Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — Shareholder Meeting (May 2013)
82 slides from Mcewen's shareholder meeting presentation, May 16, 2013
Slide 1: McEwen Mining AGM 2013
McEwen SiViinine Prvse MUX 1% AGM 2013
Slide 2: Agenda
Agenda 1. Formal Meeting 2. Financial Overview 3. Operation + Exploration Update 4. Gold Market Overview 2
Slide 3: Formal Meeting
FORMAL MEETING Nils Engelstad Vice President, Corporate Affairs & Secretary 3
Slide 4: Financial Overview
FINANCIAL OVERVIEW Perry Ing Chief Financial Officer 4
Slide 5: Cautionary Statement
Cautionary Statement Forward Looking Statements 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,
Slide 6: Statement of Operations
Statement of Operations Year ended Three months ended Dec 31, 2012 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 cost
Slide 7: Argentina
Argentina 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 contri
Slide 8: El Gallo 1
El Gallo 1 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 In thousand
Slide 9: All-In Sustaining Cost / oz
All-In Sustaining Cost / oz Dec 31, 2012 Mar 31, 2013 Total cash costs for El Gallo 1 Production costs applicable to sales (1) - $10,593 Less: Depreciation - (669) Less: Pre-stripping costs for future pit access - (3,813) Total cash costs as reported by MSC (49%) 73,311 14,159 Total consolidated cas
Slide 10: Balance Sheet
Balance Sheet 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 T
Slide 11: Liquid Assets
Liquid Assets 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
Slide 12: Share Capital
Share Capital Jan 24, 2012 Dec 31, 2012 Mar 31, 2013 (Merged with Minera Andes) 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 12
Slide 13: December 2012 Rights Offering Raised $61 Million
December 2012 Rights Offering Raised $61 Million Fully Subscribed Low Cost Shareholder Friendly 13
Slide 14: Operational + Exploration Update
OPERATIONAL + EXPLORATION UPDATE IAN BALL Senior Vice President 14
Slide 15: Key Assets
Key Assets Gold Bar Gold El Gallo 1 Mine El Gallo 2 Permitting Gold Silver Production Permitting Los Azules Copper Copper San José Mine (49%) Exploration Silver / Gold Production 15
Slide 16: 2012 AGM Growth Forecast
2012 AGM Growth Forecast What We Told You Last Year 290,000 oz 180,000 oz 105,000 oz 130,000 oz Achieved On Track 2012A 2013E 2014E 2015E San José El Gallo 1 El Gallo 2 Gold Bar *Gold equivalent 16
Slide 17: Gold Price 2012 - Present
Gold Price 2012 - Present $280 / oz Decline May Gold 2012 $1,650 / oz May Gold 2013 $1,370 / oz *As of May 15, 2013 17
Slide 18: Mining IPOs Dry Up in Q1
Mining [POs dry up in QI NP. CaNapIAN Press | 13/04/01 11:37 AM ET More from Canadian Press Junior miners fret over lack of investment Northern Ontario mineral exploration has dropped dramatically, observers say cBcnews | Posted: Mar 5, 2013 11:49 AM ET Financing for junior mining feels the pinch |T
Slide 19: If there's a way to do it better... find it
“IF THERE’S A WAY TO DO IT BETTER… FIND IT.” THOMAS A. EDISON 19
Slide 20: El Gallo 1 Mine: Mexico
El Gallo 1 Mine: Mexico 20
Slide 21: El Gallo 1: Expansion Drivers
El Gallo 1: Expansion Drivers Announced This Morning 1. Exploration Success 2. Small Capital Requirements 21
Slide 22: El Gallo 1 Mine
El Gallo 1 Mine Heap Leach Pad Samanegio Pit Lupita Pit New Central Sagrado Discovery Pit 22
Slide 23: El Gallo 1: Central Zone - Growth
El Gallo 1: Central Zone - Growth 23
Slide 24: El Gallo 1: Central Zone - Growth
El Gallo 1: Central Zone - Growth 24
Slide 25: $5 Million Capital to Expand El Gallo
Capital to Expand El Gallo 1 3,000 4,500 ore tonnes per day $5 Million Internally Financed 25
Slide 26: El Gallo 1 Expansion $5 Million
El Gallo 1 Expansion $5 Million Process Plant $2.0 M Heap Leach Pad Expansion $2.5 M Crushers $0.5 M 26
Slide 27: El Gallo Mine: Increasing Gold Production
El Gallo 1 Mine Increasing Gold Production 75,000 oz 60,000 oz 37,500 oz 27,300 oz 2013E 2014E 2015E 2016E El Gallo 1 El Gallo 1 Prior Est. Expansion Est. 27
Slide 28: El Gallo 2: Mexico
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Slide 29: El Gallo: What Method is Best?
El Gallo 2 What Method is Best? Today $ New Mill Heap Leach Defer 29
Slide 30: El Gallo 2: Heap Leach Processing
El Gallo 2: Heap Leach Processing How is this Possible? 1. El Gallo 1 & 2: Only 5 km apart 2. El Gallo 2: Early Heap Leach Results Positive 30
Slide 31: El Gallo 1 & 2: Close Proximity
El Gallo 2 El Gallo 1 & 2: Close Proximity El Gallo 1 Mine 5 km Road 31
Slide 32: El Gallo 2: Heap Leach Recovery
El Gallo 2: Heap Leach Recovery Early Test Results 45 – 65% Silver Recoveries 32
Slide 33: El Gallo 2: Next Steps
El Gallo 2: Next Steps 1. Establish Silver Recovery 2. Confirm Costs 3. Decide Process Method 33
Slide 34: Los Azules: Argentina
4 me . gi Se ! = Et ae — = Los Azules: Argentina
Slide 35: Possible Financing Sources
Possible Financing Sources Sale / JV Los Azules Lease / Debt / Equity 35
Slide 36: Los Azules Resource Growth
Los Azules Resource Growth Billion Pounds Copper 14.3 10.8 10.3 11.2 4.6 5.4 2.2 2008 2010 2012 2013 Indicated Inferred 36
Slide 37: Comparing Market Caps
Comparing Market Caps Lumina Copper $315 Million Los Azules 2/3 Size = $200 Million *As of May 15, 2013 37
Slide 38: Los Azules: Possible Source of Funding
Los Azules: Possible Source of Funding Asset Sale or JV For Sale 38
Slide 39: Los Azules vs Lumina Copper
Los Azules vs Lumina Copper Argentina Copper Development Projects 50% Resource Los Azules(1) Taca Taca(2) Growth Since PEA (McEwen) (Lumina) Production 375,000 535,000 Capex $2.8 Billion $3.0 Billion Cash Cost $0.96 $1.11 Net by-product Copper Grade 0.50% 0.45% Strip Ratio 1.3:1 1.6:1 Mine Life 26 Y
Slide 40: Los Azules Updated PEA Due Q3
Los Azules Updated PEA Due Q3 40
Slide 41: San José: Argentina
San José: Argentina 41
Slide 42: San José Mine: Forecast 2013
San José Mine: Forecast 2013 Gold & Silver Production, Gold Eq. Argentina 102,700 oz 12 Yr Annual Mine Life $750 / oz $1,300 / oz Cash Cost Total Cost High-Grade Gold + Silver *Silver : Gold ratio (52:1) 42
Slide 43: San José Mine
San José Mine The Good The Bad Resource Size All Time High 20 – 25% Inflation Grade vs 2011 Unions Production 5 Years Changing Regulations 43
Slide 44: San José: High Grade
San José: High Grade Comparison of High-Grade Deposits 20 Pretium Rubicon HOC / McEwen Phoenix Valley of Kings San José 16 Grade (Au gpt Eq.) Goldcorp Red Lake 12 Yamana Goldcorp El Penon Cerro Negro 8 Goldcorp Elenore Mine 4 Development Exploration 0 0 2 4 6 8 10 12 14 *Source: company reports Size
Slide 45: Gold Bar: Nevada
Gold Bar: Nevada 45
Slide 46: Gold Bar – Cortez Trend, Nevada
Gold Bar – Cortez Trend, Nevada Next to World’s Largest Gold Mine 46
Slide 47: Gold Bar Production Forecast
Gold Bar Production Forecast Construction Forecasted to Begin 2014 Nevada 50,000 oz Au 2015 Annual Production Starts $700/oz $850/oz Au Eq Cash Cost Total Cost 8 Yr Capex Mine Life $55 M 47
Slide 48: Gold Bar: Previously Mined
Gold Bar: Previously Mined Haul Road Open Pit Open Pit Waste Dump 48
Slide 49: Gold Bar: Previously Mined
Gold Bar: Previously Mined Open Pit Haul Road Waste Dump 49
Slide 50: Growth Scenarios by 2016
Growth Scenarios by 2016 El Gallo 2 Mill El Gallo 2 El Gallo 2 2012 AGM Est. Heap Leach Deferred 290,000 oz 285,000 oz 225,000 oz *Gold equivalent production (52:1 silver/gold ratio) 50
Slide 51: MUX / Gold Market Overview
MUX / GOLD MARKET OVERVIEW ROB McEWEN Chief Owner 51
Slide 52: Our Goal: Qualify for S&P
Our Goal Qualify For S&P 500 52
Slide 53: Forecast Annual Production Growth
Forecast Annual Production Growth 2015 Est. Cash Cost $750 / oz 2015 Est. Total Sustaining Cost $1,000 / oz 290,000 oz 180,000 oz 130,000 oz ? 105,000 oz 2012A 2013E 2014E 2015E San José El Gallo 1 El Gallo 2 Gold Bar *Gold equivalent 53
Slide 54: El Gallo 2: Capex
El Gallo 2: Capex $180 Million Construction Other, $5.0 Contingency, Owners Equipment, $10.0 $18.8 Cost, $8.8 Final Cement/Steel, Engineering, $8.5 $37.0 Construction Management, $12.0 Spares, $2.0 Construction Plant Equipment, Labour, $22.0 $57.0 54
Slide 55: Assumptions: Los Azules / El Gallo 2
Assumptions: Los Azules / El Gallo 2 1. Increase Its Value Through Exploration 2. Sale would cover El Gallo Capex 3. Sale Would Allow Non-Dilutive Build 55
Slide 56: Subsequent Events
Subsequent Events 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 56
Slide 57: Adversity Mother of Innovation
Adversity Mother of Innovation 57
Slide 58: Expand with Less Capex
Expand with Less Capex 58
Slide 59: Expand El Gallo 1 Internally Funded
Expand El Gallo 1 Internally Funded 59
Slide 60: Issue at Hand: Financing El Gallo 2
Issue at Hand Financing El Gallo 2 60
Slide 61: Development Economics – El Gallo 2
Development Economics – El Gallo 2 Silver Price / NPV 5% Payback oz (Millions) 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% 61
Slide 62: MUX Cost of Capital
| MUX Cost of Capital Percent 45 40 35 30 25 20 15 10 Gere Now) 5 All Debt All Equity 40% Debt / Equity 0 $1 $2 Share Price $3 $4 62
Slide 63: Cash Scenarios: Working Capital
Alternatives Cash Scenarios 100 Working Capital ($ Millions) 50 Stop all work El Gallo 2 on hold 0 Finish Mill -50 Engineering Stop Gold Bar work -100 -150 Projects Maintaining Timeline -200 Q2-13 Q4-13 Q2-14 Q4-14 *Gold $1,350 Silver $23.00 63
Slide 64: El Gallo Mill, Heap Leach, Defer
El Gallo 2 Mill Heap Leach Defer 64
Slide 65: Growth Scenarios by 2016
Growth Scenarios by 2016 El Gallo 2 Mill El Gallo 2 El Gallo 2 2012 AGM Est. Heap Leach Deferred 290,000 oz 285,000 oz 225,000 oz *Gold equivalent production (52:1 silver/gold ratio) 65
Slide 66: It's Money
It’s Money 66
Slide 67: Big, Persistent, Growing Concern
Big, Persistent, Growing Concern US National Debt $16.8 Trillion EU Debt $11.3 Trillion 67
Slide 68: Massive Monetary Easing
MASSIVE MONETARY EASING 68
Slide 69: Non-Existent Interest Rates
Non-Existent Interest Rates 69
Slide 70: Troubling Developments: Alert
Troubling Developments: Alert Cyprus – Currency Controls ABN Amro – Defaulting on Gold Argentina – Currency Controls 70
Slide 71: Ignore History at Your Risk
Ignore History at Your Risk *As of May 15, 2013 71
Slide 72: Strong Economies, Central Banks Buying Gold
Strong Economies Central Banks Buying Gold 72
Slide 73: SocGen – Gold: Down or Up?
SocGen – Gold: Down or Up? April 2, 2013 $1,375 Foreign Exchange Team April 25, 2013 $10,000 Global Strategist 73
Slide 74: Gold Shares Very Attractive
Gold Shares Very Attractive Huge Divergence *As of May 15, 2013 74
Slide 75: White House Effect
White House Effect Performance of XAU 80% Presidential Election Year 7 Post Election Year 8 40% Bre-X 0% 8 8 -40% 84/85 88 /89 92 /93 96 /97 00 /01 04 /05 08 /09 12 /13 *As of May 15, 2013 75
Slide 76: Contact Information
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 76
Slide 77: End Notes: Non-GAAP Disclosure
End Notes Non-GAAP Disclosure 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 s
Slide 78: End Notes: Technical Disclosure
End Notes Technical Disclosure 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 sta
Slide 79: Resource Table
Resource Table: Combined resources calculated using the following. San José Mine Tonnes (MM*) Ag (MMoz*) Au (MMoz*) Ag Grade (g/t) Au Grade (g/t) (49%) (1) (100%) (100%) (100%) Proven 0.83 470 6.73 12.54 0.18 Probable 0.94 471 6.19 14.26 0.19 Measured 1.3 559 8.2 23.17 0.34 (inclusive of P+P) Indica
Slide 80: Resource Table: Cont'd
Resource Table: Cont’d El Gallo Complex Tonnes (MM*) Au (MMoz*) Au Grade (g/t) Gold(2) (100%) (100%) Measured 28.3 0.46 0.41 Indicated 6.1 0.78 0.15 Inferred 27.6 0.31 0.27 Tonnes (MM*) Ag (MMoz*) Au (MMoz*) Gold Bar(3) Ag Grade (g/t) Au Grade (g/t) (100%) (100%) (100%) Measured 0.7 1.19 0.03 Indica
Slide 81: Resource Table: Cont'd Los Azules
Resource Table: Cont’d 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 Tonnes (MM*) Ag (MMoz*) Au (MMoz*) Limo(5) Ag Grade (g/t) Au Grade (g/t) (100%) (100%) (100%) Measured 5.9 0.89 0.17 Indicated 3.7
Slide 82: Cont'd
Cont’d 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, Regist