McEwen Mining Inc. [MUX-TSX, NYSE] has filed an updated feasibility study for its Gold Bar mine in central Nevada and a 16% drop in estimated gold reserves.
Over the six-year mine life, production will total 17.2 million tons of ore at a diluted grade of 0.84 g/t for total payable gold output of 302,000 ounces. The feasibility study calls for oxide ore to be mined from three open pits and transported by 100-ton haul trucks for processing, either by crushing and conveying to the heap leach pad, or by using trucks to place run-of-mine ore to the leach pad.
In Q1 2020, the company reported that a significant reduction in contained ounces at Gold Bar was likely. In 2019, when the company started mining, the reserve estimate was 430,000 ounces.
The Gold Bar mine is located in the southern Roberts Mountains of the Battle Mountain-Eureka-Cortez gold trend in Eureka County. Historical production includes 134,000 ounces of gold between 1991 and 1994.
Commercial production was achieved in May of 2019. In its first year of production, Gold Bar produced 30,700 ounces of gold at an all-in-sustaining cost of US$1,282/oz.
The majority of the material mined in 2019 was from the Cabin pits. However, the transition in 2020 to mining from the Pick West pit has returned lower ore tons and gold grade from the upper benches as compared to the block model.
In light of the significant difference between the modeled (expected) and mined (actual) ore tonnage and gold grade from the Pick West pit, the reserve estimate and future mine plan have been re-evaluated in 2020.
Cumulative mine production through December 2020 was 58,600 ounces, and the reserve estimate announced after the close of trading on February 22, 2021 is 302,000 ounces. The net reduction of 16% is driven by improvements to the geologic model, metallurgical recovery, additional drilling information and higher gold prices, the company said.
On Tuesday February 23, McEwen shares were down 7.50% or $0.12 to $1.48 on volume of 703,566. The shares are currently trading in a 52-week range of $2.02 and 76 cents.
The company has said it expects to produce between 141,000 and 160,400 ounces of gold equivalent ounces this year, a 21% to 38% improvement over 2020. Of that amount, Gold Bar is expected to produce between 37,000 and 45,000 GEOs this year.