Q1/24 OPERATING AND FINANCIAL HIGHLIGHTS
Highlights for the quarter ended March 31, 2024, are summarized below, and discussed further under “Consolidated Performance”:
Corporate Developments
| ● | On April 16, 2024, the Company entered into a definitive agreement and plan of merger to acquire all of the issued and outstanding shares of Timberline Resources Corporation (“Timberline”). Timberline shareholders will have the right to receive 0.01 of a share of the Company’s common stock for each share of Timberline’s common stock. At closing, the Company expects to issue approximately 1.8 million shares. The closing of the transaction is subject to customary conditions, including receipt of necessary regulatory and stock exchange approvals and approval from Timberline’s shareholders holding a majority of its outstanding shares. |
Operational Highlights
| ● | Consolidated GEO production in Q1/24 increased by 8% compared to Q1/23. We produced 33,037 GEOs in Q1/24 which included 12,934 attributable GEOs from the San José mine(1) and reiterate our consolidated production guidance of 130,000 to 145,000 GEOs for full year 2024. |
| ● | Consolidated GEOs sold increased by 13% increase compared to Q1/23. We sold 34,407 GEOs in Q1/24, including 14,603 attributable GEOs from the San José mine(1). This compares to 30,390 GEOs sold in Q1/23, including 11,190 attributable GEOs from the San José mine(1). |
| ● | Progress towards growth continued at Fox Complex. We produced 7,486 GEOs during Q1/24, slightly lower than planned due to lower than expected mined grades. These impacts were somewhat mitigated by the ability to crush and process our long-term low-grade stockpile. Our operations revised their mine plans and subsequent to quarter end, we have begun to see higher grades and gold production from the Froome mine. As a result, we reiterate production guidance at the Fox Complex of 40,000 to 42,000 GEOs for full year 2024. |
| ● | At the Gold Bar Mine, we produced 11,716 GEOs during Q1/24, an increase of 82% compared to Q1/23. Strong production was a result of the improved weather conditions in Q1/24 compared to Q1/23; we were not impacted by flooding conditions during this season. Strong production was underpinned by our contractor and crushing efficiencies achieved during late 2023. Gold Bar mine remains on track to meet guidance of 40,000 to 43,000 GEOs for full year 2024. |
| ● | At the San José Mine, Q1/24 production increased by 15% compared to Q1/23 due to an improvement in average grade processed. San José mine produced 12,934 attributable GEOs during Q1/24, exceeding their year-to-date plan. Future quarters through 2024 are expected to achieve higher production; the first quarter of each year is impacted by production seasonality due to annual maintenance efforts. We reiterate full year guidance of 50,000 to 60,000 attributable GEOs(1). |
| ● | Los Azules continues to advance its exploration program to feasibility. As of March 31, 2024, we drilled over 185,000 feet (56,528 meters) during the 2023-2024 exploration season with no lost-time incidents. Results from assays to date include significant copper values over wide intercepts, and confirm the resource block model used in the June 2023 Preliminary Economic Assessment (“PEA”). The objectives of this season also include metallurgical, geotechnical, and hydrogeological drilling, in addition to condemnation and stability testing to support the completion of a feasibility study in early 2025. |
| ● | We continue to meet safety expectations at our 100% owned operating mines. During Q1/24, we did not have any lost-time incidents at our Fox Complex and Gold Bar Mine. |
Financial Highlights
| ● | We reported consolidated cash and cash equivalents of $22.0 million, and consolidated working capital of $14.1 million as at March 31, 2024. (December 31, 2023 – $23.0 million and $22.7 million, respectively). |
| ● | Revenues of $41.2 million were reported in Q1/24 from the sale of 19,805 GEOs from our 100% owned operations at an average realized price(2) of $2,131 per GEO. This compares to Q1/23 revenues of $34.8 million from the sale of 19,193 GEOs from our 100% owned operations at a realized price of $1,856 per GEO. |
| ● | We reported gross profit of $6.0 million in Q1/24, compared to gross profit of $4.4 million in Q1/23 from our 100% owned operations. Higher revenues, driven by a 15% increase in realized gold prices and a 3% increase in GEOs sold drove improvements in gross profit and cash gross profit. |
| ● | Net loss for Q1/24 was $20.4 million, or $0.41 per share, compared to Q1/23 net loss of $43.1 million, or $0.91 per share. This improvement was driven by $31.1 million lower advanced project expenditures at Los Azules, the results of which were deconsolidated beginning in Q4/23, and offset by our improved gross margin as described above and $18.0 million of losses in McEwen Copper Inc., representing our portion of exploration costs. |
| ● | Adjusted EBITDA(2) for Q1/24 was $6.3 million, or $0.13 per share, compared to Q1/23 adjusted EBITDA of negative $2.9 million, or negative $0.06 per share. Adjusted EBITDA excludes the exploration expenditure impact of McEwen Copper Inc. and reflects the operating earnings of our gold properties, including the San José mine. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the Fox Complex in Q1/24 were $1,555 and $1,928, respectively, as compared to full-year guidance of $1,225-1,325 and $1,450-1,550, respectively. As a result of the lower mined grades described above, our unit costs were impacted by low processed grades, including the consumption of lower grade stockpiles, negatively impacting gold production and unit costs. As we improve gold production through the remainder of 2024, we expect to achieve full year cost guidance accordingly. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the Gold Bar mine in Q1/24 were $1,088 and $1,201, respectively, which was significantly lower compared to full year guidance of $1,450-1,550 and $1,650-1,750, respectively. As operations move towards high strip ratio mining areas in the second half of 2024, we expect to see our unit costs increase. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the San José mine in Q1/24 were $1,607 and $1,947, respectively, as compared to full year guidance of $1,300-1,500 and $1,500-1,700, respectively. While San José exceeded its production and cost targets in Q1/24, the first quarter traditionally has lower production due to the timing of annual maintenance programs. Through 2024, unit costs are expected to lower to meet guidance as production increases. |
Exploration and Mineral Resources and Reserves
| ● | McEwen Copper invested $48.2 million in their Los Azules copper project in Argentina during Q1/24 primarily to support its extensive drilling program and associated activities, as described above. To date, McEwen Copper has invested over $230 million in exploration expenditures to advance the Los Azules project to feasibility, and based on our last financing in Q4/23, has an implied market value of over $800 million. |
| ● | We incurred $3.9 million in exploration expenses at our other operations, primarily to advance our Stock and Grey Fox projects at the Fox Complex, and de-risking our mine plan at the Gold Bar mine through additional drilling in our Cabin Creek pit. |
| (1) | At our 49% attributable interest. |
(2) As used here and elsewhere in this report, this is a Non-GAAP financial performance measure. See “Non-GAAP Financial Performance Measures” beginning on page 30.
