McEwen Mining Inc (MUX)

[JD400]

McEwen Mining: Q3 2021 Results TORONTO, November 3

The following excerpt is from the company's SEC filing.

, 2021

- McEwen Mining Inc. NYSE: $MUX TSX: MUX

today reported its third quarter (\


) results for the period ended September 30
,
2021.

We continue to execute our turnaround strategy

and have made significant progress both from an operational and a financial perspective (see
Tables 1-3
below).

We expect this
trend to continue with the ongoing production ramp-up from the Froome deposit at the Fox Complex.

Our operations delivered production results
in line with our expectations
, and we are on track to meet our 2021 production guidance of
141,000 to 160,400 GEOs
Cas h and liquid assets
and
working capital
at September 30
,
2021 were
$72.7 million
and positive
$45.8 million
,
respectively, including $40 million of cash raised by our McEwen Copper subsidiary to advance the Los Azules project.
Continued to aggressively invest $6.2 million
in exploration and $4 million in advanced projects,
primarily focused on the Fox Complex.
These investments in our future growth and profitability
accounted for a large part of our reported net loss of
$17.4 million,
($0.04)
per share, compared to a net loss of $9.8
million, or ($0.02) per share in Q3 2020.
Commercial production at the Froome deposit
was reached
on September 19
. Froome is the newest production area at the Fox Complex
and
has several advantages compared to Black Fox mine, such as a straighter, shorter, and more efficient underground haulage route, and wider
more consistent mineralization that is amenable to lower-cost bulk mining methods.
Results of the Fox Complex Expansion PEA are
expected by the end of Q4 2021
. The study will incorporate the 2021 exploration and resource definition drilling results and will
highlight the exciting development plans for the Grey Fox and Stock deposits.
Our quarterly webcast will take place on Thursday,
November 4
at 2 pm EDT
. Please see the details further below.
Table 1.
Production and costs
Q3 & Nine Months Ended
September 30
(9M), 2021,
compared to Q3 & 9M 2020.
2021
vs. 2020
Production

(GEOs)
Cash
Costs
($/GEO)
%
Increase (+) or Decrease (-)
Gold
Bar Mine, Nevada
Fox
Complex, Canada
San
José Mine, Argentina
Table 2.
Liquidity on

and December 31
, 2020.
(Millions
of Dollars)
Q3 2021 ended
Sep. 30
Q4 2020 ended

Dec 31
Cash and cash equivalents
Liquid assets
Working capital
Debt principal
Table 3.
Financial results
Q3 & 9M 2021,
compared
to Q3 & 9M 2020.
(Millions of Dollars)
Revenue
Cash gross profit (loss)
Gross profit (loss)
Net loss
(128.8
(Dollars)
Net loss per share
Operations Update
Gold Bar Mine, USA (100% Interest)
Gold Bar
production for Q3 and 9M was
better, respectively, compared to Q3 and 9M 2020. While cash costs
and
all-in sustaining costs (AISC)
for the 9M period dropped by

, respectively, compared to 9M 2020.
12,400
GEOs
were produced in Q3 at total cash costs and AISC of
$1,553
$1,618
per
GEO sold, respectively. This compares to 6,800 GEOs in Q3 2020 at total cash costs and AISC of
$1,585
$1,769
per
GEO, respectively.
was positively impacted by less capital investment in processing
equipment in 2021 versus 2020.
Exploration
is focusing on near-mine targets and further defining oxide resources on the neighboring Tonkin property that could potentially be processed
at Gold Bar. During the quarter, we incurred exploration expenses of $1 million. Encouraging results at the Tonkin Rooster deposit included
drill intercepts up to
1.0 g/t
gold over
57.9 m
and a cyanide solubility
of 74% and
3.2 g/t
gold
over
38.1 m
(including
14.7 g/t
) with an 11% cyanide solubility that occur within a complex structural
framework. An ongoing program of remapping, relogging historic drill holes and producing an updated geologic model by year-end will establish
a basis for continued exploration at the Tonkin Property in 2022.
Fox Complex, Canada
(100% Interest)
Fox production
for Q3 and 9M was
better, respectively, compared to Q3 and 9M 2020. Cash costs and AISC for the 9M period both
dropped by
, compared 9M 2020.
$1,154
$1,423
per
GEO sold, respectively. This compares to 5,800 GEOs in Q3 2020 at total cash costs and AISC of
$1,581
$1,644

per GEO, respectively.
The increase in production and the corresponding decrease in costs
were attributed to improved efficiencies realized from production at the Froome deposit. In September, commercial production was achieved
at Froome, three months ahead of schedule. Mining from Froome is expected to bridge production while the Grey Fox and Stock projects will
be advanced in the production pipeline.
At the Stock property, we see the opportunity
to further expand the Stock West footprint beyond the grade-thickness contours shown below (see
Figure 1
). Of particular interest
is hole S21-202, which returned
4.4 g/t
21.0 m
estimated true width, 200 m above hole S19-95, which returned
27.2
g/t
. These holes are located at the projected intersection of the Stock West shallow eastern plunge and the
historically steep Stock Mine plunge, and they command further drilling in 2022.
Figure 1. Longitudinal section of Stock West
and Stock Mine profiling hole S21-202 intercept
https://mcewenmining.com/files/doc_news/archive/2021/20211103_Fig_1.pdf
We remain focused on our principal exploration
goal of cost-effectively discovering and extending gold deposits adjacent to our existing operations to contribute to near-term gold production
growth. During the quarter, we incurred exploration expenses of
$4.2 million
in relation to this program.
The Preliminary Economic Assessment (PEA) for
the Fox Complex expansion will be released later this quarter. It is based on the Grey Fox, Froome, Stock, and Fuller resources, which
are envisioned to be mined and then processed at an upgraded centralized mill at Stock. The objective of the PEA is to outline a low-cost,
near-term business case that increases production and mine life for the Fox Complex.
San José Mine, Argentina (49% Interest)
attributable
production
for Q3 and 9M was
better, respectively, compared to Q3 and 9M 2020. While cash
costs and AISC for the 9M period dropped by
, respectively, compared 9M 2020.
Attributable production
was
10,800
gold ounces and
790,000
silver ounces, for a total of
21,600
.
For Q3, total cash costs and AISC were
$1,100
$1,466
per GEO sold, respectively.
This
compares to 15,900 GEOs in Q3 2020 at total cash costs and AISC of
$1,269
$1,538
In 2021, we have received $10 million in dividends
from our interest in San José.
Exploration drilling in the mine area at San José
returned encouraging results including:
44.4 g/t
gold in the Betania vein,
1.9 m
14.5 g/t
gold
and
342 g/t
silver in the Jimena vein, and
4.3 m
14.9 g/t
gold and
1,381 g/t
silver in the Amelia vein.
Activity
at McEwen Copper’s Los Azules project is moving ahead quickly. The exploration road has been reopened, three work camp sites have
been established, an expanded local labor force and preparations are underway for starting a 10-drill, 174,000-foot (53,000 m) drilling
program. Drilling will focus on conversion of Inferred mineral resources to the Indicated category, as well as deeper exploration targets,
where drilling ended in strong copper mineralization. Drills are expected to turn towards the end of November and continue through
the end of Q2 2022.
Construction
of the new access road for providing the necessary year-round access to the project is advancing as planned. As part of our ongoing involvement
with local communities and businesses, local contractors are being sourced for the construction.
The contract
for delivery of a pre-feasibility study (PFS) is at the tender stage and work is expected to begin in Q4. Whittle Consulting has been
engaged to assist in identifying opportunities to improve the project that will be investigated during the PFS preparation.
Table 4
Production and cost results for

and comparative results from 2020:
FY 2021
Guidance Range
Total Production
Gold (oz)
32,100
23,100
87,100
68,000
110,500 – 127,900
Silver (oz)
792,000
575,000
1,897,000
1,487,600
2,300,000 – 2,450,000
42,900
30,400
114,200
84,600
141,000 – 160,400
Gold Bar Mine, Nevada
33,900
22,000
37,000 – 45,000
Cash Costs ($/GEO)
(1)(3)
AISC ($/GEO)
20,600
16,300
27,500 – 32,500
San
José Mine, Argentina (49%)
29,700
41,500 – 44,500
571,000
1,889,600
1,481,600
2,300,000 – 2,450,000
56,600
39,700
72,000 – 77,000
Our El Gallo
project produced 560 GEO during the quarter and 2,500 GEO for the 9M 2021, residual heap leaching continues.
Notes:
Gold Equivalent Ounces (GEOs) are calculated based on a gold to silver price ratio of 73:1 for Q3 2021,
68:1 for Q1 and Q2 2021, 94:1 for Q1 2020, 104:1 for Q2 2020, 79:1 for Q3 2020 and 75:1 for full year (FY) 2021 Production Guidance.
Cash gross profit, cash costs per ounce, all-in sustaining costs (AISC) per ounce, and liquid assets are non-GAAP financial performance
measures with no standardized definition under U.S. GAAP. For a description of the non-GAAP measures see "Non-GAAP Financial
Measures" section in this press release; for the reconciliation of the non-GAAP measures to the closest U.S. GAAP measures,
see the Management Discussion and Analysis for the year ended December 31
, 2020 filed on EDGAR and SEDAR.
Cyanide solubility is defined as the ratio of gold grade measured by A) a cyanide shake flask test, and B) conventional fire assay.
A/B*100=Cyanide solubility %
Represents the portion attributable to us from our 49% interest in the San José Mine.
For the SEC Form 10-Q Financial Statements and MD&A refer
to:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
Conference Call and Webcast
Management will discuss our Q3 2021 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.
Thursday, November 4
at 2:00 pm ET
To call into the conference call over the phone, please register
here:
http://www.directeventreg.com/registration/event/9134137
Audience URL:
https://event.on24.com/wcc/r/3404659/E87751D72BA57EBA0875CDA9F344E3D1
The webcast will be archived on McEwen Mining's
website at
https://www.mcewenmining.com/media
following the call.
COVID-19
All our operations have implemented rigorous health
and safety measures to prevent the spread of the COVID-19 virus. Currently, the COVID-19 pandemic is not materially affecting our operations,
or our future strategic plans and objectives.
Reliability of Information Regarding San José
Minera Santa Cruz S.A., the owner of the San José
Mine, is responsible for and has supplied to the Company all reported results from the San José Mine. McEwen Mining's joint venture
partner, a subsidiary of Hochschild Mining plc, and its affiliates other than MSC do not accept responsibility for the use of project
data or the adequacy or accuracy of this release.
Technical Information
The technical
contents of this news release, other than exploration-related disclosure, have been reviewed and approved by G. Peter Mah, P.Eng., COO
of McEwen Mining and a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of
Disclosure for Mineral Projects."
Technical
information pertaining to Stock project exploration contained in this news release has been prepared under the supervision of Ken
Tylee, P.Geo., a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure
for Mineral Projects."
Technical
information pertaining to Gold Bar exploration contained in this news release has been prepared under the supervision of Kevin Kunkel,
P.Geo., a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for
Mineral Projects."
CAUTIONARY NOTE REGARDING
NON-GAAP MEASURES
In this release, we have
provided information prepared or calculated according to United States Generally Accepted Accounting Principles ("U.S. GAAP"),
as well as provided some non-U.S. GAAP ("non-GAAP") performance measures. Because the non-GAAP performance measures do not have
any standardized meaning prescribed by U.S. GAAP, they may not be comparable to similar measures presented by other companies.
Cash Costs and All-in
Sustaining Costs
Cash costs consist of
mining, processing, on-site general and administrative costs, community and permitting costs related to current operations, royalty costs,
refining and treatment charges (for both doré and concentrate products), sales costs, export taxes and operational stripping costs,
and exclude depreciation and amortization. All-in sustaining costs consist of cash costs (as described above), plus accretion of retirement
obligations and amortization of the asset retirement costs related to operating sites, sustaining exploration and development costs, sustaining
capital expenditures, and sustaining lease payments. Both cash costs and all-in sustaining costs are divided by the gold equivalent ounces
sold to determine cash costs and all-in sustaining costs on a per ounce basis. We use and report these measures to provide additional
information regarding operational efficiencies on an individual mine basis, and believe that these measures provide investors and analysts
with useful information about our underlying costs of operations. A reconciliation to production costs applicable to sales, the nearest
U.S. GAAP measure is provided in McEwen Mining's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
Cash Gross Profit
Cash gross profit is a non-GAAP financial measure
and does not have any standardized meaning under GAAP. We use cash gross profit to evaluate our operating performance and ability to generate
cash flow; we disclose cash gross profit as we believe this measure provides valuable assistance to investors and analysts in evaluating
our ability to finance our ongoing business and capital activities. The most directly comparable measure prepared in accordance with GAAP
is gross profit or loss. Cash gross profit is calculated by adding back the depreciation and depletion expense to gross profit or loss.
A reconciliation to gross profit, the nearest U.S. GAAP measure is provided in McEwen Mining's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2021.
The term liquid assets
used in this report is a non-GAAP financial measure. We report this measure to better understand our liquidity in each reporting period.
Liquid assets is calculated as the sum of the Balance Sheet line items of cash and cash equivalents, restricted cash and investments,
plus ounces of doré held in precious metals inventories valued at the London PM Fix spot price at the corresponding period. A reconciliation
to the nearest U.S. GAAP measure is provided in McEwen Mining's Quarterly Report on Form 10-Q for the quarter ended September 30,
2021.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This news
release contains certain forward-looking statements and information, including "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as at the date of this
news release, McEwen Mining Inc.'s (the "Company") estimates, forecasts, projections, expectations or beliefs as to future events
and results. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies,
and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events
could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or
future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include,
but are not limited to, effects of the COVID-19 pandemic, fluctuations in the market price of precious metals, mining industry risks,
political, economic, social and security risks associated with foreign operations, the ability of the corporation to receive or receive
in a timely manner permits or other approvals required in connection with operations, risks associated with the construction of mining
operations and commencement of production and the projected costs thereof, risks related to litigation, the state of the capital markets,
environmental risks and hazards, uncertainty as to calculation of mineral resources and reserves, and other risks. Readers should not
place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. The Company
undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after
the date hereof except as may be required by law. See McEwen Mining's Annual Report on Form 10-K for the fiscal year ended December 31,
2020 and other filings with the Securities and Exchange Commission, under the caption "Risk Factors", for additional information
on risks, uncertainties and other factors relating to the forward-looking statements and information regarding the Company. All forward-looking
statements and information made in this news release are qualified by this cautionary statement.
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 the management of
McEwen Mining Inc.

ABOUT MCEWEN MINING
McEwen Mining is a diversified
gold and silver producer and explorer focused in the Americas with operating mines in Nevada, Canada, Mexico and Argentina.


The above information was disclosed in a filing to the SEC. To see the filing, click here.

https://www.conferencecalltranscripts.com/summary/?id=10066528