Mr. Rob McEwen reports
MCEWEN MINING 2013 PRODUCTION UP 33% OVER 2012; 139,455 GOLD EQ. OZ PRODUCED IN 2013
McEwen Mining Inc. has released full-year and fourth-quarter production results. For the full-year, the company's total production was 139,455 gold equivalent ounces comprising 79,158 gold ounces and 3,135,467 silver ounces. This represents an approximate 33-per-cent increase compared with 2012.
In the fourth quarter the company produced 37,167 gold equivalent ounces (20,686 gold ounces and 857,011 silver ounces). This is 15 per cent higher than the fourth quarter of 2012.
COMPANYWIDE OPERATING RESULTS
Fourth Fourth
Full year Full year quarter quarter
2013 2012 2013 2012
San Jose mine production (49%)(i)
Gold produced (ounces) 48,425 42,026 12,999 11,024
Silver produced (ounces) 3,114,832 2,916,742 853,225 757,009
Gold equivalent produced
(ounces)(ii) 108,326 98,117 29,407 25,582
El Gallo 1 production
Gold produced (ounces) 30,733 6,863 7,687 6,567
Silver produced (ounces) 20,635 4,492 3,786 4,360
Gold equivalent produced
(ounces)(ii) 31,129 6,949 7,760 6,651
Total production
Gold produced (ounces) 79,158 48,889 20,686 17,591
Silver produced (ounces) 3,135,467 2,921,234 857,011 761,369
Gold equivalent produced
(ounces)(ii) 139,455 105,067 37,167 32,233
(i) McEwen Mining holds a 49-per-cent attributable interest in the San Jose
mine.
(ii) Gold equivalent ounces were calculated at a silver-to-gold ratio of
52:1 for 2012 and 2013. For the purpose of the 2014 forecast a ratio of 60:1
is being used.
Production for 2014 is forecast to be roughly in line with 2013, between 135,000 and 140,000 gold equivalent ounces (approximately 81,000 gold ounces and 3,225,000 silver ounces). The company expects production during the second half of 2014 to exceed the first half due to the expansion at El Gallo 1 scheduled for completion at the end of the first quarter and ramping up in the second quarter. Production costs in 2014 are forecast to be similar to 2013, with cash costs between $750 and $850 per gold equivalent ounces and all-in sustaining costs between $1,100 and $1,200 per gold equivalent ounce. The company projects to produce 170,000 gold equivalent ounces in 2015, excluding any potential production from El Gallo 2. The decision as to whether to proceed with El Gallo 2 is still pending and subject to a number of factors, including obtaining the required financing. Final production costs for 2013 will be reported in early March, 2014, with year-end financials.
Rob McEwen, chairman and chief owner, said: "In addition to executing on our organic growth plans, we continue to analyze M&A opportunities. Our ideal candidate would significantly increase our production, lower our cost profile, and have cash and free cash flow to facilitate the construction of El Gallo 2. Our geographic focus remains on the Americas.
"As the company's largest shareholder, I can say management is focused on growth that produces a higher share value and price. It is not growth just to be a larger company. The fact that I do not take a salary means that the only way I will make money is the same as all the shareholders do and that is through a higher share price."
McEwen sources of production
San Jose mine, Argentina (49 per cent)
McEwen Mining's attributable production from the San Jose mine during the fourth quarter of 2013 totalled 29,407 gold equivalent ounces (12,999 gold ounces and 853,225 silver ounces) and the full-year production totalled 108,326 gold equivalent ounces (48,425 gold ounces and 3,114,832 silver ounces). McEwen Mining's share of production from San Jose in 2014 is forecast at 97,500 gold equivalent ounces (44,000 gold ounces and 3.2 million silver ounces). Production costs will be released with year-end financials in early March.
SAN JOSE MINE OPERATING RESULTS
Fourth Third
Full year Full year quarter quarter
2013 2012 2013 2013
San Jose -- 100%(i)
Ore production (tonnes) 536,937 509,851 156,150 131,592
Average grade gold (g/t) 6.42 5.79 6.03 6.59
Average head silver (g/t) 425 417 399 446
Average gold recovery (%) 89.2 90.4 87.6 91.9
Average silver recovery (%) 86.7 87.0 87.0 89.5
Gold produced (ounces) 98,827 85,768 26,529 25,610
Silver produced (ounces) 6,356,801 5,952,534 1,741,275 1,689,237
Gold equivalent produced
(ounces)(ii) 221,073 200,240 60,015 58,095
McEwen Mining -- 49% share
Gold produced (ounces) 48,425 42,026 12,999 12,549
Silver produced (ounces) 3,114,832 2,916,742 853,225 827,726
Gold equivalent produced
(ounces)(ii) 108,326 98,117 29,407 28,467
(i) McEwen Mining holds a 49-per-cent attributable interest in the San
Jose mine.
(ii) Gold equivalent ounces are calculated at a ratio of 52:1 for 2012 and
2013.
El Gallo 1 mine, Mexico (100 per cent)
El Gallo 1 had a successful first full year of commercial production, producing 31,129 gold equivalent ounces (30,733 gold ounces and 20,635 silver ounces). During the fourth quarter, El Gallo 1 produced 7,760 gold equivalent ounces (7,687 gold ounces and 3,786 silver ounces). In 2014, El Gallo 1 is forecast to produce 37,500 gold equivalent ounces (37,000 gold ounces and 25,000 silver ounces). Production costs will be released with year-end financials in early March, 2014.
El Gallo 1 is currently being expanded from 3,000 to 4,500 tonnes per day. The expansion is scheduled to be completed by the end of the first quarter of 2014. The increased capacity, combined with higher grades as mining moves deeper in the pit, is expected to increase production to 75,000 gold equivalent ounces by 2015.
EL GALLO 1 MINE OPERATING RESULTS IN 2013
Fourth Third
Full year quarter quarter
2013 2013 2013
Ore production (tonnes) 1,260,641 323,863 289,382
Average grade gold (g/t) 1.22 1.17 1.31
Gold produced (ounces) 30,733 7,687 7,934
Silver produced (ounces) 20,635 3,786 4,868
Gold equivalent produced (ounces)(ii) 31,129 7,760 8,028
(ii) Gold equivalent ounces are calculated at a ratio of 52:1 for 2013.
Future mines
El Gallo 2, Mexico (100 per cent)
The environmental impact statement permit for El Gallo 2 was approved by the federal Mexican Secretariat of Environment and Natural Resources on Nov. 8, 2013. The final change of land use permit is being reviewed by the state government and a decision on this permit is expected during the first quarter of 2014. This final permit would allow construction and operations to commence at El Gallo 2 under a mill scenario. The company has not yet made a decision as to whether to proceed with El Gallo 2. This decision, will among other things, be determined by the timing of permits, the availability of capital and precious metals prices.
Gold Bar, Nevada (100 per cent)
McEwen Mining continues to advance the Gold Bar permitting process for construction and production. Gold Bar is forecast to produce 50,000 ounces gold per year for eight years at a cash cost of approximately $700 per ounce. The project is located primarily on public lands managed by the Bureau of Land Management. The BLM and the Nevada Division of Environmental Protection are the primary government agencies responsible for approving the permits that would allow the company to begin construction. The company expects to have the permits required for Gold Bar by the first quarter of 2015.
Technical 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. For additional information about the El Gallo complex see the technical report titled, "Resource Estimate for the El Gallo Complex, Sinaloa State, Mexico," dated Aug. 30, 2013, with an effective date of June 30, 2013, prepared by John Read, CPG, and Luke Willis, PGeo. Mr. Read and Mr. Willis are not considered independent of the company as defined by National Instrument 43-101. For additional information about the San Jose mine see the "Technical Report on San Jose Silver-Gold Mine, Santa Cruz, Argentina," dated Aug. 15, 2013, with an effective date of Dec. 31, 2012, prepared by Eugene Puritch, PEng, David Burga, PGeo, Alfred Hayden, PEng, James L. Pearson, PEng, and Fred H. Brown, PGeo, all of whom are qualified persons and all of whom are independent of McEwen Mining, each as defined by National Instrument 43-101. For 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 Feb. 24, 2012, with an effective date of Nov. 28, 2011, prepared by J. Pennington, CPG, MSc, Frank Daviess, MAusIMM, registered SME, Eric Olin, MBA, RM-SME, MSc, Herb Osborn, PE, Joanna Poeck, MMSA, BEng, Kent Hartley, PE mining, SME, BSc, Mike Levy, PE, PG, MSc, Evan Nikirk, PE, Mark Allan Willow, MSc, CEM, and Dr. Neal Rigby, CEng, MIMMM, PhD, all of whom are qualified persons and all of whom are independent of McEwen Mining, each as defined by National Instrument 43-101.
There are significant risks and uncertainty associated with construction, commencing production or changing production plans without a current feasibility, prefeasibility or scoping study. Although the subject of a 2012 feasibility study, the company does not have a current feasibility study on the El Gallo 2 project. As such, El Gallo 2 may ultimately be determined to lack one or more geological, engineering, legal, operating, economic, social, environmental and other relevant factors reasonably required to serve as the basis for a final decision to complete the expansion of all or part of this project.
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.
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