McEwen Mining outlines Timmins gold plan in Q3 results

Black Fox Complex near Timmins, Ontario.

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McEwen Mining Inc. [MUX-TSX, NYSE] on Friday October 16 released 2020 third quarter results that were highlighted by an outline of plans for its operations in Timmins, Ontario.

McEwen is a gold and silver producer with a focus on the Americas, including the U.S., Canada, Mexico and Argentina.

The company produced 23,100 ounces of gold and 575,000 ounces of silver (30,400 gold equivalent ounce) during the third quarter, at an average gold:silver price ratio of 79:1.

Production rebounded due to the restart of all four of its operations which were temporarily suspended as a result of the COVID-19 pandemic.

McEwen shares fell on the news, easing 2.1% or $0.03 to $1.41. The shares are currently trading in a 52-week range of $2.33 and 76 cents.

McEwen’s key assets are the San Jose mine in Santa Cruz, Argentina, the Black Fox Mine in Timmins, Ontario, the El Gallo Fenix Project in Mexico, the Gold Bar Mine in Nevada, and the Los Azules copper project in San Juan, Argentina.

Robert McEwen, the Bay Street financier owns 20% of McEwen Mining’s 409 million shares outstanding. The company produced 174,420 gold equivalent ounces in 2019, compared to 175,640 in 2018.

During the third quarter, Black Fox produced 5,800 gold equivalent ounces (GEOS), an increase from 2,200 in the second quarter. McEwen said the mine is benefitting from the additional development work completed during the second quarter, work that increased mining flexibility.

“We expect production to continue to trend higher during Q4, and mining from Black Fox to continue into H1 [the first half] of 2021, while we transition to mining the Froome deposit,” the company said in a press release.

McEwen went on to say that development of underground access to the Froome deposit, located 800 metres west of the Black Fox Mine, is on track, having advanced 47% by the end of the quarter.

“We plan to reach the deposit in the second quarter of 2021 and achieve commercial production from Froome in Q4 2021,” the company said. McEwen is targeting an average annualized production rate of 40,000-45,000 GEOs per year from Froome over a period of approximately 2.5 years.

Meanwhile, McEwen is working to complete a preliminary economic assessment (PEA) for its Grey Fox – Black Fox, Stock and Timmins resources utilizing the company’s existing milling capacity. Known as the Fox Complex, those deposits host nearly 3.0 million gold ounces of measured and indicated resources, plus an additional 1.0 million ounces of inferred resources.

The objective of the PEA is to develop a plan for the Fox Complex that would see it grow to an annual production rate of 100,000-150,000 ounces of gold at a cash cost of US$800 an ounce and an all-in-sustaining cost of US$1,050 an ounce over a lifespan of 10 years. Production growth is expected to start ramping up in 2022.

The PEA is expected to be completed in the fourth quarter of 2020, and will identify the optimal business case on which to complete a feasibility study in 2021.

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