014. Costs have remained level during the past year despite difficult economic conditions in Argentine, which is a result of prudent management by our partner. 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 cash costs of $825 and AISC of $1,225 per gold equivalent ounce.
During Q2 2015, McEwen Mining received $0.5 million in dividends from its 49% interest in the San José Mine.
Gold Bar Development Project, Nevada, U.S. (100%)
We continue to advance the Gold Bar permitting process for construction and production of the open-pit heap leach project. Final permit approval is expected in the second half of 2016.
A drill program consisting of 38 in-fill holes was completed during the quarter at cost of $0.5 million. The focus of the program was to increase the mineral resource confidence by converting inferred gold ounces to the measured and indicated categories. In addition to upgrading our confidence, several holes returned significant results including 4.65 gpt gold over 41.1m and 2.2 gpt gold over 52m. An updated resource estimate and feasibility study which will incorporate the results of the drill program is scheduled to be released in the third quarter.
Major optimizations considered in the new feasibility study will include: 1) a new resource estimate, 2) a revised mine plan that reduces pre-development capital and accesses ore earlier, 3) removal of 2-stage crushing in favor of a run-of-mine heap leach, 4) electrical power alternatives, and 5) an owner operated vs. contractor trade off analysis.
El Gallo 2 Development Project, Mexico (100%)
Work to update the feasibility study for El Gallo 2 is ongoing, however, due to the recent decline in the silver price more capital cost savings and processing improvements are necessary. The scope of the changes currently being considered will require additional work on certain aspects of the project, and will delay the release of a new feasibility study into 2016. Efforts to optimize the metallurgical recoveries have so far been successful, with both higher and more rapid silver recoveries demonstrated in lab tests.
Los Azules Project, Argentina (100%)
For 2015, we have budgeted $0.7 million for Los Azules. While no significant exploration work or drilling program is expected, we will continue to advance the project with baseline environmental studies. For the three and six months ended June 30th, 2015, expenditures on the Los Azules project totaled $0.2 million and $0.3 million respectively.
The Company's intention is to monetize Los Azules and to use proceeds to advance its development projects.
Q2 2015 Conference Call Details
McEwen Mining will be hosting a conference call to discuss the Q2 2015 results
and project developments on:
Thursday, Aug 6, 2015 11:00 am EDT
WEBCAST:
http://www.gowebcasting.com/lobby/6835a
TELEPHONE:
Participant Dial-in numbers: (734) 385-2616 (Local and International) / (866) 393-4306 (North America)
Conference ID: 3277603
REPLAY:
Dial-in numbers: (404) 537-3406 (International) / (855) 859-2056 (North America)
Conference ID: 3277603
06/08/2015 14:00 EDT - 08/13/2015 23:59 EDT
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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