Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- McEwen Mining Inc (MUX, Financial) reported its most profitable quarter since 2016, with a gross profit of $10.8 million and adjusted EBITDA of $7.2 million.
- The company's cash position improved significantly, increasing by 77% to $40.7 million, and working capital rose by 28% to $29.1 million.
- McEwen Mining Inc (MUX) increased its investment in McEwen Copper, with the implied value of McEwen Copper rising to $947 million.
- The Argentinean government's legislative changes have improved the investment outlook, potentially benefiting McEwen Copper's Los Azules project.
- The company owns a portfolio of six royalties and three cash-flowing gold and silver mines, with internal asset valuations ranging from $20 to $50 per share.
Negative Points
- Ground conditions at the Fox mine presented challenges, requiring stabilization efforts and adjustments in mining techniques.
- The company's share price does not yet reflect the value of McEwen Copper, despite outperforming several market indices since the copper division's separation.
- Permitting constraints are affecting the timeline for certain projects, such as the ramp back at the Stock mine and the CDE for Mexico.
- The copper market has weakened in recent months, impacting the perceived value of McEwen Copper's assets.
- The company faces uncertainty regarding the timing of permits in Mexico, which could affect project costs and timelines.
Q & A Highlights
Q: Are the ground conditions at Fox a one-off issue or are they seen in other areas underground as well?
A: William Shaver, Chief Operating Officer: It's a single area issue at the upper level of the mine, now stabilized with cemented fill. We don't expect it to recur, as we've taken measures to control it with smaller stopes and have consulted rock mechanics experts.
Q: Can you provide insights on the cost reduction at Gold Bar and if sub-$1,500 per ounce costs are expected going forward?
A: William Shaver, Chief Operating Officer: The cost reduction is due to production being slightly above target. We anticipate costs to remain stable or slightly increase, as we continue drilling and moving the right amount of material.
Q: What is the long-term internal tax outlook in Argentina given the new incentives?
A: Michael Meding, Vice President and General Manager: The RIGI application could result in a more than 30% after-tax change, making projects more attractive. The tax rate is reduced from 35% to 25%, with accelerated VAT refunds and customs importation benefits.
Q: What is the budget for the 2024-2025 exploration season at Los Azules?
A: Rob McEwen, Chairman & Chief Owner: Most drilling for the feasibility study is complete. Future drilling will focus on new copper showings near Los Azules, with significantly less expenditure than this year.
Q: How does Los Azules compare to Filo del Sol and Josemaria in terms of valuation and project metrics?
A: Rob McEwen, Chairman & Chief Owner: Los Azules is at a lower altitude, closer to infrastructure, and has a larger resource with higher copper grade compared to the combined resources of Filo del Sol and Josemaria. It is also expected to require less capital due to being a heap leach operation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
