Mr. Rob McEwen of McEwen Mining reports

MCEWEN COPPER ANNOUNCES RESULTS OF AN UPDATED PRELIMINARY ECONOMIC ASSESSMENT (PEA) ON A COPPER LEACHING PHASE OF DEVELOPMENT AT THE LOS AZULES PROJECT IN SAN JUAN, ARGENTINA

McEwen Mining Inc. has provided the results of the updated preliminary economic assessment (PEA) on the Los Azules copper project in San Juan, Argentina. Los Azules is 100 per cent owned by McEwen Copper Inc., which is 52 per cent owned by McEwen Mining.

The 2023 PEA technical report is prepared in accordance with the requirements set forth by Canadian National Instrument 43-101 for the disclosure of material information, and is intended to meet the requirements of a preliminary economic assessment-level of study and disclosure as defined in the regulations and supporting reference documents. The effective date of the report is May 9, 2023. All currency shown in this report is expressed in Q1 2023 United States dollars unless otherwise noted.

This study is preliminary in nature and includes 26 per cent inferred mineral resources in the conceptual mine plan. Inferred mineral resources are considered too speculative geologically and in other technical aspects to enable them to be categorized as mineral reserves under the standards set forth in NI 43-101. There is no certainty that the estimates in this PEA will be realized.

Study contributors

The 2023 PEA technical report was prepared by Samuel Engineering Inc., with contributions from Knight Piesold Consulting, Stantec Consulting International Ltd., McLennan Design, Whittle Consulting Pty. Ltd. and SRK Consulting U.K. Ltd., under the supervision of David Tyler, McEwen Copper project director. The 2023 PEA technical report has been filed on SEDAR and on the company's website.

Two thousand twenty-three PEA versus 2017 PEA

The base case development strategy selected in the 2023 PEA is distinctly different from that presented in the prior PEA published in 2017. In 2017, the strategy was to construct a mine with a conventional mill and flotation concentrator producing a concentrate for export to international smelters. The 2023 PEA proposes a heap leach (leach) project using solvent extraction-electrowinning (SX/EW) to produce copper cathodes (LME Grade A) for sale in Argentina or international markets. There are three principal reasons why the implementation strategy was changed to leach in the 2023 PEA:

1. Environmental footprint: Fresh water consumption is reduced by approximately 75 per cent (150 litres per second versus 600 L/s). Electricity consumption is reduced by approximately 75 per cent (57 megawatts versus 230 MW). GHG (greenhouse gas) emissions are reduced by approximately 57 per cent (670 carbon dioxide equivalent per tonne copper (Cu) versus 1,560 eCO2/t Cu, Scope 1 and 2), with paths to further reductions by implementing new technologies, with the goal of reaching net-zero carbon by 2038, with some offsets. Los Azules copper cathodes will thus be attractive to end-users seeking to measurably reduce their upstream environmental impacts.
2. Reduced permitting risk: When proposing any mega-project development, it is vital to understand the local standards and sensitivities around permitting. The project uses technology (heap leach) that is in operation in San Juan today. It also eliminates tailings and tailings dams, conserves scarce water resources, and reduces the overall complexity of the mine, optimizing the permitting process.
3. Producing cathodes: The leach process produces LME Grade A copper cathodes, which can be directly used in industry, including within Argentina, reducing export taxes. This eliminates reliance on third party foreign smelters for the processing of concentrates into refined copper products. It also eliminates significant GHG emissions associated with transportation, and pollution associated with smelting. Counterparty and pricing risks are also reduced.

McEwen views the progress made with the 2023 PEA toward reducing its environmental footprint, and greater environmental and social stewardship, sets the project apart from other potential mine developments, which appropriately justifies certain economic trade-offs. The primary trade-offs to achieve these environmental benefits is lower overall copper recovery, slightly higher unit costs, and less immediate cash flow due to extended leach cycles. Nevertheless, the leach project remains very robust. Furthermore, McEwen believes that some of these drawbacks can be mitigated by implementing developing technologies such as Nuton, discussed below.

Property description

The Los Azules deposit is a classic Andean-style porphyry copper deposit. The large hydrothermal alteration system is at least five kilometres long and four km wide, and is elongated in a north-northwest direction along a major structural corridor. The Los Azules deposit area is approximately four km long by 2.2 km wide and lies within the alteration zone. The limits of the mineralization along strike to the north and at depth have not yet been defined. Primary or hypogene copper mineralization extends to at least 1,000 metres (m) below the surface. Near-surface, leached primary sulphides (mainly pyrite and chalcopyrite) were redeposited below the water table in a subhorizontal zone of supergene enrichment as secondary chalcocite and covellite. Hypogene bornite appears at deeper levels together with chalcopyrite. Gold, silver and molybdenum are present in small amounts, but copper is the economic driver at Los Azules.

A new vision and approach

The company developed regenerative guiding principles to reframe the approach to sustainable innovation and set forth high-reaching goals that explore all facets of the mining processes considered for Los Azules. The project development seeks to significantly reduce the environmental footprint of mining operations and their associated GHG emissions by integrating the latest renewable and environmentally responsible technologies and processes. The project aims to obtain 100 per cent of its energy from renewable sources (wind, hydro and solar) in a combination of offsite and on-site installations. The project is also seeking to have long-term net positive impacts on the greater Andean ecosystem, local flora and fauna, the lives of miners, and of the other citizens of nearby communities, while contributing positively to the local and national economy of Argentina. Refer to the full 2023 PEA technical report for more information about the company's regenerative approach.

Metal price assumption

The copper (Cu) price used in the 2023 PEA was $3.75 per pound (lb) (except for the mineral resource estimate), in line with analysts' consensus projections for long-term copper prices that range between $3.25 and $4.25 per pound, with a mean price of $3.75 per pound.

Study highlights

This 2023 PEA development strategy begins with processing of resources associated with the oxide and supergene copper mineralization in the near-surface portion of the deposit using heap leaching methods. This approach results in low average C1 costs of $1.07 per lb Cu (88 cents per lb in the first eight years) and an attractive 3.2-year payback period. Copper cathode production during the first five years of operation averages 401 million lb per year (182,000 tpa (tonnes per annum)), and average over the 27-year LOM is 322 million lb per year (146,000 tpa).

A nominal copper cathode production capacity of 385 million lb per year (175,000 tpa) is met or exceeded during the first 11 years of mining and was selected as the base case, with a smaller alternative case presented at 275 million lb per year (125,000 tpa) of copper cathodes. The 2023 PEA financial model does not include potential future development phases focused on primary copper mineralization found beneath the supergene copper layer, but some of these opportunities are discussed in the report, including the potential of deploying Nuton technologies.

The processing facility will function through to the completion of mining in year 23, with stockpile reprocessing and residual leaching operations to year 27. Mining operations ramp up over the proposed mine life from approximately 80 million total tonnes per year to 150 million tonnes per year through the life of the project as copper grades decrease, and material movements increase.

Summary results for the base case and alternative case are provided in the table entitled "Summary results."

Sensitivity analysis

The base case project economics are reasonably robust (more than 15-per-cent posttax IRR (internal rate of return)) at a copper price above $3.00 per pound, and are similarly resistant to an increase in LOM capital expenditure of up to 30 per cent and an increase in operating expenses of up to 60 per cent. The table entitled "Base case (175 ktpa (thousand tpa)) copper price sensitivity" shows the sensitivity of the base case project economics to the copper price (plus/minus 20 per cent) on a posttax basis. The project NPV (net present value) at an 8-per-cent discount is break-even at a copper price of $2.34 per pound.

The table entitled "Base case (175 ktpa) initial and sustaining capex [capital expenditure] sensitivity" shows the sensitivity of the base case project economics to initial and sustaining capital expenditure escalation on a posttax basis.

The table entitled "Base case (175 ktpa) opex [operating expenditure] sensitivity" shows the sensitivity of the base case project economics to operating expenditure escalation on a posttax basis.

Capital costs estimates

The project includes the development of an open-pit mine with multistage crushing and screening, a heap leach pad, and a copper solvent extraction-electrowinning (SX/EW) facility with a nominal production capacity of 175,000 tpa copper cathodes. There is also a sulphuric acid plant and other associated infrastructure to support the operations. Initial capital infrastructure for the base case includes the following facilities:

• Mine development and associated infrastructure;
• Coarse rock storage and handling (crushing, conveying, agglomeration);
• Heap leach pads and conveyor stacking systems;
• SX/EW facility;
• Sulphuric acid plant;
• On-site utilities and ancillary facilities, including a construction camp;
• Offsite infrastructure: power transmission line (outsourced), access roads and permanent camp.

The project initial capital costs are based on budgetary quotes for major equipment, recent in-house cost information and installation factors, and regional contractor inputs and facilities obtained between Q4 2022 and Q1 2023. The capital costs for the project are summarized in the table entitled "Initial capital costs by case," and should be viewed with the level of accuracy expected for a preliminary analysis.

The approximate construction cost of the 132 kV (kilovolt) power supply line to site is $155-million and has not been included in the capital estimate because it is assumed that YPF Luz, a large Argentinean power utility company, will be constructing the line at their expenses, pursuant to a long-term renewable power purchase agreement.

Operating costs estimates

The table entitled "LOM cash costs" summarizes the LOM project operating costs per tonne of material processed and per pound of copper produced.

Royalties and taxes

The 2023 PEA includes all government and private royalties on production, export taxes, as well as income taxes and banking taxes. Royalty calculations vary, however royalties and retentions based on net smelter return (NSR) total approximately 9.2 per cent. In the financial model, it was assumed that 10,000 tonnes per year of copper cathodes are sold within Argentina and consequently they are not subject to export taxes. Ninety-five per cent of VAT is assumed to be recoverable after two years. A 0.2-per-cent portion of the bank tax is recoverable in the following year.

Nuton opportunity

Nuton LLC is a copper heap leaching technology venture of Rio Tinto that became a strategic partner in 2022. Its Nuton suite of proprietary technologies provide opportunities to leach both primary and secondary copper sulphides, providing significant opportunity to optimize the mine plan, and the overall mining and processing operations. In addition, Nuton provides significant other benefits, such as lower overall energy consumption, allowing earlier conversion to renewable energy sources, and lower water consumption than conventional sulphide mineralization treatment processes.

Based on preliminary scoping testing, Nuton technologies offer the potential for copper recoveries of more than 80 per cent from predominantly chalcopyrite, depending on the specific mineralogy makeup of the mineral resource. At Los Azules, Nuton has the potential to economically process the large primary sulphide copper resource as an alternative to a concentrator, with low incremental capital following the oxide and supergene leach, no tailings requirement, and a smaller environmental footprint. Producing copper cathode with Nuton on-site also has the advantage of simplifying outbound logistics for copper concentrates, and offers a finished product to the domestic and international market.

The outcomes modelled using the Nuton proprietary computational fluid dynamics model are very encouraging and indicate that unoptimized copper recovery to cathode from primary material should range from 73 per cent to 79 per cent. Furthermore, Nuton recovery from secondary material is high, ranging from 80 per cent to 86 per cent. This could provide a significant opportunity to optimize the mine plan and the need for selective mining, as simultaneous stacking of both secondary and primary mineralization will not impact on the copper recovery from either material type. Based on the current resource estimate, this could have a significant positive impact on the expected life of the mine, without significantly increasing the initial capital investment required.

Nuton is currently validating modelled data with column leach tests. Column leaching of the composite samples at its facilities is under way and expected to be completed in Q1 2024. Validation of the modelled results could be obtained much sooner, depending on the trends provided by the actual column leach results.

McEwen Copper does not currently have a commercial arrangement with Nuton that enables it to deploy its technologies at Los Azules, and there is no guarantee that such an agreement will come to fruition, however McEwen Copper and Nuton intend to work in good faith toward such an arrangement. The results in the table entitled "Nuton opportunity economic summaries" assume that Nuton technologies are implemented without including costs associated with technology licensing or some other commercial cost structure.

Project development schedule

The conceptual project development timeline, based on regional contractor inputs, and long-lead equipment and materials delivery assumptions provided by vendors, assumes that the feasibility study work is completed by the end of 2024, finalization of the environmental permitting process (IIA/DIA) and other necessary permits to begin work are completed during the proposed feasibility study, and preliminary time frame and financing are in place to achieve the scheduled milestones. Following this conceptual schedule, the SX/EW plant start-up could occur in Q1 2029.

McEwen Copper capital structure

McEwen Copper is a Canadian-based private company with 28,885,000 common shares issued and outstanding. Its current shareholders are McEwen Mining Inc., 51.9 per cent, Stellantis, 14.2 per cent, Nuton, 14.2 per cent, Rob McEwen, 13.9 per cent, Victor Smorgon Group, 3.5 per cent, and other management and shareholders, 2.3 per cent.

Updated mineral resource estimate

The database for resource estimation has a cut-off date of Dec. 31, 2022. An additional 22,252 metres of drilling (mostly infill) from 49 holes, completed in 2023 to date, were not included in the resource estimate.

The mineral resources have been classified according to guidelines and logic summarized within the Canadian Institute of Mining, Metallurgy and Petroleum (CIM 2019) definitions referred to in National Instrument 43-101. Resources were classified as indicated or inferred by considering geology, sampling and grade estimation aspects of the model. For geology, consideration was given to the confidence in the interpretation of the lithologic domain boundaries and geometry. For sampling, consideration was given to the number and spacing of composites, the orientation of drilling and the reliability of sampling. For the estimation results, consideration was given to the confidence with which grades were estimated as measured by the quality of the match between the grades of the data and the model.

Mineral resources are determined using an NSR (net smelter return) cut-off value to cover the processing cost for each recovery methodology. For supergene and primary material using sulphuric acid leaching and SX/EW recovery the cut-off was $2.74/tonne. The supergene and primary material can be treated in a float mill with NSR cut-offs of $5.46/tonne and $5.43/tonne, respectively. NSR values are based on a copper price of $4/lb, gold at $1,700/oz and silver at $20/ounce, where applicable. Variable pit slopes between 30 degrees and 42 degrees were applied, depending on depth.

The current database is adequate for the preparation of a long-range model that serves as the basis for the 2023 PEA. The extent of mineralization along strike exceeds four kilometres and the distance across strike is approximately 2.2 kilometres. The deposit is open at depth and to the north. Over the approximately 2.5 km strike length where mineralization is strongest, the average drill spacing is approximately 150 m to 200 m, but there are localized areas where drilling is on 100 m spacing. The assay database includes 56,528 m of assay interval data from 162 drill holes. Resource estimation work was performed using Datamine Studio modelling software.

Resources disclosed in the table entitled "Mineral resource estimate" are reported in two categories related to processing amenability:

1. Materials that are suited for processing in a commercially proven conventional, ambient conditions, copper bio-leaching scheme (leach); and
2. Materials that are better suited to processing either in a more advanced bio-leaching scheme such as Nuton technologies or traditional milling/concentrator approach (mill or leach-plus).

Qualified person

Technical aspects of this news release, excluding mineral resource disclosure, have been reviewed and verified by James L. Sorensen, FAusIMM (registration No. 221286), with Samuel Engineering, who is a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

Disclosure related to the updated Los Azules mineral resource estimate has been reviewed and approved by Allan Schappert, CPG No. 11758, SME-RM, with Stantec Consulting, who is a qualified person as defined by National Instrument 43-101.

About McEwen Mining Inc.

McEwen Mining is a gold and silver producer with operations in Nevada, Canada, Mexico and Argentina. In addition, it owns approximately 52 per cent of McEwen Copper, which owns the large, advanced-stage Los Azules copper project in Argentina. The company's goal is to improve the productivity and life of its assets with the objective of increasing its share price and providing a yield. Mr. McEwen, chairman and chief owner, has personal investment in the company of $220-million (U.S.). His annual salary is $1 (U.S.).

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