Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — Precious Metals Summit Beaver Creek 2014
55 slides from Mcewen's conference presentation, Sep 12, 2014
Slide 1: September 2014 Precious Metals Summit Beaver Creek
September 2014 Precious Metals Summit Beaver Creek
Slide 2: 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, as at the date of this presentation, McEwen Min
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Slide 4: YTD Relative Performance
GDXJ 27% GDX 19% S&P 10% Gold 5% Dow 5% Silver -1% YTD Relative Performance Source: Bloomberg. As of September 8, 2014.
Slide 5: Gold Shares: Lots of Upside!
% Change High to Low % from Low % to High Gold -44% 18% 51% Alamos -57% -2% 140% Franco Nevada -60% 120% 13% Primero -72% 161% 35% Timmins Gold -72% 51% 137% Barrick -75% 22% 232% AuRico -76% 15% 257% Argonaut -79% 59% 204% McEwen -82% 42% 289% Gold Shares: Lots of Upside! Source: Bloomberg. In US$.
Slide 6: Best Leverage to Gold
Best Leverage to Gold Source: Bloomberg. As of September 8, 2014. McEwen Comparison of Betas Market Cap. +$500 M 3.0 2.5 2.0 1.5 1.0 0.5 0.0 3 year beta to gold Detour GDXJ Yamana B2 Gold Barrick GDX Goldcorp Kinross Agnico Eagle Franco-Nevada
Slide 7: Select Peer Comparison
Select Peer Comparison McEwen Mining Alamos Primero Argonaut Timmins Gold Insider Ownership 25% 0.5% 0.8% 2.3% 3.9% 3 Year Beta to Gold 2.8 1.5 1.7 2.0 1.8 1 Year Average Daily Value Traded ($ M) $8.0 $13.7 $10.7 $7.0 $1.9 # Analysts 1 20 17 11 14 Source: Bloomberg. In US$. As of September 8, 2014.
Slide 8: Shareholders: Largest Own 46%
Shareholders: 5 Largest Own 46% Source: Bloomberg, regulatory filings, Van Eck. As of September 8, 2014. Rob Mcwen 25% Van Eck 14% Royce 3% Jennison 2% BlackRock 2%
Slide 9: Industry Problems
Growth at any cost Shareholder dilution Over-promise and under-deliver Excessive compensation Selling profit margins via streams & royalties Industry Problems
Slide 10: Industry Problems We Don't Have!
Growth at any cost Shareholder dilution Over-promise and under-deliver Excessive compensation Selling profit margins via streams & royalties Industry Problems We Don’t Have!
Slide 11: Balance Sheet
Cash & Gold $15 Million Debt $4 Million Balance Sheet As of September 8, 2014.
Slide 12: Key Properties
Gold Bar (Nevada) Permitting El Gallo 1 (Mexico) Gold Producer El Gallo 2 (Mexico) Permitted Los Azules (Argentina) Large Copper Deposit San José (Argentina) Gold / Silver Producer Key Properties
Slide 13: MUX Projected Annual Production Growth
MUX Projected Annual Production Growth 131 koz 135 koz 170 koz Based on thousands gold eq. oz. 60:1 silver/gold ratio. The silver/gold ratio does not take into account metallurgical recoveries. Production estimates for 2014-2017 based on internal estimates. Notes 1, 2, 3, 5, 7, 8, 13 & 15. 300 koz G
Slide 14: Projected Production Growth & Costs 2013-2017
BASE CASE Au Eq 131 koz 200 koz 52% Required Financing $35M AISC $1,249/ oz $1,000 / oz -20% Projected Production Growth & Costs 2013 - 2017 BEST CASE Au Eq 131 koz 300 koz 128% Required Financing $185M AISC $1,249/ oz $900 / oz -28%
Slide 15: McEwen Projected Growth Profile Comparison 2013-2017
McEwen Projected Growth Profile Comparison 2013 - 2017 McEwen Source: McEwen Mining, Dundee Capital Markets estimates. Silver: Gold ratio (60:1). Best Base 175% 150% 125% 100% 75% 50% 25% 0% -25% AuTico Detour McEwen B2Gold Krikland Lake Alamos McEwen Primero Agnico-Eagle Yamano Goldcorp Dundee Pm E
Slide 16: Opportunity Summary
Insider Ownership 25% High Leverage to Gold Good Trading Liquidity Strong Internal Production Growth 2013 – 2017: 52-128%, Costs: 20-28% S&P 500 Opportunity Summary Production and cost estimates based on internal estimates.
Slide 17: El Gallo Mine Mexico Production
EL GALLO 1 MINE Mexico Production 17
Slide 18: El Gallo Mine - Sinaloa, Mexico
El Gallo Mine - Sinaloa, Mexico
Slide 19: El Gallo 1: Expansion
El Gallo 1: Expansion Gold, Open Pit, Heap Leach, 100% $750/oz Au Eq Cash Cost $1,100/oz Au Eq AISC 37,000 oz Au Production and cost estimates based on internal estimates. See cautionary note regarding non-GAAP measures. Notes 1, 2, 7,12 & 19. 75,000 oz Au $575/oz Au Eq Cash Cost $850/oz Au Eq AISC
Slide 20: El Gallo Annual Gold Production
El Gallo 1 75k 37k Annual Gold Production (000 oz) 75k 31k tpd (tonnes per day). Internal estimate, not supported by a Technical Report. Notes 1 & 13. Forecast Annual Production, Throughput & Grade. 75k Grade (gpt) tpd 1.1 1.1 2 2 2 3,000 4,000 4,500 4,500 4,500 2013A 2014E 2015E 2016E 2017E
Slide 21: El Gallo 2: Ready to Build / But on hold
Notes 1, 2, 5, 7 & 14. El Gallo 2: Ready to Build / But on hold El Gallo 1 Mine 5 km Road El Gallo 2 $180 M Capex 2012 Feasibility Permitted Construction & Operation Required Financing $150 M Spent $10 M, Est. $20 M Savings
Slide 22: El Gallo 2: September 2012 Feasibility Study
El Gallo 2: September 2012 Feasibility Study 5.2 M oz Ag + 6,100 oz Au 2.6:1 Strip 23 $13/oz AISC inc. $5 M/yr exploration Silver equivalent basis. Notes 1, 2, 5 & 7. Annual Production 5,000 tpd Mill 84% Recovery 7 Yrs Mine Life $9.86 /oz Ag Cash Cost 101 gpt Ag Grade
Slide 23: El Gallo 2: Postponed, Simply Economics
El Gallo 2: Postponed, Simply Economics Sept 2012 Feasibility Study - Adjusted to Reflect Mexican Tax Changes Silver Price / oz NPV 5% (M) Payback After Tax IRR $30.00 $197 2.1 35% $27.50 $151 2.4 28% $25.00 $106 2.8 22% $22.50 $60 3.5 14% $20.00 $14 4.7 6% Notes 1, 2, 5 & 7.
Slide 24: San José Mine Santa Cruz Province Argentina
SAN JOSÉ MINE Santa Cruz Province Argentina 25 Gold & Silver Production
Slide 25: San José: Comparison of High-Grade Deposits
San José: Comparison of High-Grade Deposits McEwen / Hochschild San José Size (Million Au Eq. oz) Grade (Au gpt Eq.) Rubicon Phoenix Goldcorp Red Lake Goldcorp Eleonore Goldcorp Cerro Negro Yamana El Penon Mine Development Kirkland Lake 60:1 silver/gold ratio. Estimated at different cut-off grades.
Slide 26: San José – New Neighbor: Goldcorp's Cerro Negro Mine
San José – New Neighbor: Goldcorp’s Cerro Negro Mine $3.4 B Purchase Price $1.6 B Initial Capex 525,000 oz First Five Years Annual Production 25 km San José Mill Source: Goldcorp + San Jose Goldcorp Process Plant Coeur
Slide 27: Gold Bar Cortez Trend Nevada
GOLD BAR Cortez Trend Nevada Mine Permitting 100% Owned 29
Slide 28: Cortez Trend, Nevada – Big Gold Country
Cortez Trend, Nevada – Big Gold Country South Roberts
Slide 29: Gold Bar: Open Pit, Heap Leach, Nevada, 100%
Gold Bar: Open Pit, Heap Leach, Nevada, 100% 8 Yr Mine Life $55 M Capex $700/oz Cash Cost $850/oz AISC $35 M Required Financing See cautionary note regarding non-GAAP measures. Notes 1, 8, 12 & 15. Q1 2016 Final Permits Expected 50,000 oz Annual Gold Production Starting 2017 1.03 gpt Au Grade, Oxide
Slide 30: Gold Bar: Very Attractive Margins, Even Today!
Gold Price / oz NPV 5% (M) Payback (Years) After Tax IRR $1,750 $135 1.5 55% $1,550 $100 2.0 45% $1,350 $65 2.5 35% $1,150 $30 4.0 20% Gold Bar: Very Attractive Margins, Even Today! Economic Sensitivity to Gold Price (November 2011 Pre-Feasibility) Notes 8 & 12.
Slide 31: Los Azules San Juan Province Argentina
LOS AZULES San Juan Province Big Copper Deposit 33 Argentina
Slide 32: Los Azules: Copper – PEA Sept 2013 Highlights
Los Azules: Copper – PEA Sept 2013 Highlights Open Pit Development 100% Ownership 5.4 B lbs Cu Indicated 389 M t at 0.63% Cu 14.3 B lbs Cu Inferred 1,397 M t at 0.46% Cu IRR After-Tax 14.3% 35 Yrs Mine Life NPV (8%) $1.7 B @ $3/lb Cu Capex $3.9 B Note 11. Based on $3.00/lb copper, $1,300/oz gold. PE
Slide 33: Los Azules: What Could it be Worth?
Los Azules: What Could it be Worth? First Quantum Bought Lumina for $433 M = 1.7¢ / lb Cu Note 11 and company websites. 0.35% cut-off grade. Does not include gold or molybdenum, includes measured, indicated and inferred resource categories. Company Deposit Cu lbs (B) Cu% McEwen Mining Los Azules 19.
Slide 34: Capital Structure
Shares Outstanding MUX (NYSE, TSX) 267.3 M MAQ (TSX) (1) 30.1 M Fully Diluted 302.7 M Price 52 Week High – Low $3.74 – $1.70 Market Cap Capital Structure 297.4 M $2.35 $700 Million (1) Convertible 1 for 1 into MUX shares. As of September 8, 2014.
Slide 35: Opportunity Summary
Insider Ownership 25% High Leverage to Gold Good Trading Liquidity Strong Internal Production Growth 2013 – 2017: 52-128%, Costs: 20-28% S&P 500 Opportunity Summary Production and cost estimates based on internal estimates.
Slide 36: Why? Collaborate. Create. Cure.
Why? Collaborate. Create. Cure.
Slide 37: Appendix: Directors
Rob McEwen, CM Allen Ambrose Michele Ashby Dr. Leanne Baker, MS, Ph.D Richard Brissenden, CA Gregory Fauquier Michael Stein Dr. Donald Quick Appendix: Directors Chairman of McEwen Mining, Founder and former Chairman and CEO of Goldcorp 30 years exploration & Discoveries Founder and former CEO of Den
Slide 38: Appendix: Management
Rob McEwen, CM Nathan Stubina, Ph.D, P.Eng. William Faust, PE-Mining, MBA Perry Ing, CPA-CA, CPA, CFA Andrew Elinesky, CGA Nils Engelstad, LLM Simon Quick Craig Stanley, M.Sc. Nigel Fung, P.Eng. Luke Willis, P.Geo. Appendix: Management Chief Owner Managing Director Chief Operating Officer Chief Fina
Slide 39: Appendix: El Gallo Mine: Declining Costs
Appendix: El Gallo 1 Mine: Declining Costs US$/oz $750 $575 $850 $1,100 Internal estimate, not supported by a Technical Report. Gold equivalent basis. See cautionary note regarding non-GAAP measures. Notes 1 & 13. -23%
Slide 40: Appendix: El Gallo Heap Leach Gold Mines in the Americas
Appendix: El Gallo 1 Heap Leach Gold Mines in the Americas Comparison of Grades El Gallo 1 Source: Company reports. Silver: Gold ratio (60:1). The silver/gold ratio does not take into account metallurgical recoveries. Note 7.
Slide 41: Appendix: El Gallo 2: Defer Until Higher Silver Price
Appendix: El Gallo 2: Defer Until Higher Silver Price Ideal Sources of Capital US$ M Debt financing $50 Equity financing $100 TOTAL $150 Share price of equity financing Shares issued (M) shares outstanding Current Price $2.35 42.6 14.3% $3.00 33.3 11.2% $3.50 28.6 9.6% $4.00 25.0 8.4% $4.50 22.2 7.5
Slide 42: Appendix: San José: Annual Production Growth
Appendix: San José: Annual Production Growth *San José on a 100% basis - McEwen owns 49%. Note 1 & 3. Silver : Gold ratio (60:1) 250,000 200,000 150,000 100,000 50,000 0
Slide 43: Appendix: San José: Growing Ounces
Appendix: San José: Growing Ounces Resource Gold Equivalent (M oz) Silver: Gold ratio (60:1), The silver/gold ratio does not take into account metallurgical recoveries. 100% basis, accounts for production depletion. Estimated at different cut-off grades. Notes 1, 3 & 4.
Slide 44: Appendix: San José: Steady Production Costs Despite Inflation
Appendix: San José: Steady Production Costs Despite Inflation Silver: Gold ratio (60:1), 49% MUX interests. See cautionary note regarding non-GAAP measures. Notes 1 & 3. $1,165 $836 Cash costs / Au eq oz US$/oz
Slide 45: Appendix: Los Azules: Size & Grade Comparison
Appendix: Los Azules: Size & Grade Comparison of Copper Porphyry Deposits Grade (Cu % / tonne) Attributable Total Resources Billions lbs Copper Taca Taca Los Azules Vicuna Rosemont Copper Creek Cotabambas Canariaco Norte Vizcachitas Pumpkin Hollow Harper Creek North Star Florence Caspiche Casino Not
Slide 46: Appendix: Los Azules: Next Steps
Appendix: Los Azules: Next Steps Examine potential for smaller / higher-grade mine and mill Additional metallurgical testing on potential for bio-leaching
Slide 47: End Notes
End Notes Note 1: 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 genera
Slide 48: Resource Table: San José and El Gallo 1
San José Mine (49%) (4) Tonnes (M*) (100%) Ag Grade (g/t) Au Grade (g/t) Ag (M oz*) (100%) Au (M oz*)(100%) Proven 0.95 597 7.82 18.23 0.24 Probable 0.86 426 6.15 11.82 0.17 Measured (inclusive of P+P) 1.5 640 8.9 31.36 0.43 Indicated (inclusive of P+P) 2.9 448 6.7 41.40 0.62 Inferred 1.9 455 7.2 27
Slide 49: Resource Table: Gold Bar and El Gallo 2
Gold Bar (8) Tonnes (M*) Ag Grade (g/t) Au Grade (g/t) Ag (M oz*) Au (M oz*) Probable 15.1 1.00 0.48 Measured 0.7 1.19 0.03 Indicated (inclusive of probable reserves) 18.8 0.94 0.57 M&I 19.5 0.95 0.59 Inferred 7.0 0.94 0.21 El Gallo 2 (7) Tonnes (M*) Ag Grade (g/t) Au Grade (g/t) Ag (M oz*) Au (M oz
Slide 50: Resource Table: Los Azules, Limo, Tonkin
Los Azules (11) Tonnes (M) 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 Resource Table: Cont’d Limo (10) Tonnes (M*) Ag Grade (g/t) Au Grade (g/t) Ag (M oz*) Au (M oz*) Measured 5.9 0.89 0.17 Indicated 3.7 0.61 0.07 Inferred
Slide 51: Resource notes
Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The foregoing reports are available under the Corporation's profile on SEDAR (www.sedar.com). Inferred resources are too speculative geologically to have economic considerations applied to them. The cumul
Slide 52: Technical report notes
Note 7: For the current technical report on the El Gallo Project see: "Resource Estimate for the El Gallo Complex, Sinaloa State, Mexico" dated and effective June 30, 2013, prepared by John Read , CPG, McEwen Mining's Senior Consultant, and Luke Willis, P.Geo, McEwen Mining's Director, Resource Mode
Slide 53: Notes 12-15
Note 12: There are significant risks and uncertainty associated with commencing production without a feasibility study. The Gold Bar project has not and may not be explored, developed or analyzed in sufficient detail to complete an independent feasibility or pre-feasibility study and may ultimately
Slide 54: Cautionary Note Regarding Non-GAAP Measures
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 standardized meaning presc
Slide 55: Contact Information
Contact Information Director, Investor Relations 1.866.441.0690 x.410 info@mcewenmining.com facebook.com/mcewenrob twitter.com/mcewenmining Sheena Scotland
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