McEwen Mining Provides Fourth Quarter & Full Year 2012 Operational and Development Update

Mon Mar 11, 2013 7:30am EDT

* 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
for its fourth quarter and full year operating results, including 2013
production and cost guidance, for its mines and projects in Argentina,
Mexico and Nevada. 


--  Gold equivalent production in the fourth quarter totaled 32,220 ounces
    (17,578 gold ounces and 761,377 silver ounces). Full year production
    totaled 105,050 gold equivalent ounces (48,876 gold ounces and 2,921,242
    silver ounces), meeting 2012 guidance.  
--  Cash costs totaled $728 per gold equivalent ounce in the fourth quarter.
    Full year cash costs totaled $739 per gold equivalent ounce, below 2012
    guidance of $750 per gold equivalent ounce.  
--  The Company ended the year with $79 million in cash and liquid assets
    and no debt. 
--  Estimated 2013 production is expected to grow by 24% to 130,000 gold
    equivalent ounces (72,310 gold ounces and 3,000,000 silver ounces) at a
    cash cost between $800 - $900 per gold equivalent ounce. All-in
    sustaining costs are estimated at $1,200 - $1,325 per gold equivalent
    ounce. All-in sustaining costs include operational, development,
    exploration, royalties and reclamation costs. 
--  On January 1, 2013, El Gallo Phase 1 in Mexico achieved commercial
    production. The mine is currently operating at full capacity.  
--  El Gallo Phase 2 remains on schedule for construction and will become
    the Company's third and largest mine.  
--  Four new resource updates are due by the end of the second quarter,
    building on the Company's large resource base. 

    "Last year was significant for McEwen Mining. We successfully merged US
Gold and Minera Andes, achieved record production at our San Jose mine,
completed construction and commissioned El Gallo Phase 1, published a
feasibility study for El Gallo Phase 2, and resolved the litigation
surrounding the Los Azules Copper project. This year will also be an
important year for the Company. First, we expect to see production grow
by 24% to 130,000 gold equivalent ounces, and second, financing and
construction of our third mine, El Gallo Phase 2, is scheduled to
commence during the third quarter," stated Rob McEwen, Chairman and Chief

    Balance Sheet

    At the end of the fourth quarter, McEwen Mining had cash and liquid
assets of $79 million, comprised of cash of $71 million and gold and
silver (produced and purchased) with a market value of $8 million. Our
cash balance reflects the completion of our rights offering in December
2012, for total proceeds of $60.4 million. The Company remains debt free.

    During the quarter, the Company received a dividend of $5 million from
its 49% owned San Jose mine in Argentina. Proceeds from the dividend
remained in Argentina to help fund exploration at the Los Azules Copper
project. The Company expects to receive dividends from San Jose in 2013.
Although the amounts and timing are beyond McEwen Mining's control, it is
anticipated that dividends in the first and second quarter will be less
than the fourth quarter, 2012. This is due to retirement of local credit
lines, income taxes payable, equipment purchases related to the mine's
10% expansion, and the temporary shutdown experienced in February due to
worker illnesses. Any dividends received during the first half of the
year would be spent locally at Los Azules. Dividends are expected to be
higher during the second half of 2013. The Company anticipates using
these dividends to help offset construction costs in Mexico, associated
with El Gallo Phase 2. 

    El Gallo Phase 1 generated $2.1 million in operating cash flows, after
incurring costs associated with removal of overburden to access future
mineralization, during the fourth quarter. During the quarter, the mine
was focused on increasing throughput levels towards its designed rate.
The mine is now operating at full capacity. 

    Major expenditures during the quarter included $13.1 million for
exploration at Los Azules, $3.8 million for exploration at the Company's
other projects, and $0.7 million related to El Gallo Phase 2.

    San Jose Mine, Argentina (49%)

    Solid Year of Production

    Final production results for McEwen Mining's share in the San Jose mine
during the fourth quarter, was 11,024 gold ounces and 757,009 silver
ounces, representing 25,582 gold equivalent ounces (converting the silver
into gold using a 52:1 exchange ratio). 

    For the full year, San Jose met its production guidance, with McEwen
Mining's share totaling 42,026 gold ounces and 2,916,742 silver ounces or
98,117 gold equivalent ounces. In 2013, McEwen Mining's share of
production has been forecasted at 102,700 gold equivalent ounces (45,000
gold ounces and 3,000,000 silver ounces). Production is expected to
increase in 2013 as an optimization plan was completed that will increase
processing capacity by +10% from 1,500 tonnes to 1,650 tonnes per day.

    For the quarter, cash costs equaled $728 per gold equivalent ounce. Cash
costs were flat versus the third quarter and less than the first half of
the year, as the team at San Jose has done an excellent job dealing with
industry-wide cost escalation. For the full year, cash costs were below
guidance of $750 per gold equivalent ounce at $739. Cash costs and all-in
sustaining costs per equivalent gold ounce for 2013 have been estimated
at $725 - $825 and $1,150 - $1,275, respectively. 

    An updated reserve and resource estimate for the mine will be released in
the coming weeks. The updated resource will include approximately 98,000
meters of additional core drilling. 

                     San Jose Mine Production Comparison                    
                               Full-Year  Full-Year  4th Quarter 3rd Quarter
     San Jose - 100%(i)             2012        2011        2012        2012
Ore production (tonnes)          509,851     462,825     128,940     136,577
Average grade gold (gpt)            5.79        5.86        6.00        5.24
Average head silver (gpt)            417         444         422         402
Average gold recovery (%)           90.4        92.9        90.4        91.1
Average silver recovery (%)         87.0        88.8        88.3        87.9
Gold produced (ounces)            85,786      80,948      22,498      20,967
Silver produced (ounces)       5,952,534   5,869,564   1,544,917   1,552,000
Gold equivalent(1) produced                                                 
 (ounces)                        200,240     193,824      52,208      50,813
Gold sold (ounces)                84,292      82,420      23,161      29,126
Silver sold (ounces)           5,897,099   6,087,525   1,553,077   2,165,000
Co-product total cash cost                                                  
 Au (US$)                            760         628         770         766
Co-product total cash cost                                                  
 Ag (US$)                          13.90       13.63       13.35       14.66
Gold equivalent total cash                                                  
 cost (US$)                          739         675         728         764
Co-product all-in sustaining                                                
 cash cost Au (US$)                1,208         962       1,228       1,126
Co-product all-in sustaining                                                
 cash cost Ag (US$)                22.11       20.89       21.29       21.54
Gold equivalent co-product                                                  
 all-in sustaining cash cost                                                
 (US$)                             1,174       1,035       1,160       1,122
  McEwen Mining - 49% Share                                                 
Gold produced (ounces)            42,026      39,665      11,024      10,274
Silver produced (ounces)       2,916,742   2,876,086     757,009     760,480
Gold equivalent(1) produced                                                 
 (ounces)                         98,117      94,974      25,582      24,898
(i)McEwen Mining holds a 49% attributable interest in the San Jose mine.    

    El Gallo Phase 1, Mexico (100%) 

    Commercial Production Achieved. Running at Steady State.

    The focus at El Gallo Phase 1 during the fourth quarter was on increasing
production levels towards the designed rate of 3,000 tonnes per day. This
was successfully achieved, with commercial production being declared on
January 1, 2013. During the fourth quarter the mine produced 6,554 gold
ounces and 4,500 silver ounces or 6,638 gold equivalent ounces. Since
declaring commercial production the crushers have been operating 20%
above the designed throughput rate.

    The Company will begin reporting cash costs and all-in sustaining costs
starting in the first quarter, 2013. Cash costs and all-in sustaining
costs per gold equivalent ounce for 2013 have been estimated at $1,135 -
$1,235 and $1,200 - $1,325, respectfully. Costs are estimated to be
higher in 2013 versus the life of mine plan, due to higher pre-stripping
required to access deeper mineralization and lower grades, early in the
mine life.

    A new resource estimate for Phase 1 will be released during the second
quarter. This will include approximately 11,600 meters of new core

    El Gallo Phase 2, Mexico (100%)

    Next Mine Remains on Target for Construction

    The Company remains on schedule to submit its construction and mining
permits by the end of the first quarter to SEMARNAT, Mexico's
Environmental and Natural Resource Ministry. Although the approval and
its timing are outside of McEwen Mining's control, the Company is
targeting the end of the third quarter for approval.

    Long lead-time equipment purchases have commenced. Both the ball mill and
filter presses for the dry stack tailings having been ordered. The ball
mill and filter presses are expected to be shipped to El Gallo in
approximately 32 weeks. The Company expects to purchase the crushers,
leach tanks, agitators, electrical substation and the Merrill Crowe plant
during the second and third quarters. 

    Capital expenditures to complete El Gallo Phase 2 have been estimated
between $180-$190 million. In order to complete construction the Company
will need to raise an estimated $120 million. McEwen Mining is looking at
several financing alternatives, which include a possible sale or joint
venture of its Los Azules Copper project and various forms of debt and

    A new resource estimate for Phase 2 will be released during the second
quarter. This will include approximately 10,000 meters of new core

    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
55,000 gold ounces 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 Mining will continue to advance the Gold Bar project through the
permitting process during 2013. This will involve additional
environmental baseline collection and data review. The Company expects to
submit its Plan of Operations report in the second half of 2013. 

    2) Tonkin Project

    The Tonkin project, which has a current resource of 1.4 million gold
ounces in the measured and indicated categories (32.3 million tonnes @
1.39 gpt gold) and 0.3 million gold ounces 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
last test results indicated that approximately 50-55% of the gold would
report to a concentrate, which would then be subsequently processed by an
autoclave or roaster. McEwen Mining feels the amount of gold reporting to
the concentrate needs to be higher in order to make Tonkin economically

    The Company believes the percentage of gold reporting to the concentrate
is low because the mineralization is oxidizing too quickly. In order to
determine why this is occurring, a detailed study is being conducted on
the mineralogy. If the cause can be determined, the Company plans to
explore alternatives that would slow the oxidizing process. The results
from the mineralogy study are due in the second quarter. 

    Los Azules Copper Project, Argentina (100%)

    World Class Copper Asset - Size & Grade 

    Los Azules is one of the world's largest and highest grade undeveloped
copper porphyry deposits. This year's exploration program, with a budget
of $25 million, is scheduled to be completed by the end of the first
quarter. New drill results and subsequent resource update have proven
that there remains excellent potential to further grow this world-class
copper asset. Significant drill results released in January 2013,
included 0.47% copper over 610 meters, 0.61% copper over 160 meters,
0.44% over 529 meters. Based on the results of these holes, the inferred
resource grew by 29%. Los Azules resource now contains 4.45 billion lbs
in the indicated category and 13.95 billion lbs in the inferred category
(Indicated: 310 million tonnes @ 0.65% copper; Inferred: 1.3 billion
tonnes @ 0.49% copper). 

    Additional drill results from the Company's ongoing exploration program
are expected to be released in approximately three weeks. In addition,
McEwen Mining has begun work on an updated Preliminary Economic
Assessment (PEA), which is expected to be completed in the third quarter
of this year. The updated PEA will be based on a significantly larger
mineral resource and will also evaluate the possibility of increasing the
daily throughput. The PEA will also incorporate further metallurgical
studies currently being done on the possibility of producing copper
cathode instead of a concentrate, and processing low grade mineralized
material not previously considered, via a heap leach. The advantage of
being able to produce a copper cathode is that it would eliminate the
contemplated slurry pipeline through Chile and would reduce Argentina's
export tax on concentrate. 

    Santa Cruz Exploration, Argentina (100%)

    During the fourth quarter, the Company completed approximately 1,554
meters of reverse circulation drilling on its 100% owned claim package
adjacent to the San Jose mine and Goldcorp's Cerro Negro project. A
further approximate 1,000 meters were drilled in the first quarter of
2013. The assays from this drilling did not return any economic
quantities of gold or silver. No further drilling is currently planned.

Fourth Quarter Conference Call Details                                      
McEwen Mining will be hosting a conference call to discuss fourth quarter   
results and project developments on                                         
March 11, 2013 at 2:00 pm EST.                                              
Participant dial-in number(s): 416-695-7848 / 800-769-8320                  
Participant pass code: None Required                                        
Dial-in number(s): 905-694-9451 / 800-408-3053                              
Pass code: 8222665                                                          


    The goal of McEwen Mining is to qualify for inclusion in the S&P 500 by
2015 by creating a high growth 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 project in San Juan,
Argentina and a large portfolio of exploration properties in Argentina,
Mexico and Nevada.

    McEwen Mining has 296,024,859 shares issued and outstanding. Rob McEwen,
Chairman, President and Chief Owner, owns 25% of the shares of the
Company (assuming all outstanding Exchangeable Shares are exchanged for
an equivalent amount of Common Shares). As of December 31, 2012, McEwen
Mining had cash and liquid assets of approximately US$79 million and is
debt free.


    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 information about the
current Los Azules Mineral Resource, see the Company's news release
titled "McEwen Mining Continues to Expand Los Azules' Large, High-Grade,
Mineral Resource, dated February 5, 2013.
The mineral resource estimate referenced in this news release was
prepared in January 2013 by Robert Sim, P.Geo. and Bruce Davis, PhD,
FAusIMM, each a qualified person and 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. 

    The foregoing news release and technical reports are 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 costs consists of geology, mining, processing, general and
administrative costs, royalty costs, refining and treatment charges (for
both dore and concentrate products), sales costs and export taxes. All-in
sustaining cash costs consists of total cash costs (as noted above), plus
corporate general and administrative costs, environmental rehabilitation
costs, mine site exploration and development costs, and sustaining
capital expenditures. Depreciation is excluded from both total cash costs
and all-in sustaining cash costs. Total cash cost and all-in sustaining
cash cost per ounce are calculated on a co-product basis by dividing the
respective proportionate share of the total cash costs and all-in
sustaining cash costs for the period attributable to each metal by the
ounces of each respective metal sold. 


    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,
political 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 the cost of transferring or otherwise allocating
funds between operating jurisdictions, 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 and permitting
of mining operations and commencement of production and the projected
costs thereof, risks related to litigation, 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, 2012
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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