McEwen Mining Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 18, 2025
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Operator

Hello, ladies and gentlemen. Welcome to McEwen Mining's Fourth Quarter and Year End twenty twenty four Operating and Financial Results Conference Call. Present from the company today are Rob McKeown, Chairman and Chief Owner William Shaver, Chief Operating Officer Perry Ng, Chief Financial Officer Jeff Chan, Vice President, Finance Stephan Spears, Vice President, Corporate Development Michael Metting, Vice President and General Manager of McEwen Copper Carmen Diaz, General Counsel and Secretary. After the speakers' presentation, there will be a question and answer session. I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, operator. Good morning, ladies and gentlemen. Welcome to the call. 2024 was a good year for McEwen Mining, while our consolidated production of 135,884 gold equivalent ounces was 12% lower than what we produced in 2023. The selling price of our production was 24% higher.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

As a result, our adjusted EBITDA was 3.8 times higher this year at $29,200,000 or $0.57 a share versus 7,700,000.0 or $0.16 a share in 2023. We did post a net loss of 43,700,000.0 and that was due to the equity accounting we do, the expenditures at Los Azules of 47,000,000. There's a difference of $3,300,000 We spent another $16,500,000 on exploration, bringing it to $19,800,000 and there was $10,000,000 depreciation. So our minds are making money at this point and it is the large investment we've been making in Los Azules to bring that project forward that is creating this net loss. And speaking of that, when we took started financing Los Azules separately in McEwen Copper, we did a financing of $10 a share, which effectively put a value on that property of $175,000,000 this was a property that was largely obscured in our portfolio by the performance of our gold assets.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Today, based on the last financing that we've done in McEwen Mining at $30 a share puts the value and implied value on Los Azules of $984,000,000 we have a 46% interest in that now and that equates to $457,000,000 value and on a per share basis, dollars 8.47 a share, behind every McEwen Mining share. So that's the big number, and we're pushing that project forward, to a feasibility study and after which, once we have hopefully approved in the RIGI, which is a large investment incentive scheme enacted by the Argentinian government, we get that approval and, complete feasibility at the June year. We'll be ready to do an IPO and that'll be dependent on the market sentiment towards copper. But right now, there's a positive view on the price of copper. Coming back and later in this call, I will ask Michael Netting, our Vice President General Manager, McCuen Copper to speak in greater detail about Las Azules.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Looking at McEwen Mining's gold assets, we've spent quite a bit of money on exploration. As I said, dollars 16,500,000.0 in the past year at our Fox, complex up in Timmins, Ontario. That exploration has increased our indicated and inferred resources to a total of over 2,000,000 ounces and that's allowing us to now plan for doubling of production from what we produced this year to 60,000 ounces in 2027. And we can see, there's a possibility to increase that production further, four to five fold increase over what we've done this year in 2024 to 130,000 to 150,000 ounces bringing on the Gray Fox deposit where the exploration had increased the resources. That subject permitting would increase our consolidated production to 225,000 to 250,000 ounces per annum. So exploration is working at Fox. It's also been extending our reserve life at Gold Bar and that's being augmented by the purchase of Timberline Resources which is a property near to Gold Bar where we're getting some initial good exploration results. Our, investment in 49% interest in the San Jose Mine, a mine operated by Hoshield Mining, is also expecting to pay a dividend shortly and that'd be a welcome change from a number of years without a dividend.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

But higher metal prices, gold and silver are helping that. During the year, we increased our debt from 40,000,000 to a hundred and 30,000,000 by way of a cap call convertible debenture. We chose that route to raise capital because we could get a % premium over our share price at the time we announced this debt deal. So we were trading at around $8.6 a share and we were able to get a conversion price by use of this structure of 100% premium over market. So our cash now is, approximately $62,000,000 a large part of that money is going into increasing the production at our Fox Complex and at Gold Bar.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

And at this point, I'd like to ask, Michael Netting to speak about Los Azules.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

Thank you so much, Rob.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

Los Azulis had a great year. In terms of environmental safety and regulatory compliance, we have safety excellence, one point five million hours without the lost time incident. We have received our environmental impact statement, which is the environmental permits for the construction and operation of the future Los Azules May third of December last year. Zero fines on no infractions and we completed all the hydrogeological tests of income to support sustainable water use in the future. In terms of operational achievements, we have drilled over 51,000 meters in 2024.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

We have now a project progress of about 90% by the end of twenty twenty four and as Rob said before, we plan to publish, we plan to complete the feasibility study by June. We have now the majority of our engineering complete for the feasibility study. We have a new structural geological model. We had great work done by the community and sustainability team. We have more than 3,500 participants in 61 meetings covering 50% of Kaliningas' economically active population in 2024.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

We have done lots of training initiatives to support Kaliningas'a, that's the department where our project is located, to prepare themselves for the future work at our project with more than eight ninety participants including five twenty one women and we have also joined the UN Global Compact. I think that is a summary of what was going on for Los Azules. We're looking forward to the completion of the feasibility.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you Michael. More recently we received a claim, a statement of claim from an indigenous group that have, interests in the property we have in Timmins. We believe it is without merit and we're working to engage constructively with the leadership of that tribe. At this point, I'd like to open the session to questions.

Operator

The first question comes from the line of Jake Sekelsky from Alliance Global Partners. Your line is open.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Hey, Robin Steen. Thank you for taking my questions. So, a question on opportunities for mine life extension at Gold Bar. I'm just curious if you're able to provide any additional color on sort of the critical path forward there on the permitting side in bringing the Timberline properties into the mine plan?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Sure. I'll ask Bill Shaver, our Chief Operating Officer to comment.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

Yes. Thanks very much, Jake. Yes. So we're doing exploration work at the present time on the Timberline property. As Rob mentioned earlier, we did about $1,200,000 worth of work last year and we're in the midst of doing approximately $4,000,000 worth of exploration work on Timberline properties which include the ones right adjacent to Eureka and also at 7 Troughs project which is another project that we got in that transaction.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

So I guess generally the permitting timeframe for Timberline is there's two parts to it. That's because there's part of the claims that are there are patented claims and they have a shorter period for permitting and then there's a part of the property that's on BLM land and the permitting time for that property is something in the order of could be done in three years, but it's generally seen as three to five years. So that permitting work will start immediately this year because we have some of the from the drilling that we did last year, we have some understanding in the patented ground what we might be able to do in the short term. So those permits will we'll make application for those in the next quarter and hopefully have those permits sometime early next year or early to mid next year. And so that kind of fits in with what's happening at Gold Bar at the Pick and at Gold Bar South.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

But at the present time, we have assets to mine at Gold Bar itself that extend into 02/1930. So I guess what we see happening with Timberline is we'll go through that permitting process and then tuck those in as they come on stream.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Okay. Thanks Bill. That's helpful.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

And then I noticed you broke out the royalty portfolio in the release. I mean, how should we think about these going forward? Is it an area you might look to expand upon or more of something that you might be looking to monetize in some way, shape or form when the time is right?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Yes, to both those questions.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Fair enough. And then just lastly here, we're sitting with gold over 3,000 an ounce pushing all time highs. Just curious, have these price levels caused you to go back and re examine some of the near term mine planning?

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

I would say absolutely. We're getting focused now, especially at Gold Bar to try and increase production because to take advantage of these high prices and also to we're looking at whether we can do the same in Timmins because at these prices if we could increase even by 10% of production in Timmins and 10% in Nevada that would basically create about $10,000,000 of cash. So I think yes, there's we're working diligently now to get ramped up to try and take advantage of the price that we're seeing at the present time, which all indications seem to tell us that that price is going to go higher.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Makes sense. Okay. Thanks again. Call from it.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, Jake.

Operator

Your next question comes from the line of Mike Kozak from Cantor Fitzgerald. Your line is open.

Mike Kozak
Analyst at Cantor Fitzgerald

Yes. Good afternoon, Rob and team. Hi, guys. So just one question from me and then maybe a follow-up. What's your best estimate as to when you'll know whether or not Los Azules is approved or not approved, but then it potentially admitted into Riji?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Two, three, four months from now. There's only been two groups approved so far and there was about 11 in line to be reviewed.

Mike Kozak
Analyst at Cantor Fitzgerald

Okay. And then that's helpful. That was actually my follow-up. So I saw this morning that YPS, Vaca Muerta South oil pipeline was approved under RIGI, which is the second one. So my follow-up was, do you have any sense as to where Los Azules is in the queue of projects that have applied for and are awaiting that RIGI approval?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Mike, perhaps you could answer that. I don't think we have So I

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

mean we are the second metal mining project that filed for the AG. Where we sit is a little bit difficult to say. I mean we have applied February 11 and we have given an in person presentation a week after that filing. The regulator has about forty five days, but it's every time there is an information request towards the company, the clock stops on the four to five days. That means that we have now received, for example, information requests from the regulator on the March 5 that we're going to respond tomorrow and we are hopeful that over the next couple of months as Rob said we are going to get approved.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

But it's a little bit difficult to say it's new regulation and how long each step exactly takes and where one sits in the queue is difficult to say.

Mike Kozak
Analyst at Cantor Fitzgerald

Got it. But that color is very helpful. Thank you and good luck.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

Thank you.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thanks, Mike.

Operator

Your next question comes from the line of Chris White from Gray Aspen. Your line is open.

Christopher White
Managing Director at Gray Aspen

Thank you, operator.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Hello, Chris.

Christopher White
Managing Director at Gray Aspen

Hi, Robin. Thanks for taking my questions. Just four quick ones here. The first one, Rob, has to do with your opening comments. For Los Azules investments, if the company wasn't doing those investments, would MUX's quarterly earnings been positive?

Christopher White
Managing Director at Gray Aspen

I'll give you the other three here quick and then you can just go down.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Yes.

Christopher White
Managing Director at Gray Aspen

Do you know what that number was?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

There was $47,000,000 That was, the charge we took from losses. So, we reported a loss of $43,000,000 So, it would be slightly positive there than if you backed out the exploration depreciation.

Christopher White
Managing Director at Gray Aspen

So, just roughly around $3,000,000 to $4,000,000

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Yes.

Perry Ing
Perry Ing
Chief Financial Officer at McEwen Mining

That's correct.

Christopher White
Managing Director at Gray Aspen

And then seeing how the market is valuing mux disproportionately on those quarterly earnings that they're coming as negatives and looking to be positive, Have you guys done an analysis of what the spot price goal needs to be with your investments to print a positive quarterly earning?

Perry Ing
Perry Ing
Chief Financial Officer at McEwen Mining

Maybe I'll back up a little bit, and note that with the work that Michael and his team are doing, he will we expect to be able to publish our feasibility study in the next quarter. And under U. S. Accounting rules that will allow us to in fact capitalize our expenditures on Los Azules, like companies that report under international accounting standards. So, I would say beginning at the end of the second quarter or start of the third quarter, we will in fact no longer need to report those losses.

Perry Ing
Perry Ing
Chief Financial Officer at McEwen Mining

So, but otherwise, in terms of addressing your other question, I mean, it's a little bit complex. It depends where in the cycle we are in terms of costs. But obviously at $3,000 spot gold, we expect to be generating significant positive income from our gold operations.

Christopher White
Managing Director at Gray Aspen

That's helpful. Thank you. What are you guys what's management's current expected ASIC for 2025 Geo? I couldn't find that in the release. Is that there?

Executive

Yes. So let me answer that for the team. So at both of our Fox and both our operations, we're projecting about $1,700 to $1,900 per GEO sold. We do expect to decrease those naturally over time. I think at Gold Bar, we do have a period of high strip in the first half of this year.

Executive

So we don't expect the same in 2026. So we expect that to naturally lower. And then at Fox, once we ramp up our stock mine and enter into an area of significantly lower cost and higher grade, we would also expect to see that decline.

Christopher White
Managing Director at Gray Aspen

And that answer takes into consideration what Bill just answered about increasing the throughput with the price of gold being high that you guys wouldn't do an ASIC as like 2,000 or something higher. Is that correct?

Executive

No. That's correct. That does take into account some of the considerations Bill mentioned as well.

Christopher White
Managing Director at Gray Aspen

That's great. Last thing and I'll hush up. Thank you for the time. Is there any way when you guys do these releases, we can get the heads up on the call more than the day before? Or are you guys doing that on purpose? How how does that process work?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

No. We don't do that on purpose. There is, some last minute changes that came in and unfortunately delayed it. Normally, I like to give you a day or two. This is, I agree with you.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

It's very short. On table one in the press release, you'll find the cash costs and ASIC costs outlined for each operation.

Christopher White
Managing Director at Gray Aspen

Thank you.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

You're welcome.

Christopher White
Managing Director at Gray Aspen

Really appreciate it guys. We look forward to next quarter. Thank you.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you.

Operator

Your next question comes from the line of John Tumazos from John Tumazos Berry Independent Research. Your line is open.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Hi, John.

John Tumazos
Owner and CEO at John Tumazos Very Independent Research

Thank you for taking my question. Hey, Rob. I'm concerned about Rio Tinto's participation in McEwen Copper. Last week, there was an international arbitration won by Entre Resources against the Mongolian government in Rio Tinto, where in 2012, the two thousand and four and eight agreements were not honored.

John Tumazos
Owner and CEO at John Tumazos Very Independent Research

And Rio Tinto made this little company pay lawyers for international arbitration for twelve years, trying to squeeze them to death and squeeze him out of the property. And the little company won. God bless him. You may recall that Robert Friedland didn't end up with much of Mongolia because Rio Tinto left him exposed to the capital overrun. So I'm a little worried that having Rio Tinto money is a little bit like having COVID AIDS or cancer.

John Tumazos
Owner and CEO at John Tumazos Very Independent Research

What are your protections to keep them from squeezing you out? Excuse the directness of my question. I'm just very unhappy with what they did to the other company.

Stefan Spears
Stefan Spears
Vice President of Corporate Development at McEwen Mining

Hi, John. It's Stefan Spears. Maybe I can help you get an answer to that question. So currently the investment by Rio is through an intermediary, which is Newton. And I know you're aware of that organization.

Stefan Spears
Stefan Spears
Vice President of Corporate Development at McEwen Mining

It's a technology arm of Rio Tinto. And they hold equity in McEwen Copper, which is a Canadian unlisted company, a private company. And then McEwen Copper through subsidiaries owns 100% of Los Azules. So currently as it stands, they have just over 17% equity in McEwen Copper. And we do have a shareholders rights agreement with them that provides for normal things, preemptive rights, tag along rights and so forth.

Stefan Spears
Stefan Spears
Vice President of Corporate Development at McEwen Mining

As far as your direct question about squeezing us out, it is not possible for Rio to squeeze us out in any way, shape or form at this stage.

John Tumazos
Owner and CEO at John Tumazos Very Independent Research

Okay. Would you be reluctant to take any more money from them?

Stefan Spears
Stefan Spears
Vice President of Corporate Development at McEwen Mining

Not really. I mean, if it's in the same form, so say, if they're, for example, anti diluting, they want to maintain their interest at 17 or even increase their interest, doesn't change their position, from a strategic standpoint. I think where you obviously want to be sure that you've got the right partner is when you consider doing an asset level transaction where you're selling an interest in the asset to a party that is going to be a long term supporter and a proponent for the project. I think that's a very one has to take that decision very carefully, but we're not at that decision point yet.

John Tumazos
Owner and CEO at John Tumazos Very Independent Research

Thank you. I'm just a little guy rooting for little guys.

Stefan Spears
Stefan Spears
Vice President of Corporate Development at McEwen Mining

Appreciate that.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, John. It's a good heads up.

Operator

Your next question comes from the line of Bill Powers, private investor. Your line is open.

Analyst

Hi, Rob. Thanks for taking my call.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Bill.

Analyst

A couple of questions, I guess, starting in Canada. Could you just give a little more color on the progress at stock?

Analyst

I know it seems to have been delayed quite a bit and I thought we'd be producing from that by mid this year rather than late this year. If you could maybe expand on that a little bit?

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

Yes. So I'll take that. Thanks very much, Bill. Yes. I mean, we were slowed down a little bit by the permitting.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

But at this point, we've got all of the portal drilled and blasted and we should have start driving the ramp I guess in the next ten days or so. So that should put us in down to the fourth level sometime late in the third quarter. And at the same time, we'll be driving out towards the eastern part of stock to get some mining there and there's also some mining that we're contemplating doing up there the portal. But the main thing is to get down to the fourth level with the main ramp. At this point, we're also dewatered all the way down to below the loading pocket, which is at the Fourth level.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

So the next step underground is to where we're accessing down the shaft is to get all of the surveying done of all the headings, try and understand where there might be ore and if possible get underground to do some drilling with small underground drills so that we can understand where the early mining might be in the old part of the stock mine. And so that part of the process is going to start next month. So and we're we don't have the access that we have to the fourth level is limited in terms of we're accessing that via an Alamec and we're in the midst of trying to figure out if we should put temporary hoist and headframe there to make that work a little bit easier to do. But yes, so I think we're in pretty good shape there.

Analyst

Okay. Thank you. I mean, I guess along the same lines, I know you've done a lot of drilling at Grace Fox. Could you give us some estimate on the timeline on kind of the rehab of the portal or is that going to be a this year project or a next year project, since that seems to have a material impact on future production?

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

Yes. So we're in the midst of putting a team together that's going to be responsible for Gray Fox and that's going to happen in the April. And from there we'll go into figuring out what we need to do in terms of permitting and so on to get us back into what's called the Gibson ramp which is which will hopefully allow us in the short term to do some underground drilling to start to put together resources and reserves and mining plans and so on. And of course then there's the permitting phase of that whole undertaking. And we're hoping that we can move that along quickly.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

But I would say the normal timelines on doing that kind of stuff is two to three years. So we're hoping it'll be better and we're going to initiate all of that stuff here in the next six months.

Analyst

Okay. One last question for you, Bill, while I have you. Is any movement on Mexico since that seems to be something that could be impactful, should you be able to get the permit move forward?

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

Yes. So we are I guess waiting for getting a permit there. I guess with all of the goings on with tariffs and things with cartels and so on, we're moving ahead cautiously in Mexico. And I guess once we see a permit then we'll make a decision whether we should move ahead with that or not. And at this point you're right.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

It's a little bit of an untapped resource there, which at these prices would look pretty good. And so I think it's a bit of wait and see in terms of moving ahead there. But basically we're ready to move ahead. We have equipment in Mexico. We have gas fired power plant.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

We have all of the more or less all of the assets to make that get started fairly quickly. So I guess we're just hoping that kind of the whole climate in Mexico might change a little bit here in the near future?

Analyst

Well, they seem to have handed out permits elsewhere for existing operations. And hopefully you guys would I mean, since I'm guessing this is a permit that just needs to be amended, it would not be something new, I would think, that you guys would be able to be pretty near the front of the queue for that.

William Shaver
William Shaver
Chief Operating Officer at McEwen Mining

Well, that's correct. And we I guess it's four weeks ago where we had meetings with the economic ministry to see if we could move that process along. And like we're hopeful, but permitting everywhere in the world today is the timelines are at best unpredictable including here in Canada.

Analyst

Okay. Thanks for all your time. I just have one last question. I think this may be more directed at Rob or Terry. But in your Q4 release, you mentioned it was mentioned that the joint venture with Hot Shield has $200,000,000 in cash.

Analyst

And to me, it seems as though that's an extremely large number especially given that there was an expansion last year that was completed. And now at today's run rate, it would be generating substantial cash. I guess as far as it seems as though the payout or the dividend should be substantial this year. Could you guys give some color on what you're expecting from them and why you guys why there's $200,000,000 in cash there?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Where did you see the $200,000,000

Analyst

Maybe I misread that. Maybe I misread that. What is the exact number?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

We'd be banging down their doors if they had that much money.

Perry Ing
Perry Ing
Chief Financial Officer at McEwen Mining

That's right, Rob. So they keep it, they typically keep, well, right now their cash balances are kind of in the $25,000,000 to $40,000,000 range. So, but we, as Rob mentioned in his opening remarks, we've had positive conversations with OcShield. We're declaring a dividend later this month of just under $5,000,000 So we should be receiving our share of just over $2,000,000 by the end of the first quarter. You'll also notice in the reserve reports, they have done a good job extending mine life.

Perry Ing
Perry Ing
Chief Financial Officer at McEwen Mining

It's still not long. I mean, it's still kind of eighteen months on reserves and two to three years on resources. So it's going to be a combination of dividends and putting money into exploration and looking at how we can make that operation more efficient. But you're right, at these prices, that should generate a fair bit of free cash and we'll keep investors updated on dividends on a regular basis.

Analyst

Okay. Thank you so much.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, Bill.

Operator

Your next question comes from the line of please stand by. Of Carey DeVries, a private investor. Your line is open.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Hello, Carey.

Analyst

Good morning. How are you?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Excellent. Thank you. Yourself?

Analyst

Very well. Thanks. I've got a whole bunch of questions, a whole bunch of series, so I won't get into all of one. But all these questions are with the goal of determining when your investment in McEwen Mining is going to be worth a hell of a lot more than it currently is.

Analyst

I'll start with my first question on Los Azules. Initially, I think I was wrong in assuming that when we IPO, when you IPO, hopefully Q3, the shares will be returned will be given to the shareholders. That's not the case, is it?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

That's not the case, no.

Analyst

Okay. Given that, Masazuli needs about $2,500,000,000 for production, what's the timeline to go to build the mine after you IPO until we're producing?

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Right now, we have a plan to assuming all the, finances is in place to, do the engineering and then put a shovel in the ground in late two thousand and twenty six with production starting in late, 02/1929 and running for twenty seven years.

Analyst

In that case, I'm looking I'm trying to figure out how to value Michoud Mining shares. We currently have 46%, give or take, loss of ZOE. If I was to do a worst case scenario post IPO and assume that you had to raise all the equity at $30 a share, and given costs to always increase, we could be issuing 100,000,000 shares, which would bring McEwen Mining's interest down on a worst case scenario to 10%. What's your worst case scenario? That's mine.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Well, one, we started financing the Cuban copper at $10 a share. Our last financing is at $30 If you look at what it might out at on an IPO, I'm thinking it's going to be quite a bit higher than that. If you just look at relatively recent transaction where BHP, the largest mining company in the world, came in and did a deal with Lundin Mining on two copper projects in the same province as Los Azules, and that was valued at $4,500,000,000 And when you compare Los Azules to the two projects, Jose Maria and Filo Del Sol, we have some definite advantages over that and I think could be more value. They are, and I'll start, We're at a lower altitude than either of them, so operations and, the health of the workers is better because there's more oxygen.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

We're, a larger resource than either of them and both of them combined and a higher copper value than either of them, although they have some gold. We would be a lower capital intensity as we're going with a heap leach process as opposed to a conventional mill producing a concentrate. We'll be producing a cathode, which can be used by industry immediately rather than having to go to a smelter in the case of a concentrate. We're closer to infrastructure, major roads and, hydro corridors. So, we'll have our feasibility out there.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

They're a little more advanced than we are pre fees and feasibility studies. We'll have our feasibility out by the end of the second quarter. So they have a value of $4,500,000,000 and our value is, based on the last financing, just under $1,000,000,000 I would expect in an IPO, assuming copper market stays where it is or goes higher, that we could shrink that difference between the $4,500,000,000 and the $1,000,000,000 that I spoke of. So I would expect we'd be selling at higher than $30 a share on the current share structure. And it would all be If I may add Rob. Yes, go ahead, Mike.

Michael Meding
Michael Meding
Vice President and General Manager of McEwen Copper at McEwen Mining

Sorry to jump in, but I mean, we're not looking to finance, the company of the Soles project entirely through equity. What we're looking forward to is a certain relation we could think about, for example, 40% to 60%, forty % equity, 60% debt that could be a reasonable assumption. And with regards to the debt, what we're looking into is export credit agency supported debts and development finance organization or development finance institutions supported debts. That's our main focus at the moment while we are also in the equipment selection process.

Analyst

Okay. No, thanks very much, Mike. That's exactly what I was thinking too. I was just doing, well, what if worst case scenario we have to do all equity, how much are we going to be left in the Q and A Mining, which then transitions me and thank you very much, Rob. You answered a whole ton of my questions right there regarding Los Azules, much appreciated.

Analyst

And you are to be congratulated for bringing, that mine to fruition. That's a Tier one asset. So my hat's off to you, sir.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you.

Analyst

That makes you keep in minding.

Analyst

I looked at I've been there for twelve years along with you. So your share price and my share price are pretty much the same. You put 200 or excuse me, dollars 140,000,000, which translates to about $17 a share. Adjusted for inflation, I think you need $25 a share just to get your money back. In 2016, we're sitting at $50 a share and we just hit $8 a share today, which a really nice move, roughly 50¢.

Analyst

I'm really happy. It's not anyone's fault that the gold mining sector has been out of favor like it has for so many years. And I think it's reasonable to assume that the retail investor and institutional investor is going to start looking at this sector with gold over $3,000 And silver, it looks like it wants to break out and run it to $40,000 but that's left to be seen. Maybe it will happen this week, maybe it won't. My last question to you, Mr. Hill, you need $25 just to get share price, just to get your money back. And I don't think you went into this just to get your money back and put in all this work. When do you think you will at least see $25 And I know I'm asking for speculation. When you think you can get your money back because I'm there with you? And I don't know if I have five more years to wait in this uncertain environment given what's happening with fiat currencies, world war potentials, etcetera, and overvaluations in the stock market.

Analyst

If I want to be a stock, I'd rather hold bullion, which has performed fantastically.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Right. Well, you're absolutely correct. I didn't go in there to lose money. And all investors are the same way. You make an investment, you're expecting it to go up, not go down unless you're shorting it.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

In terms of Los Azules, that little piece I gave the comparison with the BHP Lundin deal, if we just went up halfway up the value, so doubling. Right now, there is $8.47 per share behind value due to Los Azules, behind every share of McEwen Mining. So a doubling of that would get it up to $17 a little over that. And the gold sector as you observed has been unloved for quite a while. It represent and most portfolios are under gold is underrepresented in them.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Them. You're going to see, I believe, a lot more M and A occurring in the space driven by the natures whose treasuries are filling up very quickly and they're going to be looking at the intermediates and the juniors and that is going and that's one of the reasons we've been looking at a number of juniors. While I was running Goldcorp, we maintained a portfolio of juniors. I viewed it as a listening post for what was going on in the industry and treated some of them as a farm team, where in the case of Goldcorp, most of them went up beyond where I wanted to accept the goodwill by doing M and A. So we just sold them and financed a large portion of our capital development through capital gains.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

And we've been doing that in a small way. I would have been like would have liked to have been doing much more of that because we're in a moment when I think there's a lot of value to be created in the junior space. If you look at the past gold manias, if you wanna call it, where people really get excited about gold, the seniors, you can see a triple digit increase in a number of the junior explorers and developing companies. You can see a, you know, a four digit increase in value. So, it's a spot to be watching and I think more investors will be looking and you're gonna see the discoveries that people are making gaining greater prominence and attention in the market.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

So, when will that return to my cost base and exceed it? I think we're in a market right now. If you look at commodities relative to financial assets, we're at a forty year low. It's a cyclical nature and I'd say that commodities, precious metals are going to be appreciating in value as we watch the world bifurcate into various areas with tariffs and geopolitical conflicts causing not only sovereign states but large manufacturers looking very quickly to secure safe sources of supply and, whereas a regular supply areas have been disrupted by these factors. So, I just say, anyone who's looking at the junior sector and hasn't invested, it's a place they should pay more attention to.

Analyst

Mr. McKeown, thanks very much for your great response. I really appreciate that you always take time to answer my questions. I'll invest it.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, Carrick. Successful investing.

Operator

And there are no further questions at this time. Mr. Rob McKeon, I turn the call back over to you.

Robert McEwen
Robert McEwen
Executive Chairman & Chief Owner at McEwen Mining

Thank you, operator. Thank you, ladies and gentlemen. Looking forward to better days ahead, increased production, more cash flow and better share price. Thank you.

Operator

This concludes today's call. You may now disconnect.

Executives
    • Robert McEwen
      Robert McEwen
      Executive Chairman & Chief Owner
    • Michael Meding
      Michael Meding
      Vice President and General Manager of McEwen Copper
    • William Shaver
      William Shaver
      Chief Operating Officer
    • Perry Ing
      Perry Ing
      Chief Financial Officer
    • Stefan Spears
      Stefan Spears
      Vice President of Corporate Development
Analysts
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Key Takeaways

  • Despite a 12% decline in consolidated production to 135,884 gold equivalent ounces, the selling price rose 24%, driving adjusted EBITDA to $29.2 M from $7.7 M, while a net loss of $43.7 M reflects heavy investment in Los Azules, exploration, and depreciation.
  • Having spun out McEwen Copper, the Los Azules project valuation rose from $175 M to $984 M based on $30 share financing, giving McEwen Mining a 46% stake valued at $457 M or $8.47 per share, with a feasibility study due in June and planned RIGI approval before an IPO.
  • At the Fox complex in Timmins, Ontario, $16.5 M of exploration boosted indicated and inferred resources to over 2 Moz, underpinning plans to double production to 60 koz by 2027 and potentially scale to 130–150 koz (225–250 koz consolidated) with Gray Fox development subject to permitting.
  • McEwen Mining increased its debt from $40 M to $130 M via a cap call convertible debenture at a 100% premium, raising liquidity to ~$62 M, primarily allocated to ramping up production at Fox and Gold Bar.
  • In 2024, Los Azules achieved safety excellence (1.5 M LTI-free hours), secured its environmental impact statement, completed 51,000 m of drilling, reached 90% project progress, and engaged over 3,500 community participants ahead of June’s feasibility completion.
AI Generated. May Contain Errors.
Earnings Conference Call
McEwen Mining Q4 2024
00:00 / 00:00

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