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Enter Symbol
or Name
USA
CA



McEwen Mining Inc
Symbol MUX
Shares Issued 278,239,338
Close 2016-08-04 C$ 5.85
Market Cap C$ 1,627,700,127
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McEwen Mining earns $8.4-million (U.S.) in Q2 2016

2016-08-04 06:47 ET - News Release

Mr. Rob McEwen reports

MCEWEN MINING Q2 2016 OPERATING & FINANCIAL RESULTS

McEwen Mining Inc. had quarterly production of 39,555 gold-equivalent ounces, which accounts for 27,888 ounces gold and 875,006 ounces silver (all amounts are in U.S. dollars). The company reported net income of $8.4-million and $21.3-million, as well as earnings from mining operations of $19.3-million and $38.8-million for the three and six months ended June 30, 2016, respectively.

The company generated $4.8-million and $19.5-million of net cash flow from operations for the three and six months ended June 30, 2016, respectively. During the quarter, the company purchased a royalty on the El Gallo property for $5.3-million which reduced cash flow but increased future leverage to higher gold and silver prices.

The company ended the second quarter of 2016 with liquid assets of $55.7-million composed of cash of $36.7-million, precious metals of $14.3-million and marketable securities of $4.7-million. The company has no debt. As at Aug. 2, 2016, the company had liquid assets of $51.8-million.

The tables provide selected operating and financial results for Q2, comparative results for Q2 2015, and production and cost guidance for full-year 2016. For the company's Form 10-Q financial statements and management's discussion and analysis, please refer to EDGAR.

                                   Q2 COMPARATIVE FINANCIAL RESULTS
 
                                                Q2 2016   Q2 2015    Year to date      Guidance 2016
Corporate total
Gold ounces produced                             27,888    28,483          56,863             99,500
Silver ounces produced                          875,006   801,119       1,548,773          3,337,000
Gold-equivalent ounces produced                  39,555    39,164          77,513            144,000
Gold-equivalent total cash cost ($/oz)             $719      $713            $663               $780
Gold-equivalent co-product AISC ($/oz)             $942    $1,048            $873               $935
Gold-equivalent all-in cost ($/oz)               $1,201    $1,151          $1,046                 $-
El Gallo mine -- Mexico
Gold ounces produced                             15,536    17,208          35,551             54,500
Silver ounces produced                            7,815     8,775          14,263             37,000
Gold-equivalent ounces produced                  15,640    17,325          35,741             55,000
Gold-equivalent total cash cost ($/oz)             $465      $351            $445               $780
Gold-equivalent co-product AISC ($/oz)             $495      $546            $517               $840
San Jose mine -- Argentina
Gold ounces produced                             12,352    11,275          21,312             45,000
Silver ounces produced                          867,191   792,344       1,534,510          3,300,000
Gold-equivalent ounces produced                  23,915    21,839          41,772             89,000
Gold-equivalent total cash cost ($/oz)             $849      $933           $ 806               $780
Gold-equivalent co-product AISC ($/oz)           $1,075    $1,215          $1,006               $990
    
Silver production is presented as gold-equivalent. Gold-equivalent calculations are based on 
prevailing spot prices at the beginning of the year. The gold-to-silver ratio used for 2015 and 2016 
is 75 to 1.

          Q2 COMPARATIVE PRODUCTION AND FINANCIAL RESULTS
  (In millions of U.S. dollars, except per share and where noted)

                                                   Q2 2016   Q2 2015

Gold-equivalent ounces sold                         34,373    36,016
El Gallo mine                                       11,593    13,577
San Jose mine                                       22,780    22,439
Average realized prices 
Gold ($/oz)                                         $1,267    $1,172
Silver ($/oz)                                       $18.08    $15.34
Earnings from mining operations                       19.3      13.4
Earnings from mine operations per share               0.07      0.05
Cash flow from operations                              4.8       0.4
Cash flow from operations per share                   0.02      0.00
Net income (loss)                                      8.4     (14.1)
Net income (loss) per share                           0.03     (0.05)

Operating and financial highlights

Production costs

Consolidated total cash costs, all-in sustaining costs and all-in costs per gold-equivalent ounce in Q2 were $719, $942 and $1,201, respectively. At the El Gallo mine, total cash costs and AISCs were $465 and $495 per gold-equivalent ounce, respectively. At the San Jose mine, total cash costs and AISCs were $849 and $1,075 per gold-equivalent ounce, respectively. The all-in costs per gold-equivalent ounce in Q2 include the $5.5-million purchase for the royalty on the El Gallo properties plus an exploration property in Mexico acquired in May, 2016. These additions were partly offset by the $1.2-million decrease in exploration expenses as well as lower property holding costs incurred during 2016.

Production

Production in Q2 totalled 39,555 gold-equivalent ounces, which include 15,640 gold-equivalent ounces from the El Gallo mine, and 12,352 gold ounces and 867,191 silver ounces attributable to the company from its 49-per-cent interest in the San Jose mine.

Ounces sold

Sales in Q2 totalled 34,373 gold-equivalent ounces, accounting for 23,179 gold ounces and 839,602 silver ounces.

Earnings from mining operations

Earnings from mining operations were $19.3-million or seven cents per share for Q2, compared with earnings of $13.4-million or five cents per share for the six months ended June 30, 2015.

Cash flow

Net cash provided by operations was $4.8-million or two cents per share for Q2, compared with net cash flow generated of $400,000 or nil per share in Q2 2015.

Net income (loss)

Consolidated net income was $8.4-million or three cents per share for Q2, compared with a net loss of $14.1-million or five cents per share loss in Q2 2015. This is a result of an increase in net income from the company's investment in Minera Santa Cruz (MSC) and lower all-in sustaining costs at the El Gallo mine compared with Q2 2015.

Average realized prices

The average realized prices of gold and silver sold during Q2 were $1,267 and $18.08 per ounce, respectively.

Production and cost guidance

The company's 2016 production guidance remains 99,500 gold ounces and 3.3 million silver ounces, or approximately 144,000 gold-equivalent ounces, at total cash costs and AISCs of $780 and $935 per gold-equivalent ounce, respectively.

Treasury

The company ended the second quarter of 2016 with liquid assets of $55.7-million composed of cash of $36.7-million, precious metals of $14.3-million and marketable securities of $4.7-million. The company has no debt. As at Aug. 2, 2016, the company had liquid assets of $51.8-million.

Return of capital (yield)

The next semi-annual return of capital instalment of 0.5 cent per share will be distributed to shareholders of record on Aug. 24, 2016. The distribution will be paid on Aug. 29, 2016.

Redemption of exchangeable shares

At the annual meeting held on June 6, 2016, shareholders of the outstanding shares of McEwen Mining -- Minera Andes Acquisition Corp. voted to allow the early redemption of its shares. On Aug. 22, 2016, the company will cause each remaining exchangeable share to be redeemed in exchange for one common share of McEwen Mining. Notice has been mailed to holders of exchangeable shares. Holders of exchangeable shares may continue to exercise their normal retraction rights at any time before Aug. 22, 2016.

El Gallo mine, Mexico (100 per cent)

The El Gallo mine delivered production results in line with guidance accounting for 15,640 gold-equivalent ounces, compared with 17,325 gold-equivalent ounces during the same period in 2015. Production in Q2 was lower than the prior quarter due to lower ore grades, as the company previously forecasted (2.3 grams per tonne in Q2 2016 versus 3.6 g/t in first quarter 2016). This decrease in the grade is the result of moving from the higher-grade Samaniego pit to the lower-grade Lupita pit. The company's full-year guidance for El Gallo remains 55,000 gold-equivalent ounces out of which 35,741 ounces have been produced in the six months ended June 30, 2016. As such, the rate of production will be reduced in the second half of the year.

For 2016, the company has budgeted $3.7-million for sustaining costs and capital expenditures, and $2.9-million for exploration activities. During Q2, the company spent $1.8-million at the El Gallo mine, which mostly related to an expansion of the heap-leach pad that was completed during the second quarter of 2016, and $800,000 in exploration activities aligned with the company's plan.

San Jose mine, Argentina (49 per cent)

The company's attributable production from San Jose in Q2 was 12,352 gold ounces and 867,191 silver ounces for a total of 23,915 gold-equivalent ounces. Compared with Q2 2015, gold production was up 10 per cent and silver production was up 9 per cent. Tax reforms, including the elimination of export tax on dore and concentrate, and other macroeconomic developments in Argentina, as well as the devaluation of the Argentine peso, have resulted in a significant improvement of operations and cash flows at San Jose. As a result, the company received $2.8-million in dividends from MSC in Q2 and it has received $5.4-million in dividends year to date against an original dividend forecast of $7.5-million for 2016 (in comparison, the company received $500,000 in dividends for all of 2015). The company expects to receive additional dividends throughout the year provided gold and silver prices remain at current or higher levels.

The 2016 exploration budget has been increased from $4.5-million to $6.5-million. This is the first time in several years that a significant budget has been allocated to exploration.

Gold Bar advanced-stage project, Nevada, United States (100 per cent)

As outlined in the feasibility study dated Sept. 19, 2015, the Gold Bar asset, the upside case for Gold Bar at $1,300/ounce gold provides improved economics over the original base case of $1,150/ounce as outlined in the table.

                             SENSITIVITY ANALYSIS ON GOLD BAR
 
                                    Base case: $1,150/oz gold   Upside case: $1,300/oz gold

IRR                                                       20%                           36%
NPV at 5-per-cent discount rate                   $30-million                   $67-million
Average annual cash flow                        $22.5-million                 $31.5-million
Average operational profit margin                     $395/oz                       $537/oz
Payback period                                        3 years                       2 years

The company estimates that it will receive a permitting decision from the Bureau of Land Management during the first quarter of 2017. This final permit, once received, will allow the company to begin construction of the mine, which it has estimated to take 12 months. Production is estimated to begin the following year in 2018. For 2016, the company has budgeted approximately $4.7-million to be spent toward advancing the project closer to the production stage, of which $1.3-million has been spent during the six-month period ended June 30, 2016. Mine permitting and engineering activities continue to advance at Gold Bar.

El Gallo silver advanced-stage project, Mexico (100 per cent)

During the quarter, the company completed a positive internal economic scoping study on a new development plan for the El Gallo silver project. Given prevailing silver prices, the company is undertaking a new feasibility study on the project expected to be completed later this year.

Los Azules exploration project, Argentina (100 per cent)

The company is preparing an updated preliminary economic assessment for Los Azules. The company believes the recent policy shifts in Argentina such as the elimination of export taxes, the devaluation of the peso and the lifting of certain import restrictions on equipment will improve the economics of Los Azules over the previously published PEA completed in 2013. For 2016, the company has budgeted $1.0-million to advance the project and will commence a drill program in early 2017.

Q2 2016 conference call details

McEwen Mining will be hosting a conference call to discuss the Q2 2016 results and project developments on Thursday, Aug. 4, 2016, at 11 a.m. ET.

Webcast

A webcast will be available on-line.

Telephone

Participant dial-in numbers:  877-291-4570 (North America)/647-788-4922 (international)

Conference ID:  61127273

Replay

Dial-in numbers:  800-585-8367 (North America)/416-621-4642 (international)

Conference ID:  61127273

Availability:  Aug. 4, 2016, at 2 p.m. ET to Aug. 11, 2016, at 11:59 p.m. ET

Technical information

The technical contents of this news release have been reviewed and approved by Dr. Nathan M. Stubina, PhD, PEng, FCIM, managing director, a qualified person as defined by National Instrument 43-101.

We seek Safe Harbor.

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