McEwen Mining(US:MUX)2022-11-07 20:18Financial Data and Key Metrics Changes - The company reported a cash gross profit of $5.8 million and a gross profit of $1.5 million for Q3 2022, compared to a GAAP loss of $10.5 million or $0.21 per share, reflecting significant investments in projects that were expensed rather than capitalized [9] - Gold equivalent production for Q3 was 35,700 ounces, down approximately 16% from 43,000 ounces in Q3 2021, but roughly equivalent to Q2 2022 production [11] - Cash costs per ounce were reported at $774, with all-in sustaining costs at $1,308 per ounce, driven by strong underground operations and a weaker Canadian dollar [12] Business Line Data and Key Metrics Changes - At the Fox complex, production was strong with 13,146 ounces produced, exceeding budget expectations, but mechanical issues in the processing plant limited availability to approximately 77% for the quarter [22][23] - Gold Bar produced 7,200 ounces in Q3, with cash costs at $1,712 per ounce and all-in sustaining costs at $2,049 per ounce, remaining elevated due to carbonaceous ore issues [14][28] - The San José mine in Argentina reported cash costs of $1,223 per ounce and all-in sustaining costs of $1,562 per ounce, reflecting improvements from earlier COVID-related production issues [16] Market Data and Key Metrics Changes - The company completed an $82 million financing, with a significant investment from a subsidiary of Rio Tinto, enhancing its financial position [4][17] - The cash equivalent balance stood at $55 million at the end of the quarter, unchanged from the beginning of the year, with the majority allocated to McEwen Copper [17][108] Company Strategy and Development Direction - The company is focusing on the development of the Gold Bar South deposit, which is expected to yield lower-cost production due to higher-grade ore and lower strip ratios [6] - McEwen Copper is advancing the Los Azules project towards a feasibility study, with significant investments planned for exploration and technical studies [48][54] - The company aims to enhance its exploration efforts, particularly at the Fox Complex and Gold Bar, with a global exploration budget of approximately $20 million for 2023 [93] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's value, estimating it to be between $8 to $30 per share based on the value of its assets, particularly highlighting the potential of the Los Azules project [58] - The management acknowledged challenges in production but emphasized ongoing improvements and the potential for future growth, particularly in copper due to its role in electrification [118] Other Important Information - The company is addressing mechanical issues in the Fox processing plant and is implementing systematic improvements to enhance throughput [23][71] - The acquisition of a processing plant in Mexico for $2.8 million is expected to save approximately $40 million in capital expenditures if built anew [69] Q&A Session Summary Question: Details on the processing plant acquired in Mexico - The processing plant was acquired for $2.8 million and is expected to save approximately $40 million in capital expenditures if built anew [69] Question: Production bottlenecks at Fox - The plant has been experiencing bottlenecks primarily due to aging equipment, and efforts are underway to improve production rates [71][83] Question: Average grade of surface stockpiles - The average grade of the surface stockpiles is reported at 2.44 grams per tonne, with ongoing additions of higher-grade ore [86][89] Question: Exploration budget for 2023 - The global exploration budget for 2023 is approximately $20 million, with a significant portion directed at the Fox Complex [93] Question: Dividend expectations from partner - There are currently no indications that the partner will pay dividends this year, but there may be updates in the first quarter of the following year [102] Question: Cash balance allocation - The majority of the $55 million cash balance is within the McEwen Copper subsidiary, with the remainder in McEwen Mining [108]