Q2 2024 Summary
Published Feb 5, 2025, 12:06 AM UTC- Los Azules Copper Project's Significant Value Potential: McEwen Mining's Los Azules project compares very favorably to other major copper deposits recently acquired by large mining companies. Los Azules has a larger resource than the combined resources of Filo del Sol and Josemaria, with a higher copper grade. It is also at a lower altitude and closer to infrastructure, which may result in lower capital costs due to the planned heap leach operation. This positions Los Azules as a highly attractive asset that could significantly enhance shareholder value.
- Beneficial Tax Incentives from the Argentine Government: Argentina has enacted the RIGI law, providing substantial tax benefits for mining projects like Los Azules. These benefits include a reduction in the corporate income tax rate from 35% to 25%, accelerated depreciation, unlimited carryforward of losses, and faster VAT recoveries. Importantly, there is also a 30 to 40-year tax stability guarantee. These incentives are expected to significantly improve the project's net present value by more than 30%, adding approximately $960 million.
- Expansion and Increased Cash Flow from San José Mine: The San José Mine is generating considerable revenue and cash flow. McEwen Mining is investing in a mill expansion to increase throughput to 2,000 tonnes per day, with the benefits expected next year. The company received a dividend in the second quarter and anticipates a more sizable dividend in the fourth quarter, which could enhance financial liquidity and shareholder returns.
- Significant Upcoming Expenditure on Feasibility Study May Strain Financial Resources: McEwen Mining plans to spend $60 million on technical work related to the feasibility study for Los Azules, and this entire amount is still ahead of them, potentially straining their financial resources.
- Delays and Uncertainties in Permitting for Mexico Project: The company faces delays and uncertainties in obtaining permits for their Mexico project due to recent elections and changes in government, which could result in increased costs and project delays. They are in a state of flux and hope to have better news in late Q3 or early Q4.
- Operational Risks at Fox Mine Due to Ground Conditions: There have been ground condition issues at the Fox mine requiring backfilling and adjustments to mining methods. Although management believes it's under control and not expected to recur, it highlights potential operational risks.
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Los Azules Feasibility Study Budget
Q: How much to spend on Los Azules feasibility study?
A: The company plans to spend $60 million on technical work related to the Los Azules feasibility study, which is all ahead of them. -
Argentina Tax Incentives Impact
Q: What's the impact of Argentina's RIGI incentives?
A: Argentina's RIGI law reduces corporate tax from 35% to 25%, accelerates VAT refunds, offers 30 to 40 years of tax stability, and removes export duties after a certain time, significantly benefiting mining projects like Los Azules. -
Los Azules vs. Filo del Sol Comparison
Q: How does Los Azules compare to Filo del Sol?
A: Los Azules compares favorably, with a larger and higher-grade resource than Filo del Sol, lower altitude, closer to infrastructure, and potentially lower capital costs due to planned heap leach operation. -
Dividend Potential from San José Mine
Q: Any updates on dividends from the San José Mine?
A: The company received a small dividend in Q2 and expects a more sizable dividend in Q4, as the mine generates positive cash flow with gold prices above $2,400. -
Budget for Los Azules Exploration Season
Q: Is there a budget for 2024-2025 exploration at Los Azules?
A: Major drilling for the feasibility study is completed; upcoming drilling will focus on new copper showings near Los Azules but with much lower expenditure. -
Gold Bar Cost Outlook
Q: Will Gold Bar maintain sub-$1,500/oz AISC?
A: Costs may stay in the same area or move up slightly; production is slightly above target, helping maintain lower costs. -
Stock Price Reflection of McEwen Copper
Q: Why hasn't McEwen Copper value reflected in stock price?
A: The share price has outperformed indices since separating copper assets; upcoming feasibility study and higher copper prices should enhance valuation. -
Mexico Permitting and Mine Plan Adjustments
Q: Updates on Mexico permits and mine plan adjustments?
A: Anticipating permit late Q3 or early Q4; exploring options to reduce capital costs and permit requirements; in flux but hope for better news soon. -
Cash Flow and Asset Investments
Q: What cash flow and investments are expected?
A: Focusing on projects within their balance sheet, such as building the ramp at Stock Mine, advancing Mexico's CDE, and exploration at Gold Bar, aiming for incremental production increases over coming years. -
Strategic Investments in Gold Stocks
Q: Thoughts on strategic investments in gold stocks?
A: Smaller companies are attractive as gold prices rise; the company is acquiring Timberline Resources, with assets synergistic with existing operations in Nevada. -
Ground Conditions at Fox Mine
Q: Is ground issue at Fox Mine a one-off?
A: It's a single area now stabilized; the path forward involves smaller stopes for absolute control; not a major concern going forward. -
MQMNW Warrants and New Projects
Q: Any updates on MQMNW warrants and new projects?
A: The warrants are out of the money and not tied to any new projects; the only current acquisition is Timberline Resources, expected to close later this month.