Ms. Sheena Scotland reports
MCEWEN MINING 2014 OPERATING AND FINANCIAL RESULTS
McEwen Mining Inc. has released its operating and financial results for fourth quarter and full-year 2014. The company had record production in the fourth quarter and full-year 2014, beating both production and cost guidance. The strong operational performance in the fourth quarter is projected to continue throughout 2015.
The attached results for 2014 and guidance for 2015 table provides fourth quarter and full-year production and cost per ounce results for 2014 and 2013, along with projections of such for 2015.
RESULTS FOR 2014 AND GUIDANCE FOR 2015
Guidance Full-year Full-year Q4 Q4
2015 2014 2013 2014 2013
Silver-to-gold ratio 75:1 60:1 60:1 60:1 60:1
Corporate total
Gold ounces produced 96,500 84,351 79,158 27,401 20,686
Silver ounces
produced 3,120,000 3,195,733 3,135,468 973,457 857,011
Gold equivalent
produced (oz) 138,100 137,612 131,416 43,625 34,970
Gold equivalent
total cash cost
(U.S.$/oz) $725 $817 $823 $709 $799
Gold equivalent co-
product all-in
sustaining cash
cost
(U.S.$/oz) $1,125 $1,198 $1,249 $1,063 $1,172
El Gallo 1 mine
El Gallo 1 mine
Average gold grade
mined (gpt) 2.60 1.40 1.31 2.20 1.27
Gold ounces produced 50,000 38,212 30,733 14,057 7,687
Silver ounces
produced 20,000 25,912 20,635 13,462 3,786
Gold equivalent
produced (oz) 50,200 38,643 31,077 14,281 7,750
Gold equivalent
total cash cost
(U.S.$/oz) $550 $875 $750 $711 $766
Gold equivalent co-
product all-in
sustaining cash
cost (U.S.$/oz) $750 $1,194 $1,166 $931 $1,073
San Jose mine --
49%
Gold ounces produced 46,500 46,139 48,425 13,344 12,999
Silver ounces
produced 3,100,000 3,169,821 3,114,833 959,995 853,225
Gold equivalent
produced (oz) 87,800 98,969 100,339 29,344 27,220
Gold equivalent
total cash cost
(U.S.$/oz) $825 $795 $848 $708 $809
Gold equivalent co-
product all-in
sustaining cash
cost
(U.S.$/oz) $1,225 $1,086 $1,144 $1,024 $1,098
Guidance for 2015
For 2015, the company forecasts production of 96,500 gold ounces and 3.12 million silver ounces. At a silver-to-gold ratio of 75 to 1, this equates to 138,100 gold equivalent ounces at all-in sustaining costs (including corporate general and administrative costs) of $1,125 per gold equivalent ounce.
At El Gallo 1, the company expects to produce 50,200 gold equivalent ounces at all-in sustaining costs of $750 per gold equivalent ounce. This significant improvement compared with 2014 is due to a much higher grade of 2.6 grams per tonne gold, reduced crusher throughput, and lower mining, blasting and cyanide costs.
At San Jose, the company's 49-per-cent share of production is forecast to be 46,500 gold ounces and 3.1 million silver ounces. At a silver-to-gold ratio of 75 to 1, this equates to 87,800 gold equivalent ounces at all-in sustaining costs of $1,225 per gold equivalent ounce. This is similar to 2014 results calculated at a silver-to-gold ratio of 60 to 1.
Development pipeline
The company will deliver updated feasibility studies for both El Gallo 2 and Gold Bar in the third quarter of 2015.
The El Gallo 2 project is fully permitted and ready to build. The updated feasibility study will examine the potential for utilizing used equipment and a different processing technique that increases recoveries while reducing retention times, consumables and the number of tanks. The company is targeting capital expenditures of $130-million, down from the $180-million in the 2012 feasibility study.
For Gold Bar, the 2011 prefeasibility study outlined an open-pit, heap leach operation utilizing two-stage crushing for average annual production of approximately 51,000 ounces of gold over an eight-year mine life at an estimated initial capital expenditure of $56-million. The 2015 feasibility will examine the potential for utilizing used equipment and run-of-mine ore processing.
Financials
Liquidity
At March 6, 2015, the company had $22-million in cash and precious metals and no bank debt. The cash on hand, projected to be generated in 2015, is sufficient to finance exploration, operations, and general and administrative expenses.
Annual results for 2014
The company performed a review of its property holdings, taking into account the current metal prices, the carrying values, its future exploration and development plans, and its treasury, and decided to focus on its most prospective assets. As a result, the company decided to significantly reduce the carrying value of its properties.
Although these impairments represent large accounting losses, they do not impact the cash flow of the company. The company reported a consolidated net loss of $312-million, or $1.05 per share, in 2014 compared with $148-million, or 50 cents per share, in 2013. The net loss for 2014 includes impairment charges of $228-million for Los Azules, $98-million for its Nevada properties, $27-million for its exploration properties in Santa Cruz and $21-million on its investment in the San Jose mine.
The $228-million impairment charge on Los Azules ($120-million in second quarter 2014 and $108-million in fourth quarter 2014) is the result of a decline in the observed market value of comparable copper transactions. The impairments to the Nevada and Argentine exploration properties both occurred in fourth quarter 2014 and are due to declines in observed market transactions and a decision by the company to rationalize its non-core property holdings. The impairment to its investment in the San Jose mine is due to decreases in long-term silver price assumptions and the value of the exploration properties surrounding the mine.
The adjusted net loss for 2014 was $33-million, or 11 cents per share. This compares with a net loss of $31-million, or 10 cents per share, for 2013. Adjusted net loss removes the impact of impairment charges, foreign currency gains or losses, and non-recurring items.
Fourth quarter and full-year 2014 conference call details
McEwen Mining will be hosting a conference call to discuss the fourth quarter and full-year 2014 results and project developments on March 10, 2015, at 4 p.m. EST.
Telephone:
Participant dial-in number(s): 647-788-4922/877-291-4570
Conference ID: 81336714
Replay:
Dial-in number(s): 416-621-4642/800-585-8367
Conference ID: 81336714
Technical information
This news release and the company and project information have 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.
El Gallo
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 NI 43-101.
Gold Bar
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 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.
San Jose
For additional information about the San Jose mine, see the technical report titled "Technical report on San Jose silver-gold mine, Santa Cruz, Argentina," dated Aug. 15, 2014, with an effective date of Dec. 31, 2013, prepared by Eugene Puritch, PEng; David Burga, PGeo; Alfred Hayden, PEng; James L. Pearson, PEng; Fred H. Brown, PGeo; James K. Duff, PGeo, all of whom are qualified persons and all of whom, except Mr. Duff, are independent of McEwen Mining, each as defined by NI 43-101.
The foregoing news release and technical report are available under the corporation's profile on SEDAR. There are significant risks and uncertainty associated with commencing production or changing production plans without a feasibility, prefeasibility or scoping study. The expansion to El Gallo 1 has not and may not be explored, developed or analyzed in sufficient detail to complete an independent feasibility or prefeasibility study. Further, the company does not have a current feasibility study on the El Gallo 2 project. As such, each of the foregoing 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 or construction of all or part of these projects.
Reliability of information regarding the San Jose mine
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, which is 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.
We seek Safe Harbor.
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