Q3/24 OPERATING AND FINANCIAL HIGHLIGHTS
Highlights for Q3/2024 are summarized below and discussed further under “Consolidated Performance”:
Corporate Developments
| ● | On July 12, 2024, McEwen Copper closed an initial tranche of a private placement financing for up to $70.0 million to advance the Los Azules copper project to feasibility, consisting of an investment by McEwen Mining for $14.0 million, and by Rob McEwen, Chairman and Chief Owner, for $5.0 million. McEwen Copper issued 466,667 common shares to McEwen Mining for the aforementioned proceeds. As of September 30, 2024, the Company owned a 48.3% interest in McEwen Copper. Subsequent to quarter end, McEwen Copper closed a second tranche of the offering for $37.0M, including $35.0M from Nuton LLC, a Rio Tinto Venture, and the Company’s ownership interest in McEwen Copper decreased from 48.3% to 46.4%. |
| ● | On August 19, 2024, the Company successfully completed its acquisition of all of the issued and outstanding shares of Timberline Resources Corporation (“Timberline”) by way of a merger between Timberline and a wholly owned subsidiary of the Company. As a result, the shares of Timberline ceased trading and were delisted from the TSX Venture Exchange and the OTCQB. This transaction augments McEwen’s existing portfolio of development and exploration projects in Nevada, including properties adjacent to our existing Gold Bar mine with near-term development potential. |
Operational Highlights
| ● | Consolidated production of 35,180 GEOs in Q3/24 decreased by 9% compared to 38,613 GEOs in Q3/23. During 9M/24, we produced 103,445 GEOs, including 41,290 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 the production performance from the Gold Bar mine. |
| ● | Consolidated sales of 34,435 GEOs in Q3/24 decreased by 2% compared to 35,244 GEOs in Q3/23. During 9M/24, we sold 104,025 GEOs, including 42,241 attributable GEOs from the San José mine(1) compared to 100,859 GEOs sold during 9M/23 including 42,879 attributable GEOs from the San José mine(1). |
| ● | At the Fox Complex, we produced 7,855 GEOs during Q3/24, a 30% decrease compared to 11,174 GEOs produced during Q3/23. Production continued to be impacted by a shortfall in development meters in H1/24 due to a stope failure, limiting stope availability in Q3/24. During 9M/24, we produced 23,600 GEOs compared with 34,225 GEOs during 9M/23. While stope availability is expected to improve during Q4/24, resulting in higher GEO production compared to prior quarters in 2024, we expect full year production to be approximately 15% to 20% below our annual production guidance of 40,000 to 42,000 GEOs. |
| ● | At the Gold Bar Mine, we produced 13,640 GEOs during Q3/24, an increase of 43% compared to 9,507 GEOs produced in Q3/23. Despite a 49% decrease in stacked tonnes, higher mined grades and recovery rates compared to prior year improved production significantly. During 9M/24, we produced 37,654 GEOs at the Gold Bar mine, and expect to meet, and potentially exceed, annual production guidance of 40,000 to 43,000 GEOs. |
| ● | At the San José Mine, Q3/24 production of 13,684 GEOs decreased by 24% compared to 17,932 GEOs during Q3/23. Production was impacted by lower than expected mined metal grades, however with additional infill drilling performed during the quarter and availability of new mining areas, grade performance is expected to improve during Q4/24. With 41,290 attributable GEOs produced in 9M/24, we expect the San José mine to meet annual production guidance of 50,000 to 60,000 attributable GEOs(1). |
| ● | We continued to advance our Los Azules copper project to feasibility. While drilling ceased during Argentina’s winter season, the McEwen Copper team remains on track to deliver a feasibility study during the first half of 2025. |
| ● | We continued to meet safety expectations at our 100% owned operating mines. During 9M/24, we did not have any lost-time incidents at our Fox Complex and Gold Bar Mine. Both of our operating mines have operated without lost-time incidents for over four years. |
Financial Highlights
| ● | We reported consolidated cash and cash equivalents of $29.2 million, and consolidated working capital of $8.6 million as at September 30, 2024. (December 31, 2023 – $23.0 million and $22.7 million, respectively). |
| ● | Revenue of $52.3 million was reported in Q3/24 from the sale of 21,350 GEOs from our 100% owned operations at an average realized price(2) of $2,499 per GEO. This compares to Q3/23 revenue of $38.4 million from the sale of 20,620 GEOs from our 100% owned operations at a realized price of $1,920 per GEO. |
| ● | We reported gross profit of $13.8 million in Q3/24, compared to $3.8 million in Q3/23 from our 100% owned operations. Our increase in revenue that contributed to the increase in gross profit in Q3/24 was slightly offset by higher production costs attributable to sales during the 2024 period. |
| ● | Net loss for Q3/24 was $2.1 million, or $0.04 per share, compared to a net loss of $18.5 million for Q3/23, or $0.39 per share. Our results improved primarily due to lower attributable advanced projects expenditures at Los Azules, as well as our higher gross profit described above. |
| ● | Adjusted EBITDA(2) for Q3/24 was $10.5 million, or $0.20 per share, compared to Q3/23 adjusted EBITDA of $1.5 million, or $0.03 per share. Adjusted EBITDA excludes the impact of McEwen Copper’s results and reflects the earnings of our operating properties, including the San José mine. |
| ● | Fox Complex unit costs: Cash costs(2) and AISC(2) per GEO sold in Q3/24 were $1,572 and $1,953, respectively. 9M/24 cash costs and AISC per GEO sold were $1,572 and $1,909, respectively, as compared to annual guidance ranges of $1,225 to $1,325 and $1,450 to $1,550, respectively. Accelerated development costs to improve stope availability for Q4/24 increased unit costs during the third quarter. While we expect production to improve in the fourth quarter, including adding on new production from our Black Fox mine, we expect that unit costs will be 15% to 20% higher than annual guidance. |
| ● | Gold Bar unit costs: Cash costs(2) and AISC(2) per GEO sold in Q3/24 were $1,281 and $1,822, respectively. 9M/24 cash costs and AISC per GEO sold were $1,302 and $1,548, respectively, as compared to annual guidance of $1,450 to $1,550 and $1,650 to $1,750, respectively. While higher planned stripping costs in Q3/24 increased unit costs, we remain on track to meet our full year cost guidance. |
| ● | San José unit costs: Cash costs(2) and AISC(2) per GEO sold in Q3/24 were $2,173 and $2,675, respectively. 9M/24 cash costs and AISC per GEO sold were $1,788 and $2,194, respectively, as compared to full year guidance of $1,300 to $1,500 and $1,500 to $1,700, respectively. While Argentine cost inflation remained high, the relative strength of the peso against the US Dollar continued to increase costs in US Dollar terms. Combined with lower than expected mined grades, unit costs were higher than expected. While production is expected to recover in Q4/24 from new mining areas, unit costs are expected to remain above guidance due to macroeconomic factors. |
Exploration and Mineral Resources and Reserves
| ● | McEwen Copper invested $6.1 million at the Los Azules copper project in Argentina during Q3/24 to advance its feasibility study and associated activities. Including amounts spent by Minera Andes Inc. prior to 2012, and McEwen Mining prior to 2021, we have invested over $350 million in exploration expenditures to develop Los Azules as a world-class copper deposit. |
| ● | We incurred $1.8 million in exploration expenses at Fox Complex during Q3/24 to advance our Grey Fox project, where we completed 29,918 feet (9,119 meters) of drilling and initiated mineralogical studies to better understand the nature of the mineralization. |
| ● | We incurred $3.5 million in exploration expenses at the Gold Bar mine on near-term production targets during Q3/24, including the Cabin, Gold Bar South and Hunter deposits, as well as greenfield targets for mine life extension opportunities. |
| ● | During Q4/24, we plan to initiate exploration at newly acquired properties from the Timberline acquisition that closed in August 2024. |
(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 33.
