Q4 2022 McEwen Mining Inc Earnings Call
Hello, Ladies and gentlemen, welcome to Mcewen Mining's fourth quarter and year end 2022, operating and financial results Conference call present from the company today are Rob Mcewen, Chairman and Chief owner Perry Ing, Chief Financial Officer, William Schaefer, Chief Operating Officer, Mike.
<unk>, Vice President and general manager of Mcewan copper.
After the speaker's presentation, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press. The star one I will now turn the call over to Mr. Rob Mcewen Chief owner. Please go ahead Sir.
Again, Mr. Rob Mcewen. Please go ahead.
Uh huh.
Thank you operator.
Ladies and gentlemen.
Today, I'll start with a discussion about cold.
And then our share price performance.
And follow up with factors driving our future.
With all the uncertainties in the world.
Many people are asking why the price of gold hasnt climbed much higher.
I believe.
That most investors.
Feel good that we have entered into a new era.
Where low very low <unk>.
Interest rates and massive monetary stimulation are here to stay.
And the Colts reputation and just.
Well, there is no longer relevant or needed.
World Awash with the easy money.
However, as we all know the unexpected happen.
Happens quickly.
Rising interest rates and an unexpected bank failure.
Are.
Vivek reminders gold still has a role to play in your portfolio.
I suspect more investors.
We will start adding golden gold shares to their portfolio.
And they will follow the lead of a select number of central banks, who became large gold buyers in 2022.
In fact, their purchases where the largest purchases.
Made in the past 50 years by Central bankers.
Perhaps they too are concerned about holding too much of their reserves and Fiat currencies.
So during 2022, the price of gold outperformed.
Not only gold equities, but also the Dow Jones gold increased 1% year over year and at yesterday's close it was up 6% since December .
31 2021.
During that same period to see the senior.
And junior gold equities as measured by the Etfs, the Gtx and the Gtx Jay registered losses.
10, 5% and 15% respectively.
In 2022.
While the Dow was down three 7%, but if we look back another year to December 31st 2021.
Come forward to yesterday's close.
The Gtx was down nine 1% the Gd XJ down 16, 2% and the Dow was down 12.4%.
We were just lucky.
22 <unk>.
Our share price goes Kmart.
It was down a painful 36%.
Unfortunately.
It has recovered much of this loss.
<unk> has increased an impressive 136% since the end of last year December 31st 2022.
And if we look back to December 31st.
'twenty one.
Our share price is only down.
13.1%.
Which is less than the gtx decline of 16 point too.
And very close to the decline of the Dow Jones industrial average.
12, 4%.
So looking at our stock chart.
From a technical perspective, it looks very promising.
With our share price, having broken out on the upside through its 50 103 hundred.
They.
Moving averages.
Driving this price.
The improvement is our demonstration of improving operational performance good exploration results production growth.
Lower cost per ounce.
Along with the growing recognition that mcewan copper is losses or list project is a large copper resource with large strategic shareholders.
Rio Tinto, the world's second largest mining company and the Lantus the world's fourth largest automobile manufacturer.
Mobility provider.
For 2023.
We are looking at.
Production increase of 12, and a half 227.5% over.
What we did in 2022.
Our costs are expected to decline.
By about 5%.
In 2022, our Fox complex and go up our mines generated operating profits, but they accelerated activities at our subsidiary Mcewan copper.
And its losses oldest project.
And our heavy investment in exploration contributed significantly to our large reported loss.
I will now ask.
Terry.
To provide details.
On how we performed financially.
In 2022, and more importantly, what we see going forward in 2000.
In 'twenty three it will be followed by our director and interim Chief Operating Officer, Bill Schafer, who will comment on our success in stabilizing our mine operations.
And where we see growth in those operations.
Bill will be followed by Michael netting our vice President General manager of Mcewan on copper.
Our progress at <unk>.
And the financings, we recently completed and the strategic shareholders we have.
Harry.
After you.
Thank you Rob good morning, everyone as Rob mentioned ill provide an overview of our fourth quarter and full year results for 2022, and then I'll discuss the impact of the recent Atlanta said Newton Rio Tinto transactions for.
Our balance sheet.
These transactions are obviously transformative for the company.
Deleverage, our balance sheet and a rising interest rate environment and allow the company to advance the Fenix project in Mexico as well as continue to explore aggressively in Ontario, and Nevada without issuing additional equity, especially at these current gold prices.
From a lack of Villa project. This transaction will bring two things first it brings on a key partner in the projected Atlantis and strengthens the relationship with another.
Rio Tinto.
It also provides significant funding to Argentina to continue our aggressive exploration efforts and provide mcewan copper further flexibility in the timing of a potential IPO.
First off though I'll start with a review of Mcewen Mining's consolidated results for the prior year.
It is important to note that we report Mcewan Cocker as a consolidated entity and reflect 100% of its expenditures on losses at Atlas on our income statement.
As a U S listed company reporting under U S accounting standards, we do not have the option of capitalizing the exploration and development cost at that project or any of our other ah projects for that matter until we have completed the feasibility study.
And permits for development. Unlike many of our Canadian listed peers that often capitalize these costs at a much earlier stage.
In terms of looking at our headline figures, we reported a loss for the quarter and year of 37, 4 million and 81.1 million respectively.
This translated into 79 cents per share and $1 71 per share respectively.
Absent the loss for the year is due to the expensing of costs at losses, the loss net of foreign exchange gains realized.
A further 25% roughly is due to exploration and development costs at our 100% owned properties.
The remainder.
The last figures per share.
Reflect higher G&A costs, and certain onetime tax charges.
I also note that the per share amounts reflect the tenant for one share consolidation completed in July of last year, which reestablished the company's compliance with NYSE share price listing requirements.
Looking at our 100% owned mine, we generated a cash gross profit of $7 9 million for the quarter and $19 2 million for the full year respectively.
On a gross profit basis, we were.
These operations were essentially breakeven a significant improvement over 2021 performance.
Looking at gold equivalent production production for the fourth quarter of 37300 gold equivalent ounces was down just under 10% compared to the fourth quarter of 2021.
Driven by a decrease of approximately 2000 ounces at gold bar that transitioned into the new gold bar South cats during the quarter.
Full year production of 133300 gold equivalent ounces was down approximately 14% year over year.
Again, the decrease was primarily primarily driven at gold bar due to carbonaceous ore issues experienced earlier in the year as well as the transition into gold bar South in the fourth quarter of the year.
At the San Jose Mine production was down approximately 10% year over year due to issues with Covid and at the mill in the first quarter of 2022.
Bill Schafer, we'll cover off line operations in further detail.
So the revenue and cost standpoint realized gold prices were roughly unchanged at 1800 dollar level for both 2022 and the prior year.
Gold prices were slightly lower in the fourth quarter of.
2022, but appears to have rebounded well into the first quarter of this year so far.
Looking at cost we noted a significant improvement in cash costs at our 100% owned operations at $12 76 per ounce, which have decreased steadily since 2020, but lower cost reported at both the Fox complex and gold bar compared to the prior year.
All in sustaining costs were largely consistent with the prior year and reflect the cost of bringing gold bar south into production.
In Nevada.
At the San Jose mine, both cash costs and all in sustaining cost increased incrementally over the prior year, reflecting lower production due to the issues I noted previously.
Finally, looking at our Treasury at the end of the year, our cash equivalent balance stood at $44 million.
Compared to $60 million.
At the beginning of the year.
Now I'll turn the attention to the recent transactions with the Lantus in Newton, Rio Tinto, and how it impacts our balance sheet and working capital on a go forward basis.
These transactions at those within the past three weeks. The transaction included an offering of primary shares directly from the Killen copper in that component of secondary shares which are the shares.
Of the Kulin copper owned by Mcewan findings.
The details are summarized in our news release, so I'll just try to encapsulate it at a high level essentially mcewan mining if we look at it as a standalone company receives $48 million.
Mcewan Cocker receives approximately 30 billion received 30 billion Argentine pesos.
The price point of the transaction the price point I wish. These transactions are valued from the Killen copper standpoint is nearly double the initial $10 per share amount.
When we did the investments.
Yes.
In June and August of last year.
Following these transactions mcewan mining ownership of <unk> copper reduces from approximately 68% at the end of 2022 to 51, 9% today.
In terms of the proceeds to Mcewen mining, we intend to use $25 million of the proceeds to retire debt.
Secured debt with sprott lending, which will reduce our total debt from 65 million to 40 million saving the company significant interest costs going forward.
With our enhanced Treasury, we believe we now have the funds on hand to build phase one of the Fenix project in Mexico and bring that operation.
And to production within the next year without raising additional capital.
As far as Mcewan copper <unk> 30 billion pesos as a significant amount.
Exchange rate.
Equivalent to over $150 million.
Using that as a special measures such as the Blue chip swap rate.
This is approximately equal to about $80 million.
With this round of financing completed mcewan copper is well positioned to execute our drilling and development program for the remainder of.
The year and into 2024, which Michael will outline.
So based on these transactions the urgency to complete an IPO in the first half of 2023 has been eliminated.
So with that I'll turn the presentation over to bill favor.
Yes.
Thank you very much Perry good morning shareholders.
This morning, I'd like to leave you with three messages with regard to our operations.
We have improved mining operations at the Fox complex and our improving milling operations, which will result in higher output and lower <unk>.
<unk> costs into 2023.
At Gold bar, we have successfully transitioned to a new contractor and we have moved the operations too.
<unk> gold bar to the gold bar, South pit, which will produce most of the ore in 2023.
And based on the first two months of production, we are fully transitioned on both fronts that being the new contractor.
Full operations.
Cash costs.
For these operations will be approximately 1100.
<unk> per ounce.
In 2023, which is a significant improvement of approximately 15% from 2022.
And lastly at the Phoenix project.
He has mentioned.
<unk> have moved to plant.
<unk>.
Yes.
That we purchased last year.
Two of the plant site and our.
In working stages of planning production in early 2024.
So the last quarter of 2022 was challenging but hard work by all of our mining operations helped us overcome these hurdles, making Q4 a reasonable quarter.
We are also making progress in stabilizing and improving operations. So we can obtain predictable outcomes for gold production and costs in 2023 and into the future.
So far this year, we are on track.
On the safety front in 2022 we had two low severity lost time incidents.
In January and March.
At our Ohio operations.
And for the rest of the year, we were lost time accident.
Free.
At Fox complex, we have operated for a full year in 2022 with no lost time injuries and at gold Bar. We recently passed three years without a lost time injury.
On the environmental front we.
There were no environmental events recorded.
2022.
Now I'll turn it over to.
Each of the operations at the Fox complex, we had a very challenging year with the.
With our mill, which continue to have significant availability issued which hampered our throughput. This resulted in us missing our gold production last year.
At the same time, the mine had an excellent year, which resulted in a stockpile build up to 120000 tons by year end. This represents a value of approximately.
$15 million after milling and recovery.
Yes.
On a positive note we have now undertaken crushing of ore at the mine prior to it being <unk>.
<unk> to the mill.
This lowers the amount of work that the mill needs to do in processing.
<unk>.
This decision.
<unk>.
Was followed following a.
Test program.
Prove this concept.
Last year.
We have been able to get our production tonnage through the mill successfully in Q1 of 2023 and are looking forward to improving the throughput.
When we get the contract crushing plant that we have.
Plans for the remainder of the year add into place.
<unk>.
That will be commissioned in early April which will allow us to reduce the size of stockpile, we have at the Fox mill transforming it into gold and therefore cash.
Anticipate we will meet our budgeted cash call for the year of $922 per ounce.
At the gold bar mine in Nevada.
2022 was also challenging.
With our issues of fragrance.
Craig robbing ore and are parting of ways with our mining contractor at the start of Q4.
Notwithstanding these issues we transitioned the mine plan successfully to begin production in Q4.
And we are happy to tell you we have successfully transitioned to a new contractor who is now in full production.
We also completed the move to the gold bar South pit.
Now in full production in this pit.
Coal bulk production from gold bar has been on budget for the first two months of this year.
Forward to a good year from operations.
Yes.
Okay.
The Fenix project in.
In Mexico, we have been able to develop an approach to get the fenix project in production in a timely manner.
And then at a significantly lower capital cost.
We will report a SaaS the heap Leach pad, which has a grade of six grams per tonne to accomplish this we have acquired a used 7000 ton per day processing plant.
Which operated recently at a local mining operation, we have moved 80% of this plant to our site.
And for Phoenix, We will initially assemble only the grinding circuit.
The cyclone <unk> and the leaching portion of the plant and used a present value gold recovery circuit.
This will reduce our capex to approximately $12 million.
With the potential to increase.
The throughput as we move into production and.
And prove that this plant will give the required outputs.
There are a few minor changes in our permits that are required but we hope to have this plant operating.
This year or early in 2024.
With that I. Thank you very much and now turn it over to Michael for an update on our world class losses all of those projects.
Thank you so much bill.
I'll quickly highlight our financing the strategic importance of our new shareholders. Then report on our drilling exploration on study work and finally, you mentioned, what we did last year and in 2023 concerning our enhanced organizational and ESG competence in Argentina.
Mcewan Copa completed 81 9 million.
Million offering, including a 25 million investment by Newton.
Rio Tinto venture on August 31, 2022 volatile October 24th by an option agreement with Canaccord exploration another subsidiary of Rio Tinto for a potential earn in of 60% for other creek by investing 18 million over seven years.
Subsequent to December 31st 2022, we announced the closing of an Argentine pesos 30 billion investment by Fiat Chrysler Argentina, a subsidiary of Cilantro is to acquire shares of Mcewan Copa and of a second investment of $30 million by new debt in case, the investment to $55 million.
No new isn't it of innovative new venture with a portfolio of proprietary Copa heap Leach related technologies and capabilities at the core.
<unk> of almost 30 years of research and development.
Those have the potential to economically unlock copper sulfide resources and achieve higher copper recoveries on oxide and transitional material.
Rio Tinto is the world's second biggest mining company, bringing significant financial and technical resources to make your own copper envelope as soon as project.
Atlantis on the other hands, it's one of the world's leading automakers. It produces iconic brands such as Alpha male Geisler Sichuan.
<unk> see it Jeep Landshark Maserati Opel to Joel.
Vauxhall and others.
And then Argentina still and just produces about 160000 cop yearly has about 3000 employees and as president with manufacturing in Boneless Itis, and then call the buy in Argentina.
Partnering with Atlantis is an expression of a paradigm shift for downstream customers of copper.
Companies realize that copper is the middle critical to the Green energy and mobility transition and to my knowledge. It's the first time, an automotive company has invested in a couple of company.
Subsequent to those transactions still anticipate each own 42% of Mcewan Copa Mcewen Mining's ownership is now approximately 52%.
Now I'm going to talk about drilling exploration sites and study work.
A total of $41 3 million was incurred in 2022 at the lesser soon as project to advance drilling engineering and project feasibility work.
Drilling is focused on increasing drill hole density to upgrade the copper mineral resource classification to measured and indicated and to define the payback pit design better.
To provide metallurgical hydrological and geotechnical data to support mine design and step out exploration testing for potential extensions of the copper resource to the north south and at depth of this already vast deficit.
Mining intelligence ranked in 2022 as the ninth largest undeveloped copper project by copper resource size.
In 2022 drilling started in January and went to me when it stopped for the winter in the southern hemisphere than restarted in October and is currently ongoing.
Since October 2022, there were six drill rigs on site and five more edits in early 2023.
Come 2022 to date, we have drilled over 105000 feet approximately 32000 meters and 98 drill holes to increase geological confidence and we see the drill results are generally consistent with our model.
Beyond robust delineation results published in January and March this year.
Recently published our northern step out exploration results with 1052 meters of 0.29% copper, including an interval of 480 meters of 0.42% copper, which demonstrates the potential of the deposit to the north.
The updated Pea will include all available information on drilling essay and metallurgical testing obtained until early 2023 and is now slated for publishing during Q2 this year.
We are developing a scenario for lots of solace is an open pit mine that initially processes leasable copper content in the heap leach with the solvent extraction and electrowinning facility to produce copper cathodes.
This scenario is more environmentally sensitive due to its much lower water consumption and carbon footprint and is derisking the project due to lower complexity.
The project design makes use of renewable energy, which will allow for low carbon footprint production and improves financial attractiveness.
While the VA as a base case considers economic leaching without new technology. We are excited to be able to test heap leaching using their technology, which could represent a very interesting upside scenario and initial results are promising.
We have a preparation for the filing of the environmental permit application for the exploitation stage to the South one mining authority the.
The drafting of the report is underway and on track for submitting it to the authorities in April 2023.
In 2022, a major advance was made that will accelerate the development of the solar projects with the completion of a new low altitude access roads, which goes to a maximum of about 11000 feet or approximately 3400 meters above sea level.
Would you say in part with other mining projects, including a catch all for Glencore and on top of multiple on resources.
The importance of having a second road into the site at more than 2000 feet low altitude means that we now have almost year round access to the site.
In addition, we upgraded the exploration roads, the former existing roads to low four articulated <unk> less to get to site, a significant logistics improvement lowering costs and quickly transports.
With regards to organization is strong and experienced management team was setup in Argentina in 2022 with management team members, having a total of over 180 years of experience in tier one operations. The majority in South one Argentina, where the project is located.
To further cement our relations with local communities, we opened up our community Affairs officer, and Colleen Gastar and so one where the project is located so as you can.
Closer relations with the community and we are operating in.
And I can report that we are happy to receive ongoing support to develop our project them.
This concludes my report on Mcewan Copa Thank you for your attention and I will now turn it back over to Rob.
Yes.
Thanks, Michael.
Tom.
I'd like to say.
I always felt losses are less.
It was a tremendous asset for Mcewen mining.
The problem lies.
In 2022.
Our share price was scraping along the bottom.
And our Treasury was small.
Okay.
In order to Dan <unk>.
We needed a lot of money.
And.
The thought of trying to do a financing.
When we share price was at historic lows.
It's not.
That attractive or possibly feasible.
So we decided the best way to advance losses litigation and build its value.
In surface the value for Mcewen mining.
And allow it to access financing.
Whereas to create mcewan copper.
And funded separately.
And I believe we have been successful in surfacing value.
We've retracted the second largest mining company in the world as a shareholder.
And the fourth largest automobile manufacturer in the world.
They both did extensive due diligence on.
And lastly, Louis.
And.
Just confirming that we do have a very large very attractive.
Copper project.
Likely be one of the larger copper mines in the world when it is bill.
So last August .
We raised $82 million.
Had a share price of $10.
Now several months later.
Fleet at an even larger financing.
$30 million and 30 billion Argentinian pesos.
At an average price of approximately $18 75.
As a result, the implied value of losses Louis has increased.
$260 million.
To $550 million.
And that's excluding the one in a quarter percent royalty that mcewan mining Cogs on this property.
So now behind every share of Mcewen mining.
On a fully diluted basis is a value.
$5 70.
From losses ruling.
Back in mid 2020, our share price was around $3 a share.
Looking ahead.
With our operations performing much better.
And then they have in the past.
With prospects of growth.
Fox complex, where we can see the potential to double production and further reduce costs.
Sue below $900 an ounce.
Mining at gold bar.
We're in a new deposit that is.
Higher grade and lower strip.
And.
Assuming the winter doesn't frustrate our plans.
Increasing production.
By better than 50%.
And we're looking at the Fox complex, increasing production anywhere from 15% to 30%.
Keeping its costs around $1000 an ounce.
Sure.
Looking at 150 to 170000.
The equivalent ounces, representing an increase between 13% to 28%.
Mcewan mining trades at a significant discount to its peer group.
Our objective is to get up and exceed that here.
Peer group.
Economic value per gold equivalent ounce.
And when we do that along with continuing to progress.
Our.
Okay.
<unk> project.
I think that the value behind Mcewan mining is going to increase.
And I see a value.
Somewhere between.
Between.
$7 and $28 a share.
We might be wondering how I got to that number.
And it's really the sum of the parts.
We have.
Losses Lewis.
In there.
When compared to two other copper projects in the same province in Argentina.
We're at a lower altitude closer to the infrastructure than they are roads power.
And based on the published resources.
Has a larger resource and higher copper grade and.
Neither of those two properties one has a value we purchased it.
$485 million last April and the other one has a market cap of about $1 9 billion.
So you could see.
I think we are in a position to be somewhere between that 500.
And $2 billion for the value for losses zoom it.
We have five.
Royalties non producing royalties.
One in a quarter percent on losses their list 1.25%.
Q copies other copper.
Project Elder Creek, which you heard earlier at an option by.
<unk> exploration arm kennecott copper.
And then we have our gold assets.
<unk> are trading well below.
Yeah.
Our peer group.
So I think there is quite a bit of room to grow.
And.
I think we're in really good position.
To push forward on that front.
The investment that we have brought in recently into Mcewan copper.
Although at reduced our interest our ownership interest.
It increased the value is significantly above that.
Yes.
And it allowed us to.
As we reduce mcewen mining.
Yeah.
And money in the Treasury of Mcewen mining.
To further the development of our Fox complex.
Expand down in Mexico.
And <unk>.
And our exploration program.
So.
If any of you are interested in buying.
Getting exposure to me keeling copper.
Through the shares of Mcewen mining.
Or wait for.
The IPO of materials copper.
Thank you.
Operator, let's.
Let's open the session for questions and answers.
Certainly at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad Andrew.
And your first question comes from the line of Jay Zukowski from Alliance Global Partners. Your line is open.
Hey, Robyn Hi, Jeff Thanks for taking my questions.
So just I had hurting with gold bar you mentioned the change of contract during Q4 can.
Can you give us any color on the improvements you've seen since making that switch and youre able to quantify them at all.
Sure I'll ask bill to answer that question.
Thanks very much for the question.
Yes.
I guess.
There's two aspects too.
The improvement the first aspect is.
That's.
We have a significantly different.
Tracks tool arrangement.
With this group.
And that along with their performance.
Brought the relationship to a very professional.
Relationship which is contractually.
I guess not complicated.
And that has been nice to see.
From my perspective, and also from the site's perspective.
And.
They have successfully transitioned in a relatively short time approximately three months from the time, we first started talking to them until we had a contract in place and they were on site and they are now totally ramped up.
As the gold bar, South project, which is a.
New mining operation if you were there a year ago. It was.
A big Hill.
In the middle of the desert.
No.
Full scale.
Mining operation producing about 100000 tonnes of ore a months.
Between three and 400000 tonnes a month of waste.
It's been a relatively smooth transition.
We've had this fall.
Early winter.
I guess, the toughest winter that they've had in a decade.
In Nevada from the perspective of.
Snow and.
And rain.
So.
With those challenges.
Seeing the success of the first two months, where we're basically.
Right on budget.
I think that.
Tells me, we're we're on the road to seeing.
Better performance as the year goes on.
As the contractor becomes more comfortable and also as the amount of work space that we have in the pit.
Expanding because right now it's a very small pit.
Because of the fact that we're just starting.
I hope that answers.
Question.
Okay. That's helpful.
And then just looking at losses.
Obviously looking at the recent financing and increased cash position for Mcewan copper.
Just wondering if this has changed your thinking.
On.
The IPO timeline.
With a longer cash runway, obviously, I think you'd have a bit more flexibility.
Okay.
Take a market dependent approach any thoughts here would be helpful.
Sure Jake.
With the financing well I'll go back a bit we had time, we complete the.
Updated pea and use it as the basis for growing.
<unk> public.
This.
In this first half of the year.
And then as you mentioned with the financing now completed.
The urgency to do a financing there is no longer there.
So.
I don't have the ability to.
Think of it financing later.
This year or into early next year.
But any more buoyant marketplace.
Okay.
Got it okay that makes sense.
That's all on my end thanks again.
Thank you.
Your next question comes from the line of Heiko L from HC.
Your line is open.
Hey, Rob Thanks for taking my questions.
Okay.
No go ahead in the last week.
One of the other questions.
Primary question really is the contractor at gold bar, South I mean, you got a new people there.
Efficiencies have they brought with them already to improve production how much more do you think you can see and even more importantly, do you think any of those efficiencies can be extrapolated to other sites.
Hum.
Bill.
And could you jump in.
Yes.
No.
I guess the the.
Potential upside.
At gold bar.
So is that.
<unk>.
We will have once we get up to full operations, which were very close to now we will have.
The ability to ramp up.
Production to a higher level.
I don't think we've completely.
Figured out exactly what that capability is.
And one of the things we have to be a bit careful with is that the life of this.
This pit is relatively short.
It's between 12 and 18 months. So we wanted to make sure that we.
Run the operation is in that.
In a very efficient manner to make sure that we optimize.
<unk>.
Optimize not necessarily maximized our production either the pit.
And we also have to make sure that we get the right recoveries.
From the operation.
At the same time at gold bar, we also need to expand our leach pad.
This year and that work.
Uh huh.
Now getting underway and will be completed.
Some time.
In the late Summer August September .
So those are some of the complicating factors.
But so far as.
As I mentioned earlier, we're right on on budget and on schedule in terms of production.
And it's.
No I guess the thing we're not absolutely clear on is what the recovery will be.
From this or although early indications are that the recovery will be.
Sure.
Higher than what we have.
In our study so.
Think.
We're looking good for the future.
You know, it's a question of managing all of our our operating costs, we need a little bit of.
Sure.
Of cash to do some exploration work.
I think all of that can happen out of gold bar.
To ensure we know where we're going.
Next after globe ourselves.
HEICO in terms of applying.
We're doing it the other site.
This contractor and specific to this mine and I don't think they'll go.
We'll be using them at other sites at this point.
No I didn't mean physically move them over I meant more of the techniques.
That was helpful. Nonetheless.
Yes.
My next question was going to be pointing out your market cap that youll, 62% of the Mckee and copper in that that's $286 million right, there, which let's say $100 million on the rest of the company.
You did a terrific job describing how you're unlocking all of this earlier on that call for that I. Thank you.
The one thing I think I'd like to see just a touch more color on is the management time priorities for the senior team for the company.
I assume there is.
Some people that are going to have some overlap and how you expect client priorities to be spend please.
Okay.
Michael has done that.
Wonderful job of assembling a very seasoned Argentinian management team.
Which are handling much of what's going on in the Q&A after.
At last year's illness.
Then we have oversight from Toronto.
On.
The financing and.
So the other property Elder Creek, which is largely being run the program to be run by Rio Tinto Kennecott copper arm over the next.
Number of years.
Michael perhaps you could talk about the team we have assembled and their backgrounds.
Yeah sure no problem, so what Rob has said.
That we set of them local management teams so in Argentina, we have.
Myself for the majority of my time and I have about 16 years in Latin America attendance off one in Argentina spend about seven years with Barrick.
Being responsible in finance and operations for they are if all of the assets in Argentina, then we have our project director.
But to also relocated to south one in Argentina.
Taiwan tied to operations to our.
Illegal manager 20 years of experience with Barrick.
In the natural resources.
Our environmental and Harrison safety manager and he has experience in Taiwan operations with Barrick.
Through all the different functions. So we have a very very strong team that is capable of bringing this project from where it currently is over to feasibility engineering.
And in construction and operation.
Yes.
Rob.
Okay.
Okay.
Well heiko.
Yes, yes.
Yes. It does thank you very much.
I appreciate.
Thank you.
And your next question comes from the line of Mike Kozak from Cantor Fitzgerald. Your line is open.
Yes, good afternoon, everybody. Thanks for hosting the call a couple of questions from me first one.
You put out 2023 cash cost and the ASIC guidance in your December 21 press release last year, but that guidance. It was noticeably absent from your press release. This morning was that just an unplanned omission or.
Should I interpret that as your previous 2023 cash cost guidance should no longer be relied upon.
I'm, sorry to say an omission.
Okay. Okay. So can you just say reiterate the cost guidance a good.
Alright second one yeah, so and Michael you mentioned that the losses release it is now.
Expected in Q2, which is a small delay from Q1 for before now on the site visit a few weeks ago. It's abundantly clear just how much work is going on there right exploration drilling testing the Geo Tech drilling new iterations of the life of mine plan that seem to be changing like almost constantly. So my question is by pushing the PGA.
To Q2 from Q1, how much and what.
What type of extra data might you be able to jam into that PPA.
Otherwise it wouldn't have been able to that could presumably improve the project economics there.
Mike.
Sorry.
I was just going to say one aspect is deciding on the base case that we've done a number of optimization run.
We're just finalizing that base case and getting agreements across the board on all of our consultants.
And Mike do you want to add.
Sure they're informational.
What we what we looked at.
Beginning of this year was that we had some interesting.
Additional drilling inflammation that we wanted to include.
And this requires us.
Update on the walk around the mineral resource estimate.
From the works off the <unk> over to the Geos to the mine planning.
And while we said well, we're going to publish where we'd go into complete this.
By by end of Q1.
We now think okay, we are going to complete it and off end of this month beginning of next month, depending on the on the optimization work that Bob just mentioned because we still think that we can do some further work that we werent.
A couple of weeks.
Later publishing off.
Hey.
Especially in the framework of the offtake financing that gives us.
More headroom to.
To look for as Rob said before a buoyant.
Financial market. So we have the time, so we want to make sure that we get the best possible outcome.
For this PPA I think.
We owe that to our shareholders.
No that makes perfect sense. Thanks for that color, maybe maybe just one follow up and you touched on this briefly I was going to ask on it anyway, but you mentioned that now you've upgraded that exploration road. So that you can get 18 Wheeler trucks in there can I then assume that if you wanted to you would now be able to winterize the camp.
If you will or if you want but.
Is that possible now to enable drilling year round.
Yeah. So.
As we had highlighted before and drop had mentioned in prior press releases one one of the things that is critical for US is access to sites and they just decided we have through the explanation of all in through the southern roads and on top of that we upgraded the explanation about as he said to bring.
Tractor trailers to sites now this means that a potential construction of a winter Kevin.
Through fall seasonal Kim with fixed installations is now possible much more efficiently so should we decide.
To go forward and conspectus Camden, we could think about winter drilling this season, but we're currently evaluating that and look for what is the most.
Cost effective and efficient solution and also what is required from them.
From a study.
Program point of view to be able to complete the feasibility study by end of 2024.
Okay. Okay very good very helpful. Thanks, That's all that's all for me.
Thanks, Mike.
Your next question comes from the line of John Tumazos from John Tumazos, very independent research. Your line is open.
Okay.
Thank you very much and congratulations on all the progress.
In your press release.
You mentioned 42 meters of 2.78% comp or in whole.
23191 on looser Lewis.
Could you tell us how deep was and whether it was oxide Leach mill.
Open pit or underground ores.
Hi, Eric.
Garrett comfort.
<unk>.
Sure that.
The section is in our press release, where you can see.
Where the copper mineralization is.
So best is to open that up.
The.
The 174 the explanation one.
It's mostly primary.
And the.
$31 91 is.
Mostly secondary and then goes into primarily.
Yes.
His primary mill ore leach ore.
Primarily would be either mill or all using a technology such as new heap.
Heap leaching technology or <unk>.
<unk> technology.
So it's not an old fashioned leach, but it might be a tomorrow.
<unk>.
Yeah. This is today.
The mill.
It would be a mill to date.
But.
Thinking it there is advances taking place.
And recovering metals.
Hoping we will see a heap leach alternative.
Thank you for clarifying and helping me could you just repeat.
2023 cost guidance.
From the release.
Chris.
Okay.
Hi, John It's Stefan Spears on the on the line.
Yes. So in December we guided on a consolidated basis. So that's a 100% owned operations cash cost of 200 and all in sustaining a 1500.
Gold bar, we guided cash cost of <unk> hundred all in sustaining of $16 80.
Fox was $1000 cash cost and $13 20 on sustaining and San Jose at $12 50, cash costs and $15 50, all in sustaining.
Thank you.
Concerning the.
The mill Guy.
<unk>.
And the ramp.
Its stock.
Could you give some indication.
As to what months.
And 'twenty 'twenty four or early.
2023.
My begin production.
The monthly production rate might be.
Yeah.
Bill could you address that question.
So with regard to Phoenix.
We anticipate that we would.
Have that plant running.
In the first quarter of 2024.
And the tons per day is somewhere around 3500 to 4000 tonnes a day.
Yes.
And with regard to.
Fox and the start of the ramp there what.
What we hope to be able to do is to.
Construct the portal.
In the last quarter of this year.
And then be in production.
Some time.
In the first.
Late in the first quarter or the second quarter.
Of next year from or that's relatively close to surface that we have been drilling.
Feverishly over the last couple of months.
I guess basically what I'm, saying is that there is or very close to surface.
Rich will take something less than three months to develop.
And then we'll continue driving the ramp down.
Towards.
While towards stock West.
But also with a possibility of heading to stock East where are we also have.
Have some.
Or that's relatively close to surface.
And of course as you.
Robley know the.
Better or in the stock west deposit as is.
Is quite deep.
Anywhere from.
200 to 400 meters deep.
If I could follow up.
Maybe its too much to ask you with the gold output could be.
In 2024 from stock since you are still in filling the gold.
Finalize the grade concerning.
3500 tonnes per day.
How much gold per month or per quarter.
Would that be given the grades and recoveries.
With regard to.
Yeah.
Fox, we anticipate that we would be able to continue production at the same.
Right.
We are planning for 2023 at Fox.
All of that somewhere in the range of about 4000 ounces per months.
And to tell you the truth I don't remember the production number.
I'll budgets or $6 24 times 30.
Yes.
500, a month, yeah, it's about 1500 ounces per month.
From <unk>.
Yeah, so so it'll.
From a cash generation perspective, Phoenix will be a very very good project with a relatively short payback period because we've.
Basically you worried our capital costs down too.
Thank you for all those explanations my Collinsville.
Nomura.
Youre welcome John .
Your next question comes from the line of Bill powers from a private Investor Your line is open.
Yes, thanks for such a great conference call today.
A question on the stock I know you were planning to do in quite a bit of drilling and it sounds like from.
Bill just recent comments.
That youre planning.
Drive a shaft down and then.
Aren't producing or I guess is this.
At the point, where.
<unk> production is I guess continued.
To go forward or is this going to be.
Produced along with fruit.
So that's a really good question so.
Just for your interests will do a 100000.
<unk> meters of drilling.
<unk> this year.
At stock.
With possibly some of that in fact <unk> stock by the Grey Fox.
And a couple of other projects, but.
You know a substantial amount of drilling will be completed at star.
So conceptually at this point.
From will continue at least to the first quarter of 'twenty 'twenty six.
Yes.
And so the transition across.
Two.
Two stock will will be one where we will be mining at stock before we're out of or thrown.
And so that's where we hope to increase the tonnage.
Yeah.
In 2024.
The increase of tonnage coming from the stock from the Fox complex, which will increase the total amount of holes.
That were that we are producing however at this point.
I can't tell you what that.
Oil production might look like in part because we have all of the resources put together and mine plans.
For that period of time.
But I would.
Venture that it will be.
A couple of thousand ounces.
Months once we get it ramped up.
Okay, and so you would the idea would be that I mean, it sounds like there's still a fair bit of exploration that it keeps getting extended as far as it is.
The terminal date.
It sounds like there's still a fair bit of exploration Youre planning to do there.
And so with this with <unk>.
Additional recall.
Adjustments need to be made to the mill to accommodate this ore or is that in your plans for this year to accommodate the increased throughput since it sounds like.
That's kind of a bottleneck as of right now.
Yes.
That's correct.
The mill has been a bottleneck.
Crushing.
<unk> at the mine has significantly.
Lifted the pressure on that because we're basically the plan going forward.
There is two basically crushed down to six millimeters.
All of that across and put it directly into the ball mill and leaching part of the circuit.
What we have to determine this year is what the long term.
Configuration of that mill will actually be.
Well we go to.
Crushing at the stock side.
As well or will we do something innovative at the front end of that plant.
Such as you know a larger ball mill.
Some other kind of.
Tower mill to do.
Ryan doing but at the present time or.
We're.
Part of our task. This year is to figure out what that long term solution is and then to implement that so that we can take advantage of not only our from room.
But also of course stock, but also to have a view on what the future might hold at Grey Fox.
Okay.
One last question as far as getting back on track in San Jose.
What changes are Hock shield.
<unk> planned to make do you kind of get production back up or is there.
Or is it planned to operate at a lower level this year.
Assessors.
Sure so.
And Stefan speaking so production should rebound obviously they are not anticipating any of the issues. They had in the early 2020 to be repeated in 2023 and <unk>.
Our partner <unk> is projecting a significantly lower cost.
Cost as well relative to last year.
If you look at Hush out guidance I believe there theyre guiding around 1400 all in sustaining.
And.
<unk>.
Yes, so I'd say overall a substantial improvement at.
San Jose.
Yes.
Are you at with this.
Potentially are you expecting dividends I guess production goes.
Things do rebound is that something that safety guidance on so far.
Certainly something we're expecting but we don't have the ability to provide any real color on that at this point.
Okay. Thank you so much.
Thanks Bill.
And there are no further questions at this time, Mr. Rob Mcewen I turn the call back over to you.
So.
It was a year of big numbers.
Past.
Oh 15 month.
Large losses were largely a function of the consolidation of the work being done at.
Losses Atlas.
And we will expect that to continue as long as Mcewan mining is.
Over 52%.
The.
Ownership.
And up to the feasibility.
Study.
Losses illness, which we expect to have at the end of 'twenty four but.
Hi.
We consolidate all of the expenditures.
As Perry said that at current losses.
Has an adverse impact on our earnings.
We also have a large exploration program this year.
Probably will not be as large next year and our.
Other properties.
That contributed to the loss of the mines are generating operating profits.
So and we're looking at increased production.
And an improved cost per ounce.
I do think the.
The copper.
That will play out continue to play a very large role in building the value of Mcewen mining.
I'm not discounting at all the precious metal assets catching up.
We hope to surpass our peer group valuation.
Yeah.
With that I'd like to thank everyone for attending and.
Look forward to our next exploration.
Updates.
Thank you operator.
This concludes today's conference call. Thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Yes.
Sure.
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Okay.
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