Q1 2024 McEwen Mining Inc Earnings Call
Okay.
Operator: Hello, ladies and gentlemen. Welcome to McEwen Mining's Q1 2024 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner, Harry Ng, Chief Financial Officer, Jeff Chan, Vice President of Finance, William Shaver, Chief Operating Officer, Stephen Spears, Vice President Corporate Development, Michael Meding, Vice President and General Manager of McEwen Copper, and Carmen Diaz, General Counsel
Hello, Ladies and gentlemen, welcome to Mcewen Mining's Q1, 'twenty 'twenty four operating and financial results Conference call present from the company today are Rob Mcewen, Chairman and chief owner.
Operator: And Chief Financial Officer.
Operator: Jeff Chen Vice President Finance, William Schaefer, Chief operating officer.
Operator: Seven years, Vice President corporate development, Michael netting Vice President and general manager of Mcewen, copper and Carmen D. S. G.
Operator: General Counsel and Secretary.
Operator: 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 the pound key I.
Operator: 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 the pound. I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.
Robert Ross McEwen: I will now turn the call over to Mr. Rob Mcewen Chief owner. Please go ahead, sir thank.
Robert Ross McEwen: Thank you, operator. Good morning, ladies and gentlemen.
Robert Ross McEwen: Thank you operator.
Robert Ross McEwen: Good morning, ladies and gentlemen, welcome to our.
Robert Ross McEwen: Welcome to our First Quarter 2024 conference call. A few moments ago, I looked at our share price and thought, well, what happened? We're down about $2. And I think a lot of it is, I think it's overdone, but it's probably due a bit to our accounting policies, the difference between accounting treatment in Canada and the United States of America. And I'd like to ask Perry Ng, our CFO, to talk a little bit. (Inaudible) Good morning, Rob.
Robert Ross McEwen: First quarter 2024 conference call.
Perry Ng: A few months ago, I looked at our share price and thought well what happened.
Perry Ng: We're down about $2 and I think a lot of it is I think it's overdone, but it's probably do a bit to our accounting policies. The difference between the accounting treatment in Canada and in the United States of America and.
Perry Ng: I'd like to ask Perry Ing our CFO.
Perry Ng: Talk about that difference.
Perry Ng: Good morning, Rob. So we would like to reiterate the fact that, as a US GAAP reporting company, we expense all of our equitable expenses related to the Los Azules Copper Project in Argentina. So given that we own 48% of the company, all of the work going into drilling for that project is being expensed through our income statements. Unlike a lot of our peers, Canadian and Australian listed companies that report under International Financial Reporting Standards, where they may capitalize those costs, and you would not see them reflected in net earnings or loss.
Perry Ng: Good morning, Rob.
Perry Ng: We would like to reiterate the fact that as a U S GAAP reporting company.
Perry Ng: Oh, we expense all of our test of all expenses related to the losses are less copper project in Argentina, So given that we own 48% of the company.
Perry Ng: All of that work going.
Perry Ng: And to drilling for that project.
Speaker Change: Uh huh.
Perry Ng: Through our income statement.
Perry Ng: I like a lot of our peers are Canadian.
Perry Ng: Australia Unlisted companies that report under international financial reporting standards, where they may.
Perry Ng: Capitalize those costs and you would not see them reflected.
Perry Ng: And net earnings or loss.
Perry Ng: So if you look in more detail at our earnings, we reported a consolidated net loss of approximately $20 million, of which $18 million was directly attributable to our investment in McEwen Copper as well as an additional $4 million in general exploration expenses. So again, had we reported under RFRS, we would not be showing a loss of that.
Perry Ng: So.
Perry Ng: As you look at more detail into our earnings.
Perry Ng: We reported a consolidated net loss of approximately $20 million of which $18 million was directly attributable to our.
Perry Ng: Our investment in Mcewen copper as well as the additional $4 million in general exploration expenses. So.
Speaker Change: Thank you.
Perry Ng: Had we reported under our F. R S.
Perry Ng: We would not be sure and the loss of that nature.
Speaker Change: Thank you Perry.
Perry Ng:
Robert Ross McEwen: I started out just saying, you know, we had a good quarter, and we're active on many fronts. We've been hitting production guidance, generating positive cash flow from our gold and silver mines. Our exploration is producing encouraging results at our Fox complex, our San Jose mine, and our Las Azulas project. In addition, there has been a dramatic political shift that has occurred in Argentina.
Perry Ng: I would.
Perry Ng: Started out saying you know we had a good quarter and we're active on many fronts.
Robert Ross McEwen: We've been hitting production guidance generating positive cash flow from our gold and silver mines.
Robert Ross McEwen: Our exploration is producing encouraging results at our Fox complex, our San Jose mine and our losses <unk> project.
Robert Ross McEwen: In addition, there has been a dramatic political shift that's occurred in Argentina. It's newly elected President is moving aggressively to make the country attractive to large direct foreign investment.
Robert Ross McEwen: Its newly elected president is moving aggressively to make the country attractive to large, direct foreign investment, of which we have one of those situations. Overall, our consolidated gold equivalent production was up 7% over the past year. First quarter 2023, and costs were in line with guidance at two of our three mines. We're making good progress at Gold Bar and San Jose. They exceeded guidance by delivering higher production and lower costs. At Gold Bar, production was up 80 percent, and at San Jose, it was up 15 percent.
Robert Ross McEwen: Of which we have one of those.
Robert Ross McEwen: Situations.
Robert Ross McEwen: Overall, our consolidated gold equivalent production was up 7% over the.
Robert Ross McEwen: First quarter 2023 and costs were in line with guidance.
Robert Ross McEwen: At two of our three mines.
Robert Ross McEwen: We're making good progress at gold bar in San Jose and they exceeded guidance by delivering higher production and lower cost at gold bar production was up 80%.
Robert Ross McEwen: And at San Jose It was up 15%.
Robert Ross McEwen:
Robert Ross McEwen: And while the results of the Fox Complex were disappointing due to mining, lower grade, and tonnage during the quarter, we're expecting over the balance of the year that production will increase and the cost per ounce will fall, to be in line with our year-end guidance. From a financial perspective, the news was also positive. During the quarter, our gross profit was $6 million, some 36% higher than the $4.4 million in the first quarter of 2023. And in this quarter, we also reported our results on an adjusted EBITDA basis because we believe it provides a better representation of the performance of our gold and silver mining operations. Why?
Robert Ross McEwen: And while the results of the Fox complex for disappointing due to mining lower grade.
Robert Ross McEwen: And tonnage during the quarter.
Robert Ross McEwen: Yes.
Robert Ross McEwen: We're expecting over the balance of the year.
Robert Ross McEwen: Production will increase in the cost per ounce will fall.
Robert Ross McEwen: To be in line with our year end guidance.
Robert Ross McEwen: From a financial perspective. The news was also positive during the quarter, our gross profit was $6 million some 36% higher.
Robert Ross McEwen: Then the $4 4 million in the first quarter of 2023.
Robert Ross McEwen: And in this quarter.
Robert Ross McEwen: We reported our results also on an adjusted EBITDA basis.
Robert Ross McEwen: We believe it provides a better representation.
Robert Ross McEwen: The performance of our gold and silver mining operations.
Robert Ross McEwen: Because it removes the impact of our ongoing investment in McEwen Copper. During the quarter, our adjusted EBITDA was $6.3 million, and our $0.13 a share, and versus an adjusted EBITDA loss of $2.9 million or $0.06 a share. So, when we include the $18 million... loss attributable to our investment in McEwen Copper, we reported a consolidated loss of $20.4 million or $0.41 a
Speaker Change: Why because it removes the impact of our ongoing investment in the Q in copper.
Robert Ross McEwen: During the quarter, our adjusted EBITA was.
Robert Ross McEwen: 6.3 million.
Robert Ross McEwen: And or 13 cents a share.
Robert Ross McEwen: And versus an adjusted EBITDA loss of $2 9 million or six cents a share.
Robert Ross McEwen: So when we include the $18 million.
Robert Ross McEwen: Loss attributable to our investment in Mcewen copper.
Robert Ross McEwen: Hmm.
Robert Ross McEwen: We reported a consolidated.
Robert Ross McEwen: Loss of $24 million or <unk> 41, a share.
Robert Ross McEwen: Yes.
Robert Ross McEwen: Okay.
Robert Ross McEwen: In Argentina, the company's new president, Javier Millet, who Mike, Carmen, Stephan, and I had the great honor of having a one hour meeting with recently, has unleashed an infectious mood of great optimism, something that has not existed in that country for many decades. I said to him that Argentina is very much like the story of Sleeping Beauty, who was poisoned by years of populist government policies and fell into a deep sleep, and now he is the prince whose kiss has awoken Earth.
Robert Ross McEwen: In Argentina, the Companys, new president, having a min Li.
Robert Ross McEwen: Who might Carmen Stefan and I had the great honor to.
Robert Ross McEwen: We have a one hour meeting with recently.
Robert Ross McEwen: His unleashed an infectious mood of great optimism something that has not existed in that country for many decades.
Robert Ross McEwen: I said to him that Argentina is very much like the story of sleeping beauty, who has poisoned by years of populous government policies and fell into a deep sleep and now he.
Robert Ross McEwen: Is the Prince whose kiss has woken there.
Robert Ross McEwen: Global investors and innovators are starting to take notice. Just two weeks ago, Elon Musk tweeted that it's time to invest in Argentina. And President Malay's election, coupled with the progress we're making on Las Azules, has made this quarter an incredibly exciting time for McEwen Copper and for McEwen Mining. Our other asset in Argentina is our 49%-owned San Jose silver and gold mine. Performance in Q1 of this year was much better than the comparable period last year.
Robert Ross McEwen: Global investors and innovators are starting to take notice.
Robert Ross McEwen: Just two weeks ago landmass, Tweed and it's time to invest in Argentina.
Robert Ross McEwen: And president malaise election, coupled with the progress, we're making advancing losses Lewis.
Robert Ross McEwen: Has made this quarter in an incredibly exciting time for macewen copper and for Mcewen mining.
Robert Ross McEwen: Our other asset in Argentina, as our 49% owned San Jose Silver and Gold mine performance in Q1 of this year was much better than the comparable period last year and as a result management is considering resuming its dividend.
Robert Ross McEwen: And as a result, management is considering resuming its dividend later this year. So, we'll be receiving money, hopefully, from that investment for the first time in a couple of years. We've also encountered encouraging exploration results there from two different targets. The best assay results reported were 12 meters of 12.7 grams gold plus 101 grams silver, and the other was 6.2 meters of 23.3 grams gold plus 314 grams silver.
Robert Ross McEwen: Later this year.
Robert Ross McEwen: So we'll be receiving money hopefully from that.
Robert Ross McEwen: Investment.
Robert Ross McEwen: For the first time in a couple of years.
Robert Ross McEwen: We've also encountered encouraging exploration results there from two different targets. The best assay results reported were 12 meters of $12 seven grams gold plus a 101 Gram silver and the other was six two meters of 23.
Robert Ross McEwen: 0.3 grams schooled plus 314 Gram silver.
Robert Ross McEwen: Pretty nice hole. It's worth noting that the San Jose land package surrounds Newmont-Saranegro property on three sides. So let's go back to Los Azules. As winter begins in the southern hemisphere, the 22 drills that were operating there are now being removed, having drilled some 69,000 meters this season, which is quite a large program.
Robert Ross McEwen: Pretty nice holes.
Robert Ross McEwen: It's worth noting that the San Jose land package surrounds newmont's, Cerro <expletive> property on three sites.
Robert Ross McEwen: This drilling has been confirming and upgrading the categories of our estimated resources that were contained in the June 2023 Preliminary Economic Assessment. They were also... drilling to precisely define the location of our payback pit, which is calculated to be payback in three years. Through the winter work, we will be progressing on delivering a bankable feasibility study for Los Azules in the first half of next year. So looking ahead. We are now in a position to think about growing, and I feel the market conditions are ideal to search out opportunities in anticipation of much greater growth and stronger markets for gold, silver, and copper. And here's what we've been doing.
Robert Ross McEwen: So let's go back to losses. Louis has the winter begins in the southern hemisphere. The 'twenty two drills that were operating.
Robert Ross McEwen: There are now being removed having drilled some 69000 meters. This season, which is quite a large program. This drilling has been confirming and upgrading the categories of our estimated resources.
Robert Ross McEwen: That were contained in the June 2023 preliminary economic assessment.
Robert Ross McEwen: They were also.
Robert Ross McEwen: Drilling to precisely define the location of our payback pit.
Robert Ross McEwen: Which is calculated to be.
Robert Ross McEwen: Payback in three years.
Robert Ross McEwen: Through the winter work.
Robert Ross McEwen: We will be progressing on delivering a bankable feasibility study for losses are less than the first half of next year.
Robert Ross McEwen: So looking ahead.
Robert Ross McEwen: We are now in a position to think about growing and I feel the market conditions are ideal to search out opportunities in anticipation of much.
Robert Ross McEwen: Stronger markets for gold silver and copper.
Robert Ross McEwen: First, we've been taking a closer look at the potential opportunities on our existing properties, and we will be very shortly providing you with exploration results from our Fox Complex, Los Azules, and San Jose. Second, we're looking at opportunities that are close to these existing operations. And to that end, we've recently made a friendly takeover bid for a company called Timberline Resources, which has property located close to our gold bar mine. And it also has a property adjoining McEwen Copper's Elder Creek property, both of which are in Nevada, and three. I believe there are some interesting situations out there where we could consider bolstering our management strength, increasing our resource base and annual production, and providing us with greater leverage on the prices of gold, silver, and copper.
Robert Ross McEwen: Here's what we've been doing.
Robert Ross McEwen: First we've been taking a closer look at the potential opportunities on our existing properties.
Robert Ross McEwen: And we will leash.
Robert Ross McEwen: Very shortly providing you with exploration results from our Fox complex losses, Lewis and San Jose.
Robert Ross McEwen: Second we're looking at opportunities that are close to these existing operations.
Robert Ross McEwen: And to that end, we've recently made a friendly takeover bid for a company called Timberline resources, which has property located close to our Goldmark Gold bar mine.
Robert Ross McEwen: And it also has a property adjoining the QM Koppers Elder Creek property, both of which are in.
Robert Ross McEwen: Nevada.
Robert Ross McEwen: And three I believe theres some interesting situations out there.
Robert Ross McEwen: Where we could consider bolstering our management strength.
Robert Ross McEwen: Increase our resource base and annual production and provide us with greater leverage too.
Robert Ross McEwen: The prices of gold silver and copper.
Robert Ross McEwen: In Los Azules, we have funds to continue for a while. We are looking at completing the feasibility study and doing the associated engineering, and all the financing for Los Azules has been done by McEwen Copper. We continue to look for opportunities with our principal investors and others to fill that funding. At this point, I'd like to ask Michael Meding, our Vice President and General Manager of McEwen Copper, to provide an overview of the political situation in Argentina and some of the changes to regulations that are being promoted, and the impact they could have on the value of that asset of ours.
Robert Ross McEwen: In Los <unk>, we have.
Robert Ross McEwen: Funds.
Michael Meding: To continue for a while.
Michael Meding: We are.
Michael Meding: Looking at.
Robert Ross McEwen: Okay.
Michael Meding: Completing the feasibility study and doing the associated engineering.
Robert Ross McEwen: <unk>.
Michael Meding: All of the financing for losses, Louis has been done in Mcewen copper.
Michael Meding: We continue to look for opportunities with our principal investors and others too.
Michael Meding: Phil that funding.
Robert Ross McEwen: Funding.
Robert Ross McEwen: Okay.
Michael Meding: At this point.
Michael Meding: I'd like to ask Michael netting our vice President General manager.
Michael Meding: Mcewen mining Mcewen copper.
Robert Ross McEwen: Two.
Michael Meding: Provide an overview of the political situation in Argentina.
Michael Meding: And some of the changes to regulations that are being promoted.
Michael Meding: And the impact it could have on the value of that asset of ours.
Robert Ross McEwen: Yeah.
Michael Meding: Thank you so much, Rob. Hello everybody.
Michael Meding: Thank you so much Rob Hello, everybody.
Michael Meding: Exciting times in Argentina as well.
Michael Meding: I've said already.
Michael Meding: Exciting times in Argentina, as Rob has already said. We had an exciting quarter with lots of progress at Los Azules, and what we're looking at at the moment, well, Los Azules has a very strong PEA without further incentives. What we see in Argentina is that there are a lot of projects that could benefit from a better investment incentive scheme, and that has been presented to Congress, to the lower house, a couple of days ago and has received approval by the lower house, and is now in the Senate for discussion. It's going through the commissions, and the administration is trying to get approval for this new exciting project. It's called Native Assets in Spanish. It contains something called RIGI.
Michael Meding: An exciting quarter with Nordstrom.
Michael Meding: Mr Salinas and what we're looking at at the moment well, let's assume that does that mean.
Michael Meding: Strong pega.
Michael Meding: Without further incentives will be seen Argentina is today, a lot of projects that could benefit from a better investment incentive scheme and that has been presented to the Congress in the lower house and a couple of days that Ken has received approval.
Michael Meding: And by the lower housing is now under Senate.
Michael Meding: For a discussion that's going to be.
Michael Meding: The commissions and the.
Michael Meding: Administration is trying to get.
Michael Meding: This new exciting project, it's called native Absolutes in Spanish.
Michael Meding: Contain something called <unk> Thats, a large infrastructure investment incentive issue just.
Michael Meding: That's the Large Infrastructure Investment Incentive. Just to give you some ideas what this means if it goes through, and we are cautiously optimistic that it will go through rather shortly, income tax would be reduced from 35% to 25%, export duty would be reduced from 4.5% to 0%, VAT recovery would be basically instant, and operating bank tax, debit and credit tax, is 1.2%; we would be able to use 100% as an advance for income tax.
Michael Meding: Just to give you some ideas.
Michael Meding: This needs if it goes through and we are.
Michael Meding: Cautiously optimistic that it will go through.
Michael Meding: So for the year.
Michael Meding: Income tax would be that used to own 35% to 25% export duty would be that useful falklands licensed central zero percent VIP recovery.
Michael Meding: It would be basically in fleece and operating banks extended credit, Texas, 1.2% would be.
Michael Meding: To use one.
Michael Meding: We are in advance for income tax. So this means that this combined with.
Michael Meding: So this means that this, combined with what is included as having the opportunity to ensure access to the capital market, can change the face of mining projects and other large infrastructure projects in Argentina. We think that this project is a major driver for the Argentine economy going forward.
Michael Meding: What is included.
Michael Meding: Having the opportunity to.
Michael Meding: Ensure access to the capital markets can change the face of mining coal Jake and other largely booked practical Jake.
Michael Meding: Tina.
Michael Meding: Think that this project is a major driver for the Argentine economy going forward.
Michael Meding: Yeah.
Michael Meding: Thanks to Europe.
Robert Ross McEwen: Thank you, Mike. And As many of you know, there's a high rate of inflation in Argentina, and we've been able to offset that.
Speaker Change: Thank you Mike.
Michael Meding: And.
Speaker Change: As many of you know there is a high rate of inflation in Argentina.
Robert Ross McEwen: And we've been able to offset that.
Perry Ng: Yeah, that's right, Rob. Overall, after our last financing transaction in McEwen Copper, we were able to invest in a variety of products that essentially fully hedged our exposure to Argentine inflation and devaluation. So, I believe at the end of the first quarter, McEwen Copper had a treasury of just over $60 million. Since we deconsolidated McEwen Copper in the fourth quarter of last year, we no longer show its cash balance on our balance sheet. It's set apart. We only report, you know, that 48% of their earnings have been lost in our income statement. Thank you, Perry.
Mike: Yes, that's right Rob overall, after our last financing transaction and Mcewen Hopper.
Perry Ng: We were able to invest in a variety of.
Speaker Change: Product stops.
Perry Ng: Essentially fully hedged our exposure to Argentine inflation and devaluation. So.
Perry Ng: I'll leave at the end of the first quarter Mcewen copper.
Perry Ng: Doug.
Perry Ng: Treasury of just over $60 million.
Perry Ng: So, Sweden <unk> consolidated Q1 copper in the fourth quarter of last year, we no longer show Macewen hoppers cash follow up on our balance sheet.
Speaker Change: Our part we only report.
Perry Ng:
Perry Ng: There are 48%.
Perry Ng: Of the earnings loss in our income statement.
Speaker Change: Thank you Perry.
Robert Ross McEwen: I'd now like to open the call to questions.
Perry Ng: I'd now like to open the <unk>.
Speaker Change: Calls to questions.
Robert Ross McEwen: Okay.
Operator: Thank you. 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. And your first question comes from the line of Jake Sikelsky, Alliance Global Partners. Jake, your line is open.
Speaker Change: Thank you as a reminder to ask a question you will need to press star followed by the number one on your telephone.
Jacob G. Sekelsky: Withdraw your question press the pound key.
Jacob G. Sekelsky: And your first question comes from the line of Jake Zukowski Alliance Global partners.
Jacob G. Sekelsky: Jay Your line is open.
Robert Ross McEwen: Hi Robin, thanks for taking my question. Hi Jake.
Operator: Hi, Robinson and thanks for taking my questions Hi, Jake.
Jacob G. Sekelsky: So it was good to see costs come down quite a bit at Goldbar, and I know this is a function of mining lower strip areas. I'm just curious if that's something you expect to continue a bit into Q2 here before moving back to more and more normalized levels of strip, as you mentioned in the second half.
Jacob G. Sekelsky: So it was good to see costs come down quite a bit of Goldberg and I know you mentioned this is a function of mining lower strip areas I'm. Just curious if that's something you expect to continue a bit into Q2 here.
Jacob G. Sekelsky: Before moving back toward more normalized levels of strip as he had mentioned in the second half.
Robert Ross McEwen: I'll ask Bill to comment on that.
Speaker Change: I'll ask bill to <unk>.
Speaker Change: Comment on that.
William M. Shaver: Yeah, Jake. I guess so. Production in the first quarter was pretty much on schedule. It's a little over budget, but it's, you know, pretty much on schedule. In the second quarter, we'll be expanding the work that we're doing in PIC and also expanding the work that we do in Globe ourselves to try and get more material or more ore onto the pad in order to improve our leaching. As you probably know, the first quarter is always a bit of a challenge because of rain and snow and cold weather.
Bill: Yes Jake.
Speaker Change: I guess.
William M. Shaver: Production in the first quarter was pretty much on.
William M. Shaver: It's a little over budget, but its pretty much on schedule.
William M. Shaver: In the second quarter.
William M. Shaver: We will be expanding the work that we're doing in Pic and also.
William M. Shaver: We're expanding the work that we do.
William M. Shaver: And gold bar, so to try and.
William M. Shaver: Or to get more material or more ore onto the pad.
William M. Shaver: In order to improve our leaching.
William M. Shaver: As you probably know the first quarter is always a bit of a challenge because.
William M. Shaver: Rain and snow and cold weather.
William M. Shaver: This year was a little bit better than last year, although this year we did... our release about four points, just under five million gallons, where last year we released about 9 million gallons. So all in all, I think the first quarter responded well to all the production challenges. And we see the second quarter as improving on that. Yeah, and the stripping, you know, the stripping is just related, I guess, to, you know, where we're taking the ore at the time and, and we're working with our contractor to, to, I guess, upgrade the number of trucks we have at the site to look after the stripping that's associated with the ore. So, you know, we see those two things as kind of being tied together.
William M. Shaver: This year was a little bit better than last year, although this.
William M. Shaver: This year, we did.
William M. Shaver: Our release about four point, just under 5 million gallons, where last year we.
William M. Shaver: Released about 9 million gallons.
William M. Shaver: So all in all I think the first quarter responded well to all all.
William M. Shaver: Sure.
William M. Shaver: Duction challenges.
William M. Shaver: We see the second quarter is improving over that.
Speaker Change: What about the stripping.
William M. Shaver: Yes, no stripping stripping is just related I guess to.
William M. Shaver: Where we're taking the or at the time and we're working with our contractor too.
William M. Shaver: To I guess upgrade the number of trucks we have.
William M. Shaver: To look after the stripping that's associated with your soul.
William M. Shaver: We see those two things.
William M. Shaver: It was kind of being tied together.
Speaker Change: Okay. That's helpful.
Robert Ross McEwen: Okay, that's helpful. And then, Rob, you touched on opportunities for growth and things that you're looking at from an M&A standpoint. I'm just curious, should we be thinking more along the lines of complementary type transactions such as Timberline, or would you be willing to look at more of a transformational type acquisition? Just your thoughts there would be helpful.
Speaker Change: And then Rob you touched on opportunities for growth and things that we're looking at from an M&A standpoint.
Robert Ross McEwen: I'm just curious should we be thinking more along the lines of complementary quite.
Robert Ross McEwen: Transactions, such as timber line or would you be willing to look at.
Rob: More of a transformational type acquisitions. So just your thoughts there would be helpful.
Robert Ross McEwen: We're just going on several fronts, Jake. I just think this market is delivering some situations that bear a lot of consideration, and there was a transformational opportunity that was attractive. Take a close look at it, because I think we're in one of these rare opportunities where this is the time to grow, because we're going to see higher prices going forward. I'm quite confident of that.
Rob: Oh, we're just going on several fronts Jake.
Robert Ross McEwen: Sure.
Robert Ross McEwen: I just think this market is delivering some switched.
Robert Ross McEwen: Situations that.
Robert Ross McEwen: There are lot of consideration and.
Robert Ross McEwen: There was a transformational opportunity that.
Robert Ross McEwen: It was attractive.
Robert Ross McEwen:
Jake: I will take a close look at it.
Robert Ross McEwen: Because I think.
Robert Ross McEwen: We're in one of these rare opportunities where this is the time to grow.
Robert Ross McEwen: Yes, we're going to see higher prices going forward.
Robert Ross McEwen: Quite confident of that.
Speaker Change: I agree with you there okay. That's all from me. Thanks again thanks.
Jacob G. Sekelsky: I agree with you there. Okay, that's all for me. Thanks again. Thanks, Jake.
Speaker Change: Thanks Jake.
Robert Ross McEwen: Okay.
Operator: Thank you, and your next question comes from the line of Joseph Reagor from Roth Capital Partners. Joseph, your line is open. Hey, Rob, and team. Thanks for taking my questions. I guess.
Jacob G. Sekelsky: Thank you and your next question comes from the line of Joseph Joseph Reagor.
Joseph George Reagor: Roth capital partners.
Operator: Joseph.
Joseph George Reagor: Hey Rob and team, thanks for taking my questions. I guess. Following on Jake's comment, the last comment there on acquisitions, the Timberline acquisition, what's your guys' best guess on timing for closing that? I can answer that. We're looking at an outside date in early July for that closing. There are a couple of factors that could accelerate that, but that's a good thing... Okay, thanks. That's helpful. And then going back to the opening comment about the accounting treatment of McEwen Copper, can you guys give us any guidance for the rest of this year on what you think your like income level expense is going to look like, you know, so that there's not such a big, you know, delta? between what we have and what actually occurs.
Joseph George Reagor: Hey, Rob and team thanks for taking my questions.
Joseph George Reagor: I guess.
Joseph George Reagor: Following on the <unk> comment that last comment there on acquisitions.
Joseph George Reagor: Acquisitions, the Timberline acquisition, what's the.
Joseph George Reagor: You guys best guess on timing on closing that.
Speaker Change: I can answer that.
Stephane: It's stephane.
Joseph George Reagor: We're looking at a outside date in early July for that closing there are a couple of factors that could accelerate that but thats. Good good.
Joseph George Reagor: I think to use at this point.
Joseph George Reagor: Okay.
Joseph George Reagor: Thanks, that's helpful and then.
Joseph George Reagor: Going back to the opening comment about the accounting treatment on the QM copper can you guys give us any guidance for the rest of this year on what you think your income level expenses kind of look like.
Joseph George Reagor: There is not such a big Delta.
Joseph George Reagor: Delta.
Joseph George Reagor: Between what we have and what actually occurs.
Joseph George Reagor: Yeah.
Perry Ng: I think as far as McEwen Copper is concerned, Q2 is going to be pretty similar to Q1. I mean, we had over 20 rigs going until May, so we'll continue to have those costs flowing through. Q3 will be quieter as there is no drilling activity, although we will still be working on the feasibility. And then Q4 activity will be dependent on when Copper raises money and what the program will be in terms of drilling in the fall.
Joseph George Reagor: Hey, Joe I think as far as the QM talker.
Perry Ng: Q2 is going to be pretty similar to Q1, I mean, we had.
Perry Ng: Over 20 regs going until May So we'll continue to have those costs flowing through Q3 will be quieter.
Perry Ng: There's no drilling activity, although we will still be working on the feasibility and then.
Perry Ng: Q4 activity will be dependent on when when copper raises money and what the what the program will be in terms of.
Perry Ng: In terms of drilling in the hall.
Perry Ng: Sure.
Perry Ng: You know, I will note, obviously, once we do have a feasibility study for McEwen Copper and, you know, permits in hand, then, you know, under U.S. GAAP, then we can start capitalizing costs at Los Azules, if it makes sense, kind of in line with our Canadian peers.
Speaker Change: I will now obviously.
Perry Ng: Once we do have a feasibility study for mcewen copper and.
Perry Ng: Permits in hand, then no under U S GAAP.
Perry Ng: Can start capitalizing costs.
Perry Ng: At losses, if it makes sense kind of in line with our Canadian peers.
Perry Ng: Okay, and what is the timing on having that feasibility study in hand?
Speaker Change: Okay, and what is the timing on having that feasibility study in hand.
Perry Ng: Certainly, in the first half of next year.
Speaker Change: Certainly first half of next year.
Perry Ng: Yes.
Perry Ng: Okay.
Speaker Change: Thats helpful from a modeling standpoint.
Joseph George Reagor: That's helpful for modeling. And then on Fox, Rob, you commented that, you know, the first quarter grades were light, but you expect things to pick up and then costs to drop. Have you already seen a pickup in grades in Q2?
Perry Ng: And then on Fox.
Joseph George Reagor: Rob you commented that the first quarter grades were light, but you expect things to pick up and then cost drop have you already seen a pick up in grade in Q2.
William M. Shaver: This bill, the grade has picked up from this month. It's running now around 3 grams. And, you know, we hope to see that pick up a little bit more. But we're saying at this point that the grade in Q2 will be around 3 grams. So right now, it's a case of making sure we put through, you know, all the tons we can through the mill.
Joseph George Reagor: Great.
Joseph George Reagor: Though the grade.
William M. Shaver: <unk> picked up from.
William M. Shaver: This month.
William M. Shaver: Running now around three grams.
William M. Shaver: We hope to see that pick up a little bit more but we're we're seeing at this point.
William M. Shaver: Late in Q2, we will be around three grams. So.
William M. Shaver: Right right now.
William M. Shaver: It's a case of making sure we put through.
William M. Shaver: All the tons, we can through the mill.
Joseph George Reagor: Okay, so we should expect tonnage to stay relatively similar to what Q1 was in the grade and start working its way higher over the rest of the year. That's correct. Okay. All right. Well, those are the questions I had. Thanks, guys.
William M. Shaver: Okay. So we should expect tonnage to stay relatively similar to what Q1 was in the grade to start working its way higher over the rest of the year.
Joseph George Reagor: Correct.
Speaker Change: Okay Alright.
Joseph George Reagor: Alright.
Speaker Change: That was all the questions I had thanks guys.
Speaker Change: Okay. Thank you Joe.
Operator: Your next question comes from the line of Mike Pozik, Cantor Fitzgerald. Mike, your line is open.
Speaker Change: Your next.
Joseph George Reagor: Question comes from the line of Mike Kozak Cantor Fitzgerald, Mike Your line is open.
Michael Peter Kozak: Good morning, Rob and team. Thanks for hosting the call. The last caller asked one of my questions, but I just wanted to follow up here and make sure I heard Perry's comment correctly that he made right at the end of the prepared remarks. Did you say cash and investments of approximately $60.6 million in the copper subsidiary at Exit Q1?
Michael Peter Kozak: Yes, good morning, Robin team, thanks for hosting the call.
Michael Peter Kozak: The last caller.
Michael Peter Kozak: Asked one of my questions, but I just wanted to follow up here.
Michael Peter Kozak: And make sure I heard Perry's comment correctly that you made right at the end of the prepared remarks did you say cash and investments of approximately $60 six zero in the corporate subsidiary would exit Q1.
Perry Ng: At the end of Q1, that's correct, yeah.
Michael Peter Kozak: Got.
Speaker Change: At the end of Q1 Thats correct, yes.
Michael Peter Kozak: Okay, and then maybe as a follow-up to that, in prior quarters and prior years, you guys would give some so-called soft guidance on when you would look at potentially IPO-ing McEwen Copper. Is IPO kind of off the table now? Is the priority to keep funding this with Stellantis and Newton, or how are you thinking about potentially IPO-ing that unit?
Perry Ng: Okay.
Perry Ng: Maybe as a follow up to that in.
Michael Peter Kozak: In prior quarters and prior years.
Michael Peter Kozak: You guys would give some call it soft guidance on when you would look at potentially IPO Ing Mcewen copper.
Michael Peter Kozak: The IPO kind of off the table now.
Michael Peter Kozak: Is the priority to keep funding this with still anticipate in Newton or how are you thinking about potentially IPO ing that unit.
Robert Ross McEwen: Well, we feel we're in an in-between spot in that we got the PEA last year that was published, and we're looking at a feasibility study. There are probably 100,000 meters of drilling that haven't been included in the resource, the results of which... We filed for an environmental application approval, and we're hopeful to get that before we publish the feasibility study. So, after the feasibility study is out and we have a permit in hand, that would be a time to be looking at an IPO, when we believe we'd maximize the value.
Michael Peter Kozak: Well, we feel we're in a in between spot and that's where we've got the <unk> last year that was published and we're looking at a feasibility study.
Robert Ross McEwen: There's probably 100000 meters of drilling that haven't been included in the resource the results of which.
Robert Ross McEwen: And we're we filed for an environmental application approval and we're hopeful to get that before we publish the feasibility study.
Robert Ross McEwen: So.
Robert Ross McEwen: After the feasibility.
Robert Ross McEwen: He is out and the we have a permit in hand that would be a time to be looking at an IPO.
Robert Ross McEwen: When we believe we can maximize the value.
Michael Peter Kozak: Got it. Okay. Thank you for that.
Speaker Change: Got it okay. Thank you for that I'll turn it back.
Michael Peter Kozak: Yeah.
Michael Peter Kozak: Yeah.
Operator: Great, thank you. And your next question comes from the line of Bill Powers, private investor. Thank you. Thanks, Rob, for hosting this call. Just a couple quick questions.
Michael Peter Kozak: Great. Thank you and your next question comes from the line of Bill powers private Investor.
Bill Powers: I guess we could start with the decline at Fox. Could you just give us an update on that? I know it was supposed to start sometime this year. If you could give us an update on that, as well as the progress towards construction starting in Mexico.
Bill Powers: Phil Your line is.
Bill Powers: Okay. Thank you thanks, Rob for hosting this call.
Bill Powers: Just a couple of quick questions I.
Bill Powers: I guess, we could start with the decline at Fox could you just give us an update on that I know.
Bill Powers: To start sometime.
Bill Powers: This year, if you could give us a.
Bill Powers: Date on that as well as the.
Bill Powers: The progress towards construction starting in Mexico.
Robert Ross McEwen: Okay, I'll ask Bill to address that question. Thank you very much, Bill.
Speaker Change: Okay, I'll ask bill to address that question.
Robert Ross McEwen: Thank you very much bill, yes in terms of the ramp that stock we expect to start the.
William M. Shaver: Yeah, in terms of the ramp at Stock, we expect to start the surface excavation work this month. We're in the midst of negotiating with contractors on that matter, and, you know, we hope to get started as soon as they can get equipment into the field. So, and, you know, the people we're talking to have equipment in their yard, so that, you know, should start as scheduled. In terms of Phoenix, there, we are waiting for permits.
William M. Shaver: Surface excavation work this month.
William M. Shaver: We're in the midst of.
William M. Shaver: Negotiating with contractors on that matter.
William M. Shaver: <unk>.
William M. Shaver: We hope to get started is like as soon as they can get equipment into the field. So.
William M. Shaver: And the people, we're talking to have equipment in the yard so that should should start as scheduled in.
William M. Shaver: In terms of Phoenix.
William M. Shaver: There we are waiting for permits.
William M. Shaver: And we, those have all been, the required submissions have all been made. We, optimistically, hope to see that in the, You know, kind of the third, second, well, second to third quarter. I guess I'm going to say the third quarter now because we're hoping to have it like in the next few months. There's an election coming up in Mexico, so we're actually planning to make a trip to Mexico in...
William M. Shaver: And we those have all been.
William M. Shaver: Required submissions have all been made.
William M. Shaver: We optimistically, we hope to see that.
William M. Shaver: Kind of the third second well second to third quarter.
William M. Shaver: I'm going to say the third quarter now because we're hoping to have it.
William M. Shaver: Like in the next few months.
William M. Shaver: There's an election coming up and in Mexico.
William M. Shaver: Sure.
William M. Shaver: So we're actually planning to.
William M. Shaver: Make a trip to Mexico.
William M. Shaver: <unk>.
William M. Shaver: In the next few weeks, we will go and have a chat with the Minister of Economic Development, who visited the site last year and basically said he would try and help us any way he could and if we needed help, to come and see him, so we're going to maybe take advantage of that, but yeah, we're in. We're doing the final engineering of the plant now, and so as soon as we have a permit in hand, we'll start working on that. We've already ordered gas generators for that project, and most of the equipment that's going to be installed is now refurbished at the site.
William M. Shaver: In the next few weeks.
William M. Shaver: Where we will go.
William M. Shaver: And have a chat with.
William M. Shaver: Minister of economic development.
William M. Shaver: We had to the site last year and basically.
William M. Shaver: <unk> said, he would try and help us.
William M. Shaver: Any way you could and if we needed help to come and see them. So we're going to maybe take advantage of that.
William M. Shaver: But yes, we are.
William M. Shaver: And we're doing now the final engineering of the <unk>.
William M. Shaver: <unk>.
William M. Shaver: And so as soon as we have a permit in hand.
William M. Shaver: I'll start working on that.
William M. Shaver: <unk> already ordered gas generators.
William M. Shaver: For that project.
William M. Shaver: And most of the equipment, that's going to be installed is now refurbished at this site.
William M. Shaver: Okay.
Bill Powers: Okay, so you'd expect construction to begin about the fourth quarter with potentially first production coming out in Q1 of next year. Is that a reasonable time frame?
William M. Shaver: Okay. So you would expect.
William M. Shaver: Construction.
Bill Powers: To begin that fourth quarter with potentially.
Bill Powers: Potentially first.
Bill Powers: Production coming out of Q1 of next year is that a.
Bill Powers: Reasonable timeframe.
William M. Shaver: That would be our hope, yeah.
Bill Powers: That would be our hope yes.
Bill Powers: Okay, and I guess as far as the stock. Given the results that came out in the stock earlier in February of this year, are there any plans to include the stock east into the initial ramp going down, or is that something for future development?
William M. Shaver: Okay, and I guess as far as the.
Bill Powers: Given the results that came out in stock earlier.
Bill Powers: In February of this year.
Bill Powers: Are there any plans to include the stock east into the initial ramp slowing down or is that something for it yeah.
Bill Powers: For future development.
William M. Shaver: No, absolutely, that is going to be the first order of the day, you know, once we get underground. We have, you know, completed a drilling program in the first quarter of the year at Stock East, and the results of that, I would say, are very good. And we are going to have an announcement about those results sometime in the next 30 days. And yeah, we'll basically be heading in two directions, one towards Stock East and the other towards Stock West. So, yeah, that's a... Because that particular ore zone is very close to the surface, we will head there right away, as soon as we get underground. Sounds great!
Bill Powers: No absolutely that is going to be the first order of the day.
William M. Shaver: Once we get underground and.
Speaker Change: We are.
William M. Shaver: We've completed a drilling program in the first quarter.
William M. Shaver: Of the year stock East and the results of that I would say are are very good.
William M. Shaver: And we are going to have an announcement about those results.
William M. Shaver: Sometime in the next 30 days.
William M. Shaver: Yes.
William M. Shaver: Basically once we get the ramp color doesn't get underground.
William M. Shaver: We'll be heading in two directions, one towards stock east and the other.
William M. Shaver: <unk>.
William M. Shaver: <unk> stock West.
William M. Shaver: Yes.
William M. Shaver: Because of its.
William M. Shaver: That particular ore zone is very close to surface, we will head there.
William M. Shaver: Right away.
William M. Shaver: Soon as we get underground.
Bill Powers: Sounds great. That was all the questions I had. Thanks so much. Thank you, Bill. And just as a reminder, if you
Speaker Change: It sounds great that was all the questions I had thanks, so much. Thank you bill.
Speaker Change: Thank you.
Operator: And just as a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad. And we'll pause for just a moment to see if there are any additional questions. Alright, it looks like there are no further questions at this time. Mr. Rob McEwen, I will turn the call back over to you. Thank you very much.
Speaker Change: And just as a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad and we'll pause for just a moment to see if there are any additional questions.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Robert Ross McEwen: All right. It looks like there are no further questions at this time, Mr. Rob Mcewen I will turn the call back over to you.
Robert Ross McEwen: Thank you very much, Operator. Thank you, ladies and gentlemen, for joining us.
Robert Ross McEwen: Thank you very much operator, thank you, ladies and gentlemen for joining us.
Speaker Change: I believe there is a question.
Robert Ross McEwen: It came in by E Mail.
Robert Ross McEwen: Okay.
Robert Ross McEwen: And I think I've already answered it.
Robert Ross McEwen: I believe there's a question that came in by email. And I think I've already answered it. It was relating to the market performance this morning. I think it's overdone and we've got a lot of positive momentum at the moment. Thank you.
Speaker Change: Relating to.
Robert Ross McEwen: The.
Robert Ross McEwen: Market performance this morning.
Robert Ross McEwen: I think it's overdone.
Robert Ross McEwen: And.
Robert Ross McEwen: We've got a lot of positive momentum at the moment.
Robert Ross McEwen: Sure.
Robert Ross McEwen: Yes.
Speaker Change: Thank you operator.
Robert Ross McEwen: Okay.
Speaker Change: Great well. Thank you. So much. This does conclude today's conference you may now disconnect. Thank you.
Robert Ross McEwen: Okay.
Robert Ross McEwen: Yeah.
Robert Ross McEwen: Yeah.
Operator: Great. Well, thank you so much. This does conclude today's conference. You may now disconnect. Thank you. Well, thank you so much. This does conclude today's webinar.
Speaker Change: Well. Thank you so much this does conclude today's.