Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — H.C. Wainwright Mining Conference November 2020
48 slides from Mcewen's conference presentation, Dec 2, 2020
Slide 1: A Unique Opportunity: A Contrarian's Moment
Gold / / Copper A Unique Opportunity: A Contrarian’s Moment H.C. Wainwright Mining Conference November 2020
Slide 2: MUX: Cautionary Statement
MUX 2 MUX: Cautionary Statement Executive Summary: If you are r isk - averse , don’t buy our shares. Past performance is unreliable in predicting the future. Unexpected events do happen and will change forecasts. MUX
Slide 3: MUX: Diversified Production & Growth
MUX 3 Black Fox Gold Bar El Gallo San Jose MUX: Diversified Production & Growth Gold & Silver Development Pipeline Froome Grey Fox Stock Copper Los Azules Fenix Argentina Mexico Nevada Ontario Mines Gold & Silver
Slide 4: The Contrarian's Bet
MUX 4 -80 -60 -40 -20 0 20 40 60 80 100 2017 2018 2019 2020 MUX GDXJ MUX - $0.98 Current MUX Source: Bloomberg. From Nov 25, 2017 to Nov 25 , 20 20 . MUX Outperformance MUX Underperformance Potential MUX $3.03 Gap to Close % MUX vs GDXJ Relative Performance Nov 2017 – Nov 2020 MUX GDXJ The Contraria
Slide 5: Why the Share Price Fell
MUX 5 MUX: Share Price Fell Because With the Benefit of 20/20 Hindsight, I Made 2 Bad Decisions: - Hired the Wrong Operators - Financed with Debt A Downward Spiral Followed: - Operations’ Massive Miss on Guidance - Resulted in a Huge Revenue Shortfall - Equity Financings Required to Avoid Debt Coven
Slide 6: Here's How We Are Turning MUX Around
MUX 6 Here's How We Are Turning MUX Around! • Added New Senior Management @ Head Office & Mine Sites • Driving Cost/ oz Down • Increasing Gold Production • Extending Mine Life • Exploration Continues to Deliver Encouraging Results • Benefiting From Higher Prices of Gold, Silver & Copper
Slide 7: Introduction to Senior Management
MUX 7 Introduction to Senior Management Rob McEwen Chairman & Chief Owner Anna Ladd - Kruger CFO Rob has $1/ year salary, has invested $165M in McEwen Mining and owns 20% of the outstanding shares. He is the founder of Goldcorp, was awarded the 2001 PDAC Developer of the Year, the Order of Canada, a
Slide 8: 2020 Operational & Financial Highlights
MUX 8 2020 Operational & Financial Highlights • Financings aligned to strategic growth profile Aug: US$50 M debt facility amended with principal repayments commencing in 2022, in line with increased production profile Sept: US$10.4 M flow - through financing @ $1.65/ share to fund exploration at the
Slide 9: 2020 – Operating & Financial Trends
MUX 9 2020 – Operating & Financial Trends Q1 - 2020 Q2 - 2020 Q3 - 2020 Production (gold equivalent oz 1 ) 35,062 19,134 30,419 Cash cost / oz 2 $1,278 $1,664 $1,406 AISC / oz 2 $1,696 $ 2,012 $1,614 Growth Projects & Exploration Investments $6.3 million $6.4 million $8.4 million Significant Challen
Slide 10: MUX Is Unique!
MUX 10 MUX Is Unique! CEO's Financial Commitment $16 5 M 2 0 % $1/ Y r Investment 1 Ownership Salary Rob McEwen 20% Institutional 16% Retail 64% 1 - Rob McEwen’s investment: $1 40 M shares + $25 M, Aug 13, 2018 press release. 2 - Average Daily Trading Volume over 3 months. 3 - Holdings in million sh
Slide 11: Operational Achievements to Date
MUX 11 Operational Achievements to Date • Improving Resource - Reserve Block Model – Tighter definition and delineation of drill spacing ahead of mining • Increasing Productivity and Reducing Costs – New leadership, management teams and company culture – Improved pro - active planning, measuring and
Slide 12: From Challenges to Solutions
MUX 12 From Challenges to Solutions Mine Challenge Solution Black Fox Contractor crusher fire Flood grade control Insufficient active ore headings Resource model inconsistencies Life Of Mine Fox Complex Expansion x x x x x Purchased in - house crusher New water control measures More development In -
Slide 13: Nevada - Prime Real Estate for Gold
MUX 13 Nevada - Prime Real Estate for Gold Cortez Nevada Gold Mines Cortez 50 Moz Au cluster 1 Fourmile Discovery Goldrush MUX Property NGM Property Faults Gold Bar 20 k m 1 . Includes past production and current resources. Underexplored, With Upside Potential Legend Gold Bar Nevada, USA 12 miles N
Slide 14: Gold Bar: Exploration Targets
MUX 14 Gold Bar: Exploration Targets Gold Bar South Legend Mine Deposit Near Mine Targets Brownfield Greenfield Pick Ridge Cabin
Slide 15: Tonkin: Potential Incremental Production for Gold Bar
MUX 15 Tonkin: Potential Incremental Production for Gold Bar Cortez Fourmile Discovery Goldrush MUX Property NGM Property Faults Gold Bar Complex 20 k m Legend 12 miles N Tonkin Gold Oxide Resource 1 : 205,000 oz @ 0.027 opt (0.92 g/t) Measured & Indicated resource (70% Measured, 30% Indicated), 200
Slide 16: Fox Complex: Fox-Stock Mine & Mill
MUX 16 Fox Complex: Fox - Stock Mine & Mill Black Fox Mine Matheson Fox - Lexam Trans - Canada Hwy 28 Miles (45 km) N Timmins 20 Miles (32 km) Grey Fox Fox Complex Gold Resources - 2.96 M oz Measured & Indicated & 1.15 M oz Inferred Froome Destor - Porcupine Fault Zone Resources: M&I - Measured & In
Slide 17: Froome – Extends Black Fox Mine Life 2.5 years
MUX 17 Froome – Extends Black Fox Mine Life 2.5 years Froome Is Better Than Black Fox: • Improved productivity and low cost – Production expected Q4 2021 • Shallower deposit - more efficient haulage and reduced underground congestion • Disseminated style mineralization - more consistent grades and c
Slide 18: Fox Complex: Exciting Upside Potential
MUX 18 Stock Mine 27.2 g/t Au / 7m, Incl. 120 g/t Au / 1.6m Black Fox Mine 55.1 g/t Au / 1.0m Stock / Black Fox Kirkland Lake Timmins Red Lake 1,000m 2,000m Surface Ore Bodies Headframe/ Shaft 3,300ft 6,600ft Stock West 6.7 g/t Au / 39m Stock East 63.6 g/t Au / 6.2m Grey Fox Area Whiskey Jack: 9.9 g
Slide 19: Fox Complex: Stock West
MUX 19 - 200m - 400m - 600m - 800m - 1000m - 1200m - 200m - 400m - 600m - 800m - 1000m Fox Complex: Stock West Stock Mine (care & maintenance) Stock East 1000 m 0 Mineralized areas / targets S19 - 95 27.2 g/t Au / 7m incl. 311 g/t Au / 0.6m S18 - 31 5.6 g/t Au / 3.3m, 14.1 g/t Au / 1.8m incl. 30.1 g
Slide 20: Fox Complex: Stock West & East
MUX 20 Cog 0.5g/t Au S19 - 98 5.6 g/t Au / 30m incl. 9.1 g/t Au / 13m S19 - 101 6.3 g/t Au / 42.8m incl. 6.7 g/t Au / 39m S19 - 106 7.7 g/t Au / 25m incl. 11.2 g/t Au / 16.2m S19 - 113 5.3 g/t Au / 23m incl. 6.8 g/t Au / 17m S19 - 105 5.5 g/t Au / 29.7m incl. 5.6 g/t Au / 29.1m S19 - 95 11.98 g/t Au
Slide 21: Fox Complex: Black Fox Mine, Froome & Grey Fox Deposits
MUX 21 2 km 1.2 miles N Please see Appendix for more details. Fox Complex: Black Fox Mine, Froome & Grey Fox Deposits Froome 181,000 oz Indicated @ 5.1 g/t Au Grey Fox 888,000 oz Indicated @ 7.1 g/t Au 173,000 oz Inferred @ 6.6 g/t Au
Slide 22: Fox Complex, Grey Fox: Excitement @ Whiskey Jack
MUX 22 Fox Complex, Grey Fox: Excitement @ Whiskey Jack 19GF - 1242 9.74g/t Au / 13m incl. 14.07g/t Au / 8.36m PR93 - 19 8.22 g/t Au / 9.9m incl. 32.2g/t Au / 2.4m GF14 - 917 17.41 g/t Au / 2.65m incl. 41.49g/t Au / 1.09m GF11 - 400 9.26 g/t Au / 13.75m incl. 15.21g/t Au / 7.95m GF14 - 925 3.93 g/t
Slide 23: Los Azules: Large Copper Deposit
MUX 23 Source: Oct 16, 2017 – “NI 43 - 101 Technical Report - Preliminary Economic Assessment Update for the Los Azules Project, Argentina”. 1 Based on current prices. Los Azules Argentina 221 m (725 ft) @ 1.62% Cu 200 m (656 ft) @ 0.89% Cu 240 m (787 ft) @ 0.94% Cu 360 m (1,181 ft) @ 0.63% Cu 429 m
Slide 24: Los Azules: Highlights of the 2017 PEA
MUX 24 Los Azules – Oct 16, 2017 – “NI 43 - 101 Technical Report - Preliminary Economic Assessment Update for the Los Azules Project, Argentina ”(Hatch). Average annual production 1 st 13 Years Mine life Initial capex Payback After - tax IRR After - tax NPV @ 8% 415 Million lbs Cu @ $1.14/ lb cash c
Slide 25: Los Azules NPV & IRR Sensitivity to Copper Price
MUX 25 Los Azules NPV & IRR Sensitivity to Copper Price IRR Sensitivity to Copper Price NPV @ 8% Sensitivity to Copper Price Oct 16, 2017 – “NI 43 - 101 Technical Report - Preliminary Economic Assessment Update for the Los Azules Project, Argentina ” (Hatch). Change from $3.00/ lb Cu Base Case Assum
Slide 26: Near Term Catalysts
MUX 26 Near Term Catalysts • Growth pipeline: Fenix feasibility study Gold Bar Pick and South resource, reserve & feasibility study update Fox Complex expansion PEA • Exploration at Fox Complex and Gold Bar • Copper price • 2021 Guidance, Q4 on track
Slide 27: Appendix
Appendix
Slide 28: MUX Strengths and Objectives
MUX 28 Strengths x Gold & Silver Production x World Class Jurisdictions for Exploration, Production & Growth x Huge Copper Deposit x Large Insider Ownership Objectives ▪ Decrease Cost / oz ▪ Increase Production ▪ Extend Mine Life MUX Is Moving to Closing the Gap
Slide 29: Strategic Organic Growth Pipeline Targeting 300,000 Gold Equivalent Oz
MUX 29 5 Year Strategic Organic Growth Pipeline Targeting Annual Production to 300,000 Gold Equivalent Oz 160 - 70 210 300 300 300 2020F 2021E 2022E 2023E 2024E 2025E Production (koz Au Eq) Fox Complex Gold Bar El Gallo San Jose Based on internal management estimates and dependent on technical studi
Slide 30: Grey Fox - Whiskey Jack: High Grade at Shallow Depth
MUX 30 From 147 m: 53 g/t Au over 7.4 m Grey Fox - Whiskey Jack: High Grade at Shallow Depth Gold grade (g/t) ▪ 2020 drilling program started in September ▪ 5,070 m drilled to date ▪ Of 15 new drill holes completed, 8 have visible gold Drill core from hole 19GF - 1293.
Slide 31: Stock West Drill Results
MUX 31 Stock West Drill Results - Strong, Consistent Mineralized Intercepts VG 21.4 g/t Visible Gold 5.6 g/t Au over 30 m Drill core from hole S19 - 98.
Slide 32: Fox Complex Conceptual Expansion Strategy
MUX 32 Fox Complex Conceptual Expansion Strategy 1 Production Growth Steps to Target 100 - 150 Koz / Yr Leveraging Stock Mill Capacity 1 Based on existing 3.0 Moz Measured & Indicated Resource from Black Fox, Grey Fox, Stock and Timmins properties. Step 1. Black Fox Mine Improve operations , profita
Slide 33: Fox Complex Expansion Objectives
MUX 33 Fox Complex Expansion Objectives • Increase Timmins gold production to 100 - 150 Koz / yr • Extend mine life to 10 years • Centralize ore processing and support services • Cash Costs $800 / oz Au, AISC $1,050 / oz Au • Near - term production growth by 2022
Slide 34: Froome Deposit – Better Mining Conditions Than Black Fox
MUX 34 Drill core from hole #15PR - G031. Numbers in yellow represent grams per tonne values over sample length. Froome Deposit – Better Mining Conditions Than Black Fox Shown below is a core interval of the wide zone - consistent grades and favorable ground conditions expected, providing for overal
Slide 35: Fox Complex Expansion - Grey Fox: Conceptual Pits
MUX 35 Gibson Portal 147 NE Contact Pit 147 Pit South Pit » Expansion study underway » Potential mining scenarios for the Grey Fox deposit: - Preliminary targeted mill throughput range of 1,800 to 2,000 tpd - Open pit and/ or underground mining trade - off studies ongoing Fox Complex Expansion - GRE
Slide 36: Gold Bar - Exploration Potential
MUX 36 Gold Bar - Exploration Potential Gold Bar South Pot Canyon Gold Canyon Cabin Creek Pick ▪ Extensions of known deposits (Gold Bar & Gold Bar South) ▪ Follow - up on positive drill intersections Hunter Taurus Horse Canyon Rutabaga Gold Stone Ridge 6,100 m Gold Bar N
Slide 37: Gold Bar - Ridge Expansion Drill Program
MUX 37 Gold Bar - Ridge Expansion Drill Program • Current M&I Resource (2020) is 92 Koz Au • Area mapped and geological model created in 2020 • Ridge deposit is open for expansion in several directions • 37 RC drill hole Phase 1 program proposed (4,097 m) • Drilling initiated on Oct 14 th , with 12
Slide 38: Gold Bar Feasibility Update
MUX 38 Gold Bar Feasibility Update Gold Bar Nevada, USA Process Status Reserve and feasibility study update, production and cost guidance Following Q4 Mining and ore processing methods Under Review Over 20 km drilling in 2020 (definition & upgrading resources from Inferred to Indicated) Ongoing Gold
Slide 39: San José Argentina
MUX 39 San José Argentina 1. Hochschild Mining 2019 Annual Report. 2. Based on 49% MUX ownership basis. 3. MUX press release Mar 16, 2020, “McEwen Mini ng Reports 2019 Full Year and Q4 Results". 4. Hochschild’s “Annual Report and Accounts 2018”. 5. Newmont 2019 10 - K report. San José - ▪ Large Prop
Slide 40: San José Mine Vein Extensions
MUX 40 San José Mine Vein Extensions Source: Hochschild Mining 0.95 m @ 7.02 g/t Au; 811 g/t Ag 1.00 m @ 2.38 g/t Au; 1964 g/t Ag 0.70 m @ 0.30 g/t Au; 18 g/t Ag 1.33 m @ 9.51 g/t Au; 1318 g/t Ag 1.00 m @ 20.26 g/t Au; 461 g/t Ag 1.30 m @ 6.67 g/t Au; 762 g/t Ag 1.15 m @ 5.80 g/t Au; 197 g/t Ag 0.90
Slide 41: San José Property Exploration Targets
MUX 41 N 20 k m Newmont Cerro Negro Mine 12 miles San José Argentina San José Property Exploration Targets ▪ Geophysics completed – new potential drilling program to begin shortly ▪ Continuing to explore Telken area next to Cerro Negro - 6 new drill holes expected ▪ Rosalia being drilled from Sept ▪
Slide 42: Fox Complex: Grey Fox 2019 Exploration Highlights
MUX 42 Area Project Hole # Gold (g/t) Width (m) From (m) Including Au_GxM GREY FOX 147NE 19GF - 1253 265 1.2 56 318 19GF - 1121 261 0.6 168.7 157 19GF - 1123 39.5 3.8 325 143 g/t Au over 1 m 150 19GF - 1151 10.0 13.2 229.8 133 19GF - 1134 6.98 15.5 466 108 19GF - 1175 148 0.71 189.1 105 GF South 19G
Slide 43: Fox Complex – Froome: Ramp Development On Target
MUX 43 Fox Complex – Froome: Ramp Development On Target 1 st Ore Expected Q2 2021
Slide 44: Strong, Consistent Mineralized Intersections
MUX 44 Strong, Consistent Mineralized Intersections Length Au g/t Cog 1Cog 3 475m 1.0 6.6 1.0 3.0 1.0 1.8 1.0 2.3 1.0 3.5 1.0 2.3 1.0 3.1 1.0 2.5 1.0 7.7 1.0 8.7 1.0 2.4 1.0 3.3 1.0 5.1 1.0 1.6 1.0 5.5 1.0 4.0 1.0 4.5 1.0 5.2 1.0 2.6 1.0 0.9 1.0 4.1 1.0 2.1 1.2 3.1 0.8 1.2 1.0 6.2 1.0 22.8 1.0 8.3 1
Slide 45: MUX: Reserves & Resources – Mineral Reserves
MUX 45 MUX: Reserves & Resources Mineral Reserves Source: Company disclosure. Attributable Gold Reserves Proven Probable Proven + Probable 43 - 101 Au Reserves Tonnes (millions) Grams per tonne Contained Metal (Koz) Tonnes (millions) Grams per tonne Contained Metal (Koz) Tonnes (millions) Grams per
Slide 46: MUX: Reserves & Resources – Mineral Resources
MUX 46 MUX: Reserves & Resources Mineral Resources Attributable Gold Resources Measured Indicated Measured + Indicated Inferred 43 - 101 Au Resources Tonnes (millions) Grams per tonne Contained Metal (Koz) Tonnes (millions) Grams per tonne Contained Metal (Koz) Tonnes (millions) Grams per tonne Cont
Slide 47: MUX: Reserves & Resources – Mineral Resources (Cont'd)
MUX 47 MUX: Reserves & Resources Mineral Resources (Cont’d) Source: Company disclosure. Note: Mineral Resources inclusive of Mineral Reserves (where applicable). Attributable Silver Resources Measured Indicated Measured + Indicated Inferred 43 - 101 Ag Resources Tonnes (millions) Grams per tonne Con
Slide 48: Cautionary Note Regarding Non-GAAP Measures
MUX 48 MUX: Cautionary Note Regarding NON - GAAP Measures In this presentation, we have provided information prepared or calculated according to U . S . GAAP, as well as provided some non - U . S . GAAP ("non - GAAP") performance measures . Because the non - GAAP performance measures do not have any
McEwen Mining — H.C. Wainwright Mining Conference November 2020 on 6ix