On back of strong Q1, McEwen acquires existing NSR royalty on El Gallo mine
TORONTO (miningweekly.com) – Gold producer McEwen Mining has acquired the existing tiered net smelter return (NSR) royalty on the El Gallo mine, in Mexico, currently paying 3.5% of gross revenue less allowable deductions.
The miner advised on Tuesday that it had bought the NSR in return for a $5.25-million payment on closing and a conditional deferred payment of $1-million, to be made on June 30, 2018.
According to McEwen, the royalty ceased being payable at the end of February and through this transaction, would enhance the future profitability of the operation and remove a royalty burden on existing and potentially new deposits inside the royalty’s area of influence, including the El Gallo silver deposit.
Meanwhile, McEwen reported a record performance for the El Gallo mine during the three months ended March 31, lifting gold equivalent output 14% year-on-year to 37 958 oz. The spirited performance was mainly attributable to processing higher-grade ore stockpiled in the previous quarter. The company advised that it expected lower output in subsequent quarters as the influence of higher-grade ore tapered during the year.
Further, the company’s attributable output from its 49%-owned San José mine, in Argentina, was 8 960 oz of gold and 667 319 oz of silver, for a total of 17 857 gold equivalent ounces. Compared with the same period of 2015, gold and silver output was down 5% and up 4%, respectively. Production was typically lower than other quarters owing to a mill shutdown and maintenance over the holidays, the company noted.
Based on the improved performance of El Gallo, McEwen now expected to produce attributable precious metals totalling 144 000 oz of gold equivalent, up from 141 000 oz expected previously.
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