McEwen Mining Inc. [MUX-TSX, NYSE] on Thursday released a summary of results from a preliminary economic assessment (PEA) for its Fox complex in the Timmins, Ont. mining camp.
The Fox complex covers 7,000 hectares along the Destor-Porcupine Fault and includes an active mining operation with gold production from the Froome mine, which commenced commercial production in September, 2021, using the pre-existing Fox mill facility.
The Fox Complex’s main properties, Black Fox, Stock and Lexam are positioned along Highway 101.
The PEA includes upgrading the Fox mill, located at the Stock property to increase throughput capacity to 2,400 tonnes per day and allow the simultaneous processing of material from multiple deposits.
The PEA outlines a mine life of over 12 years, generating average annual production of 71,980 gold ounces, at average cast costs and all-in-sustaining costs of per ounce of US$800 and US$1,225 respectively.
Peak annual gold production of approximately 100,000 ounces occur in years six to 10 of the mine life, McEwen said in a press release.
“The Fox PEA is an important step forward for us,’’ the company said. “It translates our exploration success into a business case that increases mine life and production rates and lowers cost per ounce,’’ it said. “It provides a clearer picture of where future exploration should be focused to add value.’’
However, the company said that while the PEA is an encouraging first iteration, continuing exploration success, improved economics and a shorter payback period is required before a decision is made to advance the project.
“I am pleased that the Froome mine was successfully brought into production in 2021, is performing as planned, and is expected to continue for at least another three years while our expansion plans and drilling progress,’’ said McEwen Chairman Rob McEewen.
The PEA evaluates the economics of Fox in two ways: case A (Fox, including Froome) and case B (Fox, excluding Froome). Case B is intended to show the incremental return on investment provided by the expansion of the mill to 2,400 tonnes per day and the development of mines at the Stock West, Grey Fox and Fuller deposits.
Other resources at Black Fox, Stock East, Davidson-Tisdale, Buffalo Ankerite, Paymaster and Tamarack represent potential sources of additional production and require exploration and study.
Total capital for life of mine is $358 million, of which $89 million is not addressed internally from project case flow, the company said.
As a result, McEwen is evaluating possible opportunities to mitigate this financing requirement, including enhancing near-term production opportunities at the Stock property and Froome with continuing exploration drilling in 2022.
On January 26, 2022, McEwen shares closed at $1.14 and currently trade in a 52-week range of $2.07 and $1.03.5