Mcewen Inc. · NYSE:MUX
Mcewen — McEwen Mining — Investor Presentation (January 2017)
36 slides from Mcewen's investor presentation, Jan 18, 2017
Slide 1: Cautionary Statement
Cautionary Statement 2 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 pr
Slide 2: MUX's SCORE
3 MUX’s SCORE S – Strategy C – Competitive Advantage O – Operations R – Results E – Exploration Gold
Slide 3: MUX's SCORE: Strategy
4 MUX’s SCORE Strategy Higher Share Price Profitable Growth S&P 500 Dividends +$2.2 Trillion Direct Investment in S&P Companies Lower Cost of Capital More Stable Shareowner Base MUX Requires +700,000 oz / yr
Slide 4: MUX's SCORE: Competitive Advantage
5 MUX’s SCORE Competitive Advantage Strong Financials Revenue Upside Protected, Unencumbered by Sale of Royalties, Streams or Hedging Large Insider Ownership Provides Strong Financial Discipline Accomplished Management Team High Beta
Slide 5: Generating Positive Free Cash Flow
Generating Positive Free Cash Flow 6 1Based on internal estimates. 2 Treasury in cash, investments and precious metals at market price. As of December 31, 2016 US$ Millions US$ Millions Treasury Growing2 No Debt No Streaming No Royalties No Financing Treasury2 $64 M $32M1 $15.6M $0 $10 $20 $30 $40 $
Slide 6: Big Insider Ownership
Cost Base $127M Big Insider Ownership Strong Alignment with Shareowners 7 Rob McEwen Chief Owner 25% $1 Annual salary No cash bonus No options
Slide 7: Building Management for Growth
Building Management for Growth 8 Xavier Ochoa Extensive experience with all stages of feasibility, development and operations of large scale projects: Antamina, Las Bambas and Antapaccay in Peru, and El Pachon. Former Vice President of Projects for Glencore and Construction Manager for Bechtel. Mast
Slide 8: High Beta to Gold
9 Source: Bloomberg. US$. As of January 17, 2017. 1Three year average. High Beta1 To Gold 2.7x Significant Leverage to Gold Price $9.50 $9.15 $0.42 $0.36 $3.94 26x 22x $0.65 Rob McEwen Becomes CEO US Gold McEwen Mining Share Price US$ 0 2 4 6 8 10 2000 2004 2008 2012 2016
Slide 9: MUX's SCORE: Operations
10 MUX’s SCORE Operations Gold & Silver Production Cash Cost/oz in Lower ½ of Industry Production Growth 2 Mines 2 Development Projects 1 Big Copper Deposit
Slide 10: 2016 Production and Forecast 2019 Production
11 Gold / silver ratio 75:1. 2019 production based on internal estimates. 2016 Production 30% 70% 42% 58% Forecast 2019 Production Silver 3,303,709 oz Gold 101,482 oz Silver 7,300,000 oz Gold 137,000 oz
Slide 11: Decreasing Costs
Decreasing Costs 12 $685 $962 US $ / oz Au Eq Gold / silver ratio 75:1. Based on internal estimates. $860 $700 $915 $650 $0 $200 $400 $600 $800 $1,000 $1,200 2013A 2014A 2015A 2016E 2017E Total Cash Costs All in Sustaining Cash Costs
Slide 12: Production Growth – Gold Equivalent Ounces
Production Growth – Gold Equivalent Ounces 13 154koz 127koz 121koz 88koz Production in gold equivalent ounces. Gold / silver ratio 75:1. 2017-2020 based on internal estimates. 1 2018 includes ramp-up production from Gold Bar of 10koz production. (Estimated 75koz annualized) 2 2019 includes El Gallo
Slide 13: Location of Assets
Location of Assets 14 2 Producing Mines 2 Mines to be Built + 1 Big Copper Deposit
Slide 14: Production: El Gallo Mine – Gold
Production: El Gallo Mine – Gold Sinaloa State Mexico 15 1Q3 Production. 2Production in gold equivalent ounces. Gold / silver ratio 75:1. Open Pit, Heap Leach 1.4 gpt Gold1 2016 Est. Production Cost2 Cash $550/oz, AISC $620/oz 2016 Production 55,266 oz Mine Life +2.5 Years Key Features 2017E Product
Slide 15: Production: San José Mine - Gold & Silver
Production: San José Mine - Gold & Silver 16 1 Reserve grade 2 Production in gold equivalent ounces. Gold / silver ratio 75:1. 100% basis. 3Goldcorp website, 2016 production estimate. Santa Cruz, Argentina Underground Mine, Narrow Vein, High Grade High Grade1 484 gpt Silver & 7.11 gpt Gold 2016 Prod
Slide 16: Development Pipeline: Gold Bar – Gold
Development Pipeline: Gold Bar – Gold 17 Cortez Trend Nevada, USA Gold Price $1,150 $1,250 $1,350 After Tax IRR 20% 30% 40% Payback 3 yrs 2.4 yrs 1.9 yrs Positive Feasibility Study (Oct 2015) @ $1,150 / oz Open Pit, Heap Leach, 1.1 gpt oxide ore, Low Capex Economic Sensitivity
Slide 17: Development Pipeline: Gold Bar – Gold
Tonkin Gold Bar BMX Cortez Silver Standard Marigold Waterton Ruby Hill Battle Mountain Cortez Trend Cortez Pipeline Gold Rush Discovery Premier McCoy-Cove 0 10 20 Km N Development Pipeline: Gold Bar – Gold 18 Barrick’s Biggest Gold Mine Cortez Trend Nevada, USA Great Address Open Pit, Heap Leach 0.0
Slide 18: Development Pipeline: El Gallo Silver
Development Pipeline: El Gallo Silver 19 1Feasibility study based on internal economic studies, September 2012 @ $25/oz Silver, $1,415/oz Gold. Sinaloa State Mexico N 0 3 6 Miles El Gallo Silver MUX Property Outline El Gallo Mine Location Near Existing Operations Grade 125 gpt Silver Projected Avg A
Slide 19: Los Azules – Leverage to Copper
20 San Juan Province, Argentina Los Azules – Leverage to Copper 19.7 Billion lbs Cu @ 0.55% + Gold & Silver Resources1 Large Deposit1 Gold Equivalent +40Moz Government Tax Changes Big Impact on Capex & Opex New PEA Underway Key Features 1August 1, 2013 NI 43-101 Technical Report, Los Azules Porphyry
Slide 20: Los Azules - Panoramic View - Looking South
Los Azules - Panoramic View - Looking South Preliminary Locations Proposed for Mine Facilities and Infrastructure 21 Northern Waste Dumps Los Azules Mine Primary Crusher Coarse Ore Conveyor Concentrator Facilities Tailings Pond Air Strip Tailings Dam
Slide 21: MUX's SCORE: Results
22 MUX’s SCORE Results Organic Growth, w/o Debt, Sale of Royalties, Streams, Hedges Financials Yield Share Volume Share Price Recovery
Slide 22: Improving Financial Results
Improving Financial Results 23 9 Months 2016 12 Months 2015 12 Months 2014 Cash Flow / Share $0.08 $0.05 ($0.05) Earnings / Share $0.09 ($0.07) ($1.05) Working Capital $55.6 M $32.4 M $15.6 M Book Value / Share $1.49 $1.39 $1.48 Debt $0 $3.4 M $0 Cash & Liquid Assets $45.9 M $32 M $18.3 M Avg. Gold
Slide 23: Capital Distribution to Shareowners
Next Payment February 2017 Capital Distribution to Shareowners 24 1¢ Per Share Paid Semi-Annually In February & August Tax Free in US & Canada We have a Yield
Slide 24: High Beta to Gold
26 Source: Bloomberg. US$. As of January 17, 2017. 1Three year average. High Beta1 To Gold 2.7x Significant Leverage to Gold Price $9.50 $9.15 $0.42 $0.36 $3.94 26x 22x $0.65 Rob McEwen Becomes CEO US Gold McEwen Mining Share Price US$ +6x Since July 2015 0 2 4 6 8 10 2000 2004 2008 2012 2016
Slide 25: Gold Shares Offer Better Upside Potential Than Gold
Gold Shares Offer Better Upside Potential Than Gold 27 Source: Bloomberg. US$. 2010-2012 date & high closing price. 1. Percentage Increase (or decrease) needed to achieve 2010-12 highs. Franco Nevada 2012-10-05 $60.85. Royal Gold 2012-09-28 $99.83. Gold 2011-09-05 $1900. Agnico Eagle 2010-12-06 $87.
Slide 26: MUX's SCORE: Exploration Potential
28 MUX’s SCORE Exploration Potential Nevada Mexico Argentina Innovation 2017 Exploration Budget $2 M $6 M $8 M $5 M
Slide 27: Gold Bar Exploration Potential
Gold Bar Exploration Potential 29 N 10 5 Km 100 ft @ 0.16 opt (30 m @ 5.48 gpt) 173 ft @ 0.08 opt (52.7 m @ 2.74 gpt) 0 4.22 gpt Au / 16.8 m1 Gold Bar Open Pits Gold Bar South Resource Legend Open Open Open Open 1Not included in NI 43-101. Cortez Trend Nevada, USA
Slide 28: El Gallo Complex Exploration Potential
El Gallo Complex Exploration Potential 30 El Gallo Mine 4.5 km 48 core holes 2.94 gpt / 38.2 m 9.59 gpt / 9.1 m 1.82 gpt / 31.5 m 7.82 gpt / 5.4 m 1.85 gpt / 15.2 m 9 core holes 1.2 gpt / 15.3 m 0.62 gpt / 6.9 m 0.54 gpt / 3.9 m Open Open Open Mineralization 5.6 gpt Surface Rock Samples (Gold gpt) C
Slide 29: San José Mine Exploration Potential
San José Mine Exploration Potential 31 Santa Cruz, Argentina Property Outline N 10 Km 0 20 Goldcorp Cerro Negro 2016 Production3 475-525 koz Au San José Mine Potential Area
Slide 30: 2017 - What to Expect
2017- What to Expect 32 Exploration News Permitting M&A Production & Exploration Focus Nevada – Gold Bar Mexico – El Gallo Silver (New Plan) Nevada Mexico Argentina
Slide 31: Reasons why gold looks good now
Reasons why gold looks good now 33
Slide 32: The Developed World's Attempt to Get the Economy Moving
34 Student Loan $1T Food Stamps Federal Debt $20T Money Printing $4T Home Ownership Velocity of M2 Money Supply One Example of The Developed World’s Attempt to Get the Economy Moving THE IMPACT As of Jan 1, 2017 Source: Federal Reserve Bank of St. Louis. As of July 1, 2016 As of July 1, 2016 As of J
Slide 33: # of Gold Ounces to Buy the DJIA
35 # of Gold Ounces to Buy the DJIA Source: Bloomberg. As of January 17, 2017 16 oz Jan 17, 2017
Slide 34: The Beginning of New Gold Uptrend
36 The Beginning of New Gold Uptrend Gold is Again Moving Up in All Major Currencies US$ EUR Source: Bloomberg. As of January 17, 2017 % US$ EUR % 2001 - 2011 2012 - Present Big $ invested in Mining Looks like it’s starting again Dec 17, 2015 $1,051 -40 -30 -20 -10 0 10 2012 2013 2014 2015 2016 2017
Slide 35: Time for a Mining Rant
Time for a Mining Rant 37 “Our most important audience, our shareowners, need to be given more respect” April 1, 2016, The Canadian Mining Journal www.canadianminingjournal.com Contact info Christina McCarthy, Director, Corporate Development, 1.866.441.0690 • cd@mcewenmining.com
Slide 36: Time for a Mining Rant...
ge Time for a Mining Rant... “Our most important audience, our shareowners, need to be given more respect” April 1, 2016, The Canadian Mining Journal www.canadianminingjournal.com Contact info Christina McCarthy, Director, Corporate Development, 1.866.441.0690 + cd@mcewenmining.com