McEwen Mining produces 37,958 gold Eq oz in Q1 2016

The El Gallo Mine in Sinaloa, Mexico. Source: McEwen Mining Inc.

The El Gallo Mine in Sinaloa, Mexico. Source: McEwen Mining Inc.

McEwen Mining Inc. [MUX-TSX, NYSE] has released production highlights of Q1 2016 and has acquired one royalty on the El Gallo Mine in Sinaloa State, Mexico.

Highlights:

  • Total production in the first quarter was 37,958 gold equivalent ounces (calculated based on a 75:1 silver-to-gold ratio), a 14% increase over the first quarter of 2015;
  • Increased production guidance for 2016 to 144,000 gold equivalent ounces;
  • Acquired the net smelter return royalty on the company’s El Gallo Mine and El Gallo silver deposit;
  • Strong balance sheet – $43-million (updated as of April 18, 2016, includes cash, cash equivalents and previous metals at market, net of royalty and property acquisitions mentioned herein) in liquid assets and no debt.

El Gallo Mine – a record quarter


In the first quarter, the mine produced 20,101 gold equivalent ounces, compared with 15,391 gold equivalent ounces during same period in 2015. Production in the first quarter set a new quarterly record as a result of processing higher-grade ore stockpiled in the previous quarter. Production in subsequent quarters is expected to be lower as the influence of higher-grade ore diminishes during the year. Full-year guidance for El Gallo in 2016 is now increased to 55,000 gold equivalent ounces. The 2016 exploration budget for Mexico is $4 million.

The company has acquired the existing tiered NSR royalty on the El Gallo Mine, currently paying 3.5% of gross revenue, less allowable deductions. The purchase price consisted of a $5.25 million payment on closing and a conditional deferred payment of $1 million to be made on June 30, 2018. The royalty ceased being payable at the end of February, 2016. This transaction will enhance the future profitability of the El Gallo Mine, and removes a royalty burden on existing and potentially new deposits inside the royalty’s area of influence, including the El Gallo silver deposit.

San Jose Mine, Argentina

The mine is owned by Minera Santa Cruz SA, a joint venture 49% owned by McEwen Mining, and 51% owned and operated by Hochschild Mining PLC.

McEwen Mining’s attributable production from San Jose in the first quarter was 8,960 gold ounces and 667,319 silver ounces, for a total of 17,857 gold equivalent ounces. Compared with the first quarter of 2015, gold and silver production was down 5% and up 4%, respectively. First quarter production is typically lower than other quarters due to mill shutdown and maintenance over the holidays.

Full-year production guidance for San Jose in 2016 is 45,000 gold ounces and 3.3 million silver ounces, for a total of 89,000 gold equivalent ounces attributable to the company. The 2016 exploration budget is $4.5 million.

Nevada exploration

Exploration drilling is planned to begin on the newly acquired Afgan-Kobeh property in mid-May. The primary objective of this drilling is to expand the size of the existing resource.

Financial results

Operating costs for the quarter ended March 31, 2016, will be released with the company’s quarterly financial statements in early May. McEwen Mining has 300,099,879 shares issued and outstanding at January 30, 2015.  Rob McEwen , Chairman, President and Chief Owner, owns 25% of the shares of the company

Filed in: Gold, Resources

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