Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — Sprott Natural Resource Symposium 2019
38 slides from Mcewen's conference presentation, Aug 1, 2019
Slide 1: Sprott Natural Resource Symposium July/August 2019
Sprott Natural Resource Symposium July/August 2019 Gold / / Copper
Slide 2: Cautionary Statement
Risk adverse? Forget about buying our shares. Past performance is unreliable in predicting the future. Unexpected events can happen and can change forecasts. Cautionary Statement MUX
Slide 3: Outlook for the Price of Gold and Silver
GOLD Outlook for the Price of Gold and Silver
Slide 4: Number of Gold Ounces to Buy the DJIA
Source: Bloomberg. As of July 29, 2019. 19 oz Jul 29, 2019 # of Gold Ounces to Buy the DJIA Over the last 123 years
Slide 5: Gold Price 1970 - Present
$0 $500 $1,000 $1,500 $2,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: Bloomberg. As of July 29, 2019 Gold US$ Gold Price 1970 - Present $40 +$800 $1,900 $250 $1,426 $1,050 20x 7.5x
Slide 6: Bear Markets in Gold Equities
0% 25% 50% 75% 100% 1 52 103 154 205 Mar 1939 - Apr 1942 Mar 1968 - Dec 1969 Aug 1974 - Aug 1976 Oct 1980 - Jun 1982 Jan 1983 - Nov 1986 Jan 1996 - Oct 2000 Feb 2008 - Nov 2008 Apr 08, 2011 - Jan 22, 2016 1 Credit: in gold we trust .report. Incrementum. June 1, 2017 by Ronald - Peter Stoeferle, Mark
Slide 7: Gold Equities in Bull Markets
100% 200% 300% 400% 500% 600% 700% 800% 1 52 103 154 205 256 307 358 Oct 1942 - Feb 1946 Jul 1960 - Mar 1968 Dec 1971 - Aug 1974 Aug 1976 - Oct 1980 Nov 2000 - Mar 2008 Oct 2008 - Apr 2011 Jan 2016 - Feb 2019 1 BGMI - Barron's Gold Mining Index. Credit: in gold we trust .report. Incrementum . June 1
Slide 8: Gold / S&P 500 Ratio vs S&P 500
Source: Tom Fitzpatrick, Citibank/KWN, Bloomberg. As of July 29, 2019. S&P 500 MUX 0.15 0.3 0.6 1.2 2.4 0 500 1000 1500 2000 2500 3000 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 S&P 500 Gold / S&P 500 Ratio Gold / S&P 500 Ratio (log scale) Ratio hit a low 8 months before the peak on
Slide 9: Gold Moving Higher in Many Currencies
-20 -10 0 10 20 30 40 50 60 2016 2017 2018 2019 Source: Bloomberg. As of July 29, 2019. MUX Pound RMB AUD USD Euro CAD Yen Ruble Gold Moving Higher in Many Currencies % Change Jan 2016 – Present (Monthly)
Slide 10: Performance Since Jan 2016
Source: Bloomberg. marijuanaindex.com . North American Marijuana Index. From Jan 1, 2016 – Ju l 29 , 2019. GDX J + 105 % GDX + 102 % MUX Performance Since Jan 2016 Start of the New Gold Bull Market Gold + 35% Dow + 56 % S&P 500 + 48 %
Slide 11: Shared Commitment / Growing Production / Discovery Potential
Shared Commitment / Growing Production / Discovery Potential Gold / / Copper
Slide 12: Mining Is Funding a Better Society
McEwen Leadership Program McEwen School of Architecture MUX Mining Is Funding a Better Society
Slide 13: What You Should Know About MUX
Pros Diversified Exploration Potential Ownership Good Trading Liquidity High Beta Cons Above Average Cost Short Life Mines High Beta What You Should Know About MUX
Slide 14: MUX Performs Well in Rising Gold Markets
0 2 4 6 8 10 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 $1.85 26x 22x $0.65 Rob McEwen Becomes CEO $ Source: Bloomberg. As Ju l 29 , 2019. Monthly chart. 1 Three year average. Share Price US$ High Beta 1 To Gold 3. 0 x MUX 7x Performs Well in Rising Gold Markets
Slide 15: MUX Performs Well in Rising Gold Markets
Source: John Newell, Fieldhouse Capital Inc . As Ju l 25 , 2019. MUX Performs Well in Rising Gold Markets MUX $1.85 MA (50) 1.76 MA (200) 2.29 MA (10) 1.64 2145% 663% BIG WAVE $15.20 623% 2007 2009 2011 2013 2015 2017 2019 80 M 40 M 0 M $5.0 $10.0 0 1 $7.5 $2.5 0 90 RSI (14) 58.16 10 50 MACD (12,26,
Slide 16: What's MUX Worth?
What’s MUX Worth? High Low Mid MUX Current Market Cap 5 San José $290 3 $101 1 $1 93 Black Fox $32 1 1 $ 49 4 $1 92 Gold Bar $20 5 4 $144 1 $1 76 Mexico $100 3 $ 8 2 $5 9 Los Azules $680 4 $80 1 $ 380 Total $1,59 6 $40 2 $ 1,003 $ 670 1 Cantor Fitzgerald. 2 H.C. Wainright & Co 3 Roth Capital Partner
Slide 17: Insider Alignment
$164M 22% 1 Rob McEwen’s: $139 M shares investment + $25 M loan investment, Aug 13, 2018 & March 29, 2019 press release. Share ownership percentage. Annual Salary. SEC filings. 2 CAGR - Compound annual growth rate 3 As of July 29, 2019. $1/ yr MUX With a Track Record 0 1000 2000 3000 1995 2000 2005
Slide 18: Multiple Chances of a Discovery or Two
MUX Gold / / Copper Multiple Chances of a Discovery or Two! Exploration Encouragement Turn Around Story Producing 45,000 oz Au in 2019 $18M Exploration in 2019 May 23, 2019: 34.8 g/t Au / 2.65 m 396.5 g/t Au / 1.81 m 245.6 g/t Au / 1.27 m 30.6 g/t Au / 2.99 m 51.5 g/t Au / 0.95 m Black Fox Timmins,
Slide 19: MUX Production and Costs
2016 2017 2018 2019E MUX Costs/oz Cash cost and AISC in gold equivalent ounces. 2016 – 2018 g old / silver ratio 75:1 . 2019 gold / silver ratio 85:1. 2019 based on internal estimates. AISC Industry average World Gold Council. MUX Production and Costs 190,000 oz Production In Gold Eq. oz $- $200 $40
Slide 20: Located in Top Mining Districts
Timmins Matheson Kirkland Lake Noranda Val d’Or Malartic Bousquet MUX Carlin gold deposits 224 Moz endowment includes Jerritt Canyon, Goldstrike /Meikle, Carlin, Gold Quarry, Pipeline, Cortez Hills, Four Mile/Goldrush, Ruby Hill, Twin Creeks, Getchell/Turquoise Ridge Carlin Type Deposits Las Vegas R
Slide 21: Black Fox Mine Turnaround with Exploration Potential
MUX Paid $35M for Acquisition in Oct 2017 $560M 1 Spent by Previous Owner – Significant Infrastructure in Place Underexplored Land Package Near - term Production Growth Opportunities Black Fox Ontario 1Primero’s 2014 purchase price of +$300 million plus ~$140 million in assumed liabilities plus cape
Slide 22: Black Fox - Highlights of Underground Drill Results
25.5 g/t Au / 3.35m 83.9 g/t Au / 4.92m 187.8 g/t Au / 1.12m 161.9 g/t Au / 1.2m 34.8 g/t Au / 3m 6.68 g/t Au / 8m 27.3 g/t Au / 3.33m 27.8 g/t Au / 8.1m 44.1 g/t Au / 1.2m 12.7 g/t Au / 7m 25.0 g/t Au / 1.85m 8.40 g/t Au / 6.46m 19.1 g/t Au / 3m 30.6 g/t Au / 1.4m 24.0 g/t Au / 1m 48.0 g/t Au / 1.4
Slide 23: More Than Just One Mine
kt = kilo tonnes . Reserves and resources table, go to www.mcewenmining.com/Operations/Reserves - and - Resources/default.aspx Froome 1,104 kt. Black Fox 1,901kt. Grey Fox indicated 2,485 kt , inferred 678 kt. Tamarack 778kt. MUX Black Fox Mine Indicated: 472,000 oz @ 7.72 g/t Au Grey Fox Indicated
Slide 24: Stock Property - Another Potential Source of Future Production
Stock East 150 koz Underexplored Along 2 Miles Trend and at Depth Stock Mine 137 koz historic production 4.82g/t Au / 16.3m Inc. 19.2g/t Au/ 2.9m - 500m - 1000m Stock East Infill & Extension 1,000 ft 5.58 g/t Au / 3.3m 7.01 g/t Au / 3.8m Incl. 30.1 g/t Au / 0.8m, 3.76 g/t Au / 4m Stock Mine Extensio
Slide 25: Black Fox - Is There More Gold at Depth?
Black Fox Stock Ore Bodies Headframe / Shaft MUX 30.1 g/t Au / 0.8 m @ 625 m 55.1 g/t Au / 1.2m @ 1,050 m Stock / Black Fox Kirkland Lake Timmins Red Lake 1,000m 2,000m Surface Black Fox - Is There More Gold at Depth? Other mines with similar geological settings go much deeper
Slide 26: Gold Bar - Next to Barrick Gold in Nevada
MUX Gold Bar 2 M&I 0.82 Moz Au Inferred 0.20 Moz Au Cortez Barrick’s 50Moz Au cluster 1 Fourmile Discovery Goldrush Why we like it On Trend Similar Geology Widespread Mineralization Ex - Barrick Geologist Sees Similarities Gold Bar Nevada MUX Property Barrick Property Gold Bar 0 10 20 Km 1 Includes
Slide 27: Gold Bar - Commercial Production Achieved in May
Gold Bar - Commercial Production Achieved in May AISC - All - in sustaining cost is calculated by dividing the Total Production Cost and the LOM sustaining capital cost by total o unces produced. 1 Mar 30, 2018 - “Form 43 - 101F1 Technical Report Feasibility Study Eureka County, Nevada”. 2 Gold Bar
Slide 28: Probability of a 3 Million oz Gold Deposit Growing to 10 Million oz
Gold Bar current total endowment ~1.7 Moz Au Source: Francois Robert, VP Chief Geologist, Barrick, 2013. LS = Low sulphidation . Cu = copper. Au = Gold. >10 Moz > 3 Moz 0 20 40 60 80 100 120 28% 36% 4% 45% No. of Deposits (468 deposits >3 Moz) MUX Greenstone Porphyry Cu - Au Carlin LS Epithermal Dep
Slide 29: Background on Nevada's Deeper Carlin Deposits
Barrick Gold’s Recent Discoveries Along Trend 25 Miles North of Gold Bar Fourmile: 71.6 g/t Au / 16.6 m 25.6 g/t Au / 39.3 m 30.2 g/t Au / 21.3 m 54.7 g/t Au / 20.4 m 75.6 g/t Au / 7.6 m Goldrush: 13.7 g/t Au / 10.7 m 30.9 g/t Au / 59.1 m 30.5 g/t Au / 20.5 m Depth (m) Fourmile Gold Bar Today Cortez
Slide 30: Gold Bar 2019 Exploration Targeting
Gold Bar 0 m 300 m 600 m 900 m 1 2 MUX 1. Near Surface Oxides 2. Deep Carlin Style Sulphides Goldstrike > 50 Million ozs Gold Cortez Hills > 15 Million ozs Gold Gold Bar Ore Bodies Potential Gold Bar 2019 Exploration Targeting 2 Types of Deposits:
Slide 31: San José Mine - High Grade Gold & Silver
High Grade Gold & Silver (49% Owned) Gold / silver ratio 75:1. 1 49% basis. 2 As of Dec 31, 2018, production estimated to end in 2024. 3 February 21, 2019 - “McEwen Mining Reports 2018 Full Year and Q4 Results" 4 Hochschild Mining 5 Goldcorp 2018 Annual Report. San José Mine N 2018 Production 5 489
Slide 32: Los Azules - Significant Optionality to Copper
Oct 16, 2017 – “NI 43 - 101 Technical Report - Preliminary Economic Assessment Update for the Los Azules Project, Argentina”. Tonnes Copper Gold Silver Indicated: 962 Million 10.2 Billion lbs @ 0.48% 1.7 Million oz @ 0.06 gpt 55.7 Million oz @ 1.8 gpt Inferred: 2,666 Million 19.3 Billion lbs @ 0.33%
Slide 33: Los Azules - Robust at $3/lb Copper
Oct 16, 2017 – “NI 43 - 101 Technical Report - Preliminary Economic Assessment Update for the Los Azules Project, Argentina”. Initial Capex: $2.4 Billion Payback: 3.6 Years Mine Life: 36 Year After - tax IRR: 20% After - tax NPV @ 8%: $2.2 B 1 st 13 years ' average annual production: 415 million lbs
Slide 34: Investment Highlights
Big Insider Ownership High Beta to Gold vs Peers Good Trading Liquidity Diversified Production Base Track Record of Building Mines and Turnaround Stories Investment Highlights
Slide 35: Appendix: Reserves & Resources
Au Resources Measured Indicated Measured + Indicated Inferred 43 - 101 Au Resources Ounces Ounces Ounces Ounces TOTAL 1,583,000 6 , 063 , 00 0 7, 644 , 0 00 5,8 77 ,000 Ag Resources Measured Indicated Measured + Indicated Inferred 43 - 101 Ag Resources Ounces Ounces Ounces Ounces TOTAL 28,576,000 82
Slide 36: Appendix: Capital & Exploration Expenditures
2018 2019E 2 Sustaining Capital $13 M $14 M Project Development $88 M $13 M Exploration 3 $29 M $27 M Corporate G&A $13 M $12 M Site G&A and Property Holding Costs $12 M $11 M Debt Service $2 M $7 M 1 Costs related to MSC JV (49%) are excluded unless otherwise specified. 2 Based on internal estimate
Slide 37: Share structure and stock ownership
Avg. Daily Vol. of Shares 1 : Shares Outstanding: Fully Diluted: Share Price: Market Cap: Beta 2 : 3.4 million 362 million 376 million US$1. 85 US$ 670 million 3. 0 x Source: Bloomberg. US$. As of Ju l 29 , 2019. 1 Share trading volume NYSE and TSX combined, 3 months average. 2 Three years, relative
Slide 38: Appendix: Cautionary Note Regarding Non-GAAP Measures
MUX Appendix: 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 a
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