Q2 2020 McEwen Mining Inc Earnings Call
[music].
Hello, Ladies and gentlemen, welcome to Mcewen mining Q2, 2020, operating and financial results Conference call.
And from the company today, our Robyn Friedman, Chairman and Chief owner, Peter Moore, Chief Operating Officer, and Sylvain <unk> Senior Vice President of the exploration.
After the speakers presentation, there will be a question and answer session.
If you like to ask your question. During this time so the press star followed by the number one on your telephone keypad.
If you'd like to withdraw your question press the pound Keith.
I would now like to turn the call overdue, Mr. Rob Mcewen chief owner.
Thank you operator.
Good morning, fellow shareholders, ladies and gentlemen.
Great Day, we had.
Gold and silver isn't climbing over the last couple of months.
And I was reminded the other day someone called up and said you know you said gold was going into $2000 announce.
That was a couple of years back.
And they said they thought it was impossible.
Yeah were just over $2000, an ounce silver's 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 a the prices go up 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 pricing cool.
Those currencies.
Yeah.
Q2.
I was not I quarter, we're proud out from a standpoint of performance.
We are proud if something about Q2 in that we put the health of our employees before profit.
We started with the P.D.A.C. and I'm Cobot came along we said.
You know, there's a risk to our employees being at that conference 'cause. It Kobe, then we didn't want to contribute to the spread so he said well we have a boost but we're not going to attend we're not going no. One in the from is going to that comp.
Early on after that.
We decided to suspend operations.
At our minds.
And that had a very serious impact on our production. Yeah. You expenses were there, but the ounces were produced in so in this quarter, we see in that just past quarter Q2, we've seen numbers that makes me sick when I look at them.
But I'm comfort in knowing.
That <unk>.
We protected.
Our employees.
And it's really important that they'd be protected because there's a life and the longevity. These operations going forward and you'll hear from Peter today.
Brad.
Production is picking up at all of our operations and we expect.
Our cost per ounce numbers to go back to where they're at reasonable.
In the ensuing quarters.
We also.
That's an interesting exploration news.
But feel then we'll speak to little though.
So at this point I'd like to say.
During the presentation over to Peter to talk about her operations.
Thank you, Rob and good morning, everybody.
A gold bar gold produced was 6100 ounces in Q2.
For the first half of this year 15200.
Production was impacted by shutdown in April for coal good 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 wrapping up towards the middle east levels in Q3.
An optimization that improvement plan, it's been developed.
We were targeting improved cost and throughput.
The implementation.
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 a resourcing for something in Q4 this year.
Moving onto Black box will produce was 2200 ounces for the quarter.
10500, the first half of this year.
Well again production was fairly impacted by the cold that 19 shutdown.
That's lower than expected ramp up the mine resumed normal operations.
Lower grades from a longer stope exposure times other blocks it before the shutdown.
Delays and development timing that limited dark still boxes.
Going forward in two production costs are expected to come in line with pre coal good 19 performance.
What's new I'm pleased to report or the West flight to 80 regarding on the ore development.
What's his five months ahead of schedule and we in Calgary I agreed that we anticipate will lead to stoping a this year.
Rumors on track for first or a in Q2 2020.
We expect commercial production to be reached in Q4 of next year.
The black box called Blucora expansion study its own pretender will be awarded the next week and we expect to complete.
The first step without study the preliminary economic analysis in Q4.
Little bit a boat or a gold resources in Canada.
We thought we'd just summarize them you know a totaled nearly 3 million ounces in Canada.
Kind of equally between our next I'm properties and Tim and.
And our Black Fox complex.
Next slide our organic.
Growth expansion strategy. The main objectives of this strategy to convert resources to near term.
Total gold equivalent production.
No greater than 300000 ounces per year.
Sustainable low cost and leverages or three operating regions in the Americas.
The strategy currently consists of seven projects Bach walk minus extensions room rates Hawks saw Phoenix gold bar and gold bar so.
Several of our projects are under abuse, such as the left some properties I mentioned that Kevin.
And be talking oxides, and we'll be reporting on those in the fall in quarters.
The Phoenix projects is advancing towards feasibility expect Q4 2020.
Based on the preliminary economic analysis financial model and using updated metal prices up 1500 gold 19, silver at 22.4 peso exchange rate the <unk> or is 44% and the NPV at 5% discount rate is 112 million U.S. at spot price.
So is it improves a using 2050 gold and 28, silver <unk> or rises to 97% and the NPV just north of 252 million U.S.
On the next what 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 prudent I'm grateful.
This next slide shows Black Fox and the 2020 mine plan areas that we developed towards.
Oh, it's created some new mining opportunities.
And react those in the first half of this year Gray represents mined out areas Blue is the 2019 year end resource.
I read in their fans doping and development, respectively. The dark Red show the actual Goldman.
Two examples of what's the difference in the upper part of the mine are the 240 east.
It's a new stoping area, which so far as out at about 26000 tons for the 2020 plan a recently we got in.
On the 280 level and developed a seemed very nice high grade area.
Out West Lake.
Yes.
And Oh pardon, sorry, and in the West blank got that 300 to to 80 area.
Both both of these examples were increased working faces.
All can shorter hauls and more flexibility.
All the are shown on this slide or active development stoping and definition drill programs this year.
Beyond these opportunities within assessment will be.
Completed towards the end of 2020 to determine up a bulk little great opportunity exists in the future.
Oh. This next slide shows some of the new west flank drill targets.
I wouldn't read the which are in close proximity to groom declines and could that be production at black Fox This year.
Falling slide is the Grey Fox project, it's one of the most exciting opportunities we have in our project pipeline.
Company expects it will become a long life core assets, representing strong foundation to build our future upon.
The inset in this slide shows the conceptual I agreed grey Fox Pitt shown in grade.
They target the contact one for seven northeast one for seven and south zones.
Also show him as the new Whiskey, Jack discovery above until their rights of the contact them.
An existing Gibson portal and underground workings towards left hand side again so.
Scoping study on trade off analysis to assess open pit and or underground mining, while maximizing the stop mill capacity will be completed in.
Q4, 2020 this year.
On the next slide this is just an update of where our from twin ramp accesses. The overall average both from a percent complete.
Is that.
Did you see on the right hand side or the group declined it was colored at the bottom of the Black Fox Pitt the Red Dot shows location ventilation ramp as of July 31st which is.
A little bit beyond three 7% complete actually around 40%, we expect to reach the ore body by Q2 2021.
To begin a transfers and longitudinal still development I've shown here in light green on the left hand side.
This slide.
This forecast includes a conservative estimate of a down through the fault zone, showing middle of the slide head of the Red dog.
Commercial production is expected in Q4 2021.
On the next slide.
But this slide shows some important advantages the Froome project.
Compared to black Fox its a shallower deposits suited for low cost a productive bulk mining and it's not beneath the pit it has more consistent grades and continuity in a wide disseminated style of mineralization.
Oh wider expected mining rich with ranging from 15 to 40 meters for the most of the positive.
On a larger stopes equals more efficient underground development and mine sequencing blower gradient and a street around Oh, So it will help holiday.
Whose underground congestion.
Oh, we're insperity good grown connections and so where we expect positive results with a dilution and grade control.
That concludes the operational and projects updates I'll hand over to sell them to provide the Q2 exploration.
Thank you Peter.
<unk> gold bar, our exploration drilling activities were focused primarily on the pick with pit in the gold bar soap so satellite deposit.
Infill drilling confirms things can go musician Gregan with Holger, the West Victoria and provided additional key information to assist reinforcing our model.
Of the gold bar Salt satellite deposits, which is located at a lower live vision about Threeq Onefive mileage salt east of gold bar.
We are completing a 10000 meter drill program.
We would love to results have been positive in the program is successfully consuming shallower zones of plus two gram gold mineralization.
In addition drilling results or extending transition toward the solved with user intersection of about 2.4 Gram per tonne they'll go to one well for feed to 2.2 over 95 sheet than the 1.2 gram per tonne over 1.5 feet.
As well as to the north west of the deposits area on where suddenly Windsor sections of <unk> 0.7 Gram per tonne goal over 60 feet <unk> 0.6 over 60 feet where adopting.
The 20 Twentys really program is also significantly reinforcing the judge called on the spending in control of gold mineralization.
Which are cure or small city, along with strong graphic contact and at the intersection with North East South Western thing fault.
The gold bar soaps resource will be up there was in Q4 permit the permitting it for the developed in the dilution from go more soldiers publishing and we'd expect to start mining. This satellite deposits in the second half was 221.
And Tim in snow drilling wells, mostly devoted to globally space definition drilling of gold mineralization.
Within the arduous and upcoming mining blocks the block shock deposits remain open to the west end up that alone to structurally cultural driving the German three of the main mineralized zone core or Shouldnt have shown with the yellow our rules on the slot.
The levels of structural complexity is really important the black Fox and we are putting more efforts on understanding the cultural and you only three of the mining area as well Oh, we keep advancing our drilling.
Several high grade intercepts sport generated from these or just finishing the whole including has highlighted in yellow on this slide.
Oh.
19.9 gram per tonne gold over 3.5 meter.
This is into the whole guessing randomization I just some to assume your call a Jewish thing over the three for the level.
162 Gram per tonne reached 3.2 meters. This in 2000 gram per tonne intersection.
<unk> 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 age 60 meter level return and then Bruce if I gave intersections of 44.8 Gram per tonne goal quarter of 5.8 to meet or.
Which include onto it 49 year over 1.5 meter.
On this Oh, I really return the call back to roll. Thank you.
Oh, Hi, Stephen Thank you I'm, sorry technical glitch.
Catering sylvana outlined to you well explain happened in operations and we're continuing to see excitement in their 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.
Natalie followed by economics.
That is on Grey Fox stock Phoenix.
Room will be advancing.
I'm getting closer to the ore body.
We think constrained.
With our capital given the.
The lack of production in the second quarter.
But that will be partially addressed by the end 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's will become easier for you just see.
What we have is a very significant organic growth pipeline dad is concentrated in several regions.
And I mean, how when you look out and you can see and potential for 300000 ounces a year coming from.
[noise] Hugh.
Tightly contained areas it gets quite exciting my confidence.
Yeah remains high although I'll then discuss.
Discouraged by some of the setbacks, we've experienced but [noise] recently had bought another 2 million shares screen I holdings up to 82 million shares.
I believe that we're going to see improving fortunes in the company, but were and that's going to be doing as results of the work we're doing.
But also the gold and silver price.
Is just beginning to end 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 region.
Where a number of countries have.
Abuse their monetary base abused their currency.
Hi, pushing out.
A lot of money and incurring large amounts of debt.
This time with Cove, it we have seen I.
Our universal.
Response.
Our government had 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 gold and silver and other hard assets.
And I'd, just say to you.
Add here positions wherever you are how whatever your hobby and your precious metals space and you.
You can have a great right.
Thank you very much like open up question.
As a reminder to ask a question you will need to press star followed by the number one on your telephone.
To withdraw your question press the pound Keith.
Our first question comes from line of HEICO I leave with H.C. Wainwright. Your line is open.
Hey, guys. Thanks for taking my questions hope everybody's things like.
They are HEICO. Thank you I hope he will go to your.
I am indeed, a world or walk me through the ongoing corporate expenses, Illinois, there is an intelligent way to quantify at mine by mine.
Can you just sort of walk us through.
What additional expenditures you house.
You know like this quarter next quarter et cetera.
Sure I can't ask VP finance and you I have only to.
Address your question Heiko.
[laughter].
Thanks, Rob Yes. It to address that question are we looked at the Tobin expenditures and kinda twofold, there well I guess, there's three ways. It really looking at it wanted the direct incremental costs required to improve buyers safety and security standards.
You know as people enter and lead the sites. So those costs related to things like temperature gauges and other thermometers some increased security at the site in checkpoints.
A minor changes to workstations and those costs are really not that significant and not expected to be significant on a go forward basis were significant cost that we incurred a where directly related to the shutdown and those items were disclosing our our financial statements and specifically relate to labor.
That weve continued to retain during that shutdown period.
Yeah, 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 as costs that were incurred a were really around the idle capacity costs, where we were operating below our our capacity and so we're still paying for you know.
Wages utilities overhead.
Those costs were all categorized as production cost applicable to sales and those costs would.
You know what would continue to the extent that were not back at capacity in the coming months.
Fair enough, but there's no way to quantify it I mean are we talking about 100000 are we talking about a million bucks.
A couple of million Bucks.
Well, we quantified the shutdown costs those ones were disclosed in I know for of the financial statements we incurred.
I think it was.
I was in the of shutdown costs, Yeah Black Fox then we incurred just around 1.4 million up cost for gold bar during that shutdown period.
Fair enough and we friend lined out we're probably a.
Good okay.
Or what do you mean in terms of trend lining like applying that board because those costs were specific to the period of when we were not operating well those oh. Okay can you give some indication, but you don't have a number for us what you expect to incur in Q3 before.
Not not specifically I mean, we're not we're back at operations right and then were ramping up operations. So as long as that wrap up continues then there there shouldn't be any significant covert related costs.
So.
Okay, and then well, but yes questions for you you mentioned in the release and I quote I can see anybody or you can see an exciting organic growth pipeline of projects ahead that could potentially push for production of 300000 ounces per year, just to clarify we're talking about acquisitions here.
Andy I don't know much color you're willing to provide but is there a timeline that you want to assigned to that.
Uh-huh it'd be in the next three to five years HEICO and it wouldn't be acquisition.
And be all organic.
Looking in the Timmins area, we have the.
Your stock prop.
Stock property Grey Fox.
And Froome is coming on stream first.
And then we do believe that the Black Fox mine as you heard Sylvan mentioned some of the drill results forgetting there. It's a shallow mine we think it goes deeper and also on the west out we're exploring and getting very good results show that mine means more time, we're exploration but.
We could see it coming back on stream.
And adding also the timid properties one of the attractions of the Black Hawks complex when we bought it wasn't proximity select some properties to the mill.
And so.
We were looking at everything sort of as single asset.
Oh and this is.
Right now we're looking to integrate all of those so that's in the tenants area there about.
Four or five areas that we feel can bring that production up and give us a long life assets running it better than 100000 ounces a here.
And then you go.
So a bar.
To step back when it ounces were cut back earlier this year, but Ah go far south is expanding in some of the results there quite attractive long interception intercepts of good grade.
Or an open pit.
And then we go down to Mexico, and and or the Phoenix project is a.
It's looking like it would provide a very robust feasibility study, but that's all those are all properties, we own 100%.
So we don't have to go outside we don't have to acquire any companies to get that correct.
Very good products.
Appreciate the color there like you guys very much.
You're welcome hike.
Our next question is from him back to you for running with Alliance Global Partners. Your line is open.
Good morning, guys. Thank you for taking my question.
Hi, Becky.
I would like to dive right into Black Fox you know you come up so I would be long term opportunity that's all.
Yes, Oh, you know specifically talking about the second half of my need Wendy Oh, let's see the grade school fine improving because you know made that certainly come up from there into better than before its corridor I didn't get good building there, though yeah. That's like 80, I just kind of one thing how do you.
Yeah, I think about the blade Stan.
Good coverage would you like to.
Answers there he is correct.
Thank you back the very good question before answering that just I want to draw no to a typo correction on slide six it says first for improvement Q2 2020 it.
It's 2021, so drano to that.
Yeah, I'd like to black box or yeah, I think where you're going on we're excited we're seeing some very good high grade intersections in the western flank and also historically on the central zone.
Easier some of the areas that a that I reported on your earlier and on slide nine.
And and we do expect to see some some nice grade areas. It's early days, we've just gotten access we're drilling.
We are pretty excited about it to 80, a area we might filled out on that recently.
And I saw some nice grades.
And significantly higher than our head grade, but it's a two too early to guide on that but I can report very encouraging that's why we're excited about extensions of those zones up to the for them.
Decline area, which I showed you a those targets, which we do have some drilling on them too.
Give us confidence so 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 blank and certainly comedy 40, and adapt to switch filling out there and I've had some hybrid and we do you expect to see some extent.
Chains out of that centers on going down the block.
Got it I think there's so much where the guy that and just from that standpoint or could you. Maybe you know things we had one month oh into production for the total day could you maybe you know Hawaii some more color into you know how how that's on a dumb funding along at Black Fox you know boasts the second budget are designed it to go ahead.
Yeah, the tonnage is trending on plan.
And beat our these development access and of course, some helped us increase or a number of stopes that we have access to ore mining flexibility.
Improved tremendously.
So we don't see any issue in terms of having available Stokes going forward in the second now.
Okay, well you know moving onto through Oh, you know tool is expected to come online in Q4, 2021, I know, it's kind of eliminating but could you. Maybe you know talking I do think more about the cost a little find that Oh, you know the great slightly lower than that had great somebody's into black.
But just kind of curious how does the trade in combat isn't a you know because when oh and committed than the black box.
Yeah, it's it's significantly better where we're in the final stages at itself or our feasibility and will be coming out with that soon here in Q3.
That's a that's all about all I can say about it not all 'em. We have you know a great bulk John first open stoping kind of you know deposit that's really suited for for low cost fighting to 5% decline short haul.
Got all the whole hallmarks of some very good offering.
Good God, either [laughter] could you contrast that for back to you can't.
What's going on and Black Fox in terms of the mining there as opposed to groom and why you feel that easier and better.
Yeah at Black Fox with thanks, Thanks, Robert at Black Fox Oh.
We have very small.
We're trying to we call them the chiklis sticking out these high grade areas that are maybe a thousand or 2000 tons. Each on average and so you have to do a lot of set up work a lot of drilling a lot of prep work and then that would remind them up very quickly to minimize the stand up time and filling them quickly.
Conversely go over to a Froome you know we have very wide intersections 15 to 40 meters slip walnut hanging wall that we can set up transfer stoping primary secondary really much more contained bigger stopes no 10 to 20000 ton range, we can get up to.
And then on you know how're stability works out so.
Just as a whole different you know a type of mining approach, so less a bigger bigger more productive stopes and tighter.
Element will will translate into better overall costs, including all in sustaining.
But as I said, when when we complete DFS final edits, but we'll guide on that.
Got it. Thank you so much of the color.
You know approximately because I think I've never been has been completed to be just kind of Qt Oh from modeling the expense going forward, how much Oh. Additionally development expense or do you expect to into Oh in that second half of this year.
Right.
Yeah, Andrew do you want to.
Take that one.
Sorry can you repeat the question.
I said, Oh, how much of that doesn't happen that expense Oh, I didn't get meeting to be in good and with that hopefully that luqman for the second huh.
[laughter].
I think for the second half of the year, we are projecting another $10 million of development expenditures for for him.
Got it. Thank you so much oh moving on Phoenix. So that's really easy you did talk about you know renewing Oh, yeah focus and given high admit it's nice to know the project now makes more sense, you just kind of Qt Oh, I believe you how everything for summed up on the being front.
Well at least what advancing the deposit Oh, well is the feasibility study just kind of wondering what.
Additional things you need to accomplish before do you think Oh production decision then and could you maybe didn't minded about the initial topic weideman called the project.
What sort of what's that screw them back to feeney.
I, just Phoenix Oh Phoenix.
So Phoenix Phase one is permitted that's the goal project. So phase one is the gold hey, stewards silver.
Phase one permitted that's approximately a 44 million dollar project.
And then phase to the silver project, there's about a $23 million project.
We are in the final stages of about feasibility as well as mentioned and those numbers might change and we look for improvement.
Oh on our on on our key on our business case, there, but for now that's those are the numbers were using.
Got it and when it comes to a you know construction or development timeline, what's kind of though and today Oh, you know painting, Dan If you decide to go ahead, I'm kinda give out into production.
Yeah. It's I mean, it's early stages or we were working on those yeah implementation plans for construction schedules.
But our initial estimates or are about 12 months schedule.
Got it.
Lastly, Ah you know, what's going to help the dividend expectation from San Jose Oh, I know a golden has disrupted.
In all patients, but just kind of curious.
[noise] San Jose back T is.
Having to deal with travel restrictions between provinces in Argentina.
And most of the workforce comes from.
Health and northern provinces.
And so it's only operating at about 60% capacity right now.
Oh.
It's not.
Generating it it's not realizing the economics.
As as much as it should be.
Mind, you half of its production.
It's high grade silver.
Oh.
Moving to sell for around from $12 in March to $28 today is better.
It should have a.
Hi, good impact on on the economics there.
I had they hope to get back up to full production and then it's.
Later this year, but in the Kobe.
Issue this is clouding.
Having the picture.
God.
So I I can't really quantify we haven't been able to quantify what you might get out now.
Our interest in the San Jose.
But I am.
The the economics at least on a separate from Dan is if they so.
Oh.
Fair enough. Thank you very much but all the color that's it from my side.
You're welcome.
Our next question is from Mike It goes back with Cantor Fitzgerald. Your line is open.
Yeah. Good afternoon, everybody. Thanks for hosting the call a couple of questions for me.
First I'd gold bar, you're saying you're gonna be back mining at full capacity in September and my question is you know what does full capacity mean for gold output that that mine like ours are you still mining in only pick west have you solve the grade reconciliation challenges there and just going to follow on there I mean.
Guidance was withdrawn earlier this year, but now the you're ramping back up are you clearly have a plan there a gold bar. So do you have a production target at gold bar in Q3 in Q4.
Peter you care to handle that.
Oh, absolutely there were number questions there hopefully I captured the mall.
So full capacity.
What were meaning there is ramping up to 24 hours operations.
And targeting our feasibility feasibility level.
Production.
Where we've currently a in end of July increased the our crews and ramped up to 24 hours or we are achieving somewhere in the range of 5000 6000 tonnes a day.
We are targeting 7000 tonnes a day.
And in our optimization plan I cost savings have a couple of hundred dollars an ounce cap cashcall.
Mm pick west a exactly that's where we'll be mining threw out 2020.
And hence where most of the drilling that children has spoken about in the past.
Where we're focused on mining.
Resource estimate a is coming out in Q3, and then we'll be updating a reserve based on on the optimizations that I spoke about earlier in terms of mining and processing costs.
It's early days for reconciliation versus the model, we're just getting into it now.
And just starting Oh on that so we don't have guidance on that.
Or ounces as you can tell where we're still updating our resource and reserve.
So when they are.
At this stage Oh no guidance there.
Things are trending very well and we expect to Oh.
We'll have our fully our teams fully crewed up and operating.
In September as normal as are normally operating pretty cold.
Okay.
Hi, good if I can jump in there just curious.
Peter could you get might have reference point or.
That cost reduction wedding, reducing it from our hope to reduce it from.
Right.
So it's not heated and it's not from Q2 numbers.
In in our 18 month plan.
And normalized our grades and if you did that in achieved or Oracle.
Production.
Costs at our at our go forward ounces I know, it's a bit it'd be in complicated, but that that would've been a thousand $9 per ounce.
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 to 17 million savings annually.
Life of mine.
It's a pretty exciting and compelling project, there's a there's no one magic area, there's a whole bunch of areas, where there's opportunity in efficiency improvements with our existing plants. So this is no capex. This is just looking at or efficiencies and how we operate in how we can get better and we had done.
There are seven work streams.
Where were.
Actively.
Working to improve at the moment.
Okay. So so it sounds like you have a much better handle on what the costs will be but the.
The ounce profile is still a bit of a question Mark until you get the reserve model and the reconciliation issues figured out correct.
Exactly okay. Okay.
And then just one more in its another one for you Peter So you've been at Mcewen mining for four months now despite all the travel restrictions and stuff I was assuming you've been able to spend a bit at time of quite a bit of time hopefully at black Fox in gold Bar. My question is you know is there anything at either of those operations either on the mining side or on the processing.
Side, you know over the last four months it kind of immediately jumped out to you that that needs to be fixed or or can be improved over the over the short term.
Yeah, I mean, I think there's always room for improvement Ive spoken a lot about a gold bar.
I think you know we have similar journeys at both mines and again the operations you can find opportunities.
We've spoken a lot of both the resources and improvements to that.
And sort of similar approach was at both mines, where we get more access more drilling ahead of ourselves more information on the Geo Matt. We can understand are key technical and and financial drivers way out ahead of mine planning a and then plan for success I think I think that's the key it's really back their base.
At this stage and then and then growing from a a strong foundation of our understanding those key driver.
Okay. Okay. Thanks, Thanks for that so so I think saw Robin team. That's that's all for me having been weekend.
Thank you Mike <unk>.
Our next question is from the John Turtles to process with John Tumazos very independent research. Your line is open.
Thank you and congratulations on all the progress even if it's not an income statement.
[laughter] I was Doodling one day.
And your 10-Q reports tons and grade and output not recovery.
So I saw the equation for recovery.
And I noticed a five of the 11 corridor shoes on Black Fox.
It's a recovery rate derived was one of six to 131, Chris Schott.
And the other six quarters. It was 77 to 99.
And the Unweighted average was 100.5, but had I waited it 2018, when there was more gold it would've been higher.
The question is.
Good explain a top cut procedure.
At Black Fox.
Oh I'm not critical of it I think it's always better to produce a little more than a little less but.
Clearly.
The recoveries suggests degree it's hard to estimate.
Hi.
Till then like you like to comment on that.
Oh more specifically north the question.
Tell us about your top cut.
Oh at Black Fox, because some of the quarters. It produces a over 100% recovery ratio, suggesting the grade sometimes is a little hard to estimate.
Yes, or no. That's a good point John up cost is you know it's all the we something up nothing it's really easy to define the specialty and then nugget T mines like we see a black Hawks has a the military's spectacular.
She is often the nishu a we have a reason north Georgia in the whole.
Uh Huh liked working full time on Black Hawk for now over to Europe, and as as we move we're worried as we learn about the.
<unk> contribution as we learn about the geological and controlled and I mentioned, both up we put.
More airports I mean, the all just in the sold on the funding and and Oh and benchmarking back to grade and model or we are actually are looking up this a sub dropping as we speak and refining the we we are modeling the default.
It's itself. So it's an ongoing process was the past top come close to 30 or closer to 100 or even higher.
It was well over a little too on the words.
[noise] continuing the line of reasoning to cool bar [noise].
Oh, it's the tons process went down the recoveries went up.
95% arrived in the first quarter and to 28% in the second quarter.
Which implies that the leach cycle might be closer to 12 months three months.
What do you think the wage cycle is it gold bar.
And is it possible.
You might have declared defeat prematurely.
And that the gold is just coming out later.
HM.
Here, Yes, [laughter] thoughts on yeah.
Very technical question as you know.
During the shutdown without mining residual lead you can see you know.
We were covering ounces and and.
You know we were about 50% of production with this.
Not a lot of ton stack up there.
Leaches directly obviously relate to that time.
ER and life of mine so at the end of life of mine if you shorten your.
Life of mine your shortening years each time.
As well for their number factors there.
Maybe we are looking at how to improve.
Leach time, that's actually part of the optimization plan.
And in the past that the feasibility was designed it I think 20 foot stack Heights.
Our operations team had moved to 30 foot such delays are leach curves.
And so we're 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 side leaching I'm. The stack in that you saw that actually come through here in Q2.
So there there are lots of opportunities to.
Improve leaching and recovery in and that's exactly one of the optimization areas. We're looking at.
And if you would bear with me one more.
Oh, it to Black Fox complex the Grey Fox.
Okay, So eight or 900000 ounces at just over seven grams.
Which looks like money in the bank.
I appreciate it from was a little more ready to develop and get into production.
[noise], how much longer or would it take to get to grey Fox and pull out a beautiful seven grams stuff.
Yeah, I'm with Yeah, [laughter] I think you asked that question a last quarter to.
Look where we're moving forward there there are some really nice underground targets there. Its early days its all about a great continuity and an infield drilling and proving up particularly in underground where you can hang together a good stopes preliminary look I like Gibson.
I like piece out a phone 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 level beneath that.
Permitting wise or you know we're looking at approximately two years once we locked down or project description. So hence why were.
Working no feverish lead to to get the scoping study done in the plan is the front end load that with.
The quality of information such that we could move right into Fs given that you know where were in operating region or we have a pretty good understanding of our cost base and what that capital my.
Once we define it.
What's the top cuts that grey Fox is there a chance to grazes I have for grammar Graham better.
[laughter].
[noise]. So then like you'd like to answer that question.
You know there's.
[laughter] the grey Fox there is some of your sub or there's there's oh I got to reside.
Well not to be a [laughter] zone, we do real with key Jacobean of the program, where we've got.
A new intersections of really I agree that there is still early stage. We also have a you know I'm a better understanding of the gifts and how are your own where we need to go back with.
Orientation of the drilling that will optimize.
Cutting better the keys structure that we received their grey Fox. It's a large complex of you know, there's there's still lots of room for infill drilling there's a lot of room for growing at a portion of the resources over some of the area.
And and we are as Peter said.
Looking at scenarios or economic scenarios regarding open pit then on the ground. So there's a benchmarking regarding what would it be realistic call.
Oh, considering what we have there on the deposit.
The Joel materials, it's another thing what make more sense doesn't open pit versus on the grounds, who all of those studies are ongoing or who speak.
Thank you and congratulations and I apologize for asking the technical questions I admire huge taking these difficult challenges.
Hey, John.
Dr question, they're the ones.
It needs they asked that.
I'm going live.
Mike being a potential.
For.
Great being higher than Weve shown here.
[noise] or longer to get the goal now that echoing bar.
Yeah.
I think oxytocin.
Our next question is from Terry the phrase Investor Your line is open.
Good morning, Rob Good morning, gentlemen, how are you today.
Thank you very good [laughter] [noise].
Hi, Rob as you know I've been with your for quite a long time, and one thing I really have difficulty in understanding.
You don't really have to go into it though is the massive a underperform if they see if I put you up against your benchmark, which when I look at it and I call you benchmark Gtx Jay if that's fair.
Sure.
And we you know we started really at beginning of January 2019, It broke down would be a little Gtx Jane This continue down and I realize you had some problems.
This year that you Didnt expect no.
Great fall to of your own I understand that these do happen, but when I look at you it at some point compared to your benchmark.
The underperformance is just.
Staggering can't five would've said in 2016, where the price of Mcewen mining would be when we had 2000 dollar 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 300000 ounces of.
Possible production, but your timeline of three to five years, where five years into a bull market.
Bull market that I think all of US new was coming because of central bank policies.
We [noise], perhaps have five years left around before the central banks destroy all of our currency and my concern is I've been waiting for for all these years.
Are we going to Miss his bull market, how long is going to take to return to even your benchmark.
We're outperforming your benchmark.
Thanks very much.
Thank you Terry.
Like you I've I've been.
Bothered by yeah, the underperformance.
I think every one of our shareholders shares the same view.
Historically, we were trading Oh, yeah, GDX chain and GDX.
So we've gone south and everybody has gone or.
And.
When I look at it.
During the transition period, right now and I believe.
<unk> future is looking right here although.
It's taking its time to the to show up.
He.
But that type of performance. If we were just to get back to where the industry lives is insane huge sums up and I think we have to deliver a couple of quarters.
Uh huh.
Good quarters.
To demonstrate that the turnaround is in progress we all believe.
Internally that they turned around is occurring we can see improvement, but it has to manifest itself in.
Sounds has produced staying cost so that with the rising gold price were participating with it rather than just trading dollars.
<unk>.
This time, but did you.
Sounds good.
Go ahead, no no I'm, sorry, I'm, sorry to cut you off so.
What I'm understanding as.
If I could if I could be patient for two to four quarters, and you're able to produce the inline with your expectations or exceed them could I expect you know at least to close the gap significantly on GDX Jay.
I would hope would that that would be the case I.
I mean, we.
Last year was a huge disappointment for everybody and.
A lot of trust was lost in confidence.
And we have to rebuild that and as you know building trust takes a long time.
And it's going to be built.
Hi, demonstrating that werent delivering on our promise.
So I think they just conceivable.
And that's what we're working hard to get too.
To regain that confidence.
<unk> and clearly out outline the.
The dynamic of the growth that we haven't found of.
[laughter] final quick question then your long term goal of qualification qualifying for the S&P 500 can you discuss Matt.
[laughter], sorry, [laughter] I guess it no no no no need and I apologize when we.
When that goal is first articulated the threshold to get into the S&P was three and a half billion dollars.
It was subsequently increased several times and it's now $8 billion.
Given our market cap or less than 800 million.
And.
300000 ounces will get us there unless they are extraordinarily inexpensive took the games, which I'm not going the same are going to be able to do so they would have to be M&A to to get to there I think the goal is still a very good schools have.
And.
Because there's only one gold stocks in the S&P 500, but.
And that will 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 our exposure to cold.
When gold themselves.
So.
I think you'll have a strong movement in the sector there.
Yeah.
Maybe that index is something that.
[laughter], you'll get the performance without the next in the near term.
Thanks, Rob I wish you a great year, thanks for answering the question.
Welcome.
Our next question is from a bill powers private Investor Your line is opus.
Yes. Good morning, Thank you for Hi, Rob Good morning, and Ah. Thank you for taking my call here today, just a few questions covering and yeah.
Broad range of subjects, but I guess, we first start with the slide nine which is youre.
And accounting of your.
Measured and indicated its wells inferred from it looks like it's both black Sam and Black Fox and that's it.
3 million and measured and indicated and inferred another you know over a million.
And I guess to me it sounds like if your goal is to only go to 100000 ounces.
That seems like a lot of resource a 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 I'm. It sounds like its 200000 at a at the stock mill.
Oh, let's say we're trying to.
Air on the side of conservatism in its early stage you haven't done all of our economics, we do see room to expand beyond.
Well the on the hundred but at the moment that.
Because of the early stage that spot where a comfortable saying.
Okay.
Fair enough as far as the ER.
Ah down in.
Nevada, there seems to be a Ah 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.
For the rest of this year.
I think Peter May have mentioned that but I'm sure. It would you like you Stan.
Dan.
Yeah sure we're targeting in that so once we get up to full you know the that six to 7000 ton.
Per day range. So you know I'm kind of a north of a kind of 150000 tons per month.
We're targeting a again.
Whereas the 10th again the guide on that until we complete tower.
Our resource update preserved been mine plans.
But Ah you know I think they pick up the capability and capacity.
Is there and as we worked on the blending you can get the tons had been becomes a can we deliver them out of the pit.
Oh, and all batch scheduling sequencing stuff.
So bill.
During.
Oh, we didnt producing me.
There was no production heckle bar and it was only one shift.
Or day.
And joining me in June.
Well the top at full capacity will be operating 24 hours a day and as Peter said, we just started.
24 hours a day, so that'll have a material impact on the amount of material, we're moving and or indefinitely loading on the pad.
Yeah.
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 are gonna be a down the road type of activity.
Hi, there will be down the road, we were concentrating on or near mine right now.
A major focus is to expand a resource base near mine, we haven't forgotten about outside or we have a property nearby.
Tom can property, which has a.
Good size resource on its oxide and sulfide.
And at some point and see if we get incorporate some of that into a gold bar production <unk> pass its been treated as a separate property and not really thought about incorporating what it has already outlined there.
You may see some news on that they go for it.
Okay, Great and I guess the.
Really the last question I would have.
Yeah.
As far as huh.
The as far as stock I know there are.
Playing I, it's just going to be incorporated into the plans for the I guess the comprehensive 10 minutes plan for that you're working on for later this year.
That's right.
Yeah.
Okay, and then I actually just one more.
Quick question as far as Argentina goes it seems as though from the at least reading the financial statements down or it seemed to be operating it's almost a and had a significant loss during the second quarter due to payments and it looks like you guys were paying the salaries.
Ah the workers who are.
Staying home and I guess has the has the attitude or it or is it leads the environment change where rather than operating as more of a charity that the government is now going to be allowing.
It seems as though there's been a significant increase in Argentina is overall foreign reserves to take profits out of the country or to at least if you do generate down which looks like it'd be a strong possibility at today's prices.
[noise], Argentina hasn't reached the point that say, a america or Canada or the European Nations and.
In terms of is viewing they want to.
Lets money into the people that are unemployed or sitting at home.
Argentina is still looks to the corporation a whole bill.
And they have travel bans still in there.
It's still.
And issue there.
But.
Higher prices I think.
There's a possibility I could possibly let's see something other there.
Later, it's got here.
That sounds great well. Thank you so much for all your time today I appreciate it.
Thank you bill Thanks for your questions.
There are no further questions at this time, Mr. Rob and given I turn the call back over to you.
Thank you everyone for joining the call a wish you much success in the investing and stay tuned I think we have more news coming.
Good news.
Thank you very much.
Well, it's very strong unhealthy.
Ladies and gentlemen, this concludes today's conference call. Thank you for participation and you may now disconnect.
[music].
[laughter].