On-time and on-budget progress at the Gold Bar open pit gold mine in Eureka County headlined McEwen Mining Inc.’s third quarter results released Oct. 31 despite a net loss.
Construction of Gold Bar is slated to be completed before the end of 2018 with commercial production expected to begin in the first quarter of 2019.
Activities at Gold Bar in the third quarter focused on completion of the heap leach pad and the crushing and conveying system, and advancing the gold processing facility. All major equipment and bulk materials are either on site or purchased. Engineering for the project is complete and 97 percent of contracts are awarded.
“With approximately 97 percent of the project cost locked in, we have removed a significant portion of the project’s price risk at this point,” said Andrew Elinesky, McEwen chief financial officer, during a conference call with investors. “[It] puts us in excellent position to meet the $81 million construction budget for the project.”
During the first three years of production, Gold Bar is expected to produce 55,000, 74,000 and 68,000 ounces of gold — with on-site exploration identifying additional resources that could extend mine life. McEwen Mining plans to drill “potential deep and large Carlin-type gold deposits” below the existing oxide resources in 2019, according to company’s third-quarter highlights.
The company reported a net loss overall but made progress on its investment projects and increased production at operations.
Net losses totaled $12.8 million or 4 cents per share in the third quarter, mainly due to overall lower sales prices and increased foreign exchange and tax costs.
In addition to the Gold Bar mine in Nevada, McEwen’s principal assets consist of: the San José mine in Santa Cruz, Argentina (49 percent interest); the Black Fox mine in Timmins, Canada; the Fenix Project in Mexico; and the large Los Azules copper project in Argentina, advancing toward development.
At the Black Fox mine in Canada, third-quarter production was 11,618 gold equivalent ounces in accordance with guidance. At the San Jose mine in Argentina, production was 11,768 gold and 743,100 silver ounces. At the El Gallo mine in Mexico, now in closure and reclamation stages, residual heap leaching in Q3 resulted in 10,448 gold equivalent ounces.
“As you can see, Q3 was another quarter during which we delivered significant production focused on the future production growth of our company,” said Chris Stewart, president and chief operating officer.
In conclusion of the investor conference call, the company executive chairman, Robert McEwen said he believes “we are in the early stage of a new bull market.”
McEwen, who is also the chief owner, referred to growth in stocks and the historic cycle of bear and bull markets for evidence to support his theory. He also pointed to the increase in value of gold exploration companies.
“They are another sign to me that we are in a bull market,” he said. “We are now in a market that is starting to pay attention to drill results. We are entering a market where profits can be made again by buying gold stocks … . I think we are well positioned to participate in this new bull market.”
McEwen also announced that he increased his investment in the company by $25 million for a total of $161 million.