Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — Shareholder Meeting (May 2013)
82 slides from Mcewen's shareholder meeting presentation, May 17, 2013
Slide 1: McEwen Mining AGM 2013
McE weno Mininc Pose MUX AGM 2013
Slide 2: Agenda
2 1. Formal Meeting 2. Financial Overview 3. Operation + Exploration Update 4. Gold Market Overview Agenda
Slide 3: Formal Meeting
3 Nils Engelstad Vice President, Corporate Affairs & Secretary FORMAL MEETING 3
Slide 4: Financial Overview
4 Perry Ing Chief Financial Officer FINANCIAL OVERVIEW
Slide 5: Cautionary Statement
5 Cautionary Statement This presentation contains certain forward-looking statements and information, including "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as at the date of this p
Slide 6: Statement of Operations
6 Year ended Dec 31, 2012 Three months ended Mar 31, 2013 Income from MSC $20,835 ($237) Gold and silver sales from El Gallo 1 $5,966 $13,498 Production costs applicable to sales from El Gallo 1 ($3,861) ($10,593) Gross margin $22,940 $2,668 Mine operating and construction costs ($22,767) ($471) Exp
Slide 7: San Jose Mine (100%)
7 2012 2013 San Jose Mine (100%) Q1 Q2 Q3 Q4 Q1 Gold eq. oz sold 34 40 71 53 30 Avg realized price / gold eq. oz $1,807 $1,441 $1,699 $1,623 $1,519 Cash cost / gold eq. oz $688 $752 $764 $794 $966 All-in sustaining cost / gold eq. oz $1,236 $1,232 $1,122 $1,226 $1,520 Implied economic contribution (
Slide 8: El Gallo 1
8 2012 2013 Q1 Q2 Q3 Q4 Q1 Gold eq. oz produced - - - 6.7 6.8 Gold eq. oz sold - - - 3.2 8.2 Avg realized price / gold eq. oz - - - $1,725 $1,639 cash cost / gold eq. oz - - - - $742 All-in sustaining cost / gold eq. oz - - - - $1,483 Implied economic contribution - - - - $1,279 El Gallo 1 In thousa
Slide 9: All-In Sustaining Cost / oz
9 In thousands of US dollars, except per ounce amounts (1) Includes geology, mining, processing, royalty costs, refining and treatment charges, sales costs and export taxes See end notes “Non-GAAP disclosure” All-In Sustaining Cost / oz Dec 31, 2012 Mar 31, 2013 Total cash costs for El Gallo 1 Produ
Slide 10: Balance Sheet
10 Dec 31, 2012 Mar 31, 2013 Cash and gold and silver bullion $72,611 $46,812 IVA taxes receivable $9,150 $7,887 Inventories $7,262 $6,692 Mineral Properties $767,067 $766,675 Investment in MSC $273,948 $273,711 Total Assets $1,150,937 $1,124,963 Deferred Tax Liability $229,522 $223,059 Total Liabil
Slide 11: Liquid Assets
11 Dec 31, 2012 Mar 31, 2013 May 15, 2013 Cash $70,921 $45,122 $37,499 Gold and silver bullion (1) $2,063 $1,983 $1,708 Inventories – Gold and silver doré (1) $5,962 $3,555 $6,990 Total $78,946 $50,660 $46,197 In thousands of US dollars (1) Based on London PM close as of December 31, 2012, March 31,
Slide 12: Share Capital
12 Jan 24, 2012 (Merged with Minera Andes) Dec 31, 2012 Mar 31, 2013 Common & Exch. Shares* 267,084 296,025 297,086 Options 6,000 4,581 4,522 Fully Diluted Shares 273,084 300,606 301,608 In thousands Share Capital
Slide 13: December 2012 Rights Offering
13 Raised $61 Million Fully Subscribed Low Cost Shareholder Friendly December 2012 Rights Offering
Slide 14: Operational + Exploration Update
14 IAN BALL Senior Vice President OPERATIONAL + EXPLORATION UPDATE
Slide 15: Key Assets
15 Key Assets Gold Bar Gold Permitting El Gallo 2 Silver Permitting Los Azules Copper Copper Exploration San José Mine (49%) Silver / Gold Production El Gallo 1 Mine Gold Production
Slide 16: 2012 AGM Growth Forecast
16 *Gold equivalent 2012 AGM Growth Forecast What We Told You Last Year 105,000 oz Achieved 290,000 oz 130,000 oz On Track 180,000 oz San José El Gallo 1 El Gallo 2 Gold Bar 2012A 2013E 2014E 2015E
Slide 17: Gold Price 2012 - Present
17 Gold Price 2012 - Present *As of May 15, 2013 May Gold 2012 $1,650 / oz May Gold 2013 $1,370 / oz $280 / oz Decline
Slide 18: Mining IPOs dry up in Q1
Mining IPOs dry up in Ql NP CANADIAN Press | 19/04/01 11:37 AM ET More from Canadian Press Junior miners fret over lack of investment Northern Ontario mineral exploration has dropped dramatically, observers say cpcnews | Posted: Mar 5, 2013 11:49 AM ET Financing for junior mining feels the pinch |TH
Slide 19: If there's a way to do it better... find it
19 “IF THERE’S A WAY TO DO IT BETTER... FIND IT.” THOMAS A. EDISON
Slide 20: El Gallo Mine: Mexico
20 El Gallo 1 Mine: Mexico
Slide 21: El Gallo 1: Expansion Drivers
21 1. Exploration Success 2. Small Capital Requirements El Gallo 1: Expansion Drivers Announced This Morning
Slide 22: El Gallo 1 Mine
22 Lupita Pit Sagrado Pit New Central Discovery Samanegio Pit Heap Leach Pad El Gallo 1 Mine
Slide 23: El Gallo 1: Central Zone - Growth
23 El Gallo 1: Central Zone - Growth
Slide 24: El Gallo 1: Central Zone - Growth
24 El Gallo 1: Central Zone - Growth
Slide 25: $5 Million Capital to Expand El Gallo 1
25 $5 Million Internally Financed Capital to Expand El Gallo 1 3,000 4,500 ore tonnes per day
Slide 26: El Gallo Expansion $5 Million
26 Heap Leach Pad Expansion $2.5 M El Gallo 1 Expansion $5 Million Crushers $0.5 M Process Plant $2.0 M
Slide 27: El Gallo Mine Increasing Gold Production
27 El Gallo 1 Mine Increasing Gold Production 27,300 oz 60,000 oz 37,500 oz 75,000 oz El Gallo 1 Prior Est. El Gallo 1 Expansion Est. 2013E 2014E 2015E 2016E
Slide 28: El Gallo 2: Mexico
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Slide 29: What Method is Best?
29 New Mill Heap Leach El Gallo 2 What Method is Best? Today $ Defer
Slide 30: El Gallo 2: Heap Leach Processing
30 El Gallo 2: Heap Leach Processing 1. El Gallo 1 & 2: Only 5 km apart How is this Possible? 2. El Gallo 2: Early Heap Leach Results Positive
Slide 31: El Gallo 1 & 2: Close Proximity
31 El Gallo 1 Mine 5 km Road El Gallo 2 El Gallo 1 & 2: Close Proximity
Slide 32: El Gallo 2: Heap Leach Recovery
32 El Gallo 2: Heap Leach Recovery 45 – 65% Silver Recoveries Early Test Results
Slide 33: El Gallo 2: Next Steps
33 1. Establish Silver Recovery 2. Confirm Costs 3. Decide Process Method El Gallo 2: Next Steps
Slide 34: Los Azules: Argentina
34 Los Azules: Argentina
Slide 35: Possible Financing Sources
35 Sale / JV Los Azules Lease / Debt / Equity Possible Financing Sources
Slide 36: Los Azules Resource Growth
36 Los Azules Resource Growth 2.2 4.6 5.4 11.2 10.3 10.8 14.3 Billion Pounds Copper Indicated Inferred 2008 2010 2012 2013
Slide 37: Comparing Market Caps
37 Lumina Copper Los Azules 2/3 Size = *As of May 15, 2013 Comparing Market Caps $315 Million $200 Million
Slide 38: Los Azules: Possible Source of Funding
38 Los Azules: Possible Source of Funding Asset Sale or JV For Sale
Slide 39: Los Azules vs Lumina Copper
39 Los Azules vs Lumina Copper 50% Resource Growth Since PEA Los Azules(1) (McEwen) Taca Taca(2) (Lumina) Production 375,000 535,000 Capex $2.8 Billion $3.0 Billion Cash Cost Net by-product $0.96 $1.11 Copper Grade 0.50% 0.45% Strip Ratio 1.3:1 1.6:1 Mine Life 26 Yrs 28 Yrs 1) June 2010. 2) April 20
Slide 40: Los Azules Updated PEA Due Q3
40 Los Azules Updated PEA Due Q3
Slide 41: San José: Argentina
bi aly a De oe 2 La San José: Argen
Slide 42: San José Mine: Forecast 2013
42 San José Mine: Forecast 2013 *Silver : Gold ratio (52:1) Gold & Silver Production, Gold Eq. 102,700 oz Annual 12 Yr Mine Life $750 / oz Cash Cost $1,300 / oz Total Cost 42 High-Grade Gold + Silver Argentina
Slide 43: San José Mine: The Good and The Bad
43 The Good The Bad Resource Size All Time High 20 – 25% Inflation Grade vs 2011 Unions Production 5 Years Changing Regulations San José Mine
Slide 44: San José: High Grade
44 San José: High Grade *Source: company reports Comparison of High-Grade Deposits 0 4 8 12 16 20 0 2 4 6 8 10 12 14 HOC / McEwen San José Size (Million Au Eq. oz) Grade (Au gpt Eq.) Rubicon Phoenix Pretium Valley of Kings Goldcorp Red Lake Goldcorp Elenore Goldcorp Cerro Negro Yamana El Penon Mine
Slide 45: Gold Bar: Nevada
45 Gold Bar: Nevada
Slide 46: Gold Bar – Cortez Trend, Nevada
46 Gold Bar – Cortez Trend, Nevada Next to World’s Largest Gold Mine
Slide 47: Gold Bar Production Forecast
47 50,000 oz Au Annual $700/oz Cash Cost $850/oz Au Eq Total Cost 2015 Production Starts Gold Bar Production Forecast Construction Forecasted to Begin 2014 Nevada 8 Yr Mine Life Capex $55 M
Slide 48: Gold Bar: Previously Mined Open Pit
Waste Dump Open Pit Gold Bar: Previously Mined 48 Open Pit Haul Road
Slide 49: Gold Bar: Previously Mined Open Pit
Gold Bar: Previously Mined Open Pit 49 Haul Road Waste Dump
Slide 50: El Gallo Mill: Growth Scenarios by 2016
50 El Gallo 2 Mill 2012 AGM Est. 290,000 oz *Gold equivalent production (52:1 silver/gold ratio) Growth Scenarios by 2016 El Gallo 2 Deferred 225,000 oz El Gallo 2 Heap Leach 285,000 oz
Slide 51: Gold Market Overview
51 ROB McEWEN Chief Owner MUX / GOLD MARKET OVERVIEW
Slide 52: Our Goal: Qualify For S&P
52 Qualify For S&P 500 Our Goal
Slide 53: Forecast Annual Production Growth
53 *Gold equivalent Forecast Annual Production Growth 2015 Est. Cash Cost $750 / oz 2015 Est. Total Sustaining Cost $1,000 / oz 105,000 oz 290,000 oz 130,000 oz 180,000 oz San José El Gallo 1 El Gallo 2 Gold Bar 2012A 2013E 2014E 2015E ?
Slide 54: El Gallo 2: Capex
54 El Gallo 2: Capex Contingency, $18.8 Owners Cost, $8.8 Final Engineering, $8.5 Construction Management, $12.0 Spares, $2.0 Construction Labour, $22.0 Plant Equipment, $57.0 Cement/Steel, $37.0 Construction Equipment, $10.0 Other, $5.0 $180 Million
Slide 55: Assumptions: Los Azules / El Gallo 2
55 1. Increase Its Value Through Exploration 2. Sale would cover El Gallo Capex 3. Sale Would Allow Non-Dilutive Build Assumptions: Los Azules / El Gallo 2
Slide 56: Subsequent Events
56 1. Increased Copper Resource Significantly 2. Mega Project: Less Enthusiasm 3. Argentina: Less Attractive 4. Silver/Gold Prices Fall – Adverse Impact IRR 5. Cost of Capital High Subsequent Events
Slide 57: Adversity Mother of Innovation
57 Adversity Mother of Innovation
Slide 58: Expand with Less Capex
58 Expand with Less Capex
Slide 59: Expand El Gallo Internally Funded
59 Expand El Gallo 1 Internally Funded
Slide 60: Issue at Hand: Financing El Gallo
60 Issue at Hand Financing El Gallo 2
Slide 61: Development Economics – El Gallo
61 Development Economics – El Gallo 2 Silver Price / oz NPV 5% (Millions) Payback After Tax IRR $30.00 $212 2.0 39% $27.50 $165 2.2 33% $25.00 $118 2.6 26% $22.50 $71 3.0 18% $20.00 $23 4.1 10%
Slide 62: MUX Cost of Capital
] MUX Cost of Capital Percent 45 Gere Now) All Equity 5 . All Debt 40% Debt / Equity $2 $3 $4 Share Price
Slide 63: Cash Scenarios
63 -200 -150 -100 -50 0 50 100 Working Capital ($ Millions) *Gold $1,350 Silver $23.00 Alternatives Stop all work El Gallo 2 on hold Finish Mill Engineering Stop Gold Bar work Projects Maintaining Timeline Q2-13 Q4-14 Q2-14 Q4-13 Cash Scenarios
Slide 64: Mill, Heap Leach, Defer El Gallo
64 Mill Heap Leach Defer El Gallo 2
Slide 65: El Gallo Growth Scenarios by 2016
65 El Gallo 2 Mill 2012 AGM Est. 290,000 oz *Gold equivalent production (52:1 silver/gold ratio) Growth Scenarios by 2016 El Gallo 2 Deferred 225,000 oz El Gallo 2 Heap Leach 285,000 oz
Slide 66: It's Money
66 It’s Money
Slide 67: Big, Persistent, Growing Concern
67 Big, Persistent, Growing Concern US National Debt EU Debt $16.8 Trillion $11.3 Trillion
Slide 68: Massive Monetary Easing
68 MASSIVE MONETARY EASING
Slide 69: Non-Existent Interest Rates
69 Non-Existent Interest Rates
Slide 70: Troubling Developments: Alert
70 Cyprus – Currency Controls ABN Amro – Defaulting on Gold Argentina – Currency Controls Troubling Developments: Alert
Slide 71: Ignore History at Your Risk
71 Ignore History at Your Risk *As of May 15, 2013
Slide 72: Central Banks Buying Gold
72 Strong Economies Central Banks Buying Gold
Slide 73: SocGen – Gold: Down or Up?
73 SocGen – Gold: Down or Up? April 2, 2013 $1,375 Foreign Exchange Team April 25, 2013 $10,000 Global Strategist
Slide 74: Gold Shares Very Attractive
74 Gold Shares Very Attractive *As of May 15, 2013 Huge Divergence
Slide 75: White House Effect
75 White House Effect -40% 0% 40% 80% *As of May 15, 2013 84 88 92 96 00 04 08 12 Presidential Election Year Post Election Year Bre-X /85 /89 /93 /97 /01 /13 /09 /05 7/8 8/8 Performance of XAU
Slide 76: Contact Information
76 Contact Information Jenya Meshcheryakova Investor Relations Tel: 1.866.441.0690 x.410 Email: info@mcewenmining.com facebook.com/mcewenrob twitter.com/mcewenmining store.mcewenmining.com
Slide 77: End Notes
77 End Notes The Company has included non-GAAP performance measures, cash costs, and all-in sustaining cost per gold ounce, throughout this document on a historic and estimated forward looking basis. In the mining industry, these are common performance measures but do not have any standardized meani
Slide 78: End Notes
78 End Notes Guidance to US Investors: McEwen Mining prepares its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101 (NI 43-101). These standards are different from the standards generally p
Slide 79: Resource Table: San José and El Gallo
79 San José Mine (49%) (1) Tonnes (MM*) (100%) Ag Grade (g/t) Au Grade (g/t) Ag (MMoz*) (100%) Au (MMoz*) (100%) Proven 0.83 470 6.73 12.54 0.18 Probable 0.94 471 6.19 14.26 0.19 Measured (inclusive of P+P) 1.3 559 8.2 23.17 0.34 Indicated (inclusive of P+P) 3.1 453 6.56 45.12 0.65 Inferred 2.1 476
Slide 80: Resource Table: El Gallo Gold, Gold Bar, Limo
80 El Gallo Complex Gold(2) Tonnes (MM*) (100%) Au Grade (g/t) Au (MMoz*) (100%) Measured 28.3 0.46 0.41 Indicated 6.1 0.78 0.15 Inferred 27.6 0.31 0.27 Gold Bar(3) Tonnes (MM*) (100%) Ag Grade (g/t) Au Grade (g/t) Ag (MMoz*) (100%) Au (MMoz*) (100%) Measured 0.7 1.19 0.03 Indicated 18.8 0.94 0.57 R
Slide 81: Los Azules and Limo Resources
81 Los Azules(6) Tonnes (MM) Cu Grade (%) Au Grade (g/t) Ag Grade (g/t) Cu (B lbs) Indicated 389 0.63 0.07 1.8 5.4 Inferred 1,397 0.46 0.06 1.9 14.3 Limo(5) Tonnes (MM*) (100%) Ag Grade (g/t) Au Grade (g/t) Ag (MMoz*) (100%) Au (MMoz*) (100%) Measured 5.9 0.89 0.17 Indicated 3.7 0.61 0.07 The cumula
Slide 82: Technical Report Sources
82 3) Gold Bar resources were derived from the report titled “NI 43-101 Technical Report on Resources and Reserves Gold Bar Project, Eureka County, Nevada” dated February 24, 2012 with an effective date of November 28, 2011, prepared by J. Pennington, C.P.G., MSc., Frank Daviess, MAusIMM, Registered