Q2/24 OPERATING AND FINANCIAL HIGHLIGHTS
Highlights for Q2/2024 are summarized below and discussed further under “Consolidated Performance”:
Corporate Developments
| ● | On April 16, 2024, the Company entered into a definitive agreement 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 expected to occur by late August 2024, and is subject to customary conditions, including receipt of necessary regulatory and shareholder approvals. |
| ● | On June 14, 2024, the Company completed a flow-through share issuance for gross proceeds of $21.9 million. The proceeds will be used for eligible expenditures at the Company’s site in Timmins, Canada, including for exploration drilling and access ramp development. The Company expects to fulfill obligations associated with the most recent tranche of flow-through shares by the end of 2025. |
| ● | On June 25, 2024, McEwen Copper announced a private placement financing for up to $70.0 million to advance the Los Azules copper project, including a commitment by McEwen Mining for a $14.0 million investment, and by Rob McEwen, Executive Chairman and Chief Owner, for a $5.0 million investment. Subsequent to quarter end, McEwen Copper issued 466,667 common shares to McEwen Mining for the aforementioned proceeds. McEwen Mining’s ownership of McEwen Copper is currently 48.3%. |
Operational Highlights
| ● | Consolidated production of 35,265 GEOs in Q2/24 was comparable to 35,658 GEOs in Q2/23. During H1/24, we produced 68,320 GEOs, including 27,605 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, supported by strong production performance from the Gold Bar and San José Mines. |
| ● | Consolidated sales of 35,182 GEOs in Q2/24 was comparable to 35,051 GEOs in Q2/23. During H1/24, we sold 69,589 GEOs, including 29,156 attributable GEOs from the San José mine(1). |
| ● | At the Fox Complex, we produced 8,297 GEOs during Q2/24, a 20% decrease compared to 10,351 GEOs produced during Q2/23. Limited access to available stopes due to development delays, resulting in lower mined material, was offset by the processing of our stockpile inventory to maintain mill throughput. During H1/24, we produced 15,800 GEOs at Fox Complex. While we engaged a mining contractor at the end of Q2/24 to address development, we expect annual production to be approximately 15-20% below the low end of annual guidance of 40,000 GEOs. |
| ● | At the Gold Bar Mine, we produced 12,297 GEOs during Q2/24, an increase of 56% compared to Q2/23. Increased mine production from our higher-grade Pick pit enabled higher GEO production from our expanded heap leach facilities. During H1/24, we produced 24,013 GEOs at the Gold Bar Mine and we remain on track to meet, and potentially exceed, annual production guidance of 40,000 to 43,000 GEOs. |
| ● | At the San José Mine, Q2/24 production decreased by 15% compared to Q2/23. San José mine produced 14,672 attributable GEOs(1) during Q2/24 compared to 17,358 attributable GEOs(1) during Q2/23. Production was primarily impacted adversely by lower gold grades processed, slightly offset by higher gold recoveries. With 27,605 attributable GEOs produced in H1/24, San José mine remains on track to meet annual production guidance of 50,000 to 60,000 attributable GEOs(1). |
| ● | We continued to advance our exploration program at Los Azules to feasibility. The Los Azules team concluded their 2023-2024 drilling program in June 2024 at the onset of winter in San Juan, Argentina, drilling over 230,800 feet (70,364 meters), sufficient to complete our planned feasibility study expected to be published in H1/25. |
| ● | We continued to meet safety expectations at our 100% owned operating mines. During H1/24, 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 $40.7 million, and consolidated working capital of $29.1 million as at June 30, 2024. (December 31, 2023 – $23.0 million and $22.7 million, respectively). |
| ● | Revenue of $47.5 million was reported in Q2/24 from the sale of 20,630 GEOs from our 100% owned operations at an average realized price(2) of $2,355 per GEO. This compares to Q2/23 revenue of $34.4 million from the sale of 18,172 GEOs from our 100% owned operations at a realized price of $1,951 per GEO. |
| ● | We reported gross profit of $10.8 million in Q2/24, compared to gross loss of $3.5 million in Q2/23 from our 100% owned operations. Higher revenues, driven by a 21% increase in realized gold prices and a 13% increase in GEOs sold drove improvements in gross profit. |
| ● | Net loss for Q2/24 was $13.0 million, or $0.26 per share, compared to a net loss of $21.6 million for Q2/23, or $0.46 per share. Our results improved primarily due to the improvement in gross margin, driven by higher average realized gold prices as discussed above. |
| ● | Adjusted EBITDA(2) for Q2/24 was $7.2 million, or $0.15 per share, compared to Q2/23 adjusted EBITDA of negative $5.8 million, or negative $0.12 per share. Adjusted EBITDA excludes the impact of McEwen Copper’s results and reflects the operating earnings of our properties, including the San José mine. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the Fox Complex in Q2/24 were $1,588 and $1,874, respectively. H1/24 cash costs and AISC per GEO sold were $1,572 and $1,886, respectively, as compared to annual guidance ranges of $1,225 to $1,325 and $1,450 to $1,550, respectively. Consistent with our outlook on production, we expect that meeting cost guidance will remain challenging. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the Gold Bar mine in Q2/24 were $1,532 and $1,634, respectively. H1/24 cash costs and AISC per GEO sold were $1,313 and $1,404, respectively, as compared to annual guidance of $1,450 to $1,550 and $1,650 to $1,750, respectively. Unit costs are expected to rise in the second half of 2024 as stripping costs increase to support production plans in 2025. |
| ● | Cash costs(2) and AISC(2) per GEO sold for the San José mine in Q2/24 were $1,624 and $2,032, respectively, as compared to full year guidance of $1,300 to $1,500 and $1,500 to $1,700, respectively. Mining and sustaining exploration costs increased in Q2/24 compared to plan, to address lower than expected mined grades. As planned production improves in H2/24, unit costs are expected to fall accordingly. |
Exploration and Mineral Resources and Reserves
| ● | McEwen Copper invested $37.5 million in exploration expenditures at their Los Azules copper project in Argentina during Q2/24 primarily to complete its 2023 – 2024 drilling program and associated activities. Including amounts spent by Minera Andes Inc. prior to 2012, and McEwen Mining prior to 2021, we have invested over $350.0 million in exploration expenditures to develop Los Azules as a world-class copper deposit. |
| ● | We incurred $5.0 million in exploration expenses at our other operations during Q2/24, primarily to advance our Grey Fox project at the Fox Complex and to advance on short and medium term exploration projects at the Gold Bar mine through additional drilling on our Cabin Creek and Gold Bar South pits, among other targets. |
(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 31.
