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Post by Entendance on Jan 18, 2020 7:46:58 GMT -5
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Post by Entendance on Feb 16, 2020 5:27:16 GMT -5
McEwen Mining: More Good News From Grey Fox
South Zone:
13.6 g/t Gold (Au) over 12.2 m
29.1 g/t Au over 4.1 m
4.9 g/t Au over 18.2 m
147NE Zone:
159.3 g/t Au over 1.6 m
14.1 g/t Au over 4.5 m
TORONTO, February 12, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to report new high-grade drill results from Grey Fox, which is part of the Black Fox Complex, located in the prolific Timmins gold district, Canada (see Figure 1).
“Our exploration at Grey Fox has focused on drilling mineralized cross structures that were not previously well understood or drill tested. We have been successful in identifying more of these structures and we believe that they represent a good opportunity to increase the current gold resource of 567 Koz at 7.1 g/t Au. A new resource update for Grey Fox will be published later this month,” said Sylvain Guerard, SVP Exploration.
The Grey Fox Area is comprised of four deposits: 147, 147NE, Contact and South, and two neighbouring targets; Whiskey Jack and Gibson (see Figure 2).
Drill results in this news release highlight the growth potential associated with northwest dipping mineralized structures. During 2019, targeting these structures led to the discovery of the 147NE deposit in the central part of the Grey Fox area. Multiple new intersections such as the extensions of the 147 and South zones strongly suggest the presence of similar important mineralized structures.
South zone drilling targeted structures similar to the 147NE zone. Significant intersections were returned, such as 13.6 g/t Au over 12.2 m, 29.1 g/t Au over 4.1 m, and 4.9 g/t Au over 18.2 m.
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Post by Entendance on Mar 16, 2020 18:20:14 GMT -5
McEwen Mining (NYSE:MUX): Q4 GAAP EPS of -$0.07
Revenue of $32.36M (+22.4% Y/Y)
MCEWEN MINING REPORTS 2019 FULL YEAR AND Q4 RESULTS March 16, 2020
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. Table 2 below provides financial highlights for Q4 and full year 2019, with comparative results from 2018.
Gold Equivalent Ounces' are calculated based on a 75:1 gold to silver price ratio for periods up to and including Q1 2019, 88:1 for Q2 2019, 87:1 for Q3 2019, and 85:1 for Q4 2019. 2020 production and cost guidance is calculated based on 88:1 gold to silver price ratio.
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 definition 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, 2019 filed on Edgar and SEDAR.
Gold Bar started commercial production on May 23, 2019.
Represents the portion attributable to us from our 49% interest in the San José Mine.
Both cash costs and AISC per GEO no longer represent key metrics used by management to evaluate residual leaching at the El Gallo Project. For this reason, the Company has ceased relying on, and disclosing, cash costs and all-in-sustaining costs per ounce as a key metric.
For the SEC Form 10-Q Financial Statements and MD&A refer to: www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000314203
Conference Call and Webcast
We invite you to join our conference call, where management will discuss our 2019 financial results and project developments and follow with a question and answer session. Questions can be asked directly by participants during the webcast. The webcast will be archived on McEwen Mining’s website following the call.
Tuesday,
March 17th, 2020
at 2:00 p.m. EDT Toll Free (US & Canada): 1 (866) 211-4128
Outside US & Canada: 1 (647) 689-6724
Conference ID Number: 3479013
Webcast Link: event.on24.com/wcc/r/2208781/05022E7D0226B7520D1EC5530FCA4A1C |
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Post by Entendance on Mar 18, 2020 3:53:42 GMT -5
Earnings Conference Call March 17, 2020 Company Participant
Rob McEwen - Chairman and Chief Owner
Chris Stewart - President and COO
Meri Verli - Chief Financial Officer
Sylvain Guérard - Senior Vice President, Exploration
Conference Call Participants
Jake Sekelsky - ROTH Capital Partners
Heiko Ihle - H.C. Wainwright
Adam Graf - B. Riley
Bhakti Pavani - Alliance Global Partners
Rob McEwen
For our shareholders, past and present, our management and myself, last year was a terrible year. We all know our share price fell out of the sky and I want to start this call with a very sincere apology to everyone. We gave you guidance throughout the year for our operational performance and we failed miserably. We did not deliver.
By the end of the year, it was impossible to believe any forecasts we provided for operations. This was very unfortunate because considerable success was made on the exploration front at Black Fox. This success was completely overshadowed by the bad news from operations.
I know it’s going to take many quarters of delivering on guidance before we gain your confidence. And I can say that last year was the worst year I have ever experienced in business and I’m sure the experience was very unpleasant for you, and I want to assure you that we’re working hard not to repeat it.
Today, we’re going to provide our perspectives on our 2019 operating, financial and exploration results and talk about what 2020 looks like.
I will now turn the call over to Meri, who will start by providing a high level overview of our financial results.
Meri Verli
Thank you, Rob. Good afternoon, everyone. During 2019, our consolidated production was 174,400 gold equivalent ounces, approximately equal to our production last year and total sales were 175,500 ounces. Our total sales were comprised of 85,100 gold equivalent ounces from our 100% own mine, Black Fox, Gold Bar and El Gallo, and 90,300 ounces were attributable to our 49% interest in the San Jose mine.
2019 revenue from our 100% owned mines totaled $170 million approximately 9% lower than in 2018. If we included the revenue attributable to our 49% interest in San Jose that would have added $129 million. But revenue from San Jose is not included in our income statements because we use the equity method of accounting for this asset.
We have created a new metric that is designed to help you evaluate our operations ability to generate cash flow. It is a non-GAAP measure disclosed in our Form 10-K called cash gross profit. Cash gross profit is calculated by adding back depletion and depreciation to gross profit.
For 2019 cash gross profit from our 100% owned operation was $33.7 million, compared to GAAP gross profit of $9 million. Cash gross profit attributable to our 49% interest in San Jose was $51 million, compared to GAAP gross profit of $16.6 million. However, we do not consolidate San Jose as mentioned earlier. During 2018, we received $8.9 million in dividends from our interest in San Jose.
I’ll now discuss the main components contributing to our net loss in 2019. During the year, we invested $37.7 million in exploration, with 90% spent at the Black Fox Complex and the balance at the Gold Bar in Nevada.
Depreciation and depletion expenses were $24.8 million. We spent $9.5 million on growth project, including spending for advancing the Froome project in Timmins, Ontario. Phoenix project in Mexico, engineering and permit work at the Gold Bar South property in Nevada and pre-production expenditures at the Gold Bar mine.
We included a loss of $8.8 million on our 49% investment in the San Jose joint venture company, bringing the book value of our investment in the joint venture to $110 million. We incurred interest expense of $6.8 million related primarily to our debt and G&A expenses of $12.8 million.
We also realized the gain on the sale of marketable securities of $5.3 million, a gain on the recovery of taxes of $3.8 million and $2 million in other income. In total, our consolidated net loss for 2018 was $59.7 million or $0.17 per share.
Financing activities during 2019 included the issuance of 54.9 million common shares and 29.8 million warrants for gross proceeds of 77 million for an average of $1.4 per share. Share issuances for cash during 2019 resulted in equity dilution of 16% based on shares outstanding at the end of 2018.
At December 31, 2019, liquid assets increased to $49.7 million from $37.8 million at the end of 2018. Working capital increased to $43.2 million from $23.4 million at the end of 2018, debt outstanding remained at $50 million.
Looking ahead to 2020, we expect a significant reduction in our exploration expenses to $110 million, spending on growth projects of approximately $14 million primarily at the Black Fox Complex, debt repayment and interest expense will increase to $14.7 million. We are currently making adjustments to our budgets given the impact in lower than planned production from Gold Bar mine in 2020, but we do not have details yet of these changes.
Chris Stewart
Thank you, Meri. I’ll start by going over the operational highlights for each operation starting with San Jose. Our San Jose joint venture mine in Argentina had a good year in 2019, meeting our guidance for gold and silver production.
For 2020, our share of production from San Jose is expected to be 45,700 ounces of gold and 3.2 million ounces of silver for a total of 82,000 gold equivalent ounces and average gold silver ratio of 88:1. Midpoint cash cost and all-in sustaining costs are $975 and $1,225 per gold equivalent ounces, respectively.
Moving to Mexico, our El Gallo heap leach is still residual leaching. During 2019 we produced 16,333 gold equivalent ounces and an attractive residual leaching cost of $688 for gold equivalent ounces sold. In 2020, our guidance is 12,000 gold equivalent ounces.
Moving to the Timmins area, our Black Fox mine encountered several one-off events at the beginning of 2019 that we have discussed in detail in prior quarters. Due to these challenges production was delayed and mining flexibility was restricted during 2019. As a result, reduced our -- we reduced our production guidance during the year. Total production was 35,700 gold equivalent ounces in 2019, compared to 48,900 gold equivalent ounces in 2018.
Of note is that despite the reduction in ounces, our team was able to decrease our cash cost to $825 per GEO from $845 in 2018, and to contain the increase in our all-in sustaining costs to $1,225 per gold equivalent ounces from 1,137 per gold equivalent ounces in 2018.
Looking ahead to 2020 our Black Fox, our production guidance was 35,000 gold ounces to 40,000 gold ounces, and midpoint cash costs and all-in sustaining costs at $1,075 per gold equivalent ounces and $1,200 per gold equivalent ounces, respectively.
This guidance was given with the benefit over two years of operating expertise since the acquisition and a revise forecasting approach, which includes risk factors assigned to each mining area planned during the year.
With respect to capital spending at Black Fox we are actively developing the access ramp from the Black Fox open pit to nearby Froome orebody. Froome is expected to have associated development expenses of $21 million over approximately the next 15 months and to provide ore production for approximately two years, beginning in Q4 of 2020.
The mineralization of Froome is different from Black Fox and that it is much thicker and more homogeneous, thus enabling more productive transfers mining method, which should reduce our costs. The schematic on the slide illustrates the difference between the Log Natumi mining methods, which is used at Black Fox and the transverse mining method, which we will be employing at Froome, using the transverse mining method, our internal studies and schedules call for Froome to produce 65,000 gold equivalent ounces in 2022 and 45,000 gold ounces in 2023.
Froome cash costs are estimated to be approximately $850 and all-in sustaining cost $926 per ounce. With Froome the life of the Black Fox Complex is extended to 2023. Moreover, our objective is to expand production by drawing ore from multiple sources to fill our mill and extend the mine life substantially.
Today we’re going to introduce a conceptual plan, which is at various stages of engineering. Key to our plan is the exploration success that Sylvain and his team had delivered over the last two years. I’m going to turn it over to Sylvain to discuss the exploration and resource definition at Black Fox, Grey Fox and Stock properties.
Sylvain Guérard
Thank you, Chris. Key highlights from our 2019 exploration program in Timmins include discovery of Stock West, an important new zone of mineralization. A significant increase and indicated resource at Grey Fox and highly positive drill intersection at several targets in the area, and positive drill results near existing access mining areas at Black Fox.
A bit more detail about Stock West, our drilling last year led to the discovery and the early definition of an impressive new zone of mineralization. We have a total of 31 drill holes into this area mineralized intersection average around 5 gram per tonne gold over average width ranging from 15 meters to 20 meters. These strong drill results occur in an area measuring 265 meter along strike and 200 meter vertically.
The new mineralized zone is located less than 350 meter from existing underground development and less than a kilometer from our mill. The Stock West zone remains open in all directions and our 2020 exploration program is designed to produce an initial mineral resource estimate and also to test the extension of the mineralization in order to access the potential size of the discovery.
Additionally, at Stock, the historical Stock mine is an opportunity to explore below the existing working. Review and interpretation of the historical data and drill program planning are currently underway.
Moving to Grey Fox, drilling generated a high rate of success, leading to an increase of 33% or 155,000 ounces to the indicated resource estimate for a total of 620,000 ounces at an average grade of 7.2 gram per tonne gold.
Our approach was to focus on drilling mineralized cross structures that were previously not well understood or drill tested, which led us to multiple exciting intersection over a 1.5 square kilometer area.
Outside of the resource areas at the Whiskey Jack target, drill results including a recent intersection of 53 gram per tonne gold over 6.7 meter indicate a strongly mineralized system with very good potential to define a new zone of mineralization. We built
Grey Fox has grown since the acquisition. We are commencing the feasibility study on the project, looking initially at an open pit mine that would eventually transition to an underground operation similar to our current Black Fox mine.
This schematic illustrates potential open pits on the contact in 147 zones, which is the extent of what we have studied so far. The 147 Northeast Zone also comes to surface and it may be included in the open pit plan.
Preliminary analysis shows that the two high grade pits around 3 grams per tonne would provide significant ore feed for our mill over a five-year to seven-year life. We anticipate having the feasibility study completed in Q4 of this year. Currently, permitting is being carried out simultaneously with the feasibility study work.
This schematic shows the developments involved with gaining access to the Old Stock mine, an additional development to access the Stock West zone. We envision a portal and a new ramp from surface to access the Old mine workings, as the existing shaft is no longer usable for personnel transport.
Fuel drifts would be developed to connect the Stock West zone to the existing mine. Great benefit we have in Stock is that this is a permanent site. Therefore, we can quickly develop an underground mining plan. At the moment it seems that this plan could be implemented relatively soon after access to Froome has established. The exploration program of 2019 to find a mineral inventory at Stock West and we’re planning to continue to exploration at this zone and to complete a compliant resource estimate in 2020.
Moving to Gold Bar, we produced 30,700 gold equivalent ounces in 2019, compared to our original guidance of 55,000 ounces. Cash costs and all-in sustaining costs were $1,101 per gold equivalent ounces and $1,282 per gold equivalent ounces, respectively.
It is important to understand the various factors that contributed to the shortfall of 24,300 ounces versus our original plan and the higher cost we incurred. There were five principal reasons.
First was delay, commercial production was planned to begin in March 2019, but was not achieved until May, which resulted in fewer ounces on the heap leach pad and less time to recover them.
Second was gold grade, we moved approximately the number of tonnes we planned in 2019, but in order to achieve that we needed the mine some lower grade stockpiles and the pre-stripping in the Pick pit contained lower grading tonnes than predicted in our model.
Third was recovery, experts in the field of heap leach believe we will achieve the expected ultimate recovery on crushed and agglomerate material, and we expect it to take much longer to reach that number. Also as a factor, whether decision to selectively Stock run a mine material, which by definition will not recover, as well as crushed material.
Fourth, was our decision to exploit the Cabin Creek orebody ahead of our original scheduled to improve cash flows. This decision caused several complications with the ore handling system because of the higher clay content and wet winter weather.
And fifth were deficiencies to overcome with the engineering and construction of the mine infrastructure. For example, and amount of preg-robbing carbon containing material was used in the heap leach pad construction. Piping areas and the process plant resulted in carbon attrition that also cause preg-robbing on the heap leach pad.
Recently, we have encountered another significant hurdle like Gold Bar. Our initial experience mining for the two Cabin Creek pits was positive in the sense that they contained about 8% more gold than was predicted by our reserve model. This is not unusual and that was a pleasant result for us.
Recently, we have transitioned to mining almost exclusively from the Pick deposit, specifically the Pick West pit. There’s quite a bit of waste dripping associated with Pick West and we have been working our way closer to the ore zones advancing about 120 foot bench per month.
Our experienced mining from Pick West has been that the reconciliation to the reserve model has been very poor for ore tones, as well as gold grade. The pit has now advanced to a point where we are mining some better material and what we see is our actual tonnes are still down relative to the model and grade is up although we don’t have enough data yet to reliably predict the differences.
This triggered a reevaluation of the resources reserved modeling, which we have been advancing at the maximum pace possible. We have an initial draft resource interpretation completed and while our geological team does not think it was optimized, we know enough to understand that the resource reserve estimates will likely decrease and the mine plan will change. There are several mitigating circumstances that may partially offset the reduction in containing balances which I will mention so people are aware.
First, fewer ore tonnes to process and higher gold grades potentially gives us a higher margin on each tonne of ore placed on the heap leach, higher grades also tend to recover better. And secondly, certain capital costs such as an expansion of the heap leach pad may not need to take place. As some of you will appreciate a geologic explanation of what we see in the pit that was caused us to refine our modeling criteria for gold Pick.
Sylvain GuérardWe’ve been using new information from pit mapping and in-pit drilling to revise and refine our resource model for Gold Bar. Previous modeling rely mainly on bidding control, which mean the gold mineralization was mostly distributed and confined to specific favorable beds of the Gold Bar deposit. Recently a better understanding of the structural controls to locate and control mineralization was developed as a key component to the bidding control, resulting in what we believe is a more robust model.
The updated structural control mineralization led to this indication of several near mine targets that were not incorporated in previous or current resource models due to low drill density. McEwen geological and resource teams are working with SRK Consulting to incorporate the revised structural and mineralization control in addition to the bidding control, and update the mineral resource of the Gold Pick deposit. The preliminary model have been completed and McEwen and SRK are continuing work adjust and optimize the model. The revised model is expected to be completed in Q2.
We are also working to incorporate the Gold Bar South satellite deposit into mine plan. Gold Bar South provides an attractive opportunity to add a new ore source to the Gold Bar mine. It is a near surface deposit located to the Southeast of the leach pad.
During 2019, Gold Bar South was drilled and the resource was upgraded to measure an indicated category, totaling now 63,000 ounces gold at an average grade of 1.1 gram per tonne. There is upside potential to grow the resource and additional drilling is planned over the Southeast -- the South extension which remained open and over the North portion of the deposit which has recently become fully accessible for drilling.
Rob McEwen
Let me leave you with four thoughts. Gold Bar is still facing challenges, so as a result, we’re reworking the gold reserves and resources along with the mine plan. This will take us some time and we are moving as quickly as possible to resolve this issue.
Second, San Jose is forecast to deliver another solid year. However, the very recent big change in the silver gold ratio, if it were to persist, the mine will be generating fewer dividends.
Three, exploration at the Black Fox complex has grown our existing resources and discovered a new resource. We are optimistic that our investment in exploration has provided us with the opportunity to increase production and extend the mine life on the Black Fox property.
Before the massive injection of capital now being deployed to combat the spread and deal with the adverse economic damage being caused by the Coronavirus, we’ll over time be extremely inflationary. I believe that in an environment with zero interest rates and this new worldwide quantitative easing will over this year accelerate the flow of investment dollars into gold.
Jake Sekelsky, ROTH Capital Partners
Hey, Rob and team, thanks for taking my questions. And I appreciate you guys hosting the call today in light of what’s going on in the world.
Just a few quick questions on my end, starting at Gold Bar. I know details here are still the work in process. But I’m just wondering should we expect 2020 guidance to be issued at Gold Bar once the updated reserve and mine plan are out. I’m just trying to get a handle on what things might look like going forward?
Rob McEwen
Absolutely. But that won’t be for a month or more.
Jake Sekelsky
Okay. That’s helpful. And looking at Gold Bar South, I know you guys are talking about potentially bringing that into the mine plan. How quickly would you say that can be brought online if that’s the decision that’s made over the next couple quarters?
Rob McEwen
We’re moving forward with the permitting and that’s supposed to be about a year, maybe a little bit longer. Once we get the permit, then we’d open it up. Nice thing about Gold Bar South, it’s located at a lower altitude and we’ve had issues processing the ore during the winter and mining up on the hill. Just due to snow in that. So it’s lower altitude. It’s a slight uphill drive from to the pad but at the same distance. So you don’t have the weather impacting it as much.
Jake Sekelsky
Okay. That’s helpful. And then just at Black Fox, it looks like explorations still the focus here and in Froome starting to look like the next leg of growth. Are there -- I am just wondering, are there any remaining permits you guys need there to move forward with that conceptual mine plan that was spoken about earlier?
Rob McEwen
Over at Stock, the mine is permitted. It’s currently the status is temporarily suspended. It’s a shallow mine, now goes down at about 330 meters. It has been dewatered in the past and we heard the last time they dewatered it took about four months to do that. We don’t know the state of the underground and that’s why Chris was talking about driving a ramp off to it and then linking up with the underground system to provide ventilation and other access.
So in terms of timing, we’d like to get a better handle on the Stock West zone to put some more drilling in there. So we could come forward with a more comprehensive plan. But what we’ve already seen so far is wide widths, consistent grades, both in close proximity to the existing workings of the old mine.
We’re also seeing values at depth below the old workings, and in fact, we have a drill hole down there, that’s about 600 meters below the past workings, it was quite an attractive grade, suggesting that the orebody continues below. We’re also looking at areas around the existing workings that appear to have resources that weren’t mined.
Jake Sekelsky
Okay. So it sounds like it can be advanced fairly quickly.
Rob McEwen
Yes.
Jake Sekelsky
Okay. That’s all I had on my end. Thanks again for hosting the call and taking my questions.
Heiko Ihle, H.C. Wainwright
Hey, guys. I’m going to build a little bit on the question that Jake asked. So I went through your MD&A on SEDAR this morning and on page 44, you state and this is a quote with respect to the Gold Bar mine a significant reduction in cash flow results from changes to the reserve estimate the mine plan, as discussed on page 45. Maybe necessary to curtail the far suspend operational expenditures and will raise capital through various financing methods? I guess sort of the question here, is this risk mitigation are there real contingency plans you guys are already looking at? And if you are looking at certain scenarios, I mean, can just sort of give us an idea at least of like a base negative and hopeful case scenario, and what kind of gold prices to use in those scenarios, please?
Rob McEwen
Sure. Thank you, Heiko. You were reading from the risk factors we set out in the 10-K.
Heiko Ihle
Correct. It was the MD&A in -- on SEDAR?
Rob McEwen
Yeah. It’s repeated in the 10-K, but…
Heiko Ihle
Okay.
Rob McEwen
In there, there is concern that we could be losing ounces and tonnage, the tonnage initially seems to be its very preliminary but we think there’ll be a reduction in tonnage announced. We don’t know the extent.
Heiko Ihle
Okay. Fair enough. And still you haven’t answered this one yet either. You don’t know the spent on exploration activities at Gold Bar for 2020 right, I mean, you quoted 2018 and 2019, and release for 2020 it just sort of work in progress because nobody knows.
Rob McEwen
We had some numbers, but a lot of things being thrown up in the air. We don’t know what -- I think the entire industry and for that matter, all industries are being disrupted by Coronavirus. So it’s becoming a little difficult to predict. What is the impact if the site was infected and shutdown for a while.
Heiko Ihle
Fair enough. Look actually just -- to the very lead through to my next question, because I was going to ask more or less exactly that. What precaution and or changes for the organization has happened thus far is everybody working from home? Is the office about to shutdown? I mean, travel international travel especially is extremely curtailed as frankly, it should be. What changes has been made and should we expect to see anything out of you guys in the next couple of weeks in regards to the update? Thank you for taking my questions.
Rob McEwen
We haven’t had any reported incidences of Coronavirus in the firm. I thought I might have been exposed to it during the PDAC. But my 14 days has passed and no symptoms. Our offices operating on a skeleton staff right now. Chris has plans in place that are operations to deal with anything occurring there. As you mentioned, international travels been stopped, most travels been stopped at the moment and we’re taking it very seriously. Chris, would you like to add anything to that?
Chris Stewart
No. Thanks, Rob. Heiko, yeah, we’re more or less following along as other mining companies are ensuring that our mine sites and operations are protected. We’re checking temperatures of people coming to the site. We’ve restricted visitors. So no unnecessary visitors are allowed on site.
And yeah, we put a lot of information to our people as well links to sort of keep track of this and we were providing updates to our people on sites on a daily basis. And we’ve educated them on self monitoring if they have travelled we’re putting them on for 14 days to self quarantine and monitor themselves. But we’re taking all the proper precautions to ensure that we can hopefully avoid having this crop up at our operations level.
Adam Graf, B. Riley
Hey, guys. Just a quick question following up on corona preparedness, have you guys taken account of supplies, grinding media, cyanide, other spare parts in case supply chains get cut off that you can continue operation without running out of a key supply?
Chris Stewart
Yeah. Thanks. And we’ve been in contact and we’re continuing to be in regular contact with our suppliers. And as of now again, they’re taking similar precautions as to what we are and they’re open for business.
With respect to you know stockpiling or cyanide, we don’t have containment to have additional cyanide on site a lot of these chemicals, you have your containments and that’s what you have and you can’t get permits overnight to essentially store more. So we are relying on our supplier network to continue.
And as those virus spreads pretty hard to determine what the overall impact will be to our business, but we’re certainly maintaining regular contact with our suppliers ensuring that we’re getting -- stockpiling what we can on site within reason and we’ll have to sort keep monitoring this and make adjustments as we go here.
Bhakti Pavani, Alliance Global Partners
Just a quick one, last year you have some very high grade drill intercepts at Black Fox mine. I’m curious, are you guys planning to go back and explore more this year in your exploration budget for 2020?
Sylvain Guérard
Yes. Bhakti, that’s a good question. And yes, we have recently, good success on the West flank at the Black Fox mine. As we’ve been developing on the ground to provide better access to drill the West and depth extension of the mine, though we’ve been running there and we have got positive intersection.
Bhakti Pavani
Got it. And in the past you have kind of talked about Froome being an additional deposit where the production would be coming from in addition to Black Fox Mine. Do you still seeing that exploration results that you have in place or do you think in 2022 you would be exclusively mining from Froome deposit at this point?
Chris Stewart
Your question - back to you if I understand well, it’s about the mining of Froome or explorations around Froome.
Bhakti Pavani
It’s combined with both, I mean the Black Fox, the mineral reserves update that you published yesterday, it has about less than two years of mine life at Black Fox. And Froome is expected to come online in fourth quarter of 2020. So I’m wondering given the exploration results at the Black Box Mine itself, do you see the mine life extending beyond the end of next year or do you think you would be exclusively mining from Froome starting 2022?
Rob McEwen
Chris, do you want that part of our conceptual plans. If you like please go over that again?
Chris Stewart
Yes. Sure. So the -- yes, I mean, we’ve had a lot of exploration success looking at on the western flank, we’ve got a lot of really good holes 150 meters away from current development. So we’re pretty excited about what we’re seeing on the western flank, but we do need to continue to drill that build that into a new resource and then reserve and what we view was Stock, we think we can sort of keep Black Fox moving along until Froome comes into play, and then Froome gives us a couple years of production.
And then at that point in time right now our current plan barring a whole bunch of more success and growing the resource significantly, our plan is to essentially slow down or stop at Black Fox and give the drills and opportunities to really drill and build that resource.
We believe is, we’re pretty bullish on Black Fox, and believe there is a lot more gold there, but we need the time to allow the drills to get there instead of drilling on top of development on top of mining, which is not efficient as everyone knows when you’re trying to run a mine.
So Froome is planning to do 1500 tonnes per day, it does have a bit of a harder work index than Black Fox and our mills capacity is around 2400 tons per day. So we do have some flexibility when we’re in Froome, as we can pick up some additional or a Black Fox we have certainly looked to put that through the mill, but our main focus at Black Fox once we get Froome started would be build our resources into what we think you can actually be.
Bhakti Pavani
Got it. That’s very helpful. Thank you. And with regards to development of Froome, could you maybe walk us through how long would it take for the development to complete, and what else needs to be done before you bring Froome into production in fourth quarter of 2021, I’m sorry?
Chris Stewart
Sorry, so Froome are basically driving twin drifts, we call them portals in the fall, and we just got started dragging the drift here in March. We have sold the contractor down slightly right off the start because we’ve got about 5000 ounces on the western edge of the Black Fox pit, which is in our mine plan for 2020 for the underground.
So we’ve actually got them to color the drifts and where we’re going to drive the ramps to access those ounces because we can’t get there from the current underground workings. So we’ve got that done and now they’ll be heading down the hill over free and you know that we expect they’ll take us till the end of - we should be down there late Q1 2021, and I’m of course we have the mine to develop and get the stoping set up. And we’d be looking at moving into production in Q4 2021.
With respect to -- there is no permits required everything for that we’re ready to go it’s basically just get down there and get ourselves set up and then we can start mining. We’re already have our ventilation set up, that’s why we’re driving twin ramps, so that we’ll have fresh air and return air can escape ways and everything will be all set and we’re driving the position the ramps will come grade in sort of the bottom third of the mine, so that we can basically hit the high grade zone, and the thicker zones right off the bat to ramp up her production quickly.
Bhakti Pavani
And just one more follow up if I correctly understand you previously mentioned the production from Froome is going to be 65,000 ounces the first year and 45 in the second year. Correct?
Chris StewartCorrect.
Bhakti Pavani
Okay. Moving to Gold Bar, I know you said that you are evaluating and remodeling the reserve for the Gold Pick deposit. The Gold Ridge is kind of small. What are your thoughts on re-evaluating or re-determining the resource there?
Chris Stewart
Yes. What we are focusing right now, Bhakti, is -- as a priority aspect, the Pick model, but right after that we keep doing the same type of exercise with the inflammation we have at Gold Ridge. The big advantage if you want that we have right now at a Gold Pick is having access to new exposure in the pit.
We also have of course the mining going on and grid control information, so a lot more details than what we had in the past and we are using this information to be incorporated to the model to really update and refund the understanding of what we have there regarding style of mineralization and controls.
Bhakti Pavani
Got it and just one follow up. Did you guys mine at Gold Pick at all during this time?
Chris Stewart
No. Not yet. The mining is at Gold Pick West currently.
John Tumazos, John Tumazos Very Independent ResearchThose the Stock indicated resource of 121,000 ounces include the benefit of the good drill results in the past year, or how much of it doesn’t include?
Sylvain Guérard
Hi, John. This is Sylvain speaking. Yes. This is Stock East only and this is an upgrade of the resources. There is still scenario for open pit and on the ground that we’ll be looking at. We have a lot better than city and have during over this these East deposit or targets if you want.
As you know, our focus at Stock has been over three kilometers strike land that include the old Stock mine, we see good potential right below the old mining there you know compiling the information, circle information, this mine have been shut down in low gold prices. And there is a bunch of good intersections just below the mine.
So that’s probably the first place we’ll be looking at in the short-term when we haven’t Stock, and going to the West as you know, this Stock West is a significant new discovery, we don’t know still the real size or potential of the zone. We want to go back into two main objectives. One is to in fill Stock West to bring it to a resource estimate and also during the extension of this new discovery to assess size potential.
So there is three kilometers strike land with the mine in the middle and good potential right below the mines. And going to the West side, we believe we had this is the big price with Stock West, and we still have Stock East this new upgraded resource that we have that includes some high grade mineralization into a lower grade larger envelope of mineralization.
John Tumazos
Directing this question to Rob if I may. Given that you don’t have a production forecast for the moment from Gold Bar and the Black Fox complex is going to be in a transition from the old mine to Froome, and the evaluation of Grey Fox. Do you think you should significantly cut the exploration spending and put a project on ice just in case the Nevada or Ontario output isn’t as good as you wish it was. A fewer balls in the air given the uncertainty?
Rob McEwen
Absolutely, John. We’ve been looking to rationalize our portfolio of properties. And focusing - it seems that Black Fox which was considered not to have a lot of future by many, we’ve had good exploration results they’re likely could build production, and Gold Bar which was going to be with Star is a little handicapped at the moment and hobbling along. So we’re just looking to rein in some of our expenditures on exploration in other areas, and focusing that we have the funds to develop these other sources of production.
John Tumazos
So, do you think that the dewatering and further evaluation of Stock should continue or be put on hold pending the subsequent performance in Nevada and Black Fox?
Rob McEwen
We’re thinking about those matters. We’ll have a better way of evaluating that once we get the Gold Bar numbers in hand.
John Tumazos
Sure I apologize for posing the question while you’re in the evaluation phase.
Rob McEwen
No. No. No. It’s a very rational question to ask.
John Tumazos
Thank you.
Rob McEwen
Where the focus needs to be. So Sylvain did you want to add something here?
Sylvain Guérard
Yes. Maybe, John, I can add a few points to this questions. And, you know, I agree the investment and exploration over the last two years actually have been quite important. But really quickly this allow us to focus our efforts and caution only in the few areas where we’ve been quite successful. As you know, Block Fox mine itself that we keep drilling on the ground. And we see a potential to extend mineralization and hopefully mining.
Then we focus on the Grey Fox area where we’ve been quite successful, increasing significant resource of significant grade with mineralization coming to surface on our mine properties. So that gives us a pretty interesting opportunity for open pit mining to start with at Grey Fox, and
Stock have been moving up if you want as a project faster than expected, especially with the Stock with discovery. So right now our focuses is only at the Black Fox mine talk with as a discovery.
And we don’t really see a need to any additional significant exploration right now at Grey Fox because we have a critical mass that allow us to keep advancing studies toward development. At Stock West we would like to bring it to a resource stage. And based on it, we can really support additional studies and potential dewatering or development of the Stock project.
In Gold Bar all of the exploration that we are planning at Gold Bar this year will be mine ex or near-mine exploration to keep drilling into the pits or around the pits to get answers back into it, or increase and Gold Bar Stock because gold bar Stock its quality spotlight deposit.
Silica-rich are very, very limited to the alteration there sub-cropping and decent grade not far from our operation and that floor elevation so we see that as quite attractive and Gold Bar South is open to the salt. The last section to the salt is in mineralization. And the northern areas only partially drill so we see growth potential there.
Adam Graf, B. Riley
Hey guys. Just a quick follow up question regarding the slide here number seven with your conceptual plans for tenants. You guys talked about it a little bit before, you guys clarified that Froome is permitted and Stock because it was never officially closed it is permitted. Does that include all of Stock the potential for the open pit, Stock West, etc and then obviously in between in this conceptual plan between, you know, Stock and Froome is Grey Fox and what if any permitting is necessary there?
Rob McEwen
Froome is permitted, Stock combine is permitted if we were to go underground to Stock West that would be permanent - that’s permanent going underground Stock East. We don’t know if that’s open pit or underground, if you were underground, we’ll be connecting with the existing mine. So that’s the permit wouldn’t be an issue, but if you want an open pit, it would be an issue. Only in that it would take time. And then Grey Fox is on our property, and no permit.
Adam Graf
No permit. Okay. Okay. So it sounds to me it’s really just about planning, engineering, drill density versus any type of regulatory hurdles per se?
Rob McEwen
Well, on Grey Fox, you’d have to deal with water containment just where and run off enough to satisfy the regulators about that. But yes…
Adam Graf
What kind of a process is that Rob? Could that delay Gray Fox or swap around some of your conceptual plan here?
Rob McEwen
It could take a - you need to have some studies done and that might take the better part of three quarters of the year. There is just water and archaeological issues to satisfy.
Adam Graf
Well, do you guys expect to sort of give us periodic revisions on this conceptual plan as your knowledge and plans evolve?
Rob McEwen
Absolutely. We see that this is a bit of a light at the end of the tunnel.
Adam Graf
Yes. I think it would be very helpful to analysts in the market to stay up-to-date on how the potential year can be unlocked?
Rob McEwen
Change the story significantly. We will be doing it eagerly Adam.
Bill Powers, Private Investor
Thank you. Thank you for hosting this call Rob. And I appreciate your candor beginning of the call most certainly. But I guess I have a few questions and I guess I’ll start with kind of an easy one. For Grey Fox, when you did the call in December, I believe it was Ken, who had mentioned that he had found up to 12 significant or potentially strikes along Grey Fox, I guess would be or right around by Whiskey Jack.
And he also had mentioned that in from what I can read from the most recent press releases, is that the width seems to be wider than what you would have been finding previously. I guess on this topic one, I guess, is that something that you’ve seen continue and was this incorporated into the most recent resource update?
Sylvain Guérard
For the question, Bill, thank you. And you’re right about Grey Fox. We’ve been successful intersecting memorization, we have a very good job condescending and model there. And our focus have been testing Northeast Southwest trending structures that are quite high grade, and we’ve been adding a new zone 147 Northeast, it’s on the slide there. It’s a new discovery that we made in 2018 and we’ve been advancing and there is about 100,000 ounces of new monsters found right in the middle of this Grey Fox area.
In addition to that, we’ve been also advancing with on many trends or structures and the main ones are again shown on the slide there. And we have a high rate of drill success, so we know that more drilling will certainly bring more success. And we will keep increasing the resource assuming additional investment.
Currently we spend 620,000 ounces, and this is only an indicated category I’m not including in for here, and the greatest 7.2 grams per tonne, which is pretty good. As I mentioned, some of the them in addition come to surface so we have started points where we could potentially drive and go for example, or potential eventually open pit mining there.
So we see Grey Fox quite a key asset in addition to what we have on the rest of the property at Black Fox and Froome, but currently, you know, this is highly exciting. But there is already a significant resource defined there, and as I mentioned are probably good enough to advance with permitting and studies to see what’s the best way forward. And in parallel with that, we are quite excited by Stock using the old mine to quickly fast track and reactivate and really trying to define what we are dealing with the Stock with discovery.
This is a zone that was never ever taught or dwell in the past. That was first drill in the middle of the summer, the grade is good, thickness is good, it’s a good style of mineralization that include high grade as part of those wide zone of five grams averaging intersection. So we see this as the probably the most exciting new discovery we have in our complex right now.
Bill Powers
Yes. And as far as - so as far as cost wise, that would be I guess on par with Froome as far as bringing that or would you estimate that would be a far lower cost than something like Gray Fox as far as remediating the Stock property is that the initial estimate as far as the way you would see it?
Sylvain Guérard
Maybe I turn to Chris or Rob
Chris Stewart
Well, it is still early.
Bill Powers
Okay.
Chris Stewart
We haven’t been fixed on the numbers yet.
Bill Powers
Okay. The other question I had was regarding black box, according to your press release from yesterday or this morning, it appears that you had some areas that went came out of the resource or reserve estimate, because they were inaccessible. And could you - and it looks like I was a little surprised given the drill intercepts that you had along the west, that you didn’t have a little bit bigger of a growth. But could you give a little color on how much came out and how much was added? I’m guessing it’s probably in your reserve report, but I wasn’t able to locate it quickly?
Rob McEwen
Yes. We will look at the numbers…
Chris Stewart
Yes. I…
Rob McEwen
Chris may be you want to talk about those answers that are not mineable. And regarding increase in growth of the resource, the issue we were facing is access to drill more to the west side of the mine, so we didn’t have proper drilling platforms. Now we do and we are adding holes to the Western and the depth extension and this will contribute to awfully adding an increasing the resource.
Bill Powers
In respect I am sorry go ahead.
Rob McEwen
No go ahead.
Bill Powers
No I say it was easy you would think so I would say that he would estimate that it was a how many approximately how many ounces came on mine board is just what really question was in at Black Fox, I guess going into the most recent reserve update?
Rob McEwen
And also so what we did was an evaluation in 2019 of the reserves are Black Fox, and about 16,000 ounces came out of the reserve as they are no longer mineable. So we had areas essentially when you sort of went and redid the math and look at the cost of rehabilitating.
Right now, Black Fox were down to two mining for lack of a better word, I use sort of kibbles and bits around the mine, we have a couple main areas with some decent strike length and new stokes, but a lot of it is we’re sort of running around, picking up little stokes here in there, to gather the remaining ounces that were sort of left behind, given the increase in gold price, we’re able to make some of these stokes economic.
But at the same time, there’s a number of stokes in there that were in the old workings of the mine, be it cave-ins, ground failures and stuff that essentially it doesn’t make it worthwhile going to get that to stokes that’s got 500 ounces, it doesn’t pay you to go get it, we have to do all this work.
So we reevaluate it all that and remove those ounces and then so the growth here you’re actually seeing probably a bit more growth than what you sort of looks like on first floss when you’re just looking at the numbers given we removed ounces. We added them back in and when you consider, we mined 35,000 ounces at the end of the day.
Our reserve is down to I guess 66. They’re about 65. So we lost a bit, but we added back in, so the western flank now we’ve had a lot of drilling successes, so very mentioned, but we need to increase the density get the proper drill platforms to drill it properly, which we now have in place, we worked hard on that in the latter half of 2019.
So the exploration groups actually got proper drill stations to be drilling out of the drill sort of perpendicular to the ore body, so that we can get good results. So that’s what they’re working on now is basically trying to build out and we will have an update on 2020 and given the success so far, we’re optimistic that we can add some more ounces back in even when we’re mining you know, 30 and you can also this year,
Bill Powers
Yes -- okay, and would you consider doing a like a midyear reserve update on given the importance of Black Fox to the operations at this point?
Chris Stewart
I’d say there is a lot of factors around that, again with Coronavirus, and that we need to shut her off down at some point here. And it’s pretty hard to sort of give you any color on that. Well, certainly, as things progress if the drill performance out of the bit and get the footage and everything coming together. We’ll certainly try and keep people apprised of our progress on Black Fox for sure, because yes, it is, right now, it’s our single source of production demo the demos camps.
Bill Powers
Yes. And one last quick question. I know, there has been the Fenix project, there has been getting that the study out the door. I know there has been some difficulty with that as far as that goes, is that still on track for I guess first quarter, or the first half of this year?
Chris Stewart
Yes. So the feasibility studies is complete. And you know, error terms are not significantly different than that of the PDA.
Bill Powers
Okay.
Chris Stewart
Right now if we’re not going to construct it, then there is not a lot of benefits to publishing that right now.
Bill Powers
Okay. That’s fine. And I would just wanted to say thanks again for holding this call. I would also recommend, you know, just as a quick side note, as far as potentially since you’re not going to be coming to any conferences, or they’re probably no conferences. I think everyone learned a lot from the December grilling update.
And I don’t know whether doing one of those once the quarter would be greatly appreciated until because I’m guessing that the public communication is going to be reduced to many availability, but I certainly would like to see more updates rather than keyword if you could possibly manage that, that would be greatly appreciated. Thank you very much.
Chris Stewart
Thank you for that suggestion Bill. Thank you for your question.
Gary Melsa
Thank you for taking this call. I’ve listened to all this stuff for a year since I first bought when you took over the company, Mr. McEwen, I appreciate your effort. My questions don’t have to do with all the mining stuff, because I don’t really understand that as much as I probably should. My main questions have to do with where the stock price is sitting right now? New York Stock Exchange has a $1 limit as to when you stay on exchange, is that correct?
Rob McEwen
That’s correct.
Gary Melsa
How long does that last for?
Rob McEwen
Oh, it may change with what’s happened recently, but they usually notify you after a certain period with your stock below. If your stock…
Gary Melsa
Okay. My question is, if that point is reached, do you have any idea as to whether or not you would do a reverse split on the stock? Because I know what’s happened with reverse split stocks in the past with companies that have done that. Is that anywhere in your plans, or you considering that or are you not at liberty to say what you’re planning to do on that because…
Rob McEwen
We’re recently below $1 and hope not to stay down there. But if there were 30 consecutive days below $1, then the New York Stock Exchange will advise you that they don’t want you on the stock exchange, but you have six months to remedy that situation.
Gary Melsa
Okay. I understand that now. We have six months to remedy the situation. The question is how do you go about remedying that because it does not appear the way the economy is and with this virus thing and everything that’s going on? To be honest with you, I do not expect the McEwen Stock to be over $1. And in your future, sitting probably around 75% [ph] and that’s been where it’s been hanging for a while.
People just start not investing. And this is no reflection on you or the company, but it’s just a situation where it is people are just cashing out running for the hills. That’s why my estimate on it is that the Stock is probably not going to reach that dollar thresholds in the near term, even though hopefully it will in the longer-term. My question again, comes back to have you taken that into consideration as to what you may have planned to either stay on New York stock exchange or whatever else is available at that point?
Rob McEwen
Well, it’s always our intention to stay on the New York Stock Exchange. We’ve only recently gone below $1. This year, we haven’t been notified by the New York Stock Exchange. And a share consolidation would be a last resort.
And just by way of a bit of history, your long-term shareholder, you might remember we got when the gold share market just absolutely died back in 2015 hit its bottom. We were below $1 and didn’t stay there and satisfied the New York requirements to remain listed on the exchange. And I don’t share your belief at the moment we’ll stay below $1 that’s something…
Gary Melsa
Well, I hope you’re right on that, but I just don’t see people buying anything right now, and I don’t see them buying anything in the near term future?
Rob McEwen
I would agree with you that in the very near future, all eyes are focused on Coronavirus and trying to stay avoiding it, and the economic repercussions of it. But your governments around the world they are making very large commitments to pump large amounts of money into the system drop interest rates. They’re working hard to ensure that this damage that’s being sustained right now it can be mitigated. And that, to me is making their balance sheets look increasingly problematic.
Gary Melsa
So I understand how pumping money into the system works. I’m not too keen on understanding everything with all the gold reports that I see in here every time I listen to this report, but I am very familiar with how money going into the system works. I just have one other question because I didn’t hear anything at all mentioned today about Los Azules, which to me is, as I looked at everything is -- I still think it’s a very significant holding, but I haven’t heard a word about it today, anything new on it?
Rob McEwen
No price coppers down to 240. We’re looking to put a road in to the site, an alternative road that would give us 12 months access rather than the current four or five months access or be some work done this year on the road to give the access. I think that’s a critical component of moving that forward.
Argentina is still trying to figure out what it wants to do. It is experiencing high inflation just recently put a new government in. They would like to promote mining. Just unfortunate right now that base metals are under a lot of pressure and…
Gary Melsa
Right.
Rob McEwen
The actions that they have taken have discouraged a lot of foreign capital investment in their country.
Gary Melsa
Hey. Thank you very much for taking my question. Appreciate it. Thanks again.
Rob McEwen
You’re welcome Gary. Thank you for being a shareholder.
This one leave you a message you wish that everyone stays healthy right now. Thank you very much.
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Post by Entendance on Mar 19, 2020 5:51:18 GMT -5
March 18, 2020
TORONTO, March 18, 2020 -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today announced that Chris Stewart has left his position as President and Chief Operating Officer of the Company. His responsibilities will be assigned to other members of the management team.
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Post by Entendance on Mar 20, 2020 12:41:10 GMT -5
March 20, 2020
TORONTO, March 20, 2020 McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports on the current impacts of COVID-19 on our operations.
The government of Argentina has declared a state of emergency and imposed a nationwide mandatory quarantine starting today to reduce the spread of COVID-19. As a result, our 49%-owned San José mine has temporarily halted operations effective today, through at least March 31, 2020. The mine site will continue to be staffed by a reduced workforce to ensure appropriate safety, security, and environmental systems are maintained.
Work at the Los Azules copper project in Argentina is also suspended until further notice.
With the confirmed presence of COVID-19 in the Timmins region, our Black Fox operation is implementing numerous safety measures in addition to very strict site access and employee screening measures already in place: all non-essential staff and second-in-command managers will be working from home, employees who must travel by plane or for more than 4 hours have been asked not to return to the site, payroll will be isolated off site, group meetings have been discontinued, data is being collected on employee family health status, and numerous other measures.
As a consequence of the suspension of mining at San José and uncertainty related to the potential impact of COVID-19 on our other operations, we are withdrawing all previously announced production and costs guidance for 2020.
McEwen Mining’s mines in Ontario, Nevada, and Mexico are currently continuing to operate. The measures being taken to combat COVID-19 by the Company and local authorities in each of the jurisdictions where we operate are changing rapidly. We are closely monitoring the situation at our mine sites and in the local communities. McEwen Mining Inc. will be following the guidelines and directions set out by the local public health authorities.
Reliability of Information Regarding San José
Minera Santa Cruz S.A. (MSC), 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.
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Post by Entendance on Mar 26, 2020 8:22:10 GMT -5
March 26, 2020
TORONTO, March 26, 2020 McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports that in order to protect the health of our workforce, their families, and the nearby communities from the spread of COVID-19, both the Black Fox and Gold Bar mines will scale down operations beginning today for a period of 14 days. Certain production and exploration activities will continue at Gold Bar in areas where social distancing can be observed, including ore crushing, irrigation of the heap leach pad, and operation of the process plant. At Black Fox, we expect to continue development activities related to the Froome access ramp. Both sites will continue to be minimally staffed to ensure safety, security and environmental compliance. Our projects in Mexico are continuing to operate normally.
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Post by Entendance on Apr 3, 2020 2:43:51 GMT -5
MCEWEN MINING APPOINTS PETER MAH AS CHIEF OPERATING OFFICERTORONTO, April 2, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to announce the appointment of Peter Mah, P.Eng., as Chief Operating Officer (COO) effective immediately.Peter is a professional engineer with 30 years of global mining experience spanning gold, diamonds and base metals. As a seasoned mining executive, his well-rounded experience comes from roles including Chief Operating Officer and Executive Vice President of Luna Gold, Group Executive at Newmont Mining, General Manager at the De Beers Victor Mine, Mine Manager of Newcrest’s Kencana Mine, as well as engineering roles at Goldcorp and Placer Dome.
At Newmont, Peter led the early stage underground exploration study teams that defined over 15 million ounces of gold resources for development in Canada, Nevada, Ghana, New Zealand and Peru. He led the project teams for the Leeville underground mine expansion in Nevada, and the new Subika underground mine in Ghana.
Peter has a strong track record of building, transitioning and operating underground and open pit mines most notably the Kencana underground mine in Indonesia, which produced over 400,000 ounces of gold per year, and the De Beers Victor open pit diamond mine in Ontario. His Ontario experience also includes working at Goldcorp’s Red Lake Mine and Placer Dome’s Campbell and Musselwhite mines in various capacities.
In 2009, Peter’s Victor Mine Team was awarded Mining Magazine’s international ‘Mine of the Year’ award. Peter has a passion for building teams that strive for business excellence and innovation. His operating philosophy is anchored on a foundation of best in class safety, health, environmental and social standards. He was a Director of the Ontario Mining Association, and holds a Bachelor’s of Applied Science in Mining and Mineral Process Engineering and a Master’s of Applied Science from the University of British Columbia. |
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Post by Entendance on Apr 14, 2020 7:23:31 GMT -5
April 14, 2020 McEwen Mining Announces Q1 2020 Production Results, and Re-Starts Black FoxTORONTO, April 14, 2020 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports consolidated production for Q1 2020 was 29,177 gold ounces and 553,179 silver ounces, or 35,062 gold equivalent ounces(1) (“GEOs”), at the average gold:silver price ratio for the quarter of 94:1.
Black Fox Mine, Timmins, Canada (100%)
In Q1, Black Fox produced 8,328 GEOs. Mining was temporarily suspended at Black Fox on March 26, 2020 for two weeks to allow time for management to evaluate and adapt to operating with the risks associated with the COVID-19 pandemic. Over the course of the shutdown we have implemented rigorous policies and procedures to minimize the potential risks to the health of all individuals at the mine. Our miners and teams are overwhelmingly supportive of returning to work with the new safety measures, and the decision has been made to restart operations immediately.
San José Mine, Santa Cruz, Argentina (49%(2))
In Q1, San José produced 8,993 gold ounces and 551,872 silver ounces, for a total of 14,864 GEOs. Mining was temporarily suspended from March 20, 2020 due to a nationwide mandatory quarantine imposed in Argentina to combat the spread of COVID-19. Permission has now been granted by the government to restart mining at San José. Hochschild Mining has notified us that they are restarting production, with the expectation that ongoing labor and travel restrictions will mean that the ramp-up will take place over an extended period.
Gold Bar Mine, Nevada (100%)
In Q1, Gold Bar produced 9,133 GEOs. On March 26, 2020, we announced that operations would be temporarily scaled back for two weeks, contract mining stopped on April 1st, and crushing and stacking stopped on April 4th. Downstream activities such as heap leaching and process plant operation are continuing.
El Gallo Project, Sinaloa, Mexico (100%)
In Q1, El Gallo produced 2,737 GEOs from residual leaching of the heap leach pad. On April 1, 2020, the Mexican government ordered the temporary closure of all non-essential businesses, including mining, to combat the spread of COVID-19. This order limits some activities at El Gallo but is not expected to have a significant effect on residual leaching.
Financial Results
Operating costs for the quarter ended March 31, 2020 will be released with our 10-Q Quarterly Financial Statements.
Notes:
(1) 'Gold Equivalent Ounces' are calculated based on a 94:1 gold to silver price ratio for Q1 2020.
(2) The San José Mine is 49% owned by McEwen Mining Inc. and 51% owned and operated by Hochschild Mining plc.
Technical Information
The technical content of this news release has been reviewed and approved by 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."
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. |
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Post by Entendance on Apr 22, 2020 3:27:57 GMT -5
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Post by Entendance on May 14, 2020 4:42:46 GMT -5
MCEWEN MINING: ANNUAL GENERAL MEETING AND Q1 2020 RESULTS WEBCASTTORONTO, May 14, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reminds shareholders that our Annual General Meeting (AGM) will be held virtually today at 4:00 pm Eastern Time. To connect to the meeting use the following link: www.meetingcenter.io/225089926
The AGM is being held exclusively for the purpose of electing the directors, appointing the auditor, and other business that comes before the meeting.
For investors wanting to hear an update on operations and exploration and to ask questions, we have scheduled a separate webcast following the release of our Q1 2020 Financial and Operating results. The webcast will be held on May 19th at 11:00 am Eastern Time. Participants should connect using the following link to register online for the webcast and add it to their calendar:
event.on24.com/wcc/r/2159381/6AC73B781B5B044A88E709622B35ACE5
Tuesday, May 19th, 2020 at 11:00 am EDT
Toll Free (US & Canada): 1 (833)-579-0918
Outside US & Canada: (778) 560-2801
Conference ID Number: 6339787
Webcast Link:
event.on24.com/wcc/r/2159381/6AC73B781B5B044A88E709622B35ACE5
An archived replay of the webcast will be available approximately two hours following the conclusion of the live event. Access the replay on the Company’s media page at www.mcewenmining.com/media.
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Post by Entendance on May 16, 2020 3:46:12 GMT -5
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Post by Entendance on May 18, 2020 15:53:55 GMT -5
ANNUAL & QUARTERLY REPORTS 2020 1st Quarter McEwen Mining Financials and MD&A |
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Post by Entendance on May 19, 2020 5:26:14 GMT -5
 TORONTO, May 19, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today reported its first quarter (Q1) results for the period ended March 31, 2020.
Production was 29,200 gold ounces and 553,200 silver ounces, or 35,100 gold equivalent ounces(1) (GEOs)(see Table 1), at the average gold:silver price ratio for the quarter of 94:1.
A non-cash impairment charge for the Gold Bar mine of $83.8 million was recorded during Q1. The write down is necessary because a change in the geological interpretation resulted in a substantial reduction in expected gold production over the life of mine (see the Gold Bar Mine section below for further details).
A consolidated net loss of $99.2 million, or $0.25 per share, primarily due to a $83.8 million impairment adjustment for the Gold Bar mine and $6.3 million spent on exploration and advanced projects. Before the impairment adjustment the net loss is $15.4 million.
The Grey Fox Indicated gold resource estimate has increased by 43% to 888,000 gold ounces at 7.1 g/t, with an additional 173,000 gold ounces at 6.6 g/t in the Inferred category.
Each of our mine sites are navigating the impacts of the COVID-19 pandemic. Black Fox, Gold Bar, and San José mines were temporarily suspended at the onset of emergency measures imposed in Ontario, Nevada, and Argentina. Black Fox and San José have now restarted operations, and Gold Bar has started to ramp-up operations with limited mining and stockpile processing during May. Production and cost guidance for 2020 has been withdrawn until the situation normalizes.
Our quarterly webcast will take place today at 11 am EDT. Details are provided below.
Operations Update
COVID-19
All our operations have implemented rigorous health and safety measures to prevent the spread of the COVID-19 virus. Fortunately, none of our employees have been infected.
San José Mine, Argentina (49% Interest)
Our attributable production from San José in Q1 was 9,000 gold ounces and 551,900 silver ounces, for a total of 14,900 GEOs. For Q1, total cash costs(2) and all-in sustaining costs (AISC)(2) were $1,138 and $1,592 per GEO, respectively.
Mining was temporarily suspended on March 20, 2020 due to a nationwide mandatory quarantine imposed in Argentina to combat the spread of COVID-19. Mining has restarted at San José around April 14, but government-imposed travel restrictions mean that it will take some time before full production is achieved. As a result, 2020 production guidance has been withdrawn until the situation stabilizes.
Black Fox Mine, Canada (100% Interest)
Production from Black Fox in Q1 was 8,300 GEOs at a total cash costs and AISC of $838 and $1,339 per GEO, respectively. The Black Fox mine was temporarily suspended due to the COVID-19 pandemic on March 26, 2020 and resumed normal operation on April 14, 2020.
The mineral resource estimate for Grey Fox deposits has been updated with drilling completed in late 2019. The estimated Indicated and Inferred resources increased by 43% and 30%, respectively, compared to the mid-2019 update published in March 2020. The updated resource estimate contains 888,000 gold ounces at 7.1 g/t in the Indicated category, and 173,000 gold ounces at 6.6 g/t in the Inferred category.
The Grey Fox resource has grown rapidly through focused exploration that we initiated in 2018. For the first time, the Grey Fox resource update includes a resource for the Gibson area. In addition, it includes a major reinterpretation of the Grey Fox South area, with updates to the 147, 147 NE and Contact zones.
Open pit and underground mining scenarios are being evaluated for the development of the Grey Fox deposits and environmental studies are in progress to allow access to the area for potential bulk sampling and initial open pit mining. In addition, we are also exploring and advancing economic studies of the Stock East gold deposit and of the recent Stock West Zone discovery at the Stock Property. Further information about economic development and mining scenarios will be provided later in 2020.
Development of underground access to the Froome ore body is proceeding towards production.
Gold Bar Mine, USA (100% Interest)
Gold Bar produced 9,100 GEOs in Q1 at cash costs and AISC of $1,887 and $2,177 per GEO, respectively. Both cash cost and AISC included the impact of $4.5 million spent for pre-stripping at the Gold Pick West pit, or $495 per ounce which cannot be capitalized under US GAAP. Excluding the impact of the $4.5 million spend on pre-stripping, cash cost per gold equivalent ounce in Q1 was $1,392, which is 9% or $111 per ounce higher than the cash cost per ounce in the fourth quarter of 2019.
The latest updated feasibility study for the Gold Bar mine was published in February 2018 (2018 FS). The study estimated that 485 thousand gold ounces were contained in the reserve pits designed at that time. In November 2018, permits to build the mine were received and construction commenced based on the 2018 FS. At year end 2018, the resource and reserve estimates were updated, which at that time had increased primarily because of additional drilling to 524 thousand gold ounces contained in the reserve pits (2018 Reserve Estimate). Pre-commercial mining commenced in December 2018, the first gold was poured in February 2019, and commercial production was declared in May 2019. The majority of material mined at Gold Bar between December 2018 and the end of 2019 was from the Cabin Creek ore body, which exhibited positive overall gold reconciliation to the 2018 Reserve Estimate.
After transitioning to mining the upper benches of the Gold Pick West ore body we started to experience poor reconciliation, contrary to our experience to this point. Our mining returned lower ore tons, gold grade and contained ounces compared to the block model. This is interpreted to occur because of greater structural control and less bedding control of the mineralization than was previously modeled by our external consultant SRK Consulting (U.S.) in the 2018 FS and 2018 Reserve Estimate. In light of the change in geologic interpretation, and control and distribution of the gold mineralization, supported by our observations while mining, the future mine plan is currently being re-evaluated. Preliminary updated resource estimates for the Gold Pick deposit were completed in Q1 and in-pit and near-pit drilling is currently taking place to further validate the results. Preliminary revised mine plans indicate that a reduction in contained ounces at the Gold Pick deposit in the order of 25-35% relative to the 2018 Reserve Estimate is likely.
As a result, during Q1, we recorded an impairment charge of $83.8 million, reducing the carrying value of the Gold Bar mine mineral property interests and plant and equipment. The impairment calculation was primarily based on the discounted cash flow technique, using a long-term gold price of $1,430 per ounce, a discount rate of 9%, and USA inflation index of 2%.
Evaluation of the resource estimate is continuing with a drilling program initiated in late-March 2020 and extending into the second quarter of 2020. This new drilling information will be incorporated into a revised resource model and a new mine plan is expected to be completed for implementation by the end of the second quarter or early in the third quarter of 2020.
On March 26, 2020 we made the decision to temporary scale back operations at the Gold Bar mine due to concerns related to COVID-19 and maintaining social distancing requirements. Mining was suspended on April 1, 2020, with downstream activities continuing, such as heap leaching and process plant operation.
We have recently resumed stripping to access the next ore benches in the Gold Pick West deposit and processing of stockpiled mineralized material. We continue evaluating the next stages to resume normal operating capacity. 2020 production guidance has been withdrawn until the situation stabilizes.
El Gallo Project, Mexico (100% Interest)
Production from El Gallo in 2019 was 2,700 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 assessing the current economics of residual leaching. We estimate that residual leaching will continue for as long as incremental revenue exceeds incremental costs. Incremental residual leaching costs for Q1 was $2.8 million, or $1,025 per GEO.
On April 1, 2020, the Mexican government ordered the temporary closure of all non-essential businesses, including mining, to combat the spread of COVID-19. While this order limits some activities at El Gallo, it is not expected to have a significant effect on residual leaching.
NYSE Listing
We previously reported that notice from the NYSE was received on March 24, 2020 regarding the $1.00 minimum share price listing standard. Effective April 21, 2020, the SEC and NYSE has provided temporary relief from the $1.00 minimum share price standard, providing the Company until December 3, 2020 to regain compliance.
Table 1 here provides production and cost results for Q1 2020 and 2019.
Conference Call and Webcast
We invite you to join our conference call, where management will discuss our Q1 2020 financial results and project developments and follow with a question and answer session. Questions can be asked directly by participants during the webcast. The webcast will be archived on McEwen Mining’s website following the call.
Tuesday,
May 19th, 2020
at 11:00 am EDT Toll Free (US & Canada): 1 (833)-579-0918
Outside US & Canada: (778) 560-2801
Conference ID Number: 6339787
Webcast Link: event.on24.com/wcc/r/2159381/6AC73B781B5B044A88E709622B35ACE5
An archived replay of the webcast will be available approximately two hours following the conclusion of the live event. Access the replay on the Company’s media page at www.mcewenmining.com/media.
Grey Fox Resource Update
The new Grey Fox resource is updated as of April 30, 2020 and was based on the results of our 2019 exploration drilling campaign (referenced by the press releases from Dec 3, 2019, Feb 5, 2020 and Feb 12, 2020), generated from mid-November 2019 to the end of Q1, 2020, and on the global remodeling of all diamond drill hole data supported by updated geological and structural interpretation over the Grey Fox area.
The increases are mostly due to: the addition of the Gibson deposit for the first time; the better-defined structural controls in the northwest-dipping cross structures leading to improved continuity and increased confidence; and the strike and down dip extensions of existing resources through the recent drill campaign.
Since the previous resource estimate, an additional 138 diamond drill holes for 52,456 meters of NQ core were added to the Grey Fox resource database, that now consists of 1,394 holes representing 513,250 meters of diamond drill core. The database includes a total of 249,827 sample intervals assayed for gold, of which 21,420 samples were added to the database since the December 31, 2019 resource estimation.
The Grey Fox area consists of five mineralized zones over a 2.25 km2 area (1.5 km by 1.5 km): 147, 147NE, Contact-Whiskey Jack, Gibson and South. For all but the Gibson zone, gold mineralization is hosted mainly in mafic volcanic rock types, extending into sediments in the Contact deposit and into syenite intrusive rock types at the Gibson deposit.
The structural controls and continuity of grades were confirmed during the 2019 exploration program, which targeted northwest dipping quartz-carbonate and breccia vein structures that were partially tested by historical drilling on a predominantly east-to-west azimuth. McEwen Mining drilled these structures perpendicular to strike (from north-west to south-east), the results of which provided the basis for an improved geological interpretation and revised geological model of the Grey Fox area. The growth potential recognized through the early stages of the drilling program has now been confirmed by the 2019 drill results and the current resource estimate update. McEwen Mining considers the potential to continue to grow the Grey Fox Resource remains excellent and follow-up drilling is being designed to test priority targets.
The mineral resource estimate for the Grey Fox area was carried out by McEwen Mining and will be audited by a 3rd party engineer during Q2 2020.
The following statements apply to information contained in the resource tables below:
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that any part of the Mineral Resources estimated will be converted into a Mineral Reserves estimate;
Numbers in the tables have been rounded to reflect the accuracy of the estimates and may not sum due to rounding;
The Inferred Mineral Resource in these estimates has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration;
Quantity and grade of reported Inferred resources are uncertain in nature and there has been insufficient exploration to classify these Inferred resources as Measured or Indicated;
Mineral Resources were estimated using the guidelines set out in the CIM Definition Standards for Mineral Resources.
Table 1.1: Grey Fox Property - Mineral Resource Estimate, April 30, 2020
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 has 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."
The technical information in this news release related to resource and reserve estimates has been reviewed and approved by Luke Willis, P.Geo., McEwen Mining’s Director of Resource Modelling and Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for Mineral Projects."
CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE ESTIMATION
McEwen Mining Inc. is required to prepare reports under the Securities Exchange Act of 1934 and the Canadian Securities Administrators’ National Instrument 43‑101 “Standards of Disclosure for Mineral Projects” (“NI 43‑101”), under the Canadian securities laws because we are listed on the Toronto Stock Exchange (“TSX”) and subject to Canadian securities laws. Standards under NI 43-101 are materially different than the standards generally permitted in reports filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”).
Under NI 43‑101, we report measured, indicated and inferred resources, which are measurements that are generally not permitted in filings made with the SEC. The estimation of measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves under Industry Guide 7. U.S. investors are cautioned not to assume that any part of measured or indicated resources will ever be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. Therefore, U.S. investors are also cautioned not to assume that all or any part of inferred resources exist, or that they can be legally or economically mined.
Canadian regulations permit the disclosure of resources in terms of “contained ounces” provided that the tonnes and grade for each resource are also disclosed; however, the SEC only permits issuers to report “mineralized material” in tonnage and average grade without reference to contained ounces. Under U.S. regulations, the tonnage and average grade described herein would be characterized as mineralized material. We provide such disclosure about our properties to allow a means of comparing our projects to those of other companies in the mining industry, many of which are Canadian and report pursuant to NI 43‑101, and to comply with applicable disclosure requirements.
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 March 31, 2020.
Cash Gross Profit
Cash gross profit is a non-GAAP financial measure and does not have any standardized meaning. 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. Cash gross profit is calculated by adding depletion and depreciation to gross profit. 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 March 31, 2020.
Liquid assets
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 March 31, 2020.
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, 2019 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 management of McEwen Mining Inc.
ABOUT MCEWEN MINING
McEwen Mining is a diversified gold and silver producer and explorer with operating mines in Nevada, Canada, Mexico and Argentina. It also owns a large copper deposit in Argentina. McEwen’s goal is to create a profitable gold and silver producer focused in the Americas.
McEwen has approximately 400 million shares outstanding. Rob McEwen, Chairman and Chief Owner, owns 20% of the shares.
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Post by Entendance on May 20, 2020 0:41:44 GMT -5
"This guy Rob Mcewen has NO PRIDE. His name is on the company. If that was my name, I'd get out of my damn office, put a jacket on, and head to every mine site and get the faces of those guys running the sites until it shaped up. Someone needs to get on a conference call and confront him about his name being on the company and him not manning up." - 88maverick9999
"I am very pissed at myself....vouched for this guy....a lot of people sitting on losses and I am trying to figure how he is going to earn money into 2021. sell mexico? copper project? i'm lost..total fuckery here....so experienced he left himself with pants down and bent ass exposed" -Tom from Florida
"blames covid....gold bar impairment huge...bye bye balance sheet.....sounds drunk
31mm liq res
25mm wc
debt covenants violation but isn't he 1 of 2 parties involved?
refinance
going concern language
some assumptions absurd regarding impairment ie gold price/discount rate 9%
peter mah sounded more upbeat but he's just happy to have a job
froome q4 2021
high grade potential grey fox etc
2 years,,,more manana
permit to de water shaft....but lot of shafting happening now.
GOLDBAR disaster
el gallo meh
argentina wait and see
resource manager talks about growth? they just wrote down main asset...guys stoned
many revised plans-wonder why...
french canadian geologist thinks everythings excellent--he must be fucking short--how could i be so stupid-never trust a frenchman
have to listen to rest....video went down...I'm disgusted alliance goldbar updated result end of q2
stock piles 60000 tonnes----west pick, too...no decision yet....no grade on ore
black fox
western black fox---still couple years out.
stock west...any plan? 250000oz targeting...more resource defining...dewater/remnant mining
they need permits...they need more time...
balance sheet..q3 has to deal with terms of debt
everyone's struggling with costs....mcewens employees all in trance...they speak like brain dead
talking about reverse split...not his intention BUT...will know by 4 months
something does not make sense here in mux.
Everyone is getting forbearances on loans, low interest loans from government, etc yet poor Rob Mcewen can not? something smells here..." -Tom from Florida
"Sent to Mcewen: I listened to the McEwen conference call today in great dismay. I have been holding shares for more than 10 years. The regressive nature of the call without any true focus of a future game plan was disconcerting. I thought with the announced impairment, the team would be laser focused. Disappointment is an understatement.
Some questions I would like clarified include:
If Rob is half the party to debt covenant problem(WC Clause), why is it so hard to resolve, as Jon Tumazos brought up on some interesting points on call? It would seem paramount to rid the auditors going concern language to help maintain a $1 minimum for NYSE listing. How is MUX going to maintain the $10 million working capital minimum in the future?
Given the Covid-19 government response rescue packages (USA/Canada), does not McEwen mining qualify for any of these loans? If yes, could you elaborate regarding possibilities?
How does MUX expect to get out of this situation via generating revenue, asset sales, spin offs, etc? None of this was addressed on call. Nothing creative, dynamic, or extraordinary was even contemplated for this major derailment. I expected more.
Each year the company pointed to lackluster precious metal prices as the missing element we needed to create performance. Now gold is near a breakout, silver has gained a strong heart beat, and copper still has potential. The shareholders are bewildered because they are not participating and face de-listment. If we are still in the game, shouldn't management have conveyed a stronger tone and plan?
Any help in gaining understanding of these matters would be greatly appreciated.
Respectfully," -Anonymous
McEwen Mining, Inc. (NYSE:MUX) Q1 2020 Earnings Conference Call May 19, 2020 11:00 AM ET
Company Participants
Rob McEwen – Chairman and Chief Owner
Peter Mah – Chief Operating Officer
Meri Verli – Chief Financial Officer
Sylvain Guerard – Senior Vice President-Exploration
Conference Call Participants
Jake Sekelsky – ROTH Capital Partners
Bhakti Pavani – Alliance
Adam Graf – B. Riley FBR
Mike Kozak – Cantor FitzgeraldHeiko Ihle – H.C. Wainright
John Tumazos – Very Independent Research
Bill Power – Private Investor
Rob McEwen
Thank you, operator. Good morning fellow shareholders, ladies and gentlemen. It’s been over two months since the World Health Organization declared the COVID-19 virus, a global pandemic. Starting in late March and into early April our operations were temporarily shutdown to protect all of our employees in compliant with government imposed restriction. I’m delighted to say that none of our employees or the employers of our contractors have contracted the virus. In part, we hope this result is because of our rapid action and the biggest measures that we put in place. As of today, Black Fox is back up operating normally, Gold Bar is starting to increase activities with a focus on preparing for production. Government restrictions in our San José mine operating at 50% capacity and our El Gallo mine is limited to residual reach. We think these government restrictions will be lifted in June.
Let’s turn to Gold Bar. Last year was a disaster. I have, and I’m sure you hope our problems would be far behind us, but this year, we have experienced a significant hit. This quarter, we are reporting a very large noncash write-down of our Gold Bar Mine. This is a result of a revised geological model that reduced the size and structural interpretation of the deposit. This mine was to be a star asset for us, but so far, it is a clearly one an enormous screwup.
Many professionals tend to work for us and others who were technical consultants made the decisions that compounded to bring us to where we are today. We’re not ready to close the mine and write it off as a very bad and benefit decision for several reasons. We believe there are opportunities to improve the operation, reducing costs and also defined additional resources through exploration. Both Peter and Sylvain will speak to these issues later in the presentation.
Let’s talk about our financial results for the quarter. First, our liquidity at the end of Q1, our liquid assets were $31 million compared to $46.5 million at the end of the year. Working capital was $25.3 million. However, we are forecasting that our working capital will decrease below the required working capital levels required by our debt covenants. Therefore, we are evaluating several alternatives to refinance in order to extend and amend the turns of our $50 million debt. Materially, we have an alternative financing in place, which addresses the risk created by a potential working capital shortfall. Our auditors have added a growing concern language to our financial statement, and that is reflected in our Q1 10-K report.
Assuming a constant – the current oil price remains constant, and we’ve been able to refinance the debt and amend the turn – extended churn, we believe we have adequate cash to fund the company through 2020. The big item on our balance sheet and income statement is the impairment of the Gold Bar Mine. We had said, a consequence of changes to our resource estimate related to mine. Our finance department, our auditors and then an external property evaluators, that information we put together and performed a recoverability test using a discounted cash flow method, employing a 9% discount debate.
It also uses which I find hard to believe a long-term gold price assumption of $1,430 per ounce. The conclusion was that the carrying value needed to be impaired, as we are recording a noncash impairment, reducing plant and equipment and annual property interest by $83.8 million in the first quarter. When we combine the impairment with $6.3 million spent on exploration and some projects plus G&A, the consolidated net loss for Q1 was $89.2 million or $0.25 a share, excluding the impairment, a net loss of $15.4 million or $0.04 a share.
I would now like to provide an introduction to our new Chief Operating Officer, Peter Mah, who joined the company on April 2. Peter is someone who has worked with before at Gold Corp. He is a very accomplished engineering executive, who is a believer in innovation, likes to challenge conventional wisdom and I have to say that he has been working flat out for the last six weeks to put in place strategies that we believe are going to turn McEwen Mining into a performer.
Peter Mah
Thank you, Rob. I’m very excited to be joining McEwen Mining and the opportunity to work alongside you again. McEwen Mining has a bright future. We have some near-term operational challenges to overcome a stellar pipeline of resources and discoveries with which to grow. Before providing the operations and projects update, I’d like to share some of my background and how my experience can be applied to the challenges and opportunities at McEwen Mining.
I’m an engineer with a background in mining and mineral processing and earned a master’s degree in open pit and underground rock mechanics. Over the past 30 years, I’ve worked as an engineer, a supervisor, manager, an executive in open pit and underground operations. My experience spans feasibilities, new mine builds, expansions and a turn around. I also worked in the Red Lake Mine for nine years in varying capacities. My experience as Mine General Manager at the Victor Diamond Mine has taught me the importance of blending challenging clay rich ores and material handling systems designed to optimize processing efficiencies and throughput.
At the Musselwhite Mine efficiencies in transverse open stopeing and conveying will support the transition to production at our new Froome project. Speaking of Froome the ramp development advanced in Q1 2020 and first store is expected in Q4 2021. The firm deposit as a resource grade of 5 grams per ton is expected to provide two to three years of mill feed productive low cost transfers open stope mining method.
Continuing with the update on the growth of the Black Fox complex, the high grade mineralization at Grey Fox project, Black Box Mine and the Stock mine represent high growth potential to utilize the excess capacity at the Stock mill. High grade open pits are being evaluated at the Grey Fox project. Permitting is set to begin in Q2 2020 and expected to take approximately two years. In addition to the open pits underground scenarios are being evaluated. The Grey Fox project is expected to grow into a long life core asset for the company.
The company has received permit or received the permit to dewater the stock shaft and is evaluating the options and costs to reaccess to mine via the existing shaft. Resource definition drilling is required to further advance this exciting discovery. High grade intercepts at stock use are also encouraging and there is strong potential for underground and/or open pit mining. At the Black Fox Mine lateral development was boosted in Q1 increased or faces and access to new stoping areas in the west side of the mine. Other costs and productivity improvement plans include reducing stope dilution through improved drill control and capable through trials, more focused exploration and mining in the upper part of the mine to reduce haulage costs, ground control optimization, reductions in rehab and improving development rates.
Moving to Nevada. Results at the Gold Bar Mine were disappointing. An estimated 25% to 35% reduction in contained ounces in the gold pick deposit is expected. Drilling resource modeling updates and determination of the best business case going forward is ongoing and expected to be completed in early Q3. Key drivers for rising costs and underperformance in 2019 is being analyzed for improved solutions. Some areas for improvement being examined our resource reserve definition drilling to improve mine planning delivery, improved stockpile management and blending, better unit mining costs and productivities with a dispatch system, assessment of run-a-mine heap leaching, improved grade ore and blast control practices.
In April the mind began a stage returned to operations that included maintenance, site cleanup and limited stripping for the next drill ready ore in west pick and processing of stockpiled ore. Ore remaining remains on hold as management adjust plans for operations. Gold Bar South is in the permit stage and is expected to begin production in the second half of 2021, ongoing metallurgical work indicates favorable metallurgical recoveries in excess of 70% with a potential for run-of-mine heap leaching. The mineralization starts at surface and exploration is plan targeting the extensions.
In Mexico, our El Gallo mine continue to produce gold from residual leaching. The Phoenix project study demonstrates robust economics and we expect to finalize this study in the second half of 2020. At our San José joint venture mine in Argentina operations remain at 50% capacity due to the government travel restrictions.
I will now turn the call over to Sylvain to take you through the exploration update.
Sylvain Guerard
Thank you, Peter. Our exploration over the last two weeks is focus on three properties, Black Fox and Stock interment, Ontario and Gold Bar in Nevada. During this time, through our strong commitment to exploration, we had the results that are clearly and beginning the high quality of our projects. Our drill programs have quickly driven the establishment of a discovery process that is contributing to our resource growth and to the definition of an outstanding project development pipeline.
Here are some key highlights starting with Nevada. At the Gold Bar Mine, the startup of mining at Gold Pick West indicated lower grades and tonnage than expected and has led to our revision of the resource model with more emphasis on the geological and structural controls of the organization, which is now better exposed in the open pit. To assess with the model review and to derisk short-term mining, we have designed an in-pit drill program consisting of RC reverse circulation and core drilling. This drilling started in late March and about 15,000 meters have been completed so far in Q2.
During results, as shown on the slide, are confirming significant gold mineralization over the respect area and will assess reinforcing our model. Significant drill results have been defining, first, in-pit mineralization derisking mining with results such as 5 grams over 64 feet, including 11 gram per ton over 70 feet and 3.4 over 90 feet. Also strong intersection beneath the revised pits that’s up 2.9 grams per ton over 82 feet, 1.2 over 144 feet, and 1.7 grams per ton gold over 225 feet and potential to extend mineralization to the Southwest of Gold Pick, where are we at an intersection of 0.9 gram per tonne gold over 120 feet outside the pit boundary. And update resource estimates using recent pit mapping all is to recall a new drilling information and the revised mine plan are expected to be completed by the Q2.
In 2019 significant drilling or cure of the Gold Bar South deposit, where we have reinforcement jobs called instructional understanding and increased confidence in the resource of this quality satellite deposit to the main Gold Bar operation.
The upside potential to grow the resource of the Gold Bar South, which sends out 63,000 ounces measure indicated remained strong and the drilling program expected to start later in Q2 will focus on three main targets. First, the South extension as a deposit is open for the last drilling in the – this area returning significant results as shown on this slide. Second, the Northern portion of the deposit which was only partially tested, and finally, Northeast Southwest structures that control higher grade mineralization.
Moving now to Timmins, at the Black Fox Mine, our focus or resource and reverse expansion is on the West side of the mine from 300 to about 700 meter depth. We have generated multiple positive intersection including high grade pits typical of the Black Fox style of mineralization suggesting a potential losses increase over these targets area. The most significant recent intersection, such as 79 gram per tonne gold over 2.9 meter and other high grade pits are shown on the figure where the yellow highlights are indicating 2020 drill results.
At Grey Fox now, we are pleased to announce that the mineral resource estimate for the Grey Fox deposit has been updated with exploration drilling completed in late 2019. The updated resource estimate contained 888,000 gold ounces at 7.1 gram per tonne gold in the Indicated category, and 173,000 gold ounces at 6.6 gram per tonne in the Inferred category, representing 43% and 30% increase respectively compared to the previous estimate.
The Grey Fox gold mineralization – mineralized system is large covering an area of 1.5 kilometer by 1.5 kilometer and it's compose of five distinct deposits located on our Black Fox property, 2.25 kilometers Southeast of the mine. We believe the potential to grow the Grey Fox resource is excellent. Open pit and underground mining scenarios are being evaluated for the potential of developing the Grey Fox deposit. More information above these evaluations would be provided later in 2020.
On the Stock property, our exploration is focused on the 3 kilometer trend reflecting a strong gold system that all of the Stock mine and newly defined zones of mineralization. The main highlight of our 2019-year program is the discovery of the significant use on the organization at Stock West. We have a total of 31 drill holes completed into this area. The gold mineralization is associated with quartz veining and [indiscernible] pyrrhotite hosted in the coarse-grained clastic rock. During the intersections average is around 5 gram per tonne gold over widths ranging from 15 to 20 meters and occurs in the area measuring 265 meter along strike and 200 meter vertically. The new mineralized zone is located less than 350 meter from existing underground development at the mine and within a kilometer west from our mill.
The Stock West remains open in all directions, and our exploration program is designed to produce an initial mineral resource estimate and also to test the extension of the mineralization in order to assess the potential size of the discovery. Our exploration effort at Stock produce results quickly with the first infra resource of Stock East in late 2018 and then we upgraded it to indicated resource category at the end of 2019. Stock East is a shallow zone of mineralization of thing 121,000 gold ounces located within one kilometer east of our processing mill. Our 2019 program generated some of the best intersections so far at East zone including 63.6 gram per tonne over 6.2 meter and 34.7 gram per tonne over 6.5 meter suggesting potential shoots.
The historical Stock mine, we have demonstrated that the mineralized gold system is open the depth extension of the old mine with a deep intersection of 27 gram per tonne gold over 7 meter, which include 0.8 meter drilling 300 gram per tonne gold. I prefer, it's called that of approximately 900 meter.
To conclude, but I would say that we are well positioned to keep adding value going forward based on solid exploration foundation we have established in payments. In only two years, we have developed a strong exploration pipeline which goes from target delineation and during testing to resource estimations. Our rate of deal success is increasing. We have strong positive momentum and remain focused on the few high quality targets including new discoveries that are showing excellent upside and development potential at Stock West and Grey Fox.
In Nevada, at Gold Bar, mining at the Gold Pick deposit reveal a different geological filling and control of the gold mineralization then was the foundation of our feasibility study. With this new understanding of the geological setting our in-house technical team believes there is more gold to be found on and around our highly prospective district scale of Gold Bar property.
That concludes our presentation. We will now open the call to questions. Thank you.
Jake Sekelsky, ROTH Capital Partner
Thanks for taking my questions and I hope everybody's well. It looks like work at Grey Fox is progressing pretty well. I mean, it's good to see resources expand there. Are you able to just provide any color on the environmental studies and permitting work that might need to be done as you work towards bringing it into the mine plan?
Rob McEwen
Sure. I'll just ask Peter to jump in on that question.
Peter Mah
Yes. We actually have all our AFE in draft form ready to approve various works on baseline, water management, water studies the movement of the Creek that our North and South pits, our we'll mine through so that sort of early baseline information and development of the project description.
Jake Sekelsky
Okay. And have you seen that process slow at all just given the operating environment we're in right now with the pandemic or?
Peter Mah
No, actually we haven't seen any impacts on that. There's been – we've been all working virtually and engaging with our consultants through the RFP process and the various departments. So we've not seen any real impact there.
Jake Sekelsky
Okay. That's helpful. And then just at Gold Bar, it looks like activities right now are focused on input drilling at Gold Pick and some stripping activities. Just trying to get a handle on the budgeted costs for these during Q2 and going forward. So are you able to provide any insight on that?
Peter Mah
No. Not in this time. As mentioned, we're evaluating the plans forward and we'll come forward with that. And at the end of Q2, early Q3 as mentioned.
Jake Sekelsky
Okay, fair enough. That's all I had on my end. Thanks again.
Bhakti Pavani, Alliance
Good morning guys. Thank you for taking my question. I would like to start with Gold Bar, if I correctly understood you had about 15,000 meters of drilling completed at Golden Pick. Just wanted to understand, do you think that drilling is sufficient enough to put out an updated resource or do you plan to further the drill and de-risk the deposit?
Rob McEwen
Sylvain, would you like to answer back these questions?
Sylvain Guerard
Yes, sure. Good morning, Bhakti. Yes, our drilling so far have been focused on the West Pick part of the Gold Bar deposit, because of this is where we are seeing short term mining. So we want to de-risk. We want to also hopefully regain the additional answers that is currently lost our falling under the revised pits scenarios and we also testing extensions around the pit at the same time. This drilling is critical for those reasons and other things that the land is to move to Gold Bar South, where we see good upside to increase the resource there and to come back up Gold Bar for follow up drilling, including on the East side of the deposit. We will have a resource update at the end of Q2 based on the revise interpretation of the structural setting based also on all of the available historical new drilling information. So to answer your question, this is key information that will contribute to new resource that would be completed by the end of Q2.
Bhakti Pavani
Okay. Thank you. One more question with regards to Gold Bar, you did mention in your prepared remarks that you have slowly started stripping and currently processing stockpiles. At this stage, what level of stockpiles do you have at site?
Rob McEwen
Peter, could you address that question?
Peter Mah
Yes, we had some stockpile material left just before shutting down for COVID to below 60,000 tonnes that will be used up in the next four or five days. And then we have another stockpile of broken ore in West Pick about 60,000 tonnes that we're contemplating milling. But we haven't taken that decision yet.
Bhakti Pavani
Could you maybe provide some kind of color on the grade?
Peter Mah
Sorry, I couldn't hear the question.
Bhakti Pavani
I said, could maybe provide some color on what kind of grade does is there in the stockpile of the broken ore?
Peter Mah
I don't have that off the top of my head. But yes, I'm sorry. I don't have that answer for you.
Bhakti Pavani
No worries. Moving to Black Fox, you have pretty good results at Grey Fox and the drilling results shown in the slides looks pretty good. So at this point you guys are still developing the access plan for Froome, is that on target and with the drill results present to date, what does it imply for Black Fox? I mean, do you see that – do you see the mind life expanding within the Black Fox mine or do you think Froome will be replacing the Black Fox mine over the next two years?
Peter Mah
Yes. So the decline is about – straight line about 160 meters in, we've got about 800 meters to get to the ore. The schedule that I quoted earlier is taking into account where we are currently in the decline and targeting first for Q4 2021. The idea is that we'll extend hopefully on this West Flank the new discoveries that Sylvain’s team and exploration have found in the Western area of Black Fox that will actually extend out Black Fox mining itself as well. But initially it was planned. Black Fox would finish mining and Froome would start the additional development I mentioned earlier, targeting some of that West Flank area that we're drilling now and having good success on hits. So, my expectations is we’ll see some improvement on the Black Fox mine side as well.
Bhakti Pavani
That’s great. Thank you. With regards to advanced projects, there was about a $1 million charge in Q2 with regards to Canada, I’m assuming that’s related to the actual development for Froome. Question is, how much of more development cost is remaining for the development of Froome at this point? And the second question is with regards to the $1 million cost in Mexico, which is related to Project Phoenix. So, how much of that cost still remains to be incurred in Mexico at this point?
Rob McEwen
Meri, if I could ask you to provide those numbers, please.
Meri Verli
Sure. So in terms of Froome, we have forecasted another around $10 million, $10.5 million for the rest of the year. And then Phoenix there could be, just to know for Phoenix, it includes also property holding costs. So, we might have something similar for the rest of the year.
Bhakti Pavani
So, is it going to be a $1 million a quarter?
Meri Verli
No, not the quarter. Not the quarter. Like, something similar, for I think it comes at the second half of the year. So, around another $1 million and there may be some like really small amounts.
Bhakti Pavani
Got it, perfect. Thank you very much. That’s it from my side, guys.
Rob McEwen
Thank you, Bhakti. Next question.
Adam Graf, B. Riley FBR.
Hello guys. Thanks for taking my call. Just question, Rob, on the overall graphical development plan that you guys presented to us last time. Has there been any updates there on schedule? I think you guys mentioned a little bit about this potential for Western Black Fox development. Has there been any update there on the overall coordinated plan?
Rob McEwen
Not in terms of schedule. No, it’s still a couple of years out, being possible production.
Adam Graf
And then just as far as the development over to Stock West, are you guys holding off until your breaking – broken through on Froome or what’s the development plan there just to drift over to the Stock West?
Rob McEwen
Peter, do you want to comment on that?
Peter Mah
Yes. We have about 250,000 ounces of mineral inventory there that we’re targeting, which is enough to pull the trigger on the development, but we’d like to get a better resource definition drilling done first. And as well the permit I mentioned that we received to dewater the shaft – the main shaft at stock is another option we’re looking at that could connect into that decline and to any potential remnant mining that would be in Stock mine. So, we’re evaluating the costs and the trade-offs of what’s the best way to go about that while further drilling is required.
Adam Graf
Could you guys get into the Stock mine to do some remnant mining there prior to the achieving permits for Grey Fox?
Peter Mah
Yes. The Stock mine is permitted and as I mentioned, we have the permits to dewater now. And that’s exactly the opportunity we’re examining its early stages. We’re getting some quotes on what it would take to dewater the shaft and restore it to your production shaft or an exploration shaft. So, I’m just going through some of those evaluations over the next quarter.
Adam Graf
And would that be – you’d be looking at that prior to development of – or prior to at least to drifting over to Stock West to do underground test mining and structural confirmation and all that?
Peter Mah
That’s a possibility, as you probably are aware from previous communications. It’s a fairly lengthy, about – 2.5 kilometer development program for Stock West. So, we’re looking at opportunities. Is there any way to bring more to the mill quicker and get access for drilling, especially, the deeper targets that Sylvain mentioned, it would be helpful if we could get down on some of the lower levels of the existing mine, provide some drill platforms there. So, those are some of the things we’re looking at and hopefully, you can come forward with some exciting options on how to develop that mine.
Adam Graf
Would you need additional permits for if you were to open pit Stock East? And if you didn’t, at what kind of – I know it’s lower grade, but at what kind of gold price is all of a sudden that ore become interesting, because you have so much extra mill capacity.
Peter Mah
Yes. We would need extra permits. We haven’t actually advanced that even though they’re a fairly nice resource there. It’s near proximal to some water and a river there in some low lying areas and as well it’s open further to east and at depth. So, we’re not sure, the size of it yet, to be able to go to permit and as well as we’ve hit some really high-grade intersections and sheets. So, there’s an underground trade-off versus a pit and more drilling to take that decision.
Adam Graf
All right, great. Thank you very much.
Mike Kozak, Cantor Fitzgerald
Hi guys. Thanks for taking – hi, there. So, just looking at the balance sheet here with the Gold Bar challenge is going to impact on near-term cash flows for the company, I mean to what degree can you cut back on some discretionary spending? And then are you, in fact, looking at cutting back on things like exploration G&A, sustaining CapEx? And if so, by how much?
Rob McEwen
I’m assuming the current gold price stays or goes higher and we can refinance the terms under our debt. We should have adequate capital to go through the year. We’ve been looking at about $5 million of exploration at both Black Fox and Gold Bar and about a $1 million in Mexico and price has changed then when we change our plans with them.
Mike Kozak
Got it. And I think the first principal repayments on that debt started, I think Q3. So, I mean presumably, you want to refi that debt, I guess in the coming months?
Rob McEwen
Yes. That’s correct.
Mike Kozak
Okay. All right, thanks. That’s it from me.
Rob McEwen
Okay, good. Next question.
Heiko Ihle, H.C. Wainright.
Hey, name of mine got ready to ask and then got skipped over. Thanks for taking my questions, guys. I hope everyone on this call and their families are staying safe and I’m sort of grateful to you guys still over $6 million exploration given the longer-term potential of the assets there. Just to follow up on one of Jake’s questions earlier a little bit. I mean, in regards to Sylvain on your remarks, you spent a decent amount on the pre-stripping at the Gold Pick West pit. Should we expect to see expenditures in that regard in Q2 and Q3; and building on that, I mean how much potential is there totally in mining in that area and essentially just move it elsewhere?
Rob McEwen
Peter, do you want to talk about that?
Peter Mah
Well, we know West pit is a positive business. So, we’re just looking for the best way to go about and carry the mine forward, and then make improvements to the overall cost and productivities before we restart. Once we get the updated resource model that Sylvain mentioned, we’ll rerun our pit optimization of a better view on strip. But at current, there’s nothing major in terms of stripping that’s the change from the past and what was the second part of your question?
Heiko Ihle
How much – I think you’ve got it pretty well. I mean, it was – how much do you seem expenditures and how much is there in order to could you possibly delay to mining there?
Peter Mah
Delay the mining?
Heiko Ihle
Just like move it elsewhere.
Peter Mah
Oh, and go after like Pick East or something.
Heiko Ihle
Correct.
Peter Mah
Yes. I mean, we’re right on top of the Pick West ore, our current thinking is to mine out Pick West and then move to Pick East. But there may be an opportunity to come down the mountain there, and do it differently than previously. So, once we see the resource update, we’ll be looking at those scenarios.
Heiko Ihle
Got it. In regards to the listing, I mean close to 90% of your volume is on the NYSE, I look this morning, it was 4.2 million [ph] shares versus 480,000 on average per day in Toronto. But clearly, the listing is extremely important. Can you walk us through some of the timelines that you have that you’re willing to disclose, but when you’d have to consider like a reverse split or like any other options in order to make sure you can stay listed given that there is a variety of a pool processes that would be needed if you were to do some of the tougher choices?
Rob McEwen
Sure. Well, one, it’s not our intention to do a reverse split. And the New York Stock Exchange and neither that COVID virus issues has pushed the deadline for compliance yet that requirement of being over $1 out to early December. We’ve got a good runway in terms of timing, you’d have to give notice to shareholders and so you probably have to be looking two months before that, so into early October.
Heiko Ihle
Okay. So that’s actually much more compressed than I thought it would be. I mean, because I mean at this point, six and a half months, but it sounds like you’ve got four months left to come back and presumably, that’s actually going to happen.
Rob McEwen
Yes.
Heiko Ihle
On that same topic, can you venture a guess on your G&A savings during Q2, and thereafter, given to you essential stoppage of travel, conference attendance. Are you looking to maybe, downsize your office a little bit? How meaningful of a number do you think you can get with everybody working from home and how sustainable do you think it is please?
Rob McEwen
Well, we had a lease. I’m not sure when our office lease – our head office lease expires. From what I can gather, I mean people don’t mind working from home some of the time, but they don’t want to do it all the time. So, we still need an office presence. We have not investigated downsizing the office, although that thought has been moved around, because of the familiarity people are getting with using technology to work remotely. We haven’t – I can’t give you a number on Q2 or Q3 as to where we can – the savings we might achieve at this time.
Heiko Ihle
Fair enough. Excellent. I have someone else who scooped up at the house – let’s we can all go back to an office at some point in time. Stay safe, guys. Thank you.
Rob McEwen
Thank you, Heiko. bye. Next question.
John Tumazos, Very Independent Research.
Good morning, Rob. Thank you for taking my call. Did the Gold Bar charge wipe out all of the PP&E, but none of the working capital?
Rob McEwen
Meri? Is there anything to add?
Meri Verli
Yes, of course. We haven’t really finally allocated the charge between – basically between PP&E and mineral interest. But we’ve determined that the fair value of mineral corporate or net assets, let’s say, it is $47 million. We’ll be splitting it and allocating it at a certain point in Q2.
John Tumazos
Thank you. Rob, the issue with the bank covenants reminds me of a training Class I was in, and is a graduate student for commercial bank lending officers at Morgan Guaranty Trust Company.
Rob McEwen
Yes.
John Tumazos
And a fellow named Charleston Chatfield III, give to our presentation on relationship banking and winning back the firestone account. And I’m a little bit confused that the lenders like your company enough to loan you money and now at sort of an awkward time, they’re enforcing the covenants and have triggered a going concern. It would seem a lot simpler if they just charged you a fee to waive the covenant, which banks like to charge fees or sat down with you privately to seek a remedy before it sort of triggered all these different events. Are the lenders just fundamentally uncomfortable with your strategy of assembling assets and drilling exploration? Or do they like the managers that departed more than the managers in place? Or are they just trying to make you write a personal check for $50 million to settle the loan? It’s just it’s sort of a weird situation. And to the extent you can make any comments, if you understand the situation yourself, I’d appreciate your insight.
Rob McEwen
Sure. We’re not – we haven’t violated the covenants on the loan for the first quarter. It’s the second quarter that we’re concerned about and going forward. The gap was structured with a three-year term, but a partial repayment of principal starting on the second anniversary. So that’s where we start getting into working capital issues. That – and that would amount to about $2 million a month or about $10 million for the year, principally in impairment. They haven’t – the lenders are concerned, and they just had this covenant that you had to maintain a minimum of $10 million working capital at the end of each quarter. But we’re just looking ahead. And that’s where it’s the partially payment and the working capital clause that got the auditors to say there’s a growing concern over the next 12 months.
And we haven’t gotten to saying, I should write a check. We have talked to another party or two. And their creditors, I have half of that yet. Creditors put up 25 and I was another creditor for 25. So and I looked at it and said, “Well, I think we’re looking to refinance. And if we can refinance, we seem to have some agreement at the moment that we could extend the term and lighten or light and extend the partial repayments. That’s where we got. And as to that creditor in the half of the debt there just they like it, but they didn’t expect nor did we the problems that we’d encountered with Gold Bar.
John Tumazos
Thank you for the explanation. The Grey Fox seven-gram per ton material seems really good. Given the need to do some development to ramp into it and other logistics, dewatering, ventilation, all the infrastructure to get into it. How many quarters or years out or is that seven-gram material from going through the mill?
Rob McEwen
Peter, would you like to speak to that question of John?
Peter Mah
Yes. So the resource just came out last week. So we haven’t actually updated the open pit and underground scenarios for the announcement you’ve just heard from Sylvain. So, I really can’t speak to that yet. I think what I can say is, the new discovery at Gibson is an exciting discovery potential another open pit or third one, we have the 147, the contact and Gibson, and then looking at how undergrounds fit around those and transition and doing those trade-offs to look at what has the best margin and returns and what combinations of open pits and underground mining. So quite a bit of work coming ahead of us there.
John Tumazos
Do you think it’s a year to figure it out and then a couple of years to get into it or longer?
Peter Mah
No, I think it’s probably six months of work, mine planning where it won’t take that long, but other technical evaluations we are proceeding with the Grey Fox pit permits on the 147 and the contact, and we’re probably going to roll in initially expedite the work on the Gibson pit and include that in the project description. So our first priority would be the open pit. And then making sure how our footprint fits together and how the underground fits together with those pits so that we’re not sterilizing good ore still a number of trade-offs need to happen there, but we are proceeding with the permitting for the open pits.
John Tumazos
It’s a little bit like a basketball game where you got your three-point shooter on the bench with the NYSE listing requirements in the bank loan and all these different pressures on the company, that seven-gram material going through the mills, you’re three-point is you need the same basket?
Rob McEwen
Yes. We’re very excited about it. It is harder ore, but we have to be a bit measured in how we bring in, in what quantities relative to the mill capacity. So that’s other parts of the trade-off and how it all blends together. With the rest of the feed. But yes, we’re very excited about it. I mean, very high-grade pits and very attractive underground ore, and we’re certainly going to be going on it as hard as we can.
Bill Power, Private Investor.
Yes. Thanks for taking my call.
Rob McEwen
Hi, Bill.
Bill Power
Hi, Rob. And thanks for taking my call this morning. I had a couple of different questions. But I guess the first one would be that you said that in Gold Bar that the auditors were using a price of 14, 30 or something along those lines? I would assume that it doesn’t sound like they were using the future strip prices going forward or anything along those lines. I guess, have you worked out internally if you use the forward strip of its substantially higher, as you – I’m sure you’re aware, what the write-down would have been by any – or is it materially different?
Rob McEwen
It would probably be different. I know, to answer your question, I don’t believe I looked at prices higher than 14, 30. They employed endless projections and apparently, we have a – I mean you have Bank of America, $3 million, but they look beyond that and said, analysts were still down around $1,400 going into the future.
Bill Power
Okay. Okay. And so as far as, they didn’t – basically, they were using analysts. They weren’t using what actual pricing is in the future’s market. That didn’t seem to impact at all.
Rob McEwen
No, no.
Bill Power
And is that a traditional way of doing write-downs? Or do they go to – because this is kind of the – the reason I’m asking is, this is the second time in less than a year that they wanted to change the accounting for the end of mine life in Mexico as well as they wanted to – like we had talked about made up a new category to put that into. And it appears that by using analysts, this seems as though it’s a little random to not what you could – what the future’s market is telling you to price it?
Rob McEwen
Yes. I probably would have – I would have picked a higher price this is my view on the different market, but I mean.
Bill Power
And that’s fine. I – it just seems as though it’s a little bit when you – I guess, for the – in other industries, there is a pricing that is very clear and well established, whether it’s Comex or whatever. But anyway to move on from that, getting to the Black Fox mine, in the last quarter, you had an average grade of 4.58 with a process rate of 3.53, and that’s down materially from the first quarter of last year, but yet you were still able to come in very well on cash costs. And the all-in sustaining was actually lower. How did that seem to – how did you kind of come to those numbers? If you could shed some light on that.
Rob McEwen
So, they’re improving their operations a bit. There were a lot of problems in the first half of 2019 that didn’t occur. We had a crusher buyer. Then it was followed by flood, those weren’t reoccurring events. That’s why the costs are coming down.
Bill Power
Okay. And do you expect to return to a higher grade later this year? And I guess, are there further improvements that you can see for the costs, at least the cash costs coming down further?
Rob McEwen
So, we hope to have better recoveries. Solution has been a problem at the mine or dilution due to mining and the ground control, and we hope we have some entries to that. Peter, do you want to jump in there?
Peter Mah
Yes. On the dilution [ph], as to we are related to the falls and here in the hanging walls. So, I’ve been discussing a lot with team of implementing capable thing trials and different techniques to try and minimize this start and onset of at least once it starts traveling up to that for that sort of being a historical challenge, especially at the lower areas of the mine, the upper areas of the marketing in the West Flank, 300. These are new areas of the mine, which aren’t around an old remnant mining. And so another reason we’re targeting in our development to get access to new areas should help the overall solution. But I’m not expecting yet.
Bill Power
Okay. So that sounds like you have it under control and are expecting improvements on the – at least the grade wise going forward. Is that fair to say?
Rob McEwen
Yes, we’re targeting that, I think it’s going to take time to prove it out and hone it. There is a good opportunity there to improve things.
Bill Power
Okay. And last question today. I appreciate all your patience. As I’m reading through the announcement down at Grey Fox, were the Whiskey Jack discovery – or I don’t know whether that was included in the discovery, but there seems to be some – it didn’t – it wasn’t mentioned specifically that it was included in the updated resource. Was the drilling done at Whiskey Jack included or is that something to be put in, in the future?
Sylvain Guerard
Well, I can answer that. Yes, Sylvain speaking, good questions. And yes Whiskey Jack is included in this revised updated resource. We have for the first time included Gibson, Gibson is part of Grey Fox. It’s to the West, hosted in a different host rock. It’s in a syenite. But we know now that the structure is in the vein that control mineralization cut all units from mafic volcanic to sediment to syenite, all of the rocks that can be potential host. And we merge in this updated resource contact zone and we added Whiskey Jack to it, so it’s part of what is shown as contact zone in this revised resource. And as you know we have spectacular results there 53 grams 7.4 meter at Whiskey Jack. It’s a new discovery with just starting point but can have to be included in this resource.
Bill Power
Okay. Well, thank you very much for all your answers this morning.
Rob McEwen
Thank you, Bill.
Mike Hawkins, Unidentified Analyst
Hi guys. Thanks for taking my call. I just have a few questions on Gold Bar. Given the comments about the mineralization being more structurally controlled at Gold Pick. Can you provide some high level guidance on what you expect the impact to be on mine grade and dilution and strip ratio at least for this year? I think there was some comment about stripping similar, but any comments on that would be helpful.
Rob McEwen
Peter, do you want to talk about that?
Peter Mah
Yes, as I mentioned, we’re waiting on the resort update in order to provide those numbers and those will come out towards the end of the next quarter.
Unidentified Analyst
Okay. But can you at least comment on sort of at least geometrically, it’s more structurally controlled and less bedding controlled. So does that mean that they’re narrower zones that have to be mined in a more narrow fashion or any commentary around that?
Rob McEwen
Yes, I think the slide that Sylvain showed of all the drill intercepts gives you a good idea. It hasn’t significantly changed the actual waste development required to access West pit. So we have, we’ll have full access to the – or some of the drilling results that Sylvain mentioned are outside of our current optimized pit shells, so with the old intermodel. So we’re anticipating some of those waste blocks to transition into West pit or really I can’t comment until we see such resource model in both the cones and then do all that good stuff.
Unidentified Analyst
Okay. And maybe just to follow-up on that. It just gives you the impression given the reduction in – or the, I guess the anticipated reduction in ounces and the commentary around it being structurally controlled that the zones are going to be different geometry than what you initially anticipated, and I’m thinking narrower. But the drilling that you showed has some pretty wide intercepts. So just wondering if you could help me reconcile what’s – what you think is going on there?
Rob McEwen
Right. Yes, well the actual, the three zones you have the West, the Central and the East haven’t changed all that much. The drilling that Sylvain mentioned is confirming the mineralization in West pit and that’s been most of the focus in near-term mining. The majority of the ounces were lost in the write down in the – what we call the hump area and it’s the stripping program we moved from West pit towards East pit. I think, so that can give probably a better color on that. Sylvain, could you speak to that issue?
Sylvain Guerard
Yes, sure. Sorry, I was on mute. Yes, the control of the mineralization all the way has been both sweaty graphic and structurally controlled. So structured across the right stratigraphical bedding horizon and mineralize the rock there. The big difference is the weight that has been allocated to the bidding or stratigraphic control versus the structural control. And this has impacted of course, the way the model – the resource model has been designed in the past. As we get better exposure to the bits and of course a lot detail coming from last hole and mining, we get better definition of what’s going on. We started with Cabin, overall, the reconciliation was okay when we moved to the West pit upper bench we saw less and less answers and we decided to go back with drilling, not just drilling, but also core oriented core, to look in more detail of the rock and better understand the control of the immunization.
The drilling so far and together is showing that gold is there, grade is there, of course, we have to wait as Peter said, for our revise resource update and what would be the revised mine plan based on this global revision that we are doing right now. And based on those new submission or we’ll see what business, what the – where we stand with that Gold Bar.
Unidentified Analyst
Okay. And could you comment on sort of the wits of those structures that you see carrying grade versus what you saw in the bedding controlled mineralization?
Rob McEwen
Yes, there is actually a lot more structures than what was previously interpreted or understood. More we get them formation more we realize the structural setting is complex, which is not necessarily a bad thing, but it’s different how it was understood and interpreted so we still have significant width associated to structures to multiple structures, intersection of structure generating a wider zone of mineralization. The biggest impact we are seeing is that the model itself would be spreading less away from the structure than it used to do as parts of the last estimation.
Unidentified Analyst
Okay. Right.
Rob McEwen
Yes, Mike. It was a real blindside. I mean their structural interpretation was the foundation for the feasibility study in the mine plan and then it was built on that basis and then the same party came along and did that based on the mining and says, Oh, well it’s not laterally dispersed or spread. It’s more vertically controlled. Thank you very much.
Unidentified Analyst
Yes. Okay. And maybe just one more question on Gold Bar. If I look at just the cumulative ounces placed on the pad and the – does it have been produced, I get a cumulative recovery rate of about 52% after a little over a year of leaching. Is that correct? And can you comment on how it compares to the feasibility and how you think about recoveries going forward on the project?
Rob McEwen
Peter, would you like to answer that? Peter is only been with us since April?
Peter Mah
Yes. I’ll do my best. If I recall, I think we ran the numbers in April, it was about 55% recovered. So we’re – you’re pretty close there. The actual recovery rates are slower than what the FS forecasted. So you’re seeing a bit more of a lag and it takes longer to get up to FS levels. But largely the expectation is to get towards the FS level by the end of mine life and cumulative. There are some impacts with a shorter mine life, obviously less each time. So as we update this resource model and the life of mine, we’ll be able to understand that better. We have done some leaching tests with Forte and are in the middle of updating the recovery model to reflect the combined run-of-mine placement on the – and agglomerated, and so far, our production is following those curves very well.
So Forte has work will culminate and complete in August and through that study we’re also going to take the new updated model, which will include a clay model and a preg-robbing for the carbonaceous material. We’re going to feed all of that into an economic assessment to find the best net present value approach for agglomerated versus [indiscernible] hybrid of agglomerated and [indiscernible].
Unidentified Analyst
Okay. And do you understand what’s causing the difference in recovery versus the initial test work at this point? Is it that – is it clay that’s being placed on the pad or carbonaceous into? Or is it something else?
Rob McEwen
It was a combination. And hence, why I think we’ve taken the model over internally and planned to create those models and refine them with our in-pit mapping, so we can – that’s what I was getting out of out blending. And in terms of the preg-robbing segregation, but right, we segregate all the carbonaceous material out. But early on in the build, there was some tonnes placed on there. I can’t recall the amount, but a small portion of the area which has been taken into account in the model.
Unidentified Analyst
Okay. Great. Yes, that’s it for me. Thanks very much guys.
Rob McEwen
Thank you, Mike. Thank you, operator. Thank you everyone for joining us. Stay strong and healthy. Thank you. Bye.
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Post by Entendance on May 23, 2020 3:16:41 GMT -5
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Post by Entendance on May 27, 2020 22:33:48 GMT -5
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Post by Entendance on Jun 9, 2020 3:42:55 GMT -5
On June 10, 2020, from 1:00 PM ET, A.G.P.'s Gold Rush will feature McEwen Mining.
Register for the webinar here
If anyone is interested in what Rob and Peter discussed at yesterday's webinar, then read here  E.
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Post by Entendance on Jun 16, 2020 23:55:48 GMT -5
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Post by Entendance on Jun 18, 2020 2:25:14 GMT -5
McEwen Mining Operations and Exploration Update
June 17, 2020 TORONTO, June 17, 2020 -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to provide an update on our Gold Bar and Black Fox operations and mine exploration drilling.
Black Fox Mine, Canada (100% Interest)
Mining at Black Fox was suspended from March 26th to April 14th to allow time for management to evaluate and adapt to operating with the risks associated with the COVID-19 pandemic. Since April 14th the mine has been operating following corporate and provincial COVID-19 guidelines. We are pleased to relay that the local health unit indicates that no new cases of COVID-19 have been reported in the Timmins region since May 10th. The temporary suspension and subsequent staged ramp-up back into production impacted our mining plan for 2020 and we are in the process of adjusting production forecasts. Guidance for the second half of 2020 will be provided with our Q2 results. Development mining remains on target and focussed on increasing access to additional mining areas. Underground exploration drilling along the upper west flank of the Black Fox mine (see Figure 1) encountered high-grade results within 400 feet (120 m) to the west of the nearest mining area. Infill drilling also returned very high grades close to existing workings. More underground development and drilling will be further required to demonstrate continuity of the mineralization on the west extension of the mine. The occurrence of high-grade gold intersections suggests the potential to define new gold resources to the west. Selected 2020 drilling intersections include: here
A complete summary of new underground drilling results from Black Fox is available here
Figure 1: Black Fox Mine – Longitudinal SectionhereProgress on the twin ramps to access the Froome deposit encountered a temporary delay in order to recondition the pit wall above the access portals. Priority work on the pit wall has been completed and ramp development resumed on June 16th. Gold production from Froome remains on target for late 2021.
The resource estimate for our Grey Fox target area, 2 miles (3.2 km) southeast of the Black Fox mine, was updated and increased by 43% (see news release from May 19th, 2020) to 888,000 gold ounces at 7.1 g/t in the Indicated category, with an additional 173,000 gold ounces grading 6.6 g/t in the Inferred category. Work on conceptual engineering and permitting is advancing, and we expect to commence an economic study later this year. Trade-off evaluations are expected to include open pit and underground mining scenarios with a production objective of at least 100,000 ounces of gold per annum from the existing Stock Mill. We plan to accelerate development of the Grey Fox Project to coincide with the completion of mining at the Froome deposit.
At the Stock property our exploration team is designing surface drilling to infill and evaluate the growth potential of the Stock West mineralized zone discovered in 2019 (see news release from October 28th, 2019). We are also assessing the potential of reopening the historic Stock mine in order to provide underground access to the Stock East and Stock West mineralized zones.
Gold Bar Mine, USA (100% Interest)Mining at Gold Bar was suspended on April 1st and restarted May 6th at the Pick West deposit on a one shift per day basis. An updated resource estimate and mine plan is expected to be completed in early Q3. Fortunately, to date we have not had any COVID-19 cases among our workforce.
Infill and confirmation drilling conducted in and around the Pick pit since mid-March 2020 (see Figure 2) has increased our confidence in the revised geologic model and demonstrated potential near mine exploration opportunities to the southwest and northeast. Selected intersections from the infill drilling program in Pick West include: here A complete summary of new surface diamond and reverse circulation drilling results from Gold Bar is available hereFigure 2: Gold Bar Mine – Gold Pick Deposit Plan View here
Drilling has started at the Gold Bar South satellite deposit to test extensions of the deposit and acquire samples for additional metallurgical testing and resource validation. Permitting for development and production from Gold Bar South is also in progress.
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Post by Entendance on Jun 24, 2020 9:33:39 GMT -5
McEwen Mining is looking to capitalize on rising gold prices coupled with very positive exploration results from mines in Northern Ontario.
On June 24, 2020, from 2:00 PM EST, Red Cloud Securities will be hosting the webinar
McEwen Mining – A Gold & Silver Producer with Exploration Leverage
Registration link:
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Post by Entendance on Jun 25, 2020 5:11:56 GMT -5
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Post by Entendance on Jul 16, 2020 5:43:51 GMT -5
TORONTO, July 16, 2020 -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports consolidated production for Q2 2020 was 15,700 gold ounces and 359,400 silver ounces, or 19,200 gold equivalent ounces(1)(“GEOs”), at the average gold:silver price ratio for the quarter of 104:1. Production was significantly impacted by temporary mine suspensions at all four of our operations as a result steps taken to stop the spread of COVID-19, along with operational issues at several mines.
Black Fox Mine, Timmins, Canada (100%)In Q2, Black Fox produced 2,200 GEOs. Mining was temporarily suspended at Black Fox from March 26th to April 13th due to health and safety concerns resulting from the COVID-19 pandemic. A progressive return to work was completed by the end of April. For the remainder of the quarter production was lower due to lower than expected grade and development work completed for establishing a greater number of mining areas in order to improve operational flexibility.
Development of the access to the Froome deposit is on track, having advanced 30% of the way to the orebody. The plan is to reach the orebody in Q2 2021, complete the necessary development and start production from Froome in Q4 2021.
At the Black Fox Mine, a total of 44,800 feet (13,650 m) of underground diamond drilling was completed between April 13th and June 30th, with 70% devoted to closely spaced definition drilling of gold mineralization within or adjacent to upcoming mining blocks (see Figure 1). Exploration is continuing on the upper west flank of the mine. During H1, this area has delivered some impressive high grade results. For details please refer to our news release dated June 17th, 2020 – Click here
San José Mine, Santa Cruz, Argentina (49%(2))
In Q2, San José produced 5,500 gold ounces and 358,700 silver ounces, for a total of 9,000 GEOs. Mining was temporarily suspended from March 20th due to a nationwide mandatory quarantine imposed in Argentina to combat the spread of COVID-19. Although the mine was able to restart operations in late April, the operations remain below capacity due to government imposed travel restrictions that continue to pose significant challenges in mobilizing personnel to the site.
Gold Bar Mine, Nevada (100%)
In Q2, Gold Bar produced 6,100 GEOs. Mining was halted on April 1st due to concerns about the COVID-19 pandemic, and production ramp up started on May 4th. Throughout May and June the mine only operated on day shift as work progressed for the updated resource model, new mine plan and addressing engineering design deficiencies. Full operations on day and night shift are scheduled to start in August.
Pit optimizations are ongoing and detailed mine planning is underway. Completion of a new resource estimate, mine plan and 2020 forecast are being finalized in Q3. A new reserve estimate is expected towards the year’s end.
Drilling on Gold Bar South is testing for extensions of the deposit. Drilling on the south extension encountered significant mineralization, indicating the potential to extend the existing resource to the south (see Figure 2), including:
Two holes drilled 100 ft (30 m) from the latest mineralized drill fence returned: 1.2 g/t Au over 125 ft (Hole GBS079) and 0.9 g/t Au over 150 ft including 4.0 g/t Au over 10 ft (Hole GBS080); and
Partial results from drilling completed 100 ft (30 m) further to the south returned 1.5 g/t Au over 70 feet (Hole GBS113).
El Gallo Project, Sinaloa, Mexico (100%)
In Q2, El Gallo produced 1,900 GEOs from residual leaching of the heap leach pad. COVID-19 is an ongoing challenge in Sinaloa. We are saddened to report that some employees and contractors at the mine and regional office have contracted the virus. One of our employees, who seemed to be recovering well in hospital, passed away suddenly due to complications. We are supporting all the families in this difficult time and extend our sincere condolences on the loss of our valued team member. No severe symptoms have been reported among the other confirmed or suspected cases.
Financial Results
Operating costs for the quarter ended June 30, 2020 will be released with our 10-Q Quarterly Financial Statements.
Notes:
(1) 'Gold Equivalent Ounces' are calculated based on a gold to silver price ratio of 75:1 for Q1 2019, 88:1 for Q2 2019, 94:1 for Q1 2020 and 104:1 for Q2 2020.
(2) The San José Mine is 49% owned by McEwen Mining Inc. and 51% owned and operated by Hochschild Mining plc.
Technical Information
The technical content of this news release has been reviewed and approved by 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 Black Fox geology and exploration contained in this news release has been prepared under the supervision of Ken Tylee, P.Geo. Mr. Tylee is Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for Mineral Projects."
Technical information pertaining to Gold Bar geology and exploration contained in this news release has been prepared under the supervision of Kevin Kunkel, CPG. Mr. Kunkel is a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for Mineral Projects."
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. |
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Post by Entendance on Jul 30, 2020 5:17:35 GMT -5
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Post by Entendance on Aug 6, 2020 23:29:09 GMT -5
August 6, 2020
McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today reported its second quarter (Q2) results for the period ended June 30th, 2020.
Cash and working capital at June 30th, 2020 were $18.4 million and $25.5 million, respectively.
Gold and silver production was adversely impacted by two factors: first, the temporary suspension of operations at all of our mines as a result of steps taken to stop the spread of COVID-19; and second, by operational issues. Production for Q2 was 15,700 gold ounces and 359,400 silver ounces, or 19,200 gold equivalent ounces (“GEOs”)(1) using the average gold:silver price ratio for the quarter of 104:1.
A net loss of $19.8 million(2) in Q2, or $0.05 per share, compared to a net loss of $13.0 million, or $0.04 per share, in Q2 2019.
On August 3rd, the New York Stock Exchange informed the Company that it had regained compliance with the continued listing standards.
Refinanced the $50 million term loan facility, thereby deferring the start of principal payments by two years and extending the term to August 2023.
At Black Fox, development of the access to the Froome underground deposit has advanced 30%. The plan is to reach the deposit in the second quarter of 2021, complete the necessary development and achieve commercial production in the fourth quarter of 2021.
At Gold Bar, the evaluation of the revised resource estimate is continuing. Mining has resumed and is expected to reach full capacity by September 2020.
Our quarterly webcast will take place Friday, Aug 7th at 11 am EDT. Details are provided below.
Operations Update
“I very much wish I could say that all our difficulties that started last year are now behind, but they are not, yet. The second quarter was challenging from an operational and health and safety standpoint. Our significantly lower production not only reduced our revenue, but also dramatically increased our costs per ounce. In addition, a change in how we account for development expenditures added significantly to our cash cost per ounce at Black Fox. However, our path to future growth and improved operational performance has become clearer.
We are in a transition period setting up for future growth. We have a large resource base, four operating mines and can see an exciting organic growth pipeline of projects ahead that could potentially push our production to 300,000 ounces per year. I recently purchased 2 million shares, increasing my ownership to 82 million shares, and underlining my confidence in our future.” commented Rob McEwen, Chairman and Chief Owner.
San José Mine, Argentina (49% Interest)Mining at San José was temporarily suspended on March 20th due to a nationwide mandatory quarantine imposed in Argentina to combat the spread of COVID-19. Although mining restarted in mid-April, government‑imposed travel restrictions have materially increased the cost of mining, as San José is operating well below its required manpower needs for an efficient operation. As a result, our partner and operator in Argentina has withdrawn production guidance for 2020 until the situation stabilizes.
Our attributable production from San José in Q2 was 5,500 gold ounces and 358,700 silver ounces, for a total of 9,000 GEOs. For Q2, total cash costs(3) and all-in sustaining costs (AISC)(3) were $1,280 and $1,476 per GEO, respectively.
Black Fox Mine, Canada (100% Interest)
Our work has begun to map out the first stage of the future expansion strategy at the Black Fox Complex in Timmins, Canada. While the present may appear uncertain, the future shows significant promise. A preliminary economic assessment on the expansion potential for the Black Fox Complex, inclusive of the Grey Fox, Black Fox, Froome and Stock deposits along with the potential inclusion of our Lexam portfolio of past producers, is targeted for completion by Q4 2020. The objective of this study is to assess the potential of increasing the Timmins annual gold production in 3 years to more than 100,000 oz per year over a mine life of 10 or more years.
Mining at Black Fox was temporarily suspended from March 26th to mid-April due to health and safety concerns related to the COVID-19 pandemic. A staged return to work was completed by the end of April. For the remainder of the quarter, production was lower due to lower than expected grade and a focus on development work to establish a greater number of mining areas that will improve operational flexibility. Production from Black Fox in Q2 was 2,200 GEOs. As such, total cash costs and AISC increased to $3,121 and $3,332 per GEO, respectively. These costs reflect the fewer ounces produced and sold, development ahead of plan for the quarter, and $1.7 million of underground development costs expensed, as opposed to capitalized, due to the short reserve life of the mine.
A total of 44,800 feet (13,650 m) of underground diamond drilling was completed at Black Fox between April 13th and June 30th, with 70% devoted to closely spaced definition drilling of gold mineralization within or adjacent to upcoming mining blocks.
Several high-grade intercepts were generated from these ore definition holes, including:
19.9 g/t Au over 3.5 m core length (CL) from infill hole 340-FR399-03 testing remnant mineralization adjacent to historic drifting on the 340 m Level; and
162.3 g/t Au over 3.2 m CL including 1,009.2 g/t Au over 0.5 m CL from hole 300-B890-04.
Recent definition drilling in the Deep Central Zone around the 860 meter level returned an impressive high grade result:
44.8 g/t Au over 5.8 m CL including 148.5 g/t Au over 1.5 m CL from hole 810-F271-25
For more Black Fox drilling results refer to our news releases dated June 17th and July16th, 2020 (click dates to link to the releases).
Development of underground access to the Froome deposit, located a half mile (800 m) west of the Black Fox mine, is on track, having advanced 30% by the end of the quarter. We plan to reach the deposit in Q2 2021 and achieve commercial production from Froome in Q4 2021.
For the Grey Fox area, the resource has grown rapidly through focused exploration that we initiated in 2018. Open pit and underground mining scenarios are being evaluated for the development of the Grey Fox deposits and environmental studies are in progress.
Current Froome and Grey Fox mineral resource estimates are provided below for reference.
Table 1: Grey Fox & Froome Mineral Resource Estimates
Gold Bar Mine, USA (100% Interest)
At Gold Bar, we decided to cease all mining on April 1st due to health and safety concerns related to the COVID-19 pandemic. Throughout May and June, the mine operated on one day shift as work progressed on the updated resource model, mine plan, and installation of process plant improvements. Gold Bar produced 6,100 GEOs in Q2 at cash costs and AISC of $1,772 and $2,462 per GEO, respectively, reflecting fewer ounces produced and sold as a result of lower tonnes mined and placed on the heap leach pad during the one month of suspension and two months of ramp-up.
The transition to 24-hour operations began in late July and the completion of ramp-up to full operations is scheduled for September, when we expect our cost per ounce to trend downward.
Evaluation of the resource estimate continued in the second quarter of 2020. By Q4, we expect to have new resource and reserve estimates and an updated feasibility study.
In Q2, we spent $4.2 million on exploration activities ($2.6 million capitalized and $1.6 million expensed), primarily around the Pick West pit and Gold Bar South deposit, both demonstrating potential extensions. Permitting for the development and production from Gold Bar South also progressed and we expect to start mining this satellite deposit in the second half of 2021. For the most recent Gold Bar drilling results please refer to our news releases dated June 17th and July 16th, 2020 (click dates to link to the releases).
El Gallo Project, Mexico (100% Interest)
El Gallo produced 1,900 GEOs in Q2 from residual leaching of the heap leach pad. Incremental residual leaching costs for Q2 were $2.4 million(6), or $1,262 per GEO.
Strengthening gold and silver prices have renewed our focus on advancing the Fenix Project, which is permitted for Phase 1 development. Based on internal economic studies, at gold and silver prices above $1,500/oz and $19/oz, respectively, the Fenix Project demonstrates a high IRR in the range of 30-40%. During Q2 we worked on assessing and updating the feasibility study and expect to publish it in Q4 2020.
Table 2 provides production and cost results for Q1, Q2 and H1 2020 and comparative results from 2019.
Notes:
‘Gold Equivalent Ounces’ are calculated based on a 75:1 gold to silver price ratio for Q1 2019, 88:1 for Q2 2019, 94:1 for Q1 2020 and 104:1 for Q2 2020.
All amounts are reported in US dollars unless otherwise stated.
Cash costs per ounce and all-in sustaining costs (AISC) per ounce are non-GAAP financial performance measures with no standardized definition under U.S. GAAP. For definition 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 three months ended June 30, 2020 and for the year ended December 31, 2019 contained in our Form 10-K and 10-Q.
Represents the portion attributable to us from our 49% interest in the San José Mine.
Pre-commercial production at Gold Bar during Q1 2019 was 2,030 GEOs, cash costs and AISC were not reported. Gold Bar started commercial production on May 23, 2019.
Both cash costs and AISC per GEO no longer represent key metrics used by management to evaluate residual leaching at the El Gallo Project. For this reason, the Company has ceased relying on, and disclosing, cash costs and all-in-sustaining costs per ounce as key metrics.
Conference Call and Webcast
We invite you to join our conference call, where management will discuss our Q2 2020 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. The webcast will be archived on McEwen Mining’s website www.mcewenmining.com/media following the call.
Friday, Aug 7th, 2020 at 11:00 am EDT
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Post by Entendance on Aug 12, 2020 9:04:05 GMT -5
Company Participants
Rob McEwen - Chairman and Chief Executive Officer
Peter Mah - Chief Operating Officer
Sylvain Guerard - Senior Vice President-Exploration
Andrew Iaboni - Vice President, Finance
Conference Call Participants
Heiko Ihle - H.C. Wainwright
Bhakti Pavani - Alliance Global Partners
Michael Kozak - Cantor Fitzgerald
John Tumazos - John Tumazos Very Independent Research
Rob McEwen
Good morning, fellow shareholders, ladies and gentlemen. It's a great day we have. Price of gold and silver have been climbing over the last couple of months. And I was reminded the other day, someone called up and said, "You said gold was going to $2,000 an ounce." And that was a couple of years back, and they said they thought it was impossible.
Now we're just over $2,000 an ounce. Silver is on a real tear. And it looks like given all of the quantitative easing that's been going on in the world and the amount of debt, we're going to see much higher prices. If you take a look at the Indian rupee right now, it's – the price of gold has just taken off over there. And I think that's a good example of what's about to happen to a lot of other currencies and the price of gold in those currencies.
Q2 was not a quarter we're proud of from a standpoint of performance, but we are proud of something about Q2, in that we put the health of our employees before profits. We started with the PDAC. And when COVID came along, we said, "There's a risk to our employees being at that conference because of COVID," and we didn't want to contribute to the spread. So we said, "Well, we have a booth, but we're not going to attend. We're not going to – no one in the firm is going to that conference."
And early on, after that, we decided to suspend operations at our mines. And that had a very serious impact on our production. The expenses were there, but the ounces weren't produced. And so in this quarter, we see – in the – just past quarter, Q2, we've seen numbers that make me sick when I look at them. But I'm comforted in knowing that we've protected our employees. And it's really important that they be protected because they're the life and the longevity of these operations.
Going forward and you'll hear from Peter today that production is picking up at all of our operations, and we expect our cost per ounce numbers to go back to where they're reasonable in the ensuing quarters. We also have got some interesting exploration news that Sylvain will speak to you about.
So, at this point, I'd like to turn the presentation over to Peter to talk about our operations.
Peter Mah
Thank you, Rob, and good morning, everybody. At Gold Bar, gold produced was 6,100 ounces in Q2, and for the first half of this year, 15,200. Production was impacted by shutdown in April for COVID, and we operated on a single shift during May and June. Getting back on track, we started 24-hour operations towards the end of July and are ramping up towards feasibility levels in Q3.
And optimization and improvement plan has been developed, and we are targeting improved costs and throughput. The implementation of that project started in late July and is progressing quite well. Also, work has progressed quite positively on the optimization of mining and processing cost scenarios, and we expect resource and curve update in Q4 this year.
Moving on to Black Fox. Gold produced was 2,200 ounces for the quarter and 10,500 for the first half of this year. Again, production was [barely] impacted by the COVID-19 shutdown. We had slower-than-expected ramp-up as the mine resumed normal operations, lower grades from longer stope exposure times that were blasted before the shutdown and delays in development timing that limited our stope access.
Going forward in half two, production costs are expected to come in-line with pre-COVID-19 performance. What's new? Pleased to report the West Flank 280W, we got in on the ore development, which is 5 months ahead of schedule, and we encountered high grade that we anticipate will lead to stopeing this year. Froome is on track for first ore in Q2 2020. And we expect commercial production to be reached in Q4 of next year. And the Black Fox complex expansion study, it's out for tender and will be awarded next week.
And we expect to complete that first step of that study, the preliminary economic analysis in Q4. A little bit about our gold resources in Canada. We thought we'd just summarize them, you know a total of nearly 3 million ounces in Canada, split kind of equally between our Lexam properties and Timmins, and our Black Fox Complex.
Next slide, our organic growth expansion strategy. The main objective of this strategy is to convert resources to near-term total gold equivalent production of greater than 300,000 ounces per year that is sustainable, low-cost and leverages our three operating regions in the Americas. The strategy currently consists of seven projects: the Black Fox Mine, its extensions; Froome; Grey Fox; Stock; Fenix; Gold Bar; and Gold Bar South. And several of our projects are under review, such as the Lexam properties I mentioned in Timmins and the Tonkin oxides. And we'll be reporting on those in the following quarters.
The Fenix project is advancing towards feasibility expected in Q4 2020. Based on the preliminary economic analysis, financial model, and using updated metal prices of 1,500 gold and 19 silver and a 22.4 peso exchange rate, the IRR is 44% and the NPV at 5% discount rate is USD 112 million. At spot prices, it improves. Using $2,050 gold and $28 silver, the IRR rises to 97% and the NPV just north of USD 252 million.
On the next slide, I'll touch on some highlights for improvements at the Black Fox Mine and give an update on some of our near-term production projects, such as Froome and Grey Fox. This next slide shows Black Fox and the 2020 mine plan areas that we develop towards – it's created some new mining opportunities, and we acted on those in the first half of this year. Gray represents mined-out areas, blue is the 2019 year-end resource, and red is our planned stopeing and development, respectively, the dark red shows the actual development.
Two examples of what's different in the upper part of the mine are the 240 East. It's a new stopeing area, which so far has added about 26,000 tons for the 2020 plan. Recently, we got in at – on the 280 level and developed some very nice high-grade areas of that West Flank. And – pardon me, sorry, and in the West Flank, that 300 to 280 area. Both of these examples will increase working phases, result in shorter hauls and more flexibility.
All the areas shown on this slide are active development, stopeing and definition drill programs this year. Beyond these opportunities, an assessment will be completed towards the end of 2020 to determine if a bulk low-grade opportunity exists in the future. This next slide shows some of the new West Flank drill targets shown in red, which are in close proximity to Froome declines and could add to production at Black Fox this year.
The following slide is the Grey Fox project. It's one of the most exciting opportunities we have in our project pipeline. The company expects it will become a long-life core asset, representing a strong foundation to build our future upon. The inset in this slide shows the conceptual high-grade Grey Fox pit shown in gray. They target the Contact, 147 Northeast, 147 and South Zones.
Also shown is the new Whiskey Jack discovery above and to the right of the Contact Zone and the existing Gibson Portal and underground workings towards the left-hand side of the inset. A study and trade-off analysis to assess open-pit and/or underground mining while maximizing the Stock mill capacity will be completed in Q4 2020 this year.
On the next slide, this is just an update of where our Froome twin ramp access is overall average about 30% complete. You see on the right-hand side, the Froome decline was colored at the bottom of the Black Fox pit. The red dot shows the location of the ventilation ramp as of July 31, which is a little bit beyond 37% complete, actually around 40%.
We expect to reach the ore body by Q2 2021 and to begin a transverse and longitudinal stope development, shown here in light green on the left-hand side of the slide. This forecast includes a conservative estimate of advance through the fault zone shown in the middle of the slide ahead of the red dot. Commercial production is expected in Q4 2021.
On the next slide, this slide shows some important advantages of the Froome project compared to Black Fox. It's a shallower deposit suited for low-cost productive bulk mining, and it's not beneath the pit. It has more consistent grades and continuity in a wide disseminated style mineralization, wider expected mining widths ranging from 15 meters to 40 meters for the most of the deposit.
Larger stopes equals more efficient underground development and mine sequencing. A lower gradient and a straighter ramp also will help haulage and reduce underground congestion. We're in fair to good ground conditions. And so, we expect positive results with dilution and grade control.
That concludes the operational and projects update. I'll hand over to Sylvain to provide the Q2 exploration results.
Sylvain Guerard
Thank you, Peter. At Gold Bar, our exploration drilling activities were focused primarily at the Pick West pit and the Gold Bar South satellite deposits. In-pit drilling confirmed significant gold mineralization, grade and width over the West Pick area and provided additional key information to assess reinforcing our model.
At the Gold Bar South satellite deposit, which is located at lower elevation, about 3.5 miles southeast of Gold Bar, we are completing a 10,000-meter drill program. Drill last year results have been positive and the program is successfully confirming shallow zones of plus 2-gram gold mineralization.
In addition, drill results are extending mineralization towards the south with new drill intersections of about 2.4 gram per ton over 104 feet, 2.2 over 95 feet and 1.2 gram per ton over 125 feet, as well as to the northwest of the deposit area were shallow intersections of 0.7 gram per ton gold over 60 feet and 0.6 over 60 feet were obtained.
The 2020 drill program is also significantly reinforcing the geological understanding and control of gold mineralization, which occurs mostly along the stratigraphic contact and at the intersection with northeast-southwest trending fault. The Gold Bar South resource will be updated in Q4 permitting for the development and production from Gold Bar South is progressing, and we expect to start mining the satellite deposit in the second half of 2021.
In Timmins now, drilling was mostly devoted to closely spaced definition drilling of gold mineralization within our adjacent of upcoming mining blocks. The BlackRock deposits remain open to the west and [at depth], along two structural control driving the geometry of the mineralized zone or ore shoot, as shown with the yellow arrows on the slide. The level of structural complexity is very important at Black Rock, and we are putting more efforts on understanding the control and geometry of the mining areas as well as we keep advancing our drilling.
Several high-grade intercepts were generated from these ore definition holes, including, as highlighted in yellow on the slide, 19.9 gram per ton gold over 3.5 meter. This is infill hole testing, gram mineralization adjacent to circle drifting over the 340 level. 162 gram per ton over 3.2 meter, this include a 1,000 gram per ton intersection over 0.5 meter, and this is coming from the West Flank extension of the mine.
Finally, very recent definition drilling in the Deep Central Zone around the 860-meter level return an impressive high-grade intersection of 44.8 gram per ton gold over 5.8 meter, which include 149 meter over 1.5 meter.
On this, I will return the call back to Rob. Thank you.
Rob McEwen
Peter and Sylvain outlined to you what's going to happen in operations, and we're continuing to see excitement in our exploration.
Looking forward and when I look into the near term, the next couple of quarters, we're going to see more ounces and better operating costs. That will be followed by economics studies on Grey Fox, Stock, Fenix. Froome will be advancing, getting closer to the ore body. We've been constrained with our capital given the lack of production in the second quarter, but that will be partially addressed by the more ounces.
I have to say, I'm really excited about the growth prospects. We've, over the years, been adding properties, and now it's starting to consolidate, and it will become easier for you to see what we have. There's a very significant organic growth pipeline that is concentrated in several regions that I think when you look out and you can see the potential for 300,000 ounces a year coming from a few tightly contained areas, it gets quite exciting.
My confidence remains high, although I've been discouraged by some of the setbacks we've experienced, but recently, I bought another 2 million shares, bringing my holdings up to 82 million shares. I believe that we're going to see improving fortunes in the company, but we're – and that's going to be doing – as a result of the work we're doing, but also, the gold and silver price is just beginning to move and the world is starting to think about what is going to happen to our currencies.
And we have seen a period most unique. In the past, you would see one country or a region where a number of countries have abused their monetary base, abused their currency by pushing out a lot of money and incurring large amounts of debt. This time with COVID, we have seen a universal response where governments have expanded their money supplies to try to assist their citizens, but this is without precedent and is going to have an explosive impact on the value of gold and silver and other hard assets. And I'd just say to you, add to your positions wherever you are, whatever you're holding in the precious metal space, and you're going to have a great ride.
Thank you very much. I'd like to open it up for questions.
Heiko Ihle, H.C. Wainwright
Hey Rob, walk me through the ongoing COVID expenses. I don't know if there is an intelligent way to quantify it mine by mine, but can you just sort of walk us through what additional expenditures you have like this quarter, next quarter, et cetera?
Rob McEwen
Sure. I'm going to ask VP Finance, Andrew Iaboni, to address your question, Heiko.
Andrew Iaboni
Thanks, Rob. Yes. So to address the question, we looked at the COVID expenditures in kind of twofold. Well, I guess there's three ways of really looking at it. One is the direct incremental costs required to improve our safety and security standards as people enter and leave the sites. So those costs related to things like temperature gauges and other thermometers, some increased security at the site and checkpoints, minor changes to workstations. And those costs are really not that significant and not expected to be significant on a go-forward basis. The more significant costs that we incurred were directly related to the shutdown, and those items were disclosed in our financial statements and specifically relate to labor that we continue to retain during that shutdown period.
Yes. So keeping our labor force available for that ramp-up was the first big bucket of costs that were incurred. And then the second category of costs that were incurred were really around the idle capacity costs where we're operating below our capacity. And so we're still paying for wages, utilities, overhead. And those costs were all categorized as production costs applicable to sales. And those costs would continue to the extent that we're not back at capacity in the coming months.
Heiko Ihle
Fair enough. But there's no way to quantify it. I mean are we talking about $100,000? Are talking about $1 million, a couple of million bucks?
Andrew Iaboni
Well, we've quantified the shutdown costs. Those ones were disclosed in Note 4 of the financial statements. We incurred – I think it was $600,000...
Heiko Ihle
I'm looking at them.
Andrew Iaboni
…of shutdown costs, yes, at Black Fox. And then we incurred just around $1.4 million of costs for Gold Bar during that shutdown period.
Heiko Ihle
Fair enough. And if we trend-line that, we're probably doing okay?
Andrew Iaboni
What do you mean in terms of trend-lining, like applying that forward? Because those costs were specific to the period of when we were not operating. For those...
Heiko Ihle
Okay. I see what you're saying, okay. So – but you don't have a number for us of what you expect to incur in Q3 and Q4?
Andrew Iaboni
Not specifically. I mean we're not – we're back at operations, right, and then we're ramping up operations. So as long as that ramp-up continues, then there shouldn't be any significant COVID-related costs.
Heiko Ihle
Fair enough. Okay. And then, Rob, I guess, questions for you. You mentioned in the release, and I quote, "I can see an exciting organic growth pipeline of projects ahead that could potentially push our production to 300,000 ounces per year." Just to clarify, we're talking about acquisitions here. And if – I don't know how much color you're willing to provide, but is there a time line that did you want to assign to that?
Rob McEwen
It'd be in the next three to five years, Heiko, and it wouldn't be acquisitions. It'd be all organic. We're looking in the Timmins area, we have the Stock property, Grey Fox and Froome is coming on stream first. And then we do believe that the Black Fox Mine, as you heard Sylvain mentioned some of the drill results we're getting there, it's a shallow mine. We think it goes deeper. And also on the west, we're exploring getting very good results. So, that mine needs more time, more exploration, but we could see it coming back on stream and adding.
Also, the Timmins properties, one of the attractions of the Black Fox complex when we bought it was the proximity of the Lexam properties to the mill. And so, we were looking at everything sort of as single assets. And this is – right now, we're looking to integrate all of those. So that's in the Timmins area. They're about four or five areas that we feel can bring that production up and give us a long-life asset, running at better than 100,000 ounces a year.
And then you go, Gold Bar had a setback when its ounces were cut back earlier this year, but Gold Bar South is expanding. And some of the results there are quite attractive, long intercepts of good grade for an open pit. And then we go down to Mexico, and the Fenix project is – it's looking like it would provide a very robust feasibility study. But that's all – those are all properties we own 100% of. So, we don't have to go outside. We don't have to acquire any companies to get that growth.
Heiko Ihle
Very good. I appreciate the color there. Thank you guys, very much.
Bhakti Pavani, Alliance Global Partners
I would like to dive right into Black Fox. You kind of provided the long-term opportunity at Black Fox. Just kind of curious, specifically talking about the second half of 2020, how do you see the grade profile improving? Because grades have certainly come up from second quarter and comparable to first quarter and with good drilling results near the west flank area. Just kind of wondering, how do you think about the grades there?
Rob McEwen
Peter, would you like to answer that piece of question?
Peter Mah
Sure. Thank you, Bhakti, a very good question. Before answering that, just want to draw a note to a typo correction on Slide 6. It says first ore in Froome in Q2 2020. It's 2021. So, just draw a note to that. Yes, going to Black Fox, yes, I think we're excited. We're seeing some very good high-grade intersections in the west flank and also historically on the Central Zone. These are some of the areas that I reported on here earlier and on Slide 9, and we do expect to see some nice-grade areas. It's early days. We've just gotten access.
We're drilling. We are pretty excited about the 280 area. We went and sealed out on that recently and saw some nice grades and significantly higher than our head grade. But it's too early to guide on that, but I can report very encouraging. That's why we're excited about the extensions of those zones up to the Froome decline area, which I showed you those targets, which we do have some drilling on them to give us some confidence.
So, I think it bodes well. It's early days. And as Rob said, we need to invest some time and more drilling into these areas in the future. And the story of Black Fox isn't over yet on the west flank and certainly down at 840 and the depths we're sealing out there and have hit some high grade. And we expect to see some extensions of that center zone going down as well.
Bhakti Pavani
Got it. Thank you so much for the color. And just from the tonnage standpoint, could you maybe – since we are one month into production for the third quarter, could you maybe provide some more color into how is the tons coming along at Black Fox post the second quarter decline due to COVID?
Peter Mah
Yes, the tonnage is trending on plan. And these development accesses, of course, have helped us increase our number of stopes that we have access to. So our mining flexibility has improved tremendously. So we don't see any issue in terms of having available stopes going forward in the second half.
Bhakti Pavani
Perfect. Moving on to Froome. Froome is expected to come online in Q4 2021. I know it's kind of preliminary, but could you maybe talk a little bit more about the cost profile there? The grades are slightly lower than the head grade comparison to Black Fox. But just kind of curious, how does it fare in comparison to cost when it – in comparison with Black Fox?
Peter Mah
Yes, it's significantly better. We're in the final stages ahead of our feasibility, and we'll be coming out with that soon here in Q3. That's all I – about all I can say about it now. We have a great bulk, chambers, open stopeing kind of deposit that's really suited for low-cost mining, the 5% decline short haul. It's got all the hallmarks of some very good operating costs.
Rob McEwen
Could – Peter, could you contrast that for Bhakti against what's going on in Black Fox in terms of the mining there as opposed to Froome and why it's -- you feel it's easier and better?
Peter Mah
Yes. At Black Fox – thanks, Rob. At Black Fox, we have very small – we're trying to – we call them the Chiclets, taking out these high-grade areas that are maybe 1,000 or 2,000 tons each on average. And so you have to do a lot of setup work, a lot of drilling, a lot of prep work. And then after, we mine them out very quickly to minimize the stand-up time and fill them quickly.
Conversely, we go over to Froome. We have very wide intersections, 15 to 40 meters the hanging wall that we can set up transfer stopeing, primary, secondary, really much more contained, bigger stopes, 10,000 to 20,000 ton range we can get up to depending on how our stability works out. So just a whole different type of mining approach. So less – bigger, bigger, more productive stopes and tighter development will translate into better overall costs, including all-in sustaining. But as I said, when we complete the FS final edits, we'll guide on that.
Bhakti Pavani
Got it. Thank you so much for the color. Approximately 30% of development has been completed to date. Just kind of curious, from modeling the expense going forward, how much of additional development expense do you expect to incur in the second half of this year?
Peter Mah
Yes. Andrew, do you want to take that one?
Andrew Iaboni
Sorry, Can you repeat the question?
Bhakti Pavani
I said, how much of the development expense are still remaining to be incurred in regards to Froome's development for the second half?
Andrew Iaboni
I think for the second half of the year, we are projecting another $10 million of development expenditures for Froome.
Bhakti Pavani
Got it. Thank you so much. Moving on to Fenix. In the press release, you did talk about renewing your focus. And given higher metal prices, the project now makes more sense. Just kind of curious, I believe you have everything for – from the permitting front, at least for advancing the deposit post the feasibility study. Just kind of wondering, what additional things do you need to accomplish before you take a production decision there? And could you maybe remind us about the initial capital requirements for the project?
Peter Mah
Sorry, was that Froome, Bhakti?
Bhakti Pavani
Fenix. Project Fenix.
Peter Mah
Oh, Fenix. So Fenix Phase 1 is permitted. That's the gold project. So Phase 1 is the gold. Phase 2 is silver. Phase 1 permitted, that's approximately a $44 million project. And then Phase 2, the silver project is about a $23 million project. We are in the final stages of that feasibility as well as mentioned, and both numbers might change, and we look for improvements on our business case there. But for now, that's -- those are the numbers we're using.
Bhakti Pavani
Got it. And when it comes to construction or development time line, what's kind of the tentative time line there if you decide to go ahead and advance into production?
Peter Mah
Yes. I mean, it's early stages. We're working on those implementation plans for construction schedules. But our initial estimates are about a 12-month schedule.
Bhakti Pavani
Got it. And lastly, what's kind of the dividend expectation from San José? I know COVID has disrupted operations, but just kind of curious.
Rob McEwen
San José, Bhakti, is having to deal with travel restrictions between provinces in Argentina, and most of the workforce comes from northern provinces. And so it's only operating at about 60% capacity right now. So, it's not generating – it's not realizing the economics as much as it should be.
Mind you, half of its production is high-grade silver. So, with the move in silver from $12 in March to $28 today, a little better, it should have a good impact on the economics there, but it's – they hope to get back up to full production, and it's later this year, but the COVID issue is just clouding the picture. So, I can't really quantify. We haven't been able to quantify what we might get out of our interest in San José. But I am – the economics, at least on the silver front, is stable.
Bhakti Pavani
Fair enough. Thank you very much for all the color. That’s it from my side.
Michael Kozak, Cantor Fitzgerald
A couple of questions from me. First, at Gold Bar, you're saying you're going to be back to mining at full capacity in September. And my question is, what does full capacity mean for gold output at that mine? Like are you still mining in only Pick West? Have you solved the grade reconciliation challenges there? And just like on a follow-on there. I mean guidance was withdrawn earlier this year, but now that you're ramping back up, you clearly have a plan there at Gold Bar. So do you have a production target at Gold Bar in Q3 and Q4?
Rob McEwen
Peter, would you care to handle that?
Peter Mah
Absolutely. There were a number of questions there. Hopefully, I captured them all. So full capacity, what we're meaning there is ramping up to 24 hours operations and targeting our feasibility level production. We've currently, in end of July, increased our crews and ramped up to 24 hours. We are achieving somewhere in the range of 5,000 to 6,000 tons a day. We are targeting 7,000 tons a day and, in our optimization plan, our cost savings of a couple of hundred dollars an ounce cash cost.
In Pick West, exactly, that's where we'll be mining throughout 2020 and hence where most of the drilling that Sylvain has spoken about in the past, where we're focused on mining resource estimate coming out in Q3. And then we'll be updating a reserve based on the optimizations that I spoke about earlier in terms of mining and process costs. It's early days for reconciliation versus the model. We're just getting into it now and just starting on that.
So we don't have guidance on that. Ore ounces, as you can tell, we're still updating our resource and reserve. So at this stage, no guidance there. But things are trending very well, and we expect to have our fully – our teams fully crewed up and operating in September as normal – as are normally operating pre-COVID.
Michael Kozak
Okay, thank you.
Rob McEwen
Mike, if I could jump in there just first. Peter, could you give Mike a reference point for that cost reduction? What are you reducing it from or hope to reduce it from?
Peter Mah
Right. So...
Rob McEwen
It's not Q2 – and it's not from Q2 numbers.
Peter Mah
No. The – so, we completed an operational review with implementation engineers. And we looked at our baseline production and costs in the previous nine months to where we are and then projected forward in our 18-month plan and normalized our grades and if we did that and achieved our ore gold production costs at our go-forward ounces. I know it's a bit busy and complicated, but that would have been $1,009 per ounce going forward.
And so, we – the improvement – program optimization plan, I talked about targets taking $200 off – an ounce off that projection. It equates to something like $13 million to $17 million savings annually for the life of mine. It's a pretty exciting and compelling project. There's no one magic area. There's a whole bunch of areas where there's opportunity and efficiency improvements with our existing plan. So, this is no CapEx. This is just looking at our efficiencies and how we operate and how we can get better. And we identify sort of seven work streams where we're actively working to improve at the moment.
Michael Kozak
Okay. So, it sounds like you have a much better handle on what the costs will be, but the ounce profile is still a bit of a question mark until you get the reserve model and the reconciliation issues figured out, correct?
Peter Mah
Exactly.
Michael Kozak
Okay, okay. And then just one more. It's another one for you, Peter. So, you've been at McEwen Mining for four months now. Despite all the travel restrictions and stuff, I'm assuming you've been able to spend a bit of time or quite a bit of time hopefully at Black Fox and Gold Bar. My question is, is there anything at either of those operations, either on the mining side or on the processing side, over the last four months that kind of immediately jumped out to you that needs to be fixed or can be improved over the short-term?
Peter Mah
Yes. I mean I think there's always room for improvement. I've spoken a lot about Gold Bar. I think we have similar journeys at both mines. And like any operations, you can find opportunities. We've spoken a lot about the resources and improvements to that and sort of similar approaches at both mines where we get more access, more drilling ahead of ourselves.
More information on the geomet, we can understand our key technical and financial drivers way out ahead of mine planning and then plan for success. I think that's the key. It's really back to basics at this stage and then growing from a strong foundation of our understanding of those key drivers.
Michael Kozak
Okay. Thanks for that. Thanks Rob and team. That’s all from me. Have a good weekend.
Rob McEwen
Thank you, Mike. You too.
John Tumazos, John Tumazos Very Independent Research.
Thank you and congratulations on all the progress even if it's not in the income statement.
Rob McEwen
Thank you, John.
John Tumazos
I noticed that at five of the 11 quarters you've owned Black Fox, the recovery rate derived was 106% to 131%, and the other six quarters, it was 77% to 99%. And the unweighted average was 100.5%, but had I weighted it to 2018 when there was more gold, it would have been higher. And the question is, if you could explain the top-cut procedure at Black Fox, I'm not critical of it. I think it's always better to produce a little more than a little less, but clearly, the recovery suggests the grades hard to estimate.
Rob McEwen
All right. Sylvain, would you like to comment on that?
Sylvain Guerard
More specifically, what's the question?
John Tumazos
Tell us about your top cut at Black Fox because some of the quarters, it produces over 100% recovery rate, suggesting the grade sometimes is a little hard to estimate.
Sylvain Guerard
Yes. No, that's a good point, John. Top cut is – it's always something that's not necessarily easy to define especially in negative mines like we see at Black Fox. We have a resource geologist in-house at site working full time on Black Fox for now over a year. And as we move forward, as we learn about the reconciliation, as we learn about the geological control, and I mentioned that, that we put more efforts having geologists in the sole, understanding and benchmarking back to grade and model, we are actually looking at this top cutting as we speak and refining the way we are modeling the deposit itself. So, it's an ongoing process.
John Tumazos
Was the past top cut closer to 30 or closer to 100 or even higher?
Sylvain Guerard
It was over – closer to 100, I would say.
John Tumazos
Continuing the line of reasoning to Gold Bar, as the tons processed went down, the recoveries went up to 95% derived in the first quarter and 228% in the second quarter, which implies that the leach cycle might be closer to 12 months than three months. What do you think the leach cycle is at Gold Bar? And is it possible that you might have declared defeat prematurely and that the gold is just coming out later?
Rob McEwen
Peter, do you have some thoughts on that?
Peter Mah
Yes. A very technical question, as you know. During the shutdown without mining residual leach, you can see we were recovering ounces, and we were about 50% of production with not a lot of tons stacked up there. Leach is directly obviously related to the time and life of mine. So at the end of the life of mine, if you shorten your life of mine, you're shortening your leach time as well.
So, there are a number of factors there. We are looking at how to improve leach time. That's actually part of the optimization plan. And in the past, if the feasibility was designed at, I think, 20-foot stack heights, the operations team had moved to 30-foot, which delays our leach curve. And so, we are actually looking at moving back towards 20 or possibly even 15 to improve our leach curves.
We've done a lot of improvements on the side leaching of the stack, and that –you saw that actually come through here in Q2. So there are lots of opportunities to improve leaching and recovery. And that's exactly one of the optimization areas we're looking at.
John Tumazos
And if you bear with me one more. At The Black Fox complex, the Grey Fox has 800,000 or 900,000 ounces at just over 7 grams, which looks like money in the bank. I appreciate that Froome was a little more ready to develop and get into production. How much longer would it take to get to Grey Fox and pull out that beautiful 7-gram stuff?
Peter Mah
Yes, I'm with you. I think you asked that question last quarter, too. Look, we're moving forward. There are some really nice underground targets there. It's early days. It's all about grade continuity and drilling improving up particularly in underground where you can hang together good stopes. Preliminary look, I like Gibson. I like the South Zone for underground. I like Whiskey Jack, although it's very early days. That could be a pit as well. We've drilled mainly to about 400 meters depth. So, we haven't even looked beneath that.
Permitting-wise, we're looking at approximately two years once we lock down our project description. So, hence why we're working feverishly to get the stopeing study done. And the plan is to front-end load that with the quality of information such that we could move right into FS given that we're an operating region, and we have a pretty good understanding of our cost base and what that capital might be once we define it.
John Tumazos
With the top cuts at Grey Fox, is there a chance the grade is 0.5 gram or a gram better?
Rob McEwen
Sylvain, would you like to answer that question?
Sylvain Guerard
There's – in the Grey Fox situation, as Peter said, there is upside that resides in some of the zone. We drill Whiskey Jack at the end of the program where we've got new intersections of really high grade that is still early stage. We also have a better understanding of the Gibson area where we need to go back with an orientation of the drilling that will optimize cutting better the key structure that we see there at Grey Fox. It's a large complex, as you know.
There's still a lot of room for infill drilling. There's a lot of room for growing a portion of the resources over some of the area. And we are, as Peter said, looking at scenarios, economic scenarios regarding open pit and underground. So there's benchmarking regarding what will be realistic cost considering what we have there as the deposit, the geometry of it and everything, what make more sense as an open pit versus underground. So all of those studies are ongoing as we speak.
John Tumazos
Congratulations, and I apologize for asking the technical questions. I admire you taking these difficult challenges.
Rob McEwen
Thank you, John. I liked your questions. They're the ones that need to be asked that underline what might be the potential for grade being higher than we've shown it or longer to get the gold out at Gold Bar. Good observations.
Terry Devries, Investor.
Good morning, Rob, good morning gentlemen, how are you today.
Rob McEwen
Good morning, Terry. Good.
Terry Devries
Hi Rob, as you know, I've been with you for quite a long time. And one thing I really have difficulty in understanding that you don't really have to go into it, though, is the massive underperformance, I see, if I put you up against your benchmark, which when I look at it – and I call your benchmark GDXJ if that's fair.
Rob McEwen
Sure.
Terry Devries
And we started really at the beginning of January 2019. It broke down below GDXJ, and this continued down, and I realized you had some problems. This year, that you didn't expect, no great fault of your own, and I understand that these do happen. But when I look at you compared to your benchmark, the underperformance is just staggering. If I would have said in 2016, where the price of McEwen Mining would be when we had $2,000 gold and $28 silver, certainly would have projected multiples beyond this.
My question now comes to my concern when you said you're moving towards 300,000 ounces of possible production, but your time line of 3 to 5 years. We're 5 years into a bull market, a bull market that I think all of us knew was coming because of central bank policies. We perhaps have 5 years left to run before the central banks destroy all of our currency. And my concern is I've been waiting for all these years. Are we going to miss this bull market? How long is it going to take to return to even your benchmark or outperforming your benchmark? Thanks very much.
Rob McEwen
Thank you, Terry. Like you, I've been bothered by the underperformance, and I think every one of our shareholders shares the same view. Historically, we were trading about the GDXJ and GDX. So, we've gone south and everybody has gone north. And when I look at it, we're in a transition period right now, and I believe the future is looking brighter, although it's taking its time to show up.
The – but the type of performance, if we were just to get back to where the industry was, is a huge bump up. And I think we have to deliver a couple of quarters, good quarters to demonstrate that the turnaround is in progress. We all believe internally that the turnaround is occurring, we can see improvements, but it has to manifest itself in ounces produced and cost so that with the rising gold price, we're participating with it rather than just trading dollars.
The size of – go ahead.
Terry Devries
No, I'm sorry. I'm sorry to cut you off. So, what I'm understanding is, if I could be patient for 2 to 4 quarters and you're able to produce in-line with your expectations or exceed them, could I expect at least to close the gap significantly on GDXJ?
Rob McEwen
I would hope that would be the case. I mean we – last year was a huge disappointment for everybody. And a lot of trust was lost and confidence and we have to rebuild that. And as you know, building trust takes a long time, and it's going to be built by demonstrating that we're delivering on our promise. So, I think that is conceivable, and that's what we're working hard to get to, to regain that confidence. And clearly, I'll outline the dynamic of the growth that we have in front of us.
Terry Devries
Just a final quick question then. Your long-term goal of qualifying for the S&P 500, can you discuss that?
Rob McEwen
Yes, sure.
Terry Devries
Yes. Sorry.
Rob McEwen
In some very distant – no, no, no need to apologize. When we – when that goal was first articulated, the threshold to get into the S&P was $3.5 billion. It was subsequently increased several times, and it's now $8 billion. Given our market cap of less than $800 million, 300,000 ounces won't get us there unless they're extraordinarily inexpensive to produce, which I'm not going to say we're going to be able to do.
So, there would have to be M&A to get to there. I think the goal is still a very good goal to have because there's only one gold stock in the S&P 500. But – and that would drive a lot of investment dollars towards Newmont, which is the only one in there. I do think we're coming into a market where there will be a lot more investors looking for exposure to gold and gold and silver. So, I think you'll have a strong movement in the sector there. And maybe that index is something that – you'll get the performance without the index in the near term.
Terry Devries
Thanks Rob. I wish a great year. Thanks for answering the questions.
Rob McEwen
You’re welcome.
Bill Powers, Private Investor.
Hi Rob. Good morning and thank you for talking my call here today. Just had a few questions covering a broad range of subjects, but I guess if we first start with the Slide 9, which is your – an accounting of your measured and indicated, as well as inferred, it looks like it's both Lexam and Black Fox, and it's 3 million in measured and indicated and inferred, another over 1 million. And I guess to me, it sounds like if your goal is to only go to 100,000 ounces, that seems like a lot of resource. It seems like it would take a long time. I guess is there a reason you would not want to go ramp up to mill capacity, which is, I guess, it sounds like it's 200,000 at the stock mills?
Rob McEwen
Let's say we're trying to err on the side of conservatism and it's early stage. We haven't done all of our economics. We do see room to expand beyond – well beyond 100,000. But for the moment, that's – because of the early stage, that's what we're comfortable saying.
Bill Powers
Okay. Fair enough. As far as the – down in Nevada, there seems to be a – you said that you were moving towards production rate at your feasibility study. I guess could you give some more color on what you're expecting on a per month basis for production rate at Gold Bar at least for the rest of this year?
Rob McEwen
I think Peter may have mentioned that, but sure. Peter, would you like to just say that?
Peter Mah
Yes, sure. We're targeting in that – so once we get up to full capacity, that 6,000 to 7,000 ton per day range. So, kind of north of kind of 150,000 tons per month is where we're targeting. Again, we're hesitant again to guide on that until we complete our resource update, reserve and mine plans, but I think the capability and capacity is there. And we worked on the blending. We can get the tons. It then becomes can we deliver them out of the pit and all that scheduling, sequencing stuff.
Rob McEwen
So Bill, we during – we didn't produce in May. There was no production at Gold Bar, and there was only one shift per day during May and June. We'll be up at full capacity. We'll be operating 24 hours a day. And as Peter said, we just started 24 hours a day. So that will have a material impact on the amount of material we're moving and – or that we're loading on the pad.
Bill Powers
Okay. And I guess are you outside of your – I know you've acquired a number of properties surrounding your Gold Bar outside of just Gold Bar South. Are those – are there any plans to drill off some of those this year? Or is that going to be down the road type of activity?
Rob McEwen
That will be down the road. We're concentrating on our near mine right now. Our major focus is to expand the resource base near mine. We haven't forgotten about outside. We have a property nearby, our Tonkin property, which has a good-sized resource on it. It's oxides and sulfides. And at some point, that – see if we can incorporate some of that into our Gold Bar production. In the past, it's been treated as a separate property and not really thought about incorporating what it has already outlined there. So, may see some news on that as we go forward.
Bill Powers
Okay. Great. And I guess the – really, the last question I would have is, as far as the – as far as Stock, I know there are plan – is this going to be incorporated into the plans for the – I guess, the comprehensive Timmins plan for – that you're working on for later this year?
Rob McEwen
That's right, yes.
Bill Powers
Okay, okay. And then actually, just one more quick question, as far as Argentina goes, it seems as though from at least reading the financial statements that it seemed to be operating at almost a – at a significant loss during the second quarter due to paying – it kind of looks like you guys were paying the salaries of the workers who were staying home. And I guess has the attitude or has at least the environment changed where rather than operating as more of a charity, that the government is now going to be allowing – it seems as though there has been a significant increase in Argentina's overall foreign reserves to take profits out of the country or to at least – if you do generate them, which looks like it'd be a strong possibility at today's prices?
Rob McEwen
Argentina hasn't reached the point that, say, America or Canada or the European nations have in terms of viewing they want to put some money into the people that are unemployed or sitting at home. Argentina still looks to the corporations to foot the whole bill. And they have travel bans still, and they're – it's still an issue there, but with much higher prices, I think there's a possibility – a good possibility we'll see something out of there later this year.
Bill Powers
Okay. That sounds great. Well thank you so much for all your time today. I appreciate it.
Rob McEwen
Thank you, Bill. Thank you for your questions.
Thank you, everyone, for joining the call. I wish you much success in reinvesting and stay tuned. I think we have more news coming that's good news. Thank you very much. Be well. Stay strong and healthy. |
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Post by Entendance on Oct 16, 2020 5:55:52 GMT -5
McEwen Mining's (MUX) production rebounded during Q3 after the successful restart of all four operations, which were temporary suspended during Q2 due to the COVID-19 pandemic.
Consolidated production for Q3 2020 was 23.1K gold ounces and 575K silver ounces, or 30.4K gold equivalent ounces, at the average gold:silver price ratio for the quarter of 79:1.
Black Fox produced 5,800 GEOs, compared to 2,200 GEOs in Q2.
Operating costs for the quarter ended September 30, 2020 will be released with the 10-Q.
McEwen Mining: Q3 2020 Production And Exploration Results
TORONTO, October 15, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) reports consolidated production for Q3 2020 was 23,100 gold ounces and 575,000 silver ounces, or 30,400 gold equivalent ounces(1)(GEOs), at the average gold:silver price ratio for the quarter of 79:1. Production rebounded during Q3 after the successful restart of all four of our operations, which were temporary suspended during Q2, largely due to actions taken to prevent the spread of COVID-19 amongst our workers, business partners, and communities.
Consolidated Production Summary
Q1 Q2 Q3
2019 2020 2019 2020 2019 2020
Gold (oz) 26,900 29,200 36,200 15,700 35,000 23,100
Silver (oz) 703,200 553,200 850,500 359,400 947,100 575,000
GEOs(1) 36,300 35,100 45,900 19,200 45,900 30,400
Black Fox Mine, Timmins, Canada (100%)
In Q3, Black Fox produced 5,800 GEOs, compared to 2,200 GEOs in Q2. The mine is benefitting from the additional development work completed during Q2 that increased mining flexibility. We expect production to continue to trend higher during Q4, and mining from Black Fox to continue into H1 2021, while we transition to mining the Froome deposit.
Froome – Development
Development of underground access to the Froome deposit, located a half mile (800 m) west of the Black Fox mine, is on track, having advanced 47% by the end of the quarter. We plan to reach the deposit in Q2 2021 and achieve commercial production from Froome in Q4 2021. Froome offers several benefits compared to Black Fox such as straighter more efficient haulage, wider and more consistent mineralization, and lower cost bulk mining methods. We are targeting an average annualized production rate of 40-45,000 GEOs per year from Froome over a period of approximately 2.5 years.
Fox Complex Expansion – Economic Study
We have engaged an independent engineering group to complete a Preliminary Economic Assessment (PEA) on the Grey Fox - Black Fox, Stock and Timmins resources utilizing our existing central milling capacity. The PEA is expected to be completed in Q4 2020 and will identify the optimal business case on which to complete a feasibility study in 2021. Combined, the Fox Complex deposits host nearly 3.0 million gold ounces of Measured and Indicated resources, and an additional 1.0 million gold ounces of Inferred resources (2). The objective of the PEA is to develop a plan for the Fox Complex where it would grow to an annual production of 100-150,000 ounces of gold, at a cash cost of $800/oz and an all-in sustaining cost (AISC) of $1,050/oz, over a 10-year life. Production growth is envisioned to start ramping up in 2022.
Grey Fox and Stock – 2020 Exploration
On September 10th we completed a flow-through financing, which provides US$10 million for exploration activities in the Timmins region over the next 1-2 years. The initial focus is on two high-potential targets, Stock West and Whiskey Jack. Both of these targets returned very encouraging results during the 2018-2019 drilling campaigns, and we are looking forward to continue exploration at these exciting discoveries, with the objective to define additional resources.
Whiskey Jack Target
Drilling 650 feet (200 m) north of existing resource blocks at the Grey Fox deposit in 2019 resulted in the discovery of a new zone called Whiskey Jack that returned 9.9 g/t Au over 39 m and 9.7 g/t Au over 6 m in hole 19GF-1248. The 2020 drilling has been designed to: a) test for extensions of the gold mineralization, which is open at depth and along strike (see Figure 1), and b) infill the central discovery area with 100 ft (30 m) spaced drilling, in order to assess gold distribution and the potential to define additional resources.
Drilling started in September and visible gold is showing in 6 of the 9 new holes logged to date, similar to the ratio observed during the 2019 drilling campaign. Highlights of the first new drill holes(3) in the Whiskey Jack target are as follows:
20.0 g/t Au over 6.7 m from hole 20GF-1255
16.3 g/t Au over 2.3 m from hole 20GF-1112
9.5 g/t Au over 2.4 m (core length) from hole 20GF-1152
San José Mine, Santa Cruz, Argentina (49%(4))
In Q3, San José produced 8,600 gold ounces and 571,000 silver ounces, for a total of 15,900 GEOs, compared to 9,000 GEOs in Q2. Lower average gold to silver price ratio of 79:1 during the quarter (versus 104:1 during Q2), resulted in higher gold equivalent production. The mine continued to operate below normal capacity during Q3 due to government-imposed COVID-19 travel restrictions that create challenges in mobilizing personnel to the site.
Gold Bar Mine, Nevada (100%)
In Q3, Gold Bar produced 6,800 GEOs, compared to 6,100 GEOs in Q2. During the quarter we progressed several key business improvement initiatives supporting the turnaround of our operations, which include improving contractor mining efficiencies, assessing material handling and processing alternatives, and further definition drilling at the Gold Pick deposit (see Figure 2), designed to upgrade mineral resources from Inferred to Indicated. A new reserve estimate and feasibility study update for Gold Bar are expected to be announced towards the end of Q4.
Highlights of the results(3) from this recently completed 28-hole drill program are as follows:
1.8 g/t Au over 90 ft (27.4 m) from hole GB769
3.1 g/t Au over 70 ft (21.3 m) from hole GB824
2.1 g/t Au over 130 ft (39.6 m) from hole GB828
4.1 g/t Au over 60 ft (18.3 m) from hole GB830
2.3 g/t Au over 65 ft (19.8 m) from hole GB833
2.1 g/t Au over 80 ft (24.4 m) from hole GB841
El Gallo Project, Sinaloa, Mexico (100%)
In Q3, El Gallo produced 1,900 GEOs from residual leaching of the heap leach pad, compared to 1,900 GEOs in Q2. An updated feasibility study for the Fenix Project is being finalized, and we expect to release the results in Q4.
Financial Results
Operating costs for the quarter ended September 30, 2020 will be released with our 10-Q Quarterly Financial Statements.
Notes:
(1) 'Gold Equivalent Ounces' are calculated based on a gold to silver price ratio of 75:1 for Q1 2019, 88:1 for Q2 2019, 87:1 for Q3 2019, 94:1 for Q1 2020,104:1 for Q2 2020 and 79:1 for Q3 2020.
(2) Resources and Reserves for all the McEwen Mining projects can be found on our website:
www.mcewenmining.com/operations/reserves-and-resources/default.aspx (3) Intercept lengths are estimated true width unless otherwise indicated.
(4) The San José Mine is 49% owned by McEwen Mining Inc. and 51% owned and operated by Hochschild Mining plc.
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Post by Entendance on Oct 30, 2020 6:12:05 GMT -5
TORONTO, October 29, 2020 - McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) today reported its third quarter (Q3) results for the period ended September 30th, 2020.
Cash and liquid assets(1) and working capital at September 30th, 2020 were $18.8 million(2) and positive $21.6 million, respectively.
Production rebounded during Q3 after the successful restart of all four of our operations, which were temporarily suspended during Q2, largely due to actions taken to prevent the spread of COVID-19 amongst our workers, business partners, and communities. Production for Q3 2020 was 23,100 gold ounces and 575,000 silver ounces, or 30,400 gold equivalent ounces(3)(GEOs), at the average gold:silver price ratio for the quarter of 79:1.
For Q3 we spent $8.5 million on exploration and advanced projects, and are reporting a net loss of $9.8 million, or ($0.02) per share, compared to a net loss of $11.5 million, or ($0.03) per share, in Q3 2019.
At Black Fox, development of the access to the Froome underground deposit has advanced 47% by the end of the quarter. We are on track to reach the deposit in the second quarter of 2021 and complete the necessary development work. Commercial production is expected by the fourth quarter of 2021.
On September 10th we closed a private placement of flow-through common shares at a price of $1.65 per share (representing a premium of 21% over the share price) for gross proceeds of $10.4 million. These funds will be used exclusively for exploration activities in the Timmins region over the next 12 to 24 months.
Consolidated production guidance for Q4 2020 is 31,500-34,000 GEOs(4).
Anna Ladd-Kruger has joined the Company as our Chief Financial Officer. Anna is an accomplished mining executive with over 20 years of experience in leading mining organizations.
Our quarterly webcast will take place tomorrow, Friday, October 30th at 11 am EDT. Details are provided below.
“I am feeling much better this year than I did last year at this time because the bad news is behind us. Our operations are starting to turn around and improve; the financial pressure on our balance sheet has been alleviated; and our future growth is becoming much brighter. Investment capital is still in the early stages of moving into precious metals. There are a number of companies that are still being largely ignored but appear to have considerable upside potential. I believe McEwen Mining is one of those companies whose share price has a lot of catching up to do. Yes, last year was a nightmare and as shareholders we all suffered great frustration and confusion over the large loss of share value at a time when the price of gold was climbing ever higher. Our problems were many, some were due to non-recurring events and others were operational. Our senior management at both head office and at our mines are focused on improving operating efficiencies and profit margins. Over the next several quarters we expect to deliver better operating results along with exploration news that we hope will start to close the price performance gap,” commented Rob McEwen, Chairman & Chief Owner.
Operations Update
San José Mine, Argentina (49% Interest)
Our attributable production from San José in Q3 was 8,600 gold ounces and 571,000 silver ounces, for a total of 15,900 GEOs(5). For Q3, total cash costs(1) and all-in sustaining costs (AISC)(1) were $1,269 and $1,538 per GEO, respectively. During Q3, government-imposed COVID-19 travel restrictions limited the mobilization of personnel resulting in the mine continuing to operate below normal capacity.
Black Fox Mine, Canada (100% Interest)
Production from Black Fox was 5,800 GEOs in Q3, at cash costs and AISC of $1,581 and $1,644 per GEO, respectively. The operation is benefitting from the additional development work completed during Q2, which increased mining flexibility. We expect production to continue to trend higher during Q4, and mining from Black Fox to continue into Q1 2021, while we transition to mining the Froome deposit.
Black Fox – Underground Drilling
Delineation and definition drilling around the 240 m and 280 m level stoping areas in the central and west part of the Black Fox Mine has recently returned impressive grades including:
On the 240 Level
85.1 g/t Au over 4.8 m including 218.8 g/t Au over 1.8 m from hole 240-B226-11
14.7 g/t Au over 2.5 m including 19.8 g/t Au over 1.7 m from hole 240-B206-09
15.1 g/t Au over 1.7 m from hole 240-B196-08
On the 280 Level
19.3 g/t Au over 3.0 m including 71.6 g/t Au over 0.8 m from hole 280-F790-12
The positive results from these drill programs are being fast-tracked and evaluation for potential additions to mine planning inventory is ongoing.
A complete summary of new underground drilling results from Black Fox is available here:
mcewenmining.com/files/doc_news/archive/2020/20201029_ug_comp_cog3.xlsx
Froome – Development
Development of the underground access to the Froome deposit, located a half mile (800 m) west of the Black Fox mine, is on track, having advanced 47% by the end of the quarter. We plan to reach the main deposit in Q2 2021 and expect to achieve commercial production from Froome in Q4 2021. Froome offers several benefits compared to Black Fox such as a straighter, more efficient haulage route and wider, more consistent mineralization that is amenable to lower cost bulk mining methods. We are targeting an average annualized production rate of 40-45,000 GEOs from Froome over a period of approximately 2.5 years.
Fox Complex Expansion – Economic Study
We have engaged an independent engineering group to complete a Preliminary Economic Assessment (PEA) for the Fox Complex that includes Grey Fox, Black Fox, Stock and Lexam resources all utilizing our existing or potentially expanded central milling capacity. The PEA results are expected to be available in Q4 2020 and will suggest the optimal business case on which to complete a feasibility study in 2021. Combined, the Fox Complex deposits host nearly 3.0 million gold ounces in Measured and Indicated resources, and an additional 1.0 million gold ounces in Inferred resources(6). The objective of the upcoming PEA is to develop a plan for the Fox Complex to grow to an annual production of 100-150,000 ounces of gold, at a cash cost of $800/oz and an all-in sustaining cost (AISC) of $1,100/oz, over a 10-year life, with production envisioned to start ramping up from 2022.
Grey Fox and Stock – 2020 Exploration
On September 10th we completed a flow-through financing, which provides US$10 million for exploration activities in the Timmins region over the next 12 to 24 months. The initial focus is on two high-potential targets within 2 miles (3.2 km) of our existing operations at the Fox Complex: Stock West and Whiskey Jack. Both of these targets returned very encouraging results during the 2018-2019 drilling campaigns, and we are looking forward to continued exploration programs at these exciting discoveries, with the objective of defining additional resources.
Whiskey Jack – Surface Drilling
Exploration drilling at Whiskey Jack continued to generate encouraging high grade results since our last update, from October 16th, 2020 (for press release click here). Visible gold was observed in 8 of the 15 shallow holes drilled to date. Highlights of two new drill holes at the Whiskey Jack target are as follows:
31.2 g/t Au over 2.7 m and 6.0 g/t Au over 8.0 m from hole 20GF-1323
12.7 g/t Au over 11.2 m including 68.2 g/t Au over 2.0 m from hole 20GF-1325
A complete summary of new drilling results from Whiskey Jack is available here:
mcewenmining.com/files/doc_news/archive/2020/20201029_wj_comp_cog1.xlsx
Gold Bar Mine, USA (100% Interest)
Gold Bar produced 6,800 GEOs in Q3 at cash costs and AISC of $1,585 and $1,769 per GEO, respectively. Operations at Gold Bar continued to ramp up during September, and savings from operational improvement initiatives are taking effect. For example, the combined average contractor and owner unit mining costs per ton of ore and waste moved decreased from $3.42/t in Q2 to $2.45/t in Q3, for a 28% decrease quarter on quarter. We expect costs to continue to trend lower in future quarters.
Evaluation of the resource estimate continued in Q3. We expect to have new resource and reserve estimates and an updated feasibility study in Q4.
El Gallo Project, Mexico (100% Interest)
El Gallo produced 1,900 GEOs from residual leaching of the heap leach pad, compared to 1,900 GEOs in Q2 2020. Incremental residual leaching costs for Q3 were $3.1 million(7), or $1,505 per GEO. An updated feasibility study for the Fenix Project is being finalized, and we expect to release the results in late Q4.
Table 1 provides production and costs for Q1, Q2, Q3 and 9 months ending September 30, 2020 and comparative results from 2019
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Post by Entendance on Jan 4, 2021 6:32:50 GMT -5
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Post by Entendance on Feb 2, 2021 17:21:53 GMT -5
*** "...only physical demand can truly break The Banks and force an unwinding of the leverage. Buying futures is fun...but...The Banks will simply create more in order to dilute supply and the CME will just raise margins in order to force some selling..."
McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to extend a warm welcome to all our new shareholders, provide production guidance for 2021 of an expected 141,000 to 160,400 gold equivalent ounces (GEOs)(1), and discuss one of our most valuable yet under-appreciated assets, the Los Azules copper project. Beyond the potential of our gold and silver assets, Los Azules provides MUX with large indirect exposure to the growth of the electric vehicle market, renewable energy and the continuing urbanization of Asia.
“ I wish to extend a warm welcome to all of our new shareholders. Some of you may not be familiar with our 100%-owned Los Azules project. According to a study (Preliminary Economic Assessment published in 2017 (2 ) ), it has the potential to generate strong returns at a $3.00/lb copper price. Here are some of the highlights: a 36-year mine life; Capex of $2.4 Billion, a payback in 3.6 years; and annual production in the first 13 years of 410 Million lbs of copper at a cost of $1.14/lb. You may be interested to learn that in terms of value, using today’s metal prices of gold at $1,834/oz, silver at $26.17/oz and copper at $3.51/lb, that approximately 522 lbs of copper are equal to 1 oz of gold or 70 oz of silver, and 7.5 lbs of copper are equal to 1 oz of silver.
Los Azules does not have reserves, but it has Indicated and Inferred resources of: here
General Motors recently announced that it will be aggressively shifting to electric vehicles, producing 30 new electric models within 4 years, and producing only electric vehicles by 2035, which may be followed by the other auto manufacturers and create an increased demand for copper and other metals.
Production Guidance
We are forecasting our 2021 gold equivalent production to be in the range of 141,000 to 160,400 gold equivalent ounces (GEOs) using a gold:silver ratio of 75:1. These production levels represent a 21% to 38% improvement over 2020. The table below provides the forecast production by mine site.
Operations Status
The turnaround at our operations is the result of new leadership in our senior executive and operations teams. At our Fox Complex in Timmins, we have a well-funded exploration program underway following on our successful exploration results from 2018-2020. Also, we are completing the access ramp to the Froome deposit in late Q1 and expect to reach commercial production in Q4.
In Mexico, we have recently announced the Feasibility Study for the Fenix ( 3) gold-silver project, which at $1,800/oz gold and $25/oz silver generates a 51% After-Tax IRR, $90.8 million NPV@8% and a 2.9 years payback, with average annual production of 26,000 (4) oz gold in Phase 1 and 4,200,000 (5) oz silver equivalent in Phase 2.
In Argentina, our San Jos é Min e is a high-grade silver and gold producer with a large property package that nearly encircles Newmont’s rich Cerro Negro mine,” commented Rob McEwen, Chairman and Chief Owner.
2021 Production Guidance here |
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Eureka County, Central Nevada: 
The Entendance Beach
