McEwen Mining Provides Third Quarter 2012 Operational and Development Update

Wed Nov 7, 2012 7:30am EST

* Reuters is not responsible for the content in this press release.


    (All Amounts in US Dollars Unless Otherwise Stated)

    McEwen Mining Inc. (NYSE:MUX)(TSX:MUX) is pleased to provide a summary of
the third quarter, including operational and development updates, for its
mines and projects in Argentina, Mexico and Nevada. 


--  Gold equivalent production during the quarter totaled 25,200 ounces.
    Year-to-date, 72,530 gold equivalent ounces have been produced. The
    Company remains on track to produce approximately 105,000 gold
    equivalent ounces in 2012.  
--  Cash costs totaled $727 per gold equivalent ounce during the quarter.
    Year-to-date, cash costs have totaled $753 per gold equivalent ounce, in
    line with the Company's guidance of $750 per gold equivalent ounce for
--  First gold pour at El Gallo Phase 1 in Mexico. The mine is currently
    ramping up towards commercial production, expected by the end of 2012.  
--  El Gallo Phase 2 feasibility study completed. Confirms potential to
    produce 5.2 million ounces silver and 6,100 ounces gold per year
    (106,100 gold equivalent ounces). 
--  Subsequent to the third quarter, the Company announced its intention to
    raise $60 million through a rights offering. Rob McEwen, Chief Owner,
    has agreed to backstop the rights issue. 

    Balance Sheet

    On October 29, 2012 the Company announced its intention to raise $60
million through a rights offering. The rights offering is being
backstopped by the Company's Chief Owner, Rob McEwen and is expected to
be completed early in December. The funds will be primarily used for: 1)
the purchase of long lead time equipment for El Gallo Phase 2, 2) advance
the environmental impact study for the Gold Bar project, 3) complete
metallurgical studies on the Tonkin project and 4) to further explore the
Company's various projects.

    At the end of the third quarter, McEwen Mining had cash and liquid assets
of $20.6 million, comprised of cash of $18.5 million, silver and gold
bullion at market value of $2.1 million. The Company remains debt free.

    During the third quarter, the Company received a dividend of $2.1 million
from its 49% owned San Jose mine in Argentina. Subsequent to the third
quarter, the Company received an additional dividend of $2.6 million on
October 4th. Proceeds from the dividends will remain in Argentina to help
fund exploration at the Los Azules Copper project and Santa Cruz
properties. We expect to receive further dividends from San Jose during
2012, although the timing and amount will depend upon precious metals
prices, production levels, operating costs, capital expenditures,
Argentine central bank and government restrictions, as well as other
factors beyond our control. 

    During the third quarter, major capital expenditures related to El Gallo
Phase 1 included $4 million for construction and $3.6 million in
expenditures for removing overburden to access mineralization. At the end
of the third quarter no more capital was required to be spent on
construction. Other major expenditures during the third quarter included
$6.7 million for exploration at the Company's various projects and $0.7
related to El Gallo Phase 2.

    San Jose Mine, Argentina (49%)

    Another Solid Quarter of Production 

    Final production results for the San Jose mine during the third quarter
was 20,967 ounces gold and 1,552,000 ounces silver, representing 50,813
gold equivalent ounces (converting the silver into gold using a 52:1
exchange ratio) (100% basis). The San Jose mine remains on target to meet
full-year production guidance of 85,000 ounces gold and 5.7 million
ounces silver or 192,500 gold equivalent ounces (100% basis). McEwen
Mining's attributable interest is 49% of these production totals.

    Total Cash Costs during the quarter equaled $755 per ounce gold and
$13.60 per ounce silver. Gold equivalent cash costs equaled $727 per
ounce (converting the cash cost of producing an ounce of silver into the
gold equivalent using a 52:1 exchange ratio). Cash costs decreased versus
the second quarter primarily due to a higher percentage of sales coming
from dore versus concentrate. The San Jose mine remains on target to meet
its full year cost guidance of approximately $750 per gold equivalent

    The average grade of ore processed during the third quarter was 5.24 gpt
gold and 402 gpt silver. Gold and silver recoveries averaged 91.1% and
87.9%, respectively. 

    During the third quarter 26,000 meters of diamond drilling was completed
at the San Jose mine. On October 18th, the Company announced the
discovery of a new vein system called Emilia. Early results from this
vein have been encouraging. 

                     San Jose Mine Production Comparison                    
                                                3rd        2nd        3rd   
                              Year to Date    Quarter    Quarter    Quarter 
San Jose - 100%(i)                2012         2012       2012       2011   
Ore production (tonnes)          380,911      136,577    128,803    124,204 
Average grade gold (gpt)          5.71         5.24       5.98       5.75   
Average head silver (gpt)        415.68         402        430        448   
Average gold recovery (%)         90.4         91.1       88.6       91.1   
Average silver recovery (%)       86.6         87.9       84.2       87.2   
Gold produced (ounces)           63,270       20,967     21,946     20,910  
Silver produced (ounces)        4,408,000    1,552,000  1,500,000  1,562,000
Gold equivalent(1) produced                                                 
 (ounces)                        148,039      50,813     50,792     50,946  
Gold sold (ounces)               61,127       29,126     17,661     18,140  
Silver sold (ounces)            4,343,000    2,165,000  1,146,000  1,409,000
Co-product cash cost Au (US$)      765          755        842        555   
Co-product cash cost Ag (US$)     14.29        13.60      15.32      13.09  
Gold equivalent cash cost                                                   
 (US$)                             753          727        816        628   
McEwen Mining - 49% Share                                                   
Gold produced (ounces)           31,002       10,274     10,754     10,245  
Silver produced (ounces)        2,159,920     760,480    735,000    765,380 
Gold equivalent(1) produced                                                 
 (ounces)                        72,538       24,898     24,888     24,964  
(i)McEwen Mining holds a 49% attributable interest in the San Jose mine.    

    El Gallo Phase 1, Mexico (100%)

    First Gold Pour - Nearing Commercial Production 

    El Gallo Phase 1 construction was completed during the third quarter at a
cost of $13.5 million, $1.5 million below estimate. On September 24th,
the Company announced that it had poured its first bar of gold at the
mine. Subsequent to the third quarter, the focus has been on increasing
production levels towards the designed rate of 3,000 tonnes per day.
During October, the average crusher throughput was 2,680 tonnes per day
or 89% of the designed capacity. The process plant operated at an average
of 45% capacity and ended the month nearing 70%. The Company is on pace
to reach commercial production (operating at 80% capacity for 30
consecutive days) by the end of this year. Once commercial production is
achieved, cash costs will be reported for El Gallo.

    Approximately 335,000 tonnes at an average grade of 1.28 gpt has been
mined to date and sent to the crusher or stockpiled for future
processing. A comparison between the resource estimate and production
results shows that the total ounces mined is 1.6% higher than estimated,
the grade is 8.1% higher, while the tonnes mined are 6.0% lower. The
Company is satisfied with these results. 

    During the third quarter, 9,870 meters of diamond drilling was completed
at the El Gallo complex. Drilling has been continually encountering new
mineralization beyond the defined resource. Based on the results, the
Company expects to update the mine plan for Phase 1 and 2 during the
first half of 2013. A more definitive timetable will be confirmed during
the fourth quarter. 

    El Gallo Phase 2, Mexico (100%)

    Feasibility Complete - Moving Towards Construction

    During the third quarter, the Company announced the results of its
feasibility study. The feasibility study was prepared by M3 Engineering
of Tucson, Arizona, Independent Mining Consultants of Tucson, Arizona,
and SRK Consulting of Reno, Nevada, and confirmed annual production of
5.2 million ounces silver and 6,100 ounces gold during each of the first
6 years at a cash cost of $9.86 per silver ounce (net of gold by-product
and including royalties). The estimated initial capital expenditures
totaled $178 million, including a 14.4% contingency.

    The Company completed three production water wells during the quarter
that will be used for Phase 2 operations. The results of the pumping
tests indicate that there is more than sufficient water to meet the needs
of Phase 2. CONAGUA, a division of SERMANAT, Mexico's Environmental and
Natural Resources Ministry, has granted McEwen Mining rights to 1.0
million cubic meters of water per year, which will meet the needs of the

    Environmental permits for construction and operations are progressing and
are expected to be submitted to SERMANAT during the first quarter 2013. 

    The Company also received approval from CFE, Mexico's Federal Electricity
Commission, for its designs to connect Phase 2 to the national electrical
power grid. Environmental permits to construct the power line are
expected to be submitted by the end of this year. 

    Long lead time equipment purchases are expected to commence once the
rights offering is completed in December. The most significant long lead
time items include: ball mill, filter presses for dry stack tailings,
Merrill Crowe, leach tanks and electrical substation. 

    Nevada (100%)

    1) Gold Bar Project

    McEwen Mining continues to advance the Gold Bar permitting process in
order to begin production in 2015. Gold Bar is forecasted to produce
50,000 ounces gold per year. The project is located primarily on public
lands managed by the Bureau of Land Management (BLM).The BLM and the
Nevada Division of Environmental Protection (NDEP) are the primary
government agencies responsible for approving the permits that would
allow the Company to begin construction. 

    McEwen will continue to advance the Gold Bar Project through the
permitting process during 2012. This will involve environmental baseline
data review with expected Plan of Operations report completion and
submittal in the first quarter of 2013. 

    2) Tonkin Project

    The Tonkin project, which has a current resource of 1.4 million ounces of
gold in the measured and indicated categories (32.3 million tonnes @ 1.39
gpt gold) and 0.3 million ounces of gold in the inferred (8.4 million
tonnes @ 1.13 gpt gold), is undergoing a series of metallurgical tests
for possible process alternatives that are common to mines in Nevada. The
primary process being explored is a flotation concentrate followed by
autoclaving or bio-oxidation. Initial baseline flotation test work
indicates that approximately 50% of the gold would report to the
concentrate. Follow-up testing will look to increase this percentage by
introducing different reagents and performing a series of floatation
steps that would look to remove problematic elements, such as carbon. 

    Los Azules Copper Project, Argentina (100%)

    World Class Copper Asset - Size & Grade 

    Drilling began at Los Azules on October 12th. Los Azules is one of the
world's largest and highest grade undeveloped copper porphyry deposits. A
total of seven drills are operating at the property. The drills are
considerably more powerful than the ones used during past field seasons.
The Company believes this will increase the likelihood of reaching target
depths (+700 meters), where high-grade copper mineralization has been
discovered. Initial drill assay results are expected to be released early
in 2013. The Company plans to drill approximately 15,000 meters this

    A portion of the Los Azules Copper project is subject to litigation in
the Courts of British Columbia. Shareholders and other interested parties
are encouraged to review our most recent quarterly filings for detailed
information. The trial is set to commence on November 19th and last for
approximately six weeks. 

    Santa Cruz Exploration, Argentina (100%)

    During the third quarter the Company received the drill permits for one
of its 100% owned claim packages adjacent to the San Jose mine and
Goldcorp's Cerro Negro project. Drilling is expected to commence during
the coming weeks. The Company plans to drill approximately 2,500 meters
and follow up with further drilling in a second campaign at a later date.

    Third Quarter Conference Call Details 

    McEwen Mining will be hosting a conference call to discuss third quarter
results and project developments on November 7, 2012 at 2:00 pm EST.

        Participant dial-in number(s): 416-695-7806 / 1-888-789-9572        
                       Participant pass code: 9798446#                      
              Dial-in number(s): 905-694-9451 / 1-800-408-3053              
                             Pass code: 7308605#                            


    The goal of McEwen Mining is to qualify for inclusion in the S&P 500 by
2015 by creating a high quality, high growth, low-cost, mid-tier gold
producer focused in the Americas. McEwen Mining's principal assets
consist of the San Jose mine in Santa Cruz, Argentina (49% interest); the
El Gallo complex in Sinaloa, Mexico; the Gold Bar project in Nevada, US;
the Los Azules Copper project in San Juan, Argentina and a large
portfolio of exploration properties in Argentina, Nevada and Mexico.

    McEwen Mining has 268,495,751 shares issued and outstanding (comprised of
190,516,797 Common Shares and 77,987,621 Exchangeable Shares). Rob
McEwen, Chairman and Chief Owner, owns approximately 25% of the shares of
McEwen Mining (assuming all outstanding Exchangeable Shares are exchanged
for an equivalent amount of Common Shares). As of September 30, 2012,
McEwen Mining had cash and liquid assets of $20.6 million.


    Minera Santa Cruz S.A., the owner of the San Jose mine, is responsible
for and has supplied to the Company all reported results from the San
Jose mine. McEwen Mining's joint venture partner, a subsidiary of
Hochschild Mining plc, and its affiliates other than MSC do not accept
responsibility for the use of project data or the adequacy or accuracy of
this release. As the Company is not the operator of the San Jose mine,
there can be no assurance that production information reported to the
Company by MSC is accurate, the Company has not independently verified
such information and readers are therefore cautioned regarding the extent
to which they should rely upon such information.


    This news release has been reviewed and approved by William Faust, PE,
McEwen Mining's Chief Operating Officer, who is a Qualified Person as
defined by National Instrument 43-101 ("NI 43-101). For additional
information about the El Gallo complex see the technical report titled
"El Gallo Complex Phase II Project, NI 43-101 Technical Report
Feasibility Study, Mocorito Municipality, Sinaloa, Mexico" with an
effective date of September 10, 2012, prepared by M3 Engineering along
with a team of associates (the "Phase II Report"). The authors of the
Phase 2 Report, Stan Timler - M3 Engineering, Mike Hester - Independent
Mining Consultants (Reserves), Dawn Garcia - SRK Consulting
(Environmental), Richard Kehmeier and Brian Hartman - Pincock Allen &
Holt (El Gallo Deposit Resource), John Read - McEwen Mining consultant
(Palmarito Insitu, Historic Waste Dumps and Historic tailings Resource),
are each qualified persons and all of whom but John Read are independent
of McEwen Mining, each as defined by NI 43-101. For additional
information about the Los Azules project see the technical Report titled
"Los Azules Porphyry Copper Project, San Juan Province, Argentina" dated
August 1, 2012, with an effective date of June 15, 2012, prepared by D.
Ernest Winkler, PE, Robert Sim, PGeo, Bruce Davis, PHD, FAUSIMM and James
K. Duff, PGeo, all of whom are qualified persons and all of whom but
James K. Duff are independent of McEwen Mining, each as defined by NI
43-101. For additional information about the Tonkin project see the
technical report titled "Technical Report on Tonkin Project" dated and
with an effective date of May 16, 2008. The report was prepared by Alan
C. Noble, P.E., Ore Reserves Engineering and Richard Gowans, Micon
International, and Steven Brown (then US Gold Corporation) all of whom
are qualified persons and all of whom but Mr. Brown are independent of
McEwen Mining, each as defined by NI 43-101. For additional information
about the Gold Bar project see the technical report titled "NI 43-101
Technical Report on Resources and Reserves Gold Bar Project, Eureka
County, Nevada" dated February 24, 2012 with an effective date of
November 28, 2011, prepared by J. Pennington, C.P.G., MSc., Frank
Daviess, MAusIMM, Registered SME, Eric Olin, MBA, RM-SME, MSc, Herb
Osborn, P.E, Joanna Poeck, MMSA, B. Eng., Kent Hartley P.E. Mining, SME,
BSc, Mike Levy, P.E, P.G, MSc., Evan Nikirk, P. E., Mark Allan Willow,
M.Sc, C.E.M. and Neal Rigby, CEng, MIMMM, PhD, all of whom are qualified
persons and all of whom are independent of McEwen Mining, each as defined
by NI 43-101. Each of the foregoing reports is available under the
Corporation's profile on SEDAR (


    In this report, we have provided information prepared or calculated
according to U.S. GAAP, as well as provided some non-U.S. GAAP
("non-GAAP") performance measures. Because the non-GAAP performance
measures do not have any standardized meaning prescribed by U.S. GAAP,
they may not be comparable to similar measures presented by other

    Total cash cost per ounce are calculated on a co-product basis and by
dividing the respective proportionate share of the total cash costs for
the period attributable to each metal by the ounces of each respective
metal produced. Total cash cost per ounce is the sum of the geology,
mining, processing, general and administration costs, royalties, refining
and treatment charges (for both dore and concentrate products), sales
costs and export taxes divided by the number of ounces of gold and silver
produced at the mine. Depreciation is excluded from total cash costs.


    McEwen Mining prepares its resource estimates in accordance with
standards of the Canadian Institute of Mining, Metallurgy and Petroleum
referred to in Canadian National Instrument 43-101 (NI 43-101). These
standards are different from the standards generally permitted in reports
filed with the SEC. Under NI 43-101, McEwen Mining reports measured,
indicated and inferred resources, measurements which are generally not
permitted in filings made with the SEC. The estimation of measured
resources and indicated resources involve greater uncertainty as to their
existence and economic feasibility than the estimation of proven and
probable reserves. U.S. investors are cautioned not to assume that any
part of measured or indicated resources will ever be converted into
economically mineable reserves. The estimation of inferred resources
involves far greater uncertainty as to their existence and economic
viability than the estimation of other categories of resources.


    This press release contains certain forward-looking statements and
information, including "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. The forward-looking
statements and information expressed, as at the date of this press
release, McEwen Mining Inc.'s (the "Company") estimates, forecasts,
projections, expectations or beliefs as to future events and results.
Forward-looking statements and information are necessarily based upon a
number of estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business, economic and
competitive uncertainties, risks and contingencies, and there can be no
assurance that such statements and information will prove to be accurate.
Therefore, actual results and future events could differ materially from
those anticipated in such statements and information. Risks and
uncertainties that could cause results or future events to differ
materially from current expectations expressed or implied by the
forward-looking statements and information include, but are not limited
to, risks related to business integration as a result of the business
combination between the Company and Minera Andes, factors associated with
fluctuations in the market price of precious metals, mining industry
risks, political, economic, social and security risks associated with
foreign operations, risks associated with the construction of mining
operations and commencement of production and the projected costs
thereof, risks related to litigation including specifically but not
limited to ongoing litigation with respect to the Los Azules property
which if resolved adversely to the Company, would materially affect the
Company's ability to develop the Los Azules project, property title, the
state of the capital markets, environmental risks and hazards,
uncertainty as to calculation of mineral resources and reserves and other
risks. Readers should not place undue reliance on forward-looking
statements or information included herein, which speak only as of the
date hereof. The Company undertakes no obligation to reissue or update
forward-looking statements or information as a result of new information
or events after the date hereof except as may be required by law. See
McEwen Mining's Annual Report on Form 10-K for the fiscal year ended
December 31, 2011 and other filings with the Securities and Exchange
Commission, under the caption "Risk Factors", for additional information
on risks, uncertainties and other factors relating to the forward-looking
statements and information regarding the Company. All forward-looking
statements and information made in this news release are qualified by
this cautionary statement.

    The NYSE and TSX have not reviewed and do not accept responsibility for
the adequacy or accuracy of the contents of this news release, which has
been prepared by management of McEwen Mining Inc.

McEwen Mining Inc.
Jenya Meshcheryakova
Investor Relations
(647) 258-0395 ext 410 or Toll Free: (866) 441-0690
(647) 258-0408 (FAX)

McEwen Mining Inc.
Mailing Address
181 Bay Street Suite 4750
Toronto, ON M5J 2T3, PO box 792


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