NYSE- and TSX-listed McEwen Mining increased its gold-equivalent ounce (GEO) production by 45% in the quarter ended June 30.
All-in sustaining costs (AISC) per ounce decreased by 2% year-on-year.
Net cash flow from the business, excluding project development costs, was $6.3-million.
Further, a total investment of $26.3-million was made to further the miner’s long-term production growth plans at Gold Bar, in the US; Black Fox, in Canada; El Gallo Fenix, in Mexico; and Los Azules, in Argentina.
As a result, McEwen’s consolidated net loss for the second quarter was $5.4-million.
On a more positive note, during the first half of 2018, GEOs produced increased by 47% and AISC per ounce increased by just 1%, compared with the first half of 2017.
However, net cash flow from the business, excluding project development costs, was $18.7-million and a total investment of $49-million was made to further the company’s long-term production growth plans at the Gold Bar, Black Fox and Los Azules projects.
As a result, McEwen’s consolidated net loss for the first half was $10.6-million.
Construction at the miner’s 100%-owned Gold Bar mine, in the US, focused on the heap leach pad, installation of the crushing and process facility, as well as site-wide electrical and water utilities.
All major equipment and bulk materials are either on site or have been bought and engineering for the project is complete, McEwen said on Tuesday.
Meanwhile, construction is advancing on schedule for completion by the end of 2018, targeting commercial production in the first quarter of 2019.
“We capitalised to construction in progress by $18.2-million and $27-million for the three and six months ended June 30, 2018, respectively, and $33-million cumulative to date,” the miner said in a statement.
During the first three years of operation, beginning in 2019, Gold Bar is projected to produce about 55 000 oz, 74 000 oz and 68 000 oz of gold respectively.
Further, during the second quarter, McEwen’s 100%-owned El Gallo mine, in Mexico, produced 10 808 GEOs, compared with the 9 780 GEOs produced in the second quarter of 2017.
Total cash costs and AISC were $783 and $816 per GEO, respectively.
Production and cost guidance for 2018 are for 32 000 GEOs at a cash cost and AISC of $650 and $715 per GEO, respectively.
By the end of the second quarter, mining and crushing activities ceased and contractor equipment has been demobilised from the mine site, McEwen pointed out, adding that closure, reclamation and residual heap leach activities are ongoing and will continue for several years.
A new preliminary economic assessment (PEA) study on potential future production from the El Gallo Complex was published on July 9.
The proposed development plan evaluated in the PEA is called Project Fenix, with key outcomes of Project Fenix including an average yearly production rate of 47 000 oz of gold equivalent, a 12-year mine life, a low initial capital cost of $41-million for Phase 1 and $30-million for Phase 2, and a pay-back period of 4.1 years.
At $1 250/oz of gold and $16/oz of silver, the after-tax internal rate of return (IRR) is 28%, and the net present value (NPV), at a 5% discount rate, is $60-million, McEwen added.
However, during the next 14 months, McEwen will be applying for permits in addition to analysing options for optimising mineral processing, mine sequencing, material transportation and tailings storage as presented in the PEA.
Meanwhile, during the second quarter, McEwen’s 100%-owned Black Fox mine, in Canada, produced 14 055 GEOs.
Total cash costs and AISC were $771 and $1 056 per GEO, respectively. Year-to-date costs are trending below budget and gold production is above the miner’s projections.
The company is maintaining production and cost guidance for 2018 at 48 000 GEOs at a cash cost and AISC of $920 and $1 210 per GEO, respectively.
Additionally, a $15-million exploration programme is currently under way at the Black Fox Complex.
For 2018, McEwen has budgeted a total of $18.4-million for sustaining and capital expenditure activities at the Black Fox mine, of which it spent $7.6-million during the first half of 2018.
McEwen’s attributable production from the 49%-owned San José mine, in Argentina, was 12 139 oz of gold and 769 197 oz of silver, for a total of 22 395 GEOs, which is essentially unchanged from the comparatible period in 2017.
Second-quarter production costs per GEO produced were also slightly lower than the comparatible period in 2017.
Year-to-date, San José is performing in line with the miner’s guidance for 2018 of 91 000 GEOs at a cash cost and AISC of $806 and $1 065 per GEO, respectively.
Meanwhile, during the second quarter and first half of 2018, McEwen received $2.4-million and $7.3-million in dividends from its interest in San José, compared with $2.4-million and $4.9-million in dividends received during the same periods in 2017.
For 2018, McEwen is forecasting dividends in excess of $12-million.
Additionally, the miner spent $5.9-million developing infrastructure alternatives and environmental baseline monitoring work to advance its permitting efforts for its 100%-owned Los Azules project.