Q2 2023 McEwen Mining Inc Earnings Call
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Hello, ladies and gentlemen.
Welcome to Mcewen, Mining's Q2, 2023 operating and financial results Conference call.
Present from the company today are Rob Mcewen, Chairman and Chief owner, Perry Ing, Chief Financial Officer William.
Williams Shaver Chief operating officer.
Michael netting vice President and general manager of Mcewen copper.
Harman D host General Counsel and Secretary, Jeff Chen Vice President of Finance.
After the speaker's presentation, there will be a question and answer session if.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you'd 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.
Thank you operator, good morning, and welcome ladies and gentlemen.
Today I'll be discussing the highlights of our operating and financial results in Q2 in the first half of this year.
As well as our expert to expectations for the balance of the year.
Our press release of this morning discusses these matters in greater detail.
And members of senior management are on the line to answer your questions.
As many of you are aware, our gold and silver assets had a weak start for the year.
Hmm.
While activities at Mcewen Koppers losses are those projects were running at a rapid pace.
I'm pleased to say that our mines delivered better results in Q2 than Q1 and the outlook for the second half of the year is significantly better.
But I'd like to share with you the highlights of the first quarter.
This quarter this past second quarter.
One Fox complex generated gross profits of $6 million and is expected to deliver on our guidance.
Juan Jose performance was much stronger.
In Q2 than in Q1, and it too is expected to deliver on its production guidance, but costs will be 10% to 20% higher on a cost per ounce basis.
Gold bar.
The outlook again is looking significantly better as a result, we are increasing the mining rate.
We'll be mining with a lower strip ratio and processing a higher grade of ore.
Mcewan copper released in June it's updated.
I'm, an aerie economic assessment it displays a project with robust economics of long life low production cost and based on an environmentally sensitive approach to mining.
Safety at all of our sites, whereas the way we like it no lost times at Fox and gold bar.
Yeah.
We improved our balance sheet by reducing our debt by 39% to $40 million.
And financially.
We consolidate the financials of our 52% owned subsidiary Mcewen copper.
And as I said, we've invested heavily in exploration and other work in order to complete the updated P. A.
So our corridor and at.
At quarter end, our consolidated liquid assets.
Were $85 million.
With an additional 29 million in investments.
Our working capital was 92 million.
And our consolidated net loss in the quarter was 22 million and then the first half.
$65 million.
Again, reflecting the very heavy investment.
And Oh moving losses of this project forward.
Yeah.
And we've increased the value of losses significantly.
During this period it now has a value of about 555.
Million.
Implied based on the last financing we did.
Our investment in exploration that Fox has given us a resource base and confidence to see.
Mine life being extended by nine years and in Mexico construction of the Phoenix project is expected to start later this year and provide a mine your nine year mine life.
In terms of our share performance.
Since the beginning of the year to.
To present day.
We're up.
Just under 18%.
In U S dollars.
And that compares against the G D X, which is down 1.8% the gtx Jay down five 2%.
Gold's up for the Dow was up six.
And.
The NASDAQ is the only one of those that has outperformed them.
It's up 32%.
Largely driven appears by generative AI development.
I have to say that the mining world will be embracing generative AI as we go forward like many other industries.
I'd now like to open the.
Conference call for questions.
Okay.
Sure.
If you would like to ask a question you would need to press star followed.
By the number one on your telephone.
To withdraw your question press the Star one.
Your first question comes from the line of Jake's Zalewski with Alliance global.
Your line is open.
Hey, Robyn Thanks for taking my question Hi.
Hi, Jake.
Hum.
Starting off with the <unk> conflict, you mentioned greed swing quite a bit higher in the second half of this year or are you able to quantify that at all I'm just trying to get a handle on how that might impact costs for Q3, and Q4 heading into next year.
Bill would you like to answer that yes sure.
Yes Jack.
We expect that.
The grade.
In the second half of the year is going to be closer to four grams per tonne.
The second quarter.
Grade was <unk>.
Closer to three grams per tonne.
That goes back to our original budget.
Budget and mine plan.
For this year.
So the original plan had us.
With a lower grade.
Uh huh.
In the first half of the year and a little bit higher grade than we are.
We're now into the higher grade stope by Stope, who were in right.
Alright. This week is grade is more like five grams per tonne. So we'll see the grade increase them.
So that'll move are our costs down.
Bye.
A significant amount and so we will finish the year.
Oh, you know following our guidance almost exactly right the upside I would say.
Is the fact that the mill has run significantly better.
In the second quarter, we had some more or less record.
My Oh around 250 tons.
Tons per day for the quarter.
May and June was actually closer to <unk> hundred 20 tons per day. So.
If there is upside in the fact that we're we've been able to increase the tonnage through the mill.
It's a great stays where we think it well and Theres no reason to think it won't.
The predictable then we will have a slightly better.
Second half.
Okay, that's helpful and good to see.
Sure.
And then just switching over to losses.
Any color on the work that's left for the feasibility study the timing.
The report and in maybe the specifics that debt or milestones that need to be hit just the switchover from.
Expensing investments there to capitalize on them.
Sure.
We slate naeem.
Liberty of the feasibility study to the end of 2020 for beginning of 2025, we have confirmed.
The main comes out.
That are working with us to the delivery mainly.
The most important when I would say, it's similar engineering and IP. So Samuel was helped us in the P E and as well as that piece of it was also delivering them.
Our environmental impact assessment report, so that is well under the way we need to drill about 45000 meters, we have secured already.
<unk> drilled to be able to do that.
We own four drill rigs and bought another two and have import permits were looking to get another two to ensure that we can get through the drilling program to be able to get all the information required to feasibility level of detail. So I think.
We are very optimistic going forward now with regards to the.
The capitalization.
How do you expect to Kelly.
Biomet will permit issued Clos.
The feasibility study im not sure whether you would like to give additional insights yeah, no I think thats, an accurate statement, Michael and just for context I mean.
That's a result of us obviously being a U S GAAP reporter and.
Assuming that you know if we I P O mcewen copper at some point, we could have a situation where you know if.
If we keep on copper with parts of the eye for us It would actually capitalize those costs as you know the criteria that <unk> are a lot looser.
Whereas mcewen mining would still have to continue expensing those costs. So.
That's just a unique feature of.
The differences in accounting policies.
Yes.
Got it okay that makes sense, that's all on my end. Thanks again.
Thanks Jake.
Your next question comes from the line of Heiko L. A with H C. Wainwright your.
Your line is open.
Hello Heiko.
Oh, sorry.
You hear me all right.
Loving player.
Excellent.
Would you be able to partner with the approximation of your labor cost increases from the past.
Call it six or 12 months by Allison.
I assume there are some pretty meaningful difference with what you've seen between you know 10 minutes or I guess router, Canada, Nevada in Argentina. Please.
Okay.
Bill would you like to venture into that yet.
Yeah, I guess that's.
A question I'm not totally prepared to answer but.
I guess, our cost in Canada in terms of labor costs.
It is around seven seven or 8%.
And I would say our material costs are probably somewhere in the range of 10%.
And I.
I think.
We anticipated we would see.
A higher.
Fuel price then we're actually seeing.
So I think there are some positives there and I think there are some other I guess consumables that we're seeing which.
It seemed to have smoothed out to some extent not being steel in terms of grinding balls in and.
And also cyanide so so I think if.
If I had to say what.
What they have cost increase has been on a year over year basis, I'd say it's around.
10% or maybe a little.
A bit higher than that but.
I think of you use 10% you wouldn't be wrong.
That's fair.
Okay.
Moving on to drilling at gold bar, a little bit I guess per your release.
Your explorations in the second half of a year.
The resources there.
You're operating two drove the circumstance if my memory is correct.
And you were talking about the feature phone now what exactly do you think that will do to the ore body are you're geologist telling you that's more or less the same type of ore. So metallurgy would be the same or is this just creating ounces would.
Lastly is the goal I guess, that's what I'm, saying.
Thank you, yes. So the goal of that drilling program is kind of two or three fold.
First we're.
Defining.
The.
The parameters for.
Or that we will mine in the relatively near future, meaning next year and the year after.
The second part is to buying more or that will that will mine into the future.
And it's too.
In both cases, we're trying to.
Get a very good understanding of what the strip ratios are going to be.
And also where there might be carbon associated with with some of these resources.
So that we're able to mine that in a proper fashion to make sure we can segregate.
Carbonaceous ore from the ore that doesn't have carbon.
There is also very helpful.
There is also some deeper drilling that we're doing there.
You know.
Where I would say we are.
Exploring.
Or perhaps some elephants that are similar to some properties that are.
Just north of Us say about 2020 kilometers away so.
But the focus of the drilling program is to make sure. We know what we're doing over the next.
18 to 24 months.
I appreciate that and I'll get back in queue. Thank you all.
Thanks Heiko.
As a reminder, if you'd like to ask a question press star followed by the number one on your telephone keypad.
We will pause for any last questions.
Your next question comes from the line of Bill powers.
Your line of Aman.
Good morning.
Thanks for setting this up today.
Just had a couple of questions.
I guess starting in Canada.
During the AGM you mentioned that you had a capacity of 4800 tons per day and I guess my question would be is the.
Stockpile has that enabled to be reduced at all at the higher rate.
Mill running or is that just is that still there and I guess are you planning to move towards 1400 tonnes per day in Q3, and the rest of the year.
Yes, so thanks for the question.
The mill tonnage in May and June has increased up to about <unk> hundred 20 tons a day.
But meanwhile, the stockpile is still very close to a 100000 ton so.
Although were increasing.
The tons through the mill.
The mine is operating very well.
The operation is kind of in a sweet spot in terms of the mining operation. So so we're keeping up with.
The milling process, even though we've increased it by <unk>.
<unk>.
Something more than 15% over last year. So so.
We would like to get the stockpile lower that transferred over into into actual cash, but we also want to keep the mine running at that sweet spot. So so that we get the optimal mining costs.
So yeah I would say.
We're doing better on the milling, where the mine is fine.
Keeping up.
And.
We're continuing to try to improve that.
Throughput through the mill.
Okay. Thank you on that.
Far as.
Nevada goes I know there was some exploration around the Atlas.
That was done last year and seem to have some promising results as those.
Has that been followed up on and I guess is that a target for later this year or is that something are you.
Focus on elsewhere.
Youre drilling near term.
We're actually focusing on.
Other.
Portions of our property the drill holes the Atlas pit.
I guess.
We've found a small amount of ore in one pit wall.
That at some point, we may go on.
But we're talking about something in the order of 10000.
Okay.
It Hasnt turned out as positive as we hoped.
Okay, and thank you for the update and.
I guess my.
My last question would be.
I was a little late to the call this morning, but the.
If you could maybe you maybe you've gone over this or this question was asked earlier, but.
And the expansion of the of the ramp I know you are are you still planning to put out a.
Ah study for that.
I guess, a larger study for that or is that something that is.
Going to be moving forward in the balance of this year.
So yes, we're talking now about the ramp.
At the stock mine, yes, yes, and yes.
Yes that ramp will be moving ahead, we're doing the final bit of delineation drilling.
With regard to that part of the project.
And we are.
Putting together I guess, what we're calling an economic analysis.
Which will have a.
Early.
Late in the third quarter or early in the fourth quarter.
<unk>.
But we don't plan to do are revised.
P a R.
The feasibility study on that we're going to.
Basically produce an economic analysis to.
To make the final decision to go ahead, but at this point were.
Basically working at full speed to.
Move that project ahead.
Okay. Thanks, so much for all your time this morning. Thanks.
Thanks Bill.
There are no further questions at this time, Mr. Rob Mcewen I will turn the call back over to you. Thank.
Thank you operator.
Im assuming.
Assuming metal prices stay where they are and we're delivering on guidance.
We don't anticipate having to come to the capital markets to fund any of our development projects.
We're in a good.
Physician from our liquidity.
Hum.
Quite excited about the projects we're advancing.
We all there'll be exploration news coming out.
This latter part of the summer and into the hall both from.
Losses, Lewis and coming from.
The Fox complex, so quite excited by that.
Very much and have a great day.
This concludes today's conference call you may now disconnect.
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Okay.
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Thanks.
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