McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) grapples with a 37.6 per cent decline in its Q2 2023 cash gross profit amidst operational challenges, yet remains buoyant with significant improvements at its San José mine and a robust liquidity position.
On Thursday, the company reported its results for the second quarter and half year of 2023. Despite the losses the robust liquidity position, marked by a 112.6 per cent surge in consolidated cash and equivalents to $84.6 million at the end of Q2 2023, underscores the company’s strategic financial management.
This uptick can be attributed to the company’s diversified investments, notably in the Los Azules copper project and the Elder Creek exploration initiative.
Collaborations with industry stalwarts like Stellantis (NYSE: STLA) (Euronext Milan: STLAM) (Euronext Paris: STLAP) and Rio Tinto Ltd.’s (ASX: RIO) (LON: RIO) Nuton division have bolstered McEwen Mining’s market valuation, providing a cushion against the revenue dip.
Despite facing initial operational challenges at its Gold Bar and San José mines, the company has reported significant improvements, particularly at the San José mine.
The Fox Complex showcased a consistent performance, achieving a record daily mill throughput of 1,250 tonnes per day and generating a cash gross profit of $6 million in Q2.
The San José mine saw a 54 per cent increase in production, coupled with a 24 per cent decrease in cash costs per ounce compared to Q1.
On the other hand, the Gold Bar mine experienced higher mining rates and gold grades. However, the increased costs in Q2 were attributed to the expansion of the heap leach pad, which is projected to be completed in the third quarter.
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McEwen Mining’s Fenix Project is progressing steadily, moving closer to a formal construction decision. Additionally, the company’s subsidiary, McEwen Copper, released a Preliminary Economic Assessment (PEA) for the Los Azules copper project in June 2023, indicating promising economic prospects.
On the financial front, McEwen Mining reported a consolidated net loss of $21.6 million for Q2, a significant increase from the $12.5 million loss in Q2 2022. This loss was primarily due to investments in the Los Azules project and exploration expenses.
However, the company’s liquidity position improved, with consolidated cash and equivalents rising to $84.6 million at the end of Q2, up from $39.8 million at the close of 2022.
In terms of production, the company reported 35,625 gold equivalent ounces (GEOs) for Q2 and 66,100 GEOs for H1 from its three operating mines. McEwen Mining maintains its consolidated production guidance of 150,000-170,000 GEOs for the entirety of 2023.
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Los Azules economic assessments show promise
McEwen Mining CEO Rob McEwen expressed his confidence in the company’s trajectory. He highlighted the Los Azules project, which continues to show significant promise.
“The story at Los Azules keeps getting better and better!” said McEwen.
“With strong financing, an updated Preliminary Economic Assessment (PEA) showing robust economics, unparalleled partners in Rio Tinto (through Nuton) and Stellantis, and potentially game-changing copper leaching technology, we could see Los Azules provide a model for how the mine of the future should look.”
McEwen Mining holds a majority stake of 52 per cent in McEwen Copper Inc. This subsidiary fully owns two prominent projects: the Los Azules copper venture in San Juan, Argentina and the Elder Creek exploration initiative in Nevada, USA.
Recent financial dealings involving McEwen Copper with industry giants Stellantis and Rio Tinto’s Nuton division have elevated the subsidiary’s market valuation to an impressive $550 million.
For McEwen Mining, this translates to a substantial $285 million, courtesy of their 52 per cent ownership. This figure represents a hefty 67 per cent of McEwen Mining’s current fully-diluted market capitalization.
McEwen Mining stock had a slight drop on Thursday by 3.35 per cent to $9.51 on the Toronto Stock Exchange.
natalia@mugglehead.com
