TORONTO — McEwen Mining Inc. reported an industrious start to the year, especially in gold production, development and exploration, in its first quarter 2018 results released May 1.
The first quarter of 2018 “marked the beginning of an important year for McEwen Mining,” said Robert McEwen, executive chairman and chief owner, in an investor conference call.
The company achieved production of 44,344 gold equivalent ounces in the first quarter of 2018.
Net cash flow from the business, excluding project development costs, was $12.4 million, offset by $22.7 million related to investments toward long-term production growth at Gold Bar in Nevada, Black Fox project in Canada and Los Azules project in Argentina.
“We’re happy with the quarter,” McEwen said, adding that although productive, the company had to report a loss.
Consolidated net loss was $5.2 million, or $0.02 per share. In the first quarter, McEwen paid a semi-annual return of capital distribution of $0.005 per share of common stock, for a total distribution of $1.7 million.
As of April 30, the company had cash, investments and precious metals of $47 million — and no debt.
During Q1 2018, construction activities at Gold Bar focused on finishing civil works related to the heap leach pad, ponds and site infrastructure, in preparation for major equipment and material deliveries in the second quarter.
Cumulative to date, McEwen capitalized $14.8 million to construction in progress relating to permitting, engineering, and site development activities. The company expects to spend about $25 million per quarter in the second and third quarters. McEwen said the company might consider taking on some debt to finance Gold Bar.
“It is the brunt of the capital going in those two quarters,” said Andrew Elinesky, chief financial officer, in response to a stakeholder’s question.
Construction is advancing on schedule for completion by the end of 2018, and McEwen expects to declare commercial production in early 2019. During the first three years of operation, Gold Bar is projected to produce approximately 55,000, 74,000 and 68,000 ounces of gold respectively.
“The project is currently on schedule and on budget,” Elinesky said.
The company also operates at the El Gallo Mine in Mexico, Black Fox Mine in Canada, and the San Jose and Los Azules projects in Argentina.
At Black Fox, the company reported its first steady operating quarter, producing 12,078 gold equivalent ounces for Q1. Production helped offset investments being made at Gold Bar.
The company reported a positive start to its exploration program at Black Fox, with 30 percent of its exploration budget going into work at the Canada site.
“As you can appreciate, we have been busy working on the future of production and growth of our company,” said Xavier Ochoa, chief operating officer.