Q4 2023 McEwen Mining Inc Earnings Call

Hello, Ladies and gentlemen, welcome to Mcewen, Mining's Q4, and year end 2023, operating and financial results Conference call present from the company today are Rob Mcewen, Chairman and Chief owner, Harry Inc. Chief Financial Officer, William Schaefer, Chief Operating Officer, Stefan Spears, Vice President corporate development.

Michael <unk>, Vice President and general manager of Mcewen copper Yep can vice President Finance Carman Diaz General Counsel and Secretary.

After the speaker's presentation, there will be a question and answer session. If you would like to ask a question. During this time press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star One again I will now turn the call over to Mr. Rob Mcewen Chief owner. Please go ahead Sir.

Thank you operator.

Good morning, ladies and gentlemen, and welcome and I'm delighted to say, we had a great year.

Not only did our strategy to surface value of Mcewen.

Killing copper and its very large copper project losses Atlas deliver large gains, but also our gold and silver mines increased production and met guidance and reduced their production cost per ounce closer to industry averages.

In addition, our exploration efforts delivered solid gains.

And at Los Angeles.

And that's our properties in Timmins.

And all of this allowed us to report a net income of $54 7 million or $1 15 per share.

With a net loss of $81 1 million or $1 71.

In 2022.

These big swings in our Bottomline are largely due to our investment in Mcewen copper.

And it is 100% ownership in our massive losses are leased properties.

Prior to last October we own more than 50% of Mcewen copper.

And as a result, mcewen mining's financials.

Representing the consolidation of its financials with that of Mcewen copper.

Where we have been spending hundreds of millions of dollars.

Advancing the Lawson Suez project first to an updated preliminary economic assessment, which we released in June of last year.

And now we're driving towards completing a bankable feasibility study in the first quarter of 2025.

In October of last year, we completed our third financing of any keelan copper.

And as a result of that our ownership dropped below 50% to 48%.

And that led to us no longer consolidating the financials of Mcewen copper.

And it generated a significant gains.

Which is reflected in our financials, which was the strategy from the very beginning to surface value for mcewen.

Mining.

Yeah.

The biggest I think we're trading at a substantial discount and I can see a price that.

Although we're trading around $6 a share.

And it is biased we have a management.

Yes.

We're trading.

At anywhere between $7 and $29 a share.

So.

I think theres a lot of room on the upside and that's driven by.

We have basically three sets of assets and that's the sum of the parts, we have in the queue and copper, which we own 48% of we have a royalty portfolio.

<unk>.

And we have our gold and silver assets.

So we have values ranging from $8 to $30 a share.

So I think there is.

You can look at it and say we're trading at a big discount for where.

There's a lot of upside.

No.

It's been that hard couple of years for us as shareholders.

From September.

September eight teen.

To.

At the end of August 22, our share price was going in one direction and that was not the direction that I ever wanted it to go.

That was it down.

And I called out the road to Hell.

Right now.

I'll call. It we're on the road to redemption.

And.

If we compare our results.

Maybe it's a false cheer but.

When you look at how we performed against the price of gold price of copper the NASDAQ the DAU.

Since September 22.

When we did our first financing in Mcewen copper.

Mcewen mining is up 107% the NASDAQ is up 37% silver 27, the Dow twenty-three gold 20, Gtx 14, Gtx J F 13 in Koppers up 12, we're clearly outperforming.

We have two drivers one is our copper, which I think is and have long considered a potential copper unicorn and that is we're seeing shape out and then the second is the turnaround in our gold and silver assets that are.

We're delivering.

Hmm.

Positive cash flows and financing our exploration programs there.

And we have some exciting development programs, one in Timmins, where we expect to put a ramp down.

And.

Start production in 'twenty five.

And.

I described earlier, we made several years ago stock West.

Stock East, we recently put out some results some intriguing high grade over there and the importance of the stock mine.

Is.

Threefold, one its right beside our mill so it would eliminate the transportation costs. We currently have.

Of about.

$10 a ton.

Two it is.

It doesn't have a royalty on it.

So we're going to save on that royalty of about $1500, an ounce that we have to give up.

And three the rock is softer which means we should be able to process a higher volume of material through the mill.

And.

In theory produce more gold as a result of that and bring down our cost.

And losses, Xu list and Mcewen copper, we delivered a very robust preliminary economic assessment in June.

We've got a project there that.

I can't help myself, but I always look at something that's not gold and try to convert it into gold to try to get a sense of at scale.

So when I do that with lots of Duvelisib indicated and inferred resources, you'll get a resource of 37 6 billion pounds of copper.

If you were to take todays price of gold and.

Divided.

By the price of copper to find out how many copper pounds equals one ounce of gold it's about 536.

Pounds of copper one ounce of gold divide that into $36 7 billion pounds of copper and you're looking at it.

Our gold equivalent deposit of 70 million ounces, the average production of $321 million.

Pounds of copper per annum would translate into about 600000 ounces, a year and with a cash cost of $1 seven a pound the gold equivalent of that would be just under $600 an ounce by my book that is a big gold equivalent deposit.

And reflects the size and I think the power.

Losses. Louis This is we're looking at a 27 year life.

And I think there's still quite a bit of room in improving the value of that asset.

Improving the value of Mcewen mining and then you look at the <unk>.

The gold and silver assets, where we're doing exploration.

I'm quite pleased with what we're getting there.

It's taken a while but we're moving in very much the right direction.

Our press release.

Lines are pretty well.

We have another project in Mexico that we're looking at advancing later this year.

And I wanted to come back to license <unk> for a moment because what we're trying to do there.

Yeah.

Is a bit different than what's in the market right now.

Mining.

Generally has is held in poorer opinions by most of the world.

They feel it's very damaging to the environment and it's not important to life, but I can assure you if all the main stop tomorrow modern civilization with grind to an abrupt halt.

And somehow we have to put that message out there that.

So that we can mine the Earth's resources.

In a manner that is viewed as responsible and sensitive to the environment.

So what losses are less.

Several years ago, we engaged the services of an.

And architect who is very prominent in the green living built.

Building space and asked him to help us redefine mining to look at it so that we could hopefully move in the direction of shifting the perception.

The public's perception of mining.

And so we're looking to create the future.

And in order to create the future it has to look like the future.

Both in terms of its buildings and we have.

Some wonderful renderings are very comfortable say attractive accommodations for the workforce.

But also looking at how do we treat the world and we're looking at a project that will.

Have a much lighter impact on the environment initially emitting one third of C O two emissions.

Using less than one quarter, the water of a comparable size conventional copper mine being powered by 100% renewable energy source from hydro water and wins and producing a sustainable copper cathode.

Most of the mines copper mines today in the world.

Produce concentrate that has to be shipped to a smelter then converted into a product that is usable by industry.

With our copper cathode it can go directly to industry and cut out the transportation costs.

And we think that will attract a premium in the marketplace as well.

So with that I'd like to open it up for questions.

As a reminder to ask a question you will need your process star followed by the number one on your telephone to withdraw your question Press Star. One again. Your first question will come from the line of Heiko Isla with H C. Wainwright. Please go ahead.

Okay, sorry, I had you on mute Hey, Robyn team thanks for taking my questions.

Earlier on this call you were talking about the lower production cost on that small, especially March or two thirds through Q1 at this point.

How much more in these cost savings have you seen in Q1, thus far and maybe if you could read.

We have a breakdown.

From I mean, obviously you have your your guidance in the release, but maybe you can just won't provide a bit more color than our overall numbers.

I'll ask bill to answer that question Heiko.

Yeah. Thanks for the question the high Court.

I guess the.

That's the drivers of the cost are basically.

You know pretty fundamental in terms of labor cost of power cost expose us all of those things that make up the costs. So what we have to do in 2024, and then going forward as we have to produce more.

More ounces in order to drive some of those.

<unk> operating cost down.

Such a way that we can improve their overall operating costs and also improve of course the margin.

So you know that's basically our the direction that we're going in.

As we transition from mining at the fruit mine over into stock we're going from.

Or that has a work index of between 21% and 23 to one between say 14 and 17, so that will allow us to increase the number of tons per day going through the plant.

The grades are lower.

For the most part similar.

So that that will allow us to move up.

<unk>.

Production from.

The present 50.

<unk> thousand ounces, a year up to up to 60, and you know I guess in the longer term. We're also looking at ways.

That we can get that tonnage up a little bit higher by adding some capacity to our grinding circuit. So.

So that's kind of the short term and the longer term aspirations in terms of.

Getting the operating cost.

Per tonne per ounce.

Lower.

Yeah.

That was good thank you.

Different question, you had a reasonably large flow through financing in December.

At year end.

22 million Canadian how much of that have you already spend at Fox This year and how much should we just more or less that's too much by quarter.

Yeah, so yeah.

Yes.

Of that total amount of money approximately half of it is.

Or is C E four for drilling and I would say if you divide that by.

Say something like a 10 or 11 that will be the expenditures per month.

The the Cte is for development of.

The infrastructure.

Stock and that well get.

We will start the spending and not.

I guess at the beginning of the second quarter.

And then it'll get spent over the rest of the year. So that's probably something like a little bit over.

One to $1 $2 million a month.

Perfect I'll get back in queue. Thank you all.

Thanks Heiko.

Your next question comes from the line of Joseph Reagor with Roth Capital. Please go ahead.

Yeah.

Hi, Julia Robin team.

Thanks for taking my questions I guess the first one is.

Since you had this large gain in Q4 can.

Can you guys just back that out and you know for apples to apples sake, what would the earnings have looked like in Q4.

Yes.

Jeff.

Sure.

That one so we reported net income for the year of $54.

7 million I would add back the accounting gain of $224 million less.

Less be deferred tax.

Accounting impacts of that of $37 million. So I think once you remove those factors that would normalize the earnings.

From that accounting change.

Yes, there's a taxes I needed there.

Yeah.

Thanks for clarifying.

Okay, and then as you guys think about.

2024.

Other than my feeling the copper what are the big things you guys are looking at for growth in this year and maybe into next.

Is it.

Yeah the.

You can assets.

Is it developing stock and drilling that out more.

What should we be looking at.

Number one would be behind losses would.

It would be timmons.

The development of the stock property, which is serving as the next source of production coming on stream.

And there is quite a bit of exploration going on there.

We've had a couple of press releases out recently.

Talking about the increase in the resource at stock.

Then the.

Over at stock East Theres been some high grade that's intriguing.

And we're also drilling.

Over at Grey, Fox, where theres over 1 million ounces.

Sure.

We're looking at.

Possible additions, if we can make it.

Adjacent areas.

That would be complementary to our production base.

Second would be.

We'd be Mexico.

Okay.

The second would be Mexico, I think we.

Two are complete.

Complete.

Well, we have to complete the engineering, but the driver is probably the permitting phase where we hope to have permits.

Sometime middle of this year, but.

Permitting is always a challenge in every part of the world today. So we don't know exactly.

Where or when that's going to happen.

But.

That's <unk>.

That's part of the future plan.

We also have a plan to.

Okay.

Expand.

Our production at gold Bar Gold bar is an asset where.

Where we have a leach pad as you probably know.

And.

We have a you know theres, a theres enough different workplaces.

At gold bar.

For us too.

Increased production.

Last year, we were able to construct our new leach pad. So now we have no constraints in terms of the.

The area, where we can put material to be leached and so that's one of the strategies for this year is to.

Increase the ore production.

At gold bar get it onto the pad and that will result in.

An increase in the total ounces produced at gold bar.

So I think we're looking at improving the production that all three operations or toward the two operations that are running today as well as at.

Doug.

As well as in Mexico, So I.

That's our goal this year.

And then as we move forward.

To do more of that.

That kind of increase in.

Maybe try and get the whole.

Timmins complex.

So it's.

Producing say, 25% or 30%.

Better tonnage going into 2025.

Okay.

Okay.

That sounds good and one final thing Rob do you have any thoughts on the potential repeal of the new mining exploration.

Duration law.

In Mexico.

And how it might impact you guys. If it does get repealed.

Okay.

We're just watching it.

We've had some permits there.

But.

Politics, it a little difficult to predict Joe So we're.

We're moving ahead on the assumption that the in pit tailings disposal.

<unk> gotten approval for will continue.

It might if it were to go in.

It would impact.

Six years later, because the first six years of reprocessing. The tailings are not the tailing Z heap Leach Leach pad, that's correct, yeah, so near term.

We've got time to see if its repeal.

Okay. Thanks for the comments I'll turn it over.

Thank you.

Again to ask a question simply press star followed by the number one on your telephone keypad. Our next question will come from the line of John Tumazos with John Tumazos very independent research. Please go ahead.

Good morning, John.

Good morning, Thank you.

Looking ahead, a year or so.

Two after that.

<unk> has completed in hand.

Okay.

<unk>.

The path forward for Mcewen proper.

Alright, yes victim.

The board.

Mcewen mining real close.

Andrew.

We'll go next.

Yes.

We will apply for walnuts.

Or do you early works with construction.

The access road and it was built.

So okay.

<unk> drilling campaign versus one of those early works already done.

Just give us a flavor.

So what's the path forward is going to be when the definitive cases in hand.

Is the feasibility study Q1 of next year.

And after which we'll have there'll be about a year of engineering required.

Before we make a decision to put a shovel in the ground.

In.

<unk>.

Mike has assembled a team are very confident team of Nash.

Nationals that have a lot of experience building.

In San Juan Province, where <unk> is located.

And.

Moving ahead on the basis.

They've built.

Substantially.

Large mines gold mines down there.

And there's a team that could build it.

We do have some large shareholders that might want to have a.

Wed prefer to operate but.

At the moment, we're moving ahead as though we could build it.

Mike do you want to add anything below that hey, John.

Okay glad to speak to you.

Okay.

We filed our environmental permit for construction.

Construction and.

Operation in April last year, we are currently going through the different meetings with the disciplines.

Ambulatory Commission members, we expect our environmental permit.

In the second half of 2024 and then.

As Rob said after having gone through the.

The detailed engineering and at the same time, obtaining remaining permits along alongside we go that will be the path forward we.

We havent.

It made any kind of decision yet on how we are going to.

Construct but as I've said before.

But we think that lots of soon this overall when you compared to other projects in the region has high construct ability with low capex I think that should help us with the financing and the construction going forward.

Thank you.

Youre welcome.

And once again for any questions. Please press star one on your telephone keypad.

Okay.

And there are no further questions at this time, Mr. Rob Mcewen I will turn the call back over to you. Thank you.

Operator, I'd like to thank everyone for being on the line.

Yeah.

Our future is looking much greater than several years ago.

Hold on we're going higher.

Yes.

And everyone that will conclude our call for today. Thank you all for joining you may now disconnect.

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