McEwen Mining (MUX) Q4 2024 Earnings Call March 18, 2025 11:00 AM ET Company Participants Robert McEwen - Executive Chairman & Chief OwnerMichael Meding - Vice President and General Manager of McEwen CopperJake Sekelsky - MD & Head of Metals & Mining ResearchWilliam Shaver - Chief Operating OfficerChristopher White - Managing DirectorPerry Ing - Chief Financial OfficerNone - ExecutiveJohn Tumazos - Owner and CEOStefan Spears - Vice President of Corporate Development Conference Call Participants Mike Kozak - ...

Core Viewpoint - McEwen Mining Inc. reported its Q4 and full year 2024 financial results, highlighting increased revenues driven by production in line with guidance and higher gold prices, while also advancing key projects at Los Azules and Fox Complex [1] Financial Results - Consolidated production in 2024 was 135,884 Gold Equivalent Ounces (GEOs), down from 154,587 GEOs in 2023, with a potential increase to 225,000 - 255,000 GEOs by 2030 due to growth at the Fox Complex [4] - Revenue for 2024 rose to $174.5 million from $166.2 million in 2023, with an average realized sale price of $2,390 per ounce, slightly above the 2024 LBMA average of $2,386 per ounce [5] - Gross profit increased to $30.9 million in 2024 compared to $17.8 million in 2023 [5] - Adjusted EBITDA for 2024 was $29.2 million, or $0.57 per share, significantly up from $7.7 million, or $0.16 per share in 2023 [6] - The net loss for 2024 was $43.7 million, primarily due to $47 million in McEwen Copper-related expenses [7] Liquidity and Capital Resources - The company issued $110 million in Capped Call 5.25% Convertible Senior Unsecured Notes due 2030 to strengthen liquidity and fund growth projects [8] - Net proceeds from the Convertible Notes were approximately $90.8 million, with $20 million used to retire part of a senior secured credit facility [10] - As of March 13, 2025, cash equivalents and restricted cash totaled $62.2 million, with total debt at $130 million [11] Exploration and Growth Initiatives - In 2024, $8.1 million was invested in exploration at the Fox Complex, resulting in a 32% increase in the estimated Indicated contained gold resource at the Grey Fox deposit [14] - The 2025 exploration budget for the Fox Complex is set at $9.7 million, including 68,500 meters of diamond drilling [16] - At the Gold Bar Mine, $7.2 million was invested in exploration, extending the expected mine life to 2029 [17] Individual Mine Performance - Gold Bar Mine produced 44,581 GEOs in 2024, aligning with production guidance despite a planned 65% decrease in Q4 [20] - The Fox Complex produced 30,151 GEOs in 2024, 25% below guidance, with cash costs per GEO sold higher than expected [24] - The San José mine produced 122,653 GEOs in 2024, within guidance, but with higher cash costs per GEO sold than anticipated [28] McEwen Copper Developments - McEwen Copper invested $114.5 million in exploration at the Los Azules copper project in 2024, with a feasibility study expected in June 2025 [39] - The company holds a 46.4% interest in McEwen Copper, which has an implied market value of $984 million [35]

Core Viewpoint - McEwen Mining Inc. reported its fourth quarter and full year 2024 financial results, highlighting increased revenues driven by production in line with guidance and higher gold prices, while also advancing key projects at Los Azules and Fox Complex [1]. Financial Results - Consolidated production in 2024 was 135,884 Gold Equivalent Ounces (GEOs), down from 154,587 GEOs in 2023, with a potential increase to 225,000 - 255,000 GEOs by 2030 due to growth at the Fox Complex [4]. - Revenue for 2024 rose to $174.5 million from $166.2 million in 2023, with an average realized sale price of $2,390 per ounce, slightly above the 2024 LBMA average of $2,386 per ounce [5]. - Gross profit increased to $30.9 million in 2024 compared to $17.8 million in 2023 [5]. - Adjusted EBITDA for 2024 was $29.2 million, or $0.57 per share, significantly up from $7.7 million, or $0.16 per share in 2023, driven by a 5% revenue increase and a 24% rise in realized gold prices [6]. - The net loss for 2024 was $43.7 million, primarily due to $47 million in McEwen Copper-related expenses and $16.5 million in exploration investments [7]. Liquidity and Capital Resources - To enhance liquidity, McEwen Mining issued $110 million in Capped Call 5.25% Convertible Senior Unsecured Notes due 2030, with net proceeds of approximately $90.8 million after costs [10]. - Cash equivalents and restricted cash as of March 13, 2025, were $62.2 million, up from $17.5 million at year-end 2024, while total debt increased to $130 million [11]. Exploration and Growth Initiatives - In 2024, $8.1 million was invested in exploration at the Fox Complex, resulting in a 32% increase in the estimated Indicated contained gold resource at the Grey Fox deposit [14]. - The 2025 exploration budget for the Fox Complex is set at $9.7 million, including 68,500 meters of diamond drilling [16]. - At the Gold Bar Mine, $7.2 million was invested in exploration, extending the mine's expected life to 2029 [17]. Individual Mine Performance - Gold Bar Mine produced 44,581 GEOs in 2024, aligning with production guidance despite a planned 65% decrease in Q4 due to mine sequencing adjustments [20]. - The Fox Complex produced 30,151 GEOs in 2024, 25% below guidance, with production costs higher than expected [24]. - The San José mine produced 122,653 GEOs in 2024, within guidance, but faced higher cash costs and AISC due to lower head grades [28]. McEwen Copper Developments - McEwen Copper invested $114.5 million in exploration at the Los Azules copper project in 2024, with a feasibility study expected in June 2025 [38]. - The Los Azules project received approval for its Environmental Impact Assessment, marking a significant milestone toward future development [41].

Core Viewpoint - McEwen Mining Inc. will hold a conference call on March 18, 2025, to discuss its Q4 and year-end 2024 financial results, along with project developments [1]. Company Overview - McEwen Mining Inc. is a gold and silver producer with operations in Nevada (USA), Canada, Mexico, and Argentina [3]. - The company owns 46.4% of McEwen Copper, which is developing the Los Azules copper project, aiming to be Argentina's first regenerative copper mine and achieve carbon neutrality by 2038 [3]. Financial and Management Insights - The company focuses on enhancing productivity and extending the life of its assets to increase share price and provide investor yield [4]. - Rob McEwen, Chairman and Chief Owner, has a personal investment of US$205 million in the company, while his annual salary is US$1 [4]. - McEwen Mining's shares are publicly traded on the NYSE and TSX under the symbol "MUX" [4].

Group 1 - McEwen (MUX) reported a quarterly loss of $0.15 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, and a significant decline from earnings of $2.90 per share a year ago, indicating an earnings surprise of -15.38% [1] - The company posted revenues of $33.52 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 5.83%, and down from $58.68 million in the same quarter last year [2] - McEwen shares have declined approximately 3.2% since the beginning of the year, outperforming the S&P 500's decline of -6.1% [3] Group 2 - The earnings outlook for McEwen is currently unfavorable, with a Zacks Rank of 4 (Sell), indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is -$0.12 on revenues of $46.9 million, and -$0.28 on revenues of $253.5 million for the current fiscal year [7] - The Mining - Miscellaneous industry, to which McEwen belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8]

Production and Sales - In 2024, total production included 111,814 ounces of gold and 2,041,891 ounces of silver, resulting in a total of 135,884 gold equivalent ounces[25]. - Revenue from gold and silver sales in 2024 was $105.1 million from the Gold Bar mine, $67.8 million from the Fox Complex, $1.5 million from the El Gallo mine, and $152.1 million from the San José mine on a 49% basis[27]. - The Gold Bar mine produced 44,574 ounces of gold and 532 ounces of silver in 2024, contributing significantly to overall production[25]. - The San José mine, operating at a 49% interest, produced 36,127 ounces of gold and 2,033,619 ounces of silver, accounting for 60,100 gold equivalent ounces[25]. - For the year ended December 31, 2024, the company generated revenues of $174.5 million from gold and silver sales, indicating a significant dependency on commodity prices[454]. - Revenue from gold and silver sales increased to $174,477,000 in 2024, up 5% from $166,231,000 in 2023[490]. Reserves and Resources - The company reported attributable estimated proven and probable gold reserves of 0.3 million ounces and silver reserves of 5.1 million ounces at the San José mine as of December 31, 2024[34]. - As of December 31, 2024, the total proven and probable gold reserves are 10,852 tonnes at the Gold Bar mine and 558 tonnes at the San José mine, totaling 11,410 tonnes[39]. - The gold grade at the San José mine is 5.02 g/t, with proven reserves of 343 tonnes and probable reserves of 215 tonnes, yielding a total of 90.1 koz[39]. - The silver reserves at the San José mine are 558 tonnes, with a silver grade of 286 g/t, resulting in a total of 5.1 Moz[39]. - The estimated measured and indicated mineral resources as of December 31, 2024, include 2.7 million ounces of gold and 27.4 million ounces of silver[54]. - The inferred mineral resources as of December 31, 2024, are estimated at 2.9 million ounces of gold and 78.6 million ounces of silver[54]. Financial Performance - Gross profit rose to $30,935,000 in 2024, compared to $17,780,000 in 2023, marking a significant improvement[490]. - Operating loss narrowed to $50,572,000 in 2024 from $162,063,000 in 2023, indicating better operational efficiency[490]. - Net loss attributable to shareholders was $43,691,000 in 2024, a decrease from a profit of $55,299,000 in 2023[490]. - Cash and cash equivalents decreased to $13,692,000 in 2024 from $23,020,000 in 2023, reflecting liquidity challenges[492]. - Total assets increased slightly to $664,623,000 in 2024 from $657,239,000 in 2023, showing stability in asset management[492]. - Total liabilities rose to $169,648,000 in 2024, up from $154,819,000 in 2023, indicating increased financial obligations[492]. Exploration and Development - The company is developing the Stock Property as an underground mine, with production expected to begin by early 2026[17]. - The company expanded its exploration-stage properties in Nevada through the acquisition of Timberline Resources Corporation in August 2024[18]. - The company aims to increase shareholder value through the exploration and economic extraction of gold, silver, and other valuable minerals[20]. Market and Economic Factors - The Argentine peso has devalued by 37% in 2024, impacting the company's operations in Argentina[445]. - A 10% change in the price of gold and silver could result in an additional income or loss of approximately $17.5 million before income and mining taxes[454]. - The company does not hedge its sales, exposing it to fluctuations in commodity prices[456]. Environmental and Regulatory Compliance - The company has received all necessary permits for its operations in Canada and Mexico, ensuring compliance with local environmental regulations[95]. - The company is subject to extensive environmental regulations, which could lead to significant expenditures if operations are designated as "Superfund" sites[93]. - As of December 31, 2024, the company has surety bonds of $44.8 million in place to cover projected reclamation costs, with an annual fee of 2.4%[459]. Internal Controls and Risks - The company assessed its internal control over financial reporting and identified a material weakness, resulting in an adverse opinion from Ernst & Young LLP[465][480]. - The company did not have a sufficient complement of human resources, leading to deficiencies in internal controls over income taxes[481]. - The company continues to face risks related to the collection of VAT receivables, which are uncertain due to the Mexican tax authorities' payment procedures[458]. Investments and Other Financial Activities - The company reported a dilution gain from investments in McEwen Copper Inc. of $5,777,000 in 2024[490]. - The company incurred a loss of $46.977 million from its investment in McEwen Copper Inc. in 2024, compared to a loss of $57.821 million in 2023[498]. - The company owns a 46.4% interest in McEwen Copper Inc., which is developing the Los Azules copper project in Argentina[500].

Core Insights - McEwen Mining Inc. has announced positive drill results from its Windfall Project, indicating significant gold mineralization and continuity along a 1.6-km section of the Windfall fault zone [1][2][15] Summary by Sections Drill Results - The initial 27-hole drilling program revealed several significant intersections, including: - WF006: 2.85 g/t Au over 33.5 m from 64.0 m (0.083 oz/T Au over 110 ft), with an inclusion of 6.96 g/t Au over 10.7 m from 83.8 m (0.203 oz/T Au over 35 ft) [1] - WF018: 1.57 g/t Au over 48.8 m from 80.8 m (0.046 oz/T Au over 160 ft) [1] - WF012: 1.47 g/t Au over 38.1 m from 41.1 m (0.043 oz/T Au over 125 ft) [1] Historical Context - Historical mining at the Windfall Mine produced 24,000 oz of gold at a grade of 12.6 g/t Au in the early 1900s and 112,000 oz at a grade of 1.4 g/t Au during the early 1980s [2] Mineralization Characteristics - Gold mineralization is found within silicified and decalcified breccia in the Windfall fault zone, extending for 3.2 km (2 miles) [7] - The mineralization starts within 7.6 meters (25 ft) down-hole and extends to over 152.4 meters (500 ft), indicating open mineralization at depth and along strike [9] Drilling Strategy - The drilling program aimed to evaluate and confirm historical results by drilling angled holes across the fault zone, targeting areas just beneath historical pits [8] - Of the 27 holes drilled, 15 intersected oxidized gold mineralization grading above 0.50 g/t Au over thicknesses of at least 3.0 m [10] Future Plans - Additional drilling is planned to further explore the mineralized area, which is located on patented claims, potentially allowing for a shorter permitting timeline [15]

Core Viewpoint - McEwen Mining (MUX) is anticipated to report a year-over-year decline in earnings due to lower revenues, with a consensus outlook indicating a quarterly loss of $0.13 per share and revenues of $35.6 million, reflecting a 39.3% decrease from the previous year [1][3]. Earnings Expectations - The consensus EPS estimate has been revised down by 71.43% over the last 30 days, indicating a significant reassessment by analysts [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with positive readings being more reliable [6][7]. - Stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have historically produced positive surprises nearly 70% of the time [8]. Historical Performance - McEwen has only beaten consensus EPS estimates once in the last four quarters, with the most recent quarter showing a surprise of -200% [12][13]. Conclusion - McEwen does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when evaluating the stock ahead of its earnings release [16].

TORONTO, Feb. 21, 2025 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is responding to the news release issued by the Apitipi Anicinapek Nation (“AAN”) dated February 12th, 2025, that alleges McEwen has breached the Impact Benefit Agreement (“IBA”) associated with the Fox Complex (“Fox”) originally signed in 2011 between Brigus Gold Corp (“Brigus”) and AAN. Since that time, the Fox property has changed ownership twice. First to Primero Mining Corp. (“Primero”) when it purchased Brigus in 2013 ...

Core Viewpoint - McEwen Copper Inc. has applied for the Los Azules copper project to be admitted to Argentina's Large Investment Incentive Regime (RIGI), which is expected to provide significant financial benefits and stability for the project [1][3]. Investment Details - The Los Azules Project involves an estimated total investment of USD 2.7 billion, with USD 227 million already committed under the RIGI for feasibility studies and preliminary work [2]. - An additional investment of USD 2.5 billion is projected for the construction of the mine and production facilities as part of the RIGI project [2]. Benefits of RIGI - Upon approval for RIGI admission, the Los Azules project will benefit from a reduced corporate income tax rate from 35% to 25%, relief from value-added tax during construction, exemption from export duties, and a 30-year stability guarantee [3]. Project Progress - The Los Azules project is recognized as one of the top 10 copper projects by resource size and has made significant progress, including the recent approval of an environmental permit for construction [4]. - The project is expected to begin construction in early 2026, following the upcoming feasibility study scheduled for the first half of 2025 [5]. Company Overview - McEwen Mining Inc. operates in multiple countries and holds a 46.4% interest in McEwen Copper, which is developing the Los Azules copper project [6][7]. - The Los Azules project aims to be Argentina's first regenerative copper mine, focusing on sustainability by consuming less water and aiming for carbon neutrality by 2038 [8]. Economic Impact - The introduction of RIGI is seen as a catalyst for large-scale infrastructure investments in Argentina's mining sector, which is expected to improve the standard of living for Argentinians and provide reasonable returns for investors [4].