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spk11: Hello, ladies and gentlemen. Welcome to McEwen Mining's fourth quarter and year-end 2022 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner, Perry Ng, Chief Financial Officer, William Shaver, Chief Operating Officer, Michael Medding, Vice President and General Manager of McEwen Copper. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.
spk12: Thank you, Operator.
spk11: Good morning, ladies and gentlemen.
spk12: Today I'll start with a discussion about gold and then our share price performance and follow up with factors driving our future. With all the uncertainties in the world, many people are asking why the price of gold hasn't climbed much higher. I believe that most investors feel that we have entered into a new era where very low interest rates and massive monetary stimulation are here to stay, and that gold's reputation as a store of wealth is no longer relevant or needed in a world awash with easy money. However, as we all know, the unexpected happens quickly. Rising interest rates and an unexpected bank failure are vivid reminders gold still has a role to play in your portfolio. I suspect more investors will start adding gold and gold shares to their portfolio and they will follow the lead of a select number of central banks who became large gold buyers in 2022. In fact, their purchases were the largest purchases made in the past 50 years by central bankers. Perhaps they too are concerned about holding too much of their reserves in fiat currencies. During 2022, the price of gold outperformed not only gold equities, but also the Dow Jones. Gold increased 1% year over year, and at yesterday's close, it was up 6% since December 31st, 2021. During that same period, the senior and junior gold equities, as measured by the ETFs, the GDX, and the GDX-J registered losses of 10.5% and 15% respectively in 2022, while the Dow was down 3.7%. But if we look back another year to December 31st, 2021, and come forward to yesterday's close, the GDX was down 9.1%. The GDX-J down 16.2%, and the Dow was down 12.4%. We weren't as lucky in 2022. Our share price was hammered. It was down a painful 36%. Fortunately, it has recovered much of this loss and has increased an impressive 136%. since the end of last year, December 31st, 2022. And if we look back to December 31st, 21, our share price is only down 13.1%, which is less than the GDX decline of 16.2, and very close to the decline of the Dow Jones Industrial Average of 12.4%. So looking at our stock chart from a technical perspective, it looks very promising with our share price having broken out on the upside through its 50, 100, and 300-day moving averages. Driving this price improvement is our demonstration of improving operational performance, good exploration results, production growth, lower cost per ounce, along with the growing recognition that McEwen Copper's Los Azules project is a large copper resource with large strategic shareholders. Rio Tinto, the world's second largest mining company, and Stellantis, the world's fourth largest automobile manufacturer and mobility provider. For 2023, we are looking at a production increase of 12.5% to 27.5% over what we did in 2022, and our costs are expected to decline by about 5%. In 2022, our Fox Complex and Gold Bar Mines generated operating profits but the accelerated activities at our subsidiary McEwen Copper and its Los Azules project. And our heavy investment and exploration contributed significantly to our large reported loss. I will now ask Perry to provide details on how we performed financially in 2022, and more importantly, what we see going forward in 2023. It will be followed by our Director and Interim Chief Operating Officer, Bill Shaver, who will comment on our success in stabilizing our mine operations and where we see growth in those operations. Bill will be followed by Michael Medding, our Vice President and General Manager of McEwen Copper, who will outline our progress at Los Azules, and the financings we recently completed and the strategic shareholders we have.
spk02: Harry, off to you. Thank you, Rob.
spk03: Good morning, everyone. As Rob mentioned, I'll provide an overview of our fourth quarter and full year results for 2022, and then I'll discuss the impact of the recent Stellantis and Newton Rio Tinto transactions for our balance sheet. These transactions are obviously transformative for the company. We'll deleverage our balance sheet in a rising interest rate environment and allow the company to advance its Phoenix project in Mexico, as well as continue to explore aggressively in Ontario and Nevada without issuing additional equity, especially at these current gold prices. For the Los Azules project, these transactions bring two things. First, it brings on a key partner in the project in Stellantis, and strengthens the relationship with another, Root Newton Rio Tinto. It also provides significant funding to Argentina to continue our aggressive exploration efforts and provides McEwen Copper further flexibility in the timing of a potential IPO. First off, though, I'll start with a review of McEwen Mining's consolidated results for the prior year. It is important to note that we report McEwen Copper as a consolidated entity and reflects 100% of its expenditures on Los Azules on our income statement. As a U.S. listed company reporting under U.S. accounting standards, we do not have the option of capitalizing the exploration and development costs at the project or any of our other projects for that matter until we have a completed feasibility study and permits for development. Unlike many of our Canadian listed peers, that often capitalized these costs at a much earlier stage. In terms of looking at our headline figures, we reported a loss for the quarter and year of $37.4 million and $81.1 million, respectively. This translates into $0.79 per share and $1.71 per share, respectively. Half of the loss for the year is due to the expensing of costs at Los Azules net of foreign exchange gains realized. A further 25%, roughly, is due to exploration and development costs at our 100% owned properties. The remainder of the lost figures per share reflect our G&A costs and certain one-time tax charges. I also note that the per share amounts reflect the 10-for-1 share consolidation completed in July of last year, which reestablished the company's compliance with NYSE share price listing requirements. Looking at our 100% owned mines, we generated a cash gross profit of $7.9 million for the quarter and $19.2 million for the full year, respectively. On a gross profit basis, these operations were essentially break-even, a significant improvement over 2021 performance. Looking at gold equivalent production, production for the fourth quarter of 37,300 gold equivalent ounces was down just under 10% compared to the fourth quarter of 2021, driven by a decrease of approximately 2,000 ounces at Gold Bar as it transitioned into the new Gold Bar South pit during the quarter. Full year production of 133,300 gold equivalent ounces was down approximately 14% year over year. Again, the decrease was primarily driven at Gold Bar due to carbonaceous ore issues experienced earlier in the year, as well as the transition into Gold Bar South in the fourth quarter of the year. At the San Jose mine, production was down approximately 10% year over year due to issues with COVID and at the mill in the first quarter of 2022. Bill Shaver will cover off these mine operations in further detail. From a revenue and cost standpoint, we realized gold prices were roughly unchanged at the $1,800 level for both 2022 and the prior year. Gold prices were slightly lower in the fourth quarter of 2022, but appears to have rebounded well into the first quarter of this year so far. Looking at costs, we noticed significant improvement in cash costs at our 100% gold operations at $12.76 per ounce, which has decreased steadily since 2020, with lower costs reported at both the Fox Complex and Gold Bar compared to the prior year. All-in sustaining costs were largely consistent with the prior year and reflect the cost of bringing Gold Bars out into production in Nevada. At the San Jose mine, both cash costs and all-in sustaining costs increased incrementally over the prior year, reflecting lower production due to the issues I noted previously. Finally, looking at our treasury, at the end of the year, our cash and equivalent balance stood at $44 million compared to $60 million at the beginning of the year. Now I'll turn the attention to the recent transactions with Stellantis and Newton Rio Tinto and how it impacts our balance sheet and working capital on a go-forward basis. These transactions all closed within the past three weeks. The transaction included an offering of primary shares directly from McEwen Copper and a component of secondary shares, which are the shares of McEwen Copper owned by McEwen Mining. The details are summarized in our news release, so I'll just try to encapsulate it at a high level. Essentially, McEwen Mining, if we look at it as a standalone company, receives 48 million dollars. McKeown Copper receives approximately $30 billion Argentine pesos. The price point at which these transactions are valued from the McKeown Copper standpoint is nearly double the initial $10 per share amount when we did the investments in June and August of last year. Following these transactions, McEwen Mining's ownership of McEwen Copper reduces from approximately 68% at the end of 2022 to 51.9% today. In terms of the proceeds to McEwen Mining, we intend to use $25 million of the proceeds to retire our secured debt with Sprott Lending, which will reduce our total debt from $65 million to $40 million, saving the company significant interest costs going forward. With our enhanced treasury, we believe we now have the funds on hand to build phase one of the Phoenix project in Mexico and bring that operation into production within the next year without raising additional capital. As far as McEwen Copper's treasury, the 30 billion pesos is a significant amount. At official exchange rate, this is equivalent to over 150 million. Using less official measures, such as a blue chip swap rate, this is approximately equal to about $80 million. With this round of financing completed, McEwen Copper is well positioned to execute its drilling and development program for the remainder of the year and into 2024, which Michael will outline. So based on these transactions, the urgency to complete an IPO in the first half of 2023 has been eliminated. So with that, I'll turn the presentation over to Bill Shaver.
spk08: Thank you very much, Perry. Good morning, shareholders. This morning, I'd like to leave you with three messages with regard to our operations. We have improved mining operations at the Fox Complex and are improving milling operations, which will result in higher output and lower cash costs in 2030. At Goldbar, we have successfully transitioned to a new contractor and we have moved the operations to the Goldbar South Pit, which will produce most of the ore in 2023. Based on the first two months of production, we are fully transitioned on both fronts, that being the new contractor and full operations. Cash costs for these operations will be approximately $1,100 per ounce in 2023, which is a significant improvement of approximately 15% from 2022. And lastly, at the Phoenix project, as Perry has mentioned, we have moved the plant that we purchased last year to the plant site and are in the working stages of planning production in early 2024. The last quarter of 2022 was challenging, but hard work by all our mining operations helped us overcome these hurdles making Q4 a reasonable quarter. We are also making progress in stabilizing and improving operations so we can obtain predictable outcomes for gold production and costs in 2023 and into the future. And so far this year, we are on track. On the safety front in 2022, we had two low severity lost time incidents. In January and March at our El Gallo operations and for the rest of the year we were lost time accident. Free. At the Fox complex we have operated for a full year in 2022 with no last time injuries and at Gold Bar we recently passed three years without a last time injury. On the environmental front, There were no environmental events recorded in 2022. Now I'll turn over to each of the operations. At the Fox Complex, we had a very challenging year with our mill, which continued to have significant availability issues, which hampered our throughput. This resulted in us missing our gold production last year. At the same time, the mine had an excellent year, which resulted in a stockpile buildup to 120,000 tons by year end. This represents a value of approximately $15 million after milling and recovery. On a positive note, we have now undertaken crushing of the ore at the mine prior to it being shipped to the mill. This lowers the amount of work that the mill needs to do in processing VR. This decision was following a test program to prove this concept last year. We have been able to get our production tonnage through the mill successfully in Q1 of 2023 and are looking forward to improving the throughput when we get the contract crushing plant that we have planned for the remainder of the year at Froome into place. This plant will be commissioned in early April, which will allow us to reduce the size of stockpile we have at the Fox Mill, transforming it into gold and therefore cash. We anticipate we will meet our budgeted cash call for the year of $922 per ounce. At the Gold Bar Mine in Nevada, 2022 was also challenging with our issues of preg robbing ore and our parting of ways with our mining contractor at the start of Q4. Notwithstanding these issues, we transitioned the mine plan successfully to main production in Q4, and we are happy to tell you we have successfully transitioned to a new contractor who is now in full production. We also completed the move to the Gobar South pit and are now in full production in this pit. Coal production from Gold Bar has been on budget for the first two months of this year, and we're looking forward to a good year from operations. At the Phoenix project in Mexico, we have been able to develop an approach to get the Phoenix project in production in a timely manner and at a significantly lower capital cost. We will reprocess the heap leach pad, which has a grade of 0.6 grams per ton. To accomplish this, we have acquired a used 7,000 ton per day gold processing plant, which operated recently at a local mining operation. We have moved 80% of this plant to our site. And for Phoenix, we will initially assemble only the grinding circuit the cyclones and the leaching portion of the plant and use the present El Gallo gold recovery circuit. This will reduce the capex to approximately $12 million with the potential to increase the throughput as we move into production and prove that this plant will give the required outputs. There are a few minor changes in our permits that are required, but we hope to have this plant operating late this year or early in 2024. With that, I thank you very much, and now turn it over to Michael for an update on our world-class Los Azules project.
spk00: Thank you so much, Bill. I will quickly highlight our financing and strategic importance of our new shareholders. then reports on our drilling, exploration, and study work, and finally mentioned what we did last year and in 2023 concerning our enhanced organizational and ESG competence in Argentina. McEwen Copper completed a 81.9 million offering, including a 25 million investment by Newton, a Rio Tinto venture on August 31st, 2022. Followed on October 24th by an option agreement with Canaccord Explorations, Another subsidiary of Rio Tinto for potential earn-in of 60% for Elder Creek by investing $18 million over seven years. Subsequent to December 31st, 2022, we announced the closing of an Argentine peso $30 billion investment by Fiat Chrysler Argentina, a subsidiary of Stellantis to acquire shares of McEwen Copper and of a second investment of $30 million by Newton that increased the investment to $55 million. Now, Newton is an innovative new venture with a portfolio of proprietary copper heap leach-related technologies and capabilities at the core, a product of almost 30 years of research and development. Those have the potential to economically unlock copper sulfide resources and achieve higher copper recoveries on oxide and transitional material. Rio Tinto is the world's second biggest mining company, bringing significant financial and technical resources to McEwen Copper and the Los Azules project. Stellantis, on the other hand, is one of the world's leading automakers. It produces iconic brands such as Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram, Vauxhall, and others. And in Argentina, Stellantis produces about 160,000 cars yearly, has about 3,000 employees, and is present with manufacturing in Buenos Aires and in Cordoba in Argentina. Partnering with Stellantis is an expression of a paradigm shift for downstream customers of copper. Companies realize that copper is a mineral critical to the green energy and mobility transition. And to my knowledge, it's the first time an automotive company has invested in a copper company. Subsequent to those transactions, Stellantis and Newton each own 14.2% of McEwen copper. McEwen Mining's ownership is now approximately 52%. Now I'm going to talk about drilling, exploration, site, and study work. A total of 41.3 million was incurred in 2022 at the Los Azules project to advance drilling, engineering, and project feasibility work. Drilling has focused on increasing drill hole density to operate the copper mineral resource classification to measure and indicate it, and to define the payback pit design better. to provide metallurgical, hydrological, and geotechnical data to support mine design, and stable exploration testing for potential extensions of the copper resource to the north, south, and the depth of this already vast deposit, which Mining Intelligence ranked in 2022 as the ninth largest undeveloped copper project by copper resource size. In 2022, drilling started in January and went to May. when it stopped for the winter in the southern hemisphere, then restarted in October and is currently ongoing. Since October 2022, there were six drill rigs on site, and five more were added in early 2023. From 2022 to date, we have drilled over 105,000 feet, approximately 32,000 meters, in 98 drill holes to increase geological confidence, and we see that drill results are generally consistent with our model. Beyond our robust delineation results published in January and March this year, we recently published our northern step-out exploration results with 1,052 meters of 0.29% copper, including an interval of 480 meters of 0.42% copper, which demonstrates the potential of the deposit to the north. The updated PEA will include all available information on drilling, assay, and metallurgical testing obtained until early 2023 and is now slated for publishing during Q2 this year. We are developing a scenario for Los Azules as an open pit mine that initially processes leachable copper content in a heap leach with a solvent extraction and electrowinning facility to produce copper cathodes. This scenario is more environmentally sensitive due to its much lower water consumption and carbon footprint, and is de-risking the project due to lower complexity. The project design makes use of renewable energy, which will allow for low carbon footprint production and improves financial attractiveness. While the PEA, as a base case, considers economic leaching without new technology, we are excited to be able to test heap leaching using their technology, which could represent a very interesting upside scenario, and initial results are promising. We are in preparation for the filing of the environmental permit application for the exploitation stage to the San Juan mining authorities. The drafting of the report is underway and on track for submitting it to the authorities in April 2023. In 2022, a major advance was made that will accelerate the development of the Los Azules project with the completion of a new low-altitude access road. which goes to a maximum of about 11,000 feet or approximately 3,400 meters above sea level, which we share in part with other mining projects, including El Pachon from Glencore and Altar from Aldebaran Resources. The importance of having a second road into the site at more than 2,000 feet low altitude means that we now have almost year-round access to the site. In addition, we upgraded the exploration roads, the former existing roads, to allow for articulated 18-wheelers to get to site, a significant logistics improvement lowering costs and quickening transport. With regards to our organization, a strong and experienced management team was set up in Argentina in 2022, with management team members having a total of over 180 years of experience in Tire One operations, the majority in San Juan, Argentina, where the project is located. To further cement our relations with local communities, we opened up our community affairs office in Calingasta in San Juan, where the project is located, to have even closer relations with the community we are operating in. And I can report that we are happy to receive ongoing support to develop our project there. This concludes my report on McEwen Copper. Thank you for your attention, and I will now turn it back over to Rob.
spk02: Thanks, Michael. I'd like to say
spk12: I've always felt that Los Azules was a tremendous asset for McEwen Mining. The problem was, in 2022, our share price was scraping along the bottom, and our treasury was small. But in order to advance Los Azules, we needed a lot of money. And the thought of trying to do a financing when our share price was at historic lows was just not that attractive or possibly feasible. So we decided the best way to advance Los Azules and build its value and surface the value from McEwen Mining and allow it to access financing was to create McEwen Copper and fund it separately. And I believe we have been successful in surfacing value. We've attracted the second largest mining company in the world as a shareholder and the fourth largest automobile manufacturer in the world. So both did extensive due diligence on Los Azules. just confirming that we do have a very large, very attractive copper project that will likely be one of the larger copper mines in the world when it is built. So last August, we raised $82 million at a share price of $10. And now seven months later, we've completed an even larger financing of $30 million and 30 billion Argentinian pesos at an average price of approximately $18.75. As a result, the implied value of Los Azules has increased from $260 million to $550 million. And that's excluding the one and a quarter percent royalty that McEwen Mining holds on this property. So now behind every share of McEwen Mining on a fully diluted basis is a value of $5.70 from Los Azules.
spk02: Back in mid 2020, our share price
spk12: was around $3 a share. Looking ahead with our operations performing much better than they have in the past with prospects of growth at our Fox complex where we can see the potential to double production and further reduce costs to below $900 an ounce. Mining at Gold Bar We're in a new deposit that is higher grade, a lower strip. And assuming the winter doesn't frustrate our plans, we'll be increasing production by better than 50%. And we're looking at the Fox Complex increasing production anywhere from 15% to 30% and keeping its costs around $1,000 an ounce. Looking at 150,000 to 170,000 gold equivalent ounces representing an increase between 13% to 28%. McEwen Mining trades at a significant discount to its peer group, and our objective is to get up and exceed that peer group economic value per gold equivalent ounce. And when we do that, along with continuing to progress our Los Azules project, I think that the value behind McEwen Mining is going to increase. And I see a value of somewhere between $7 and $28 a share. And you might be wondering how I got that number. And it's really the sum of the parts. We have Los Azules in there. And compared to two other copper projects in the same province in Argentina, we're at a lower altitude, closer to the infrastructure than they are roads power. And based on the published resources, we have a larger resource and a higher copper grade. than either of those two properties. Yet one has a value, was purchased at $485 million last April, and the other one has a market cap of about $1.9 billion. So you can see, I think we are in a position to be somewhere between that $500 million and $2 billion for the value for Los Azules. We have five royalties, non-producing royalties, 1.25% on Los Agulos, 1.25% on NICU and Copper's other copper project, Elder Creek, which you heard earlier is an auction by Rio's exploration arm, Canacop Copper. And then we have our gold assets that are trading well below our peer group. So I think there's There's quite a bit of room to grow, and I think we're in a really good position to push forward on that front. The investment that we have brought in recently into McEwen Copper, although it reduced our interest, our ownership interest, it increased the value significantly of that asset, and it allowed us to reduce McEwen mining debt and put money in the treasury of McEwen mining to further the development of our Fox complex, expand down in Mexico, and fund our exploration program. So if any of you are interested in buying, getting exposure to McEwen copper, Right now, the best way to do it is through the shares of McEwen Mining. Or wait for the IPO of McEwen Copper.
spk02: Thank you.
spk12: Operator, let's open the session for questions and answers.
spk11: Certainly. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from the line of Jake Sikelski from Alliance Global Partners. Your line is open.
spk10: Hey, Robin. Hi, Jake. Thanks for taking my question. So just starting with GoldBar, you mentioned the change of contractor in Q4. Can you give us any color on the improvements you've seen since making that switch and if you're able to quantify them at all? Sure. I'll ask Bill to address that question.
spk08: Thanks very much for the question. Yes, I guess. There's there's two aspects to the improvement. The first aspect is that. We have a significantly different contractual arrangement with this group and that along with their performance as. brought the relationship to a very professional relationship, which is contractually, I guess, not complicated. And, you know, that has been nice to see from my perspective and also from the site's perspective. And they have successfully transitioned in a relatively short time, approximately three months from the time we first started talking to them until we had a contract in place and they were on site. They are now totally ramped up at the Gold Bar South project, which is a new mining operation. If you were there a year ago, it was a big hill out in the middle of the desert. Now it's full scale mining operation producing about 100,000 tons of ore a month and between three and 400,000 tons a month of waste. So it's been a relatively smooth transition. We've had this fall and early winter, I guess the toughest winter that they've had in a in Nevada from the perspective of snow and rain. So with those challenges and seeing the success of the first two months where we're basically right on budget, I think that tells me we're on the road to seeing better performance as the year goes on. as the contractor becomes more comfortable and also as the amount of workspace that we have in the pit expanding because right now it's a very small pit because of the fact that we're just starting. I hope that answers the question.
spk02: That's helpful.
spk10: And then just looking at Los Azulis, you know, obviously looking at the recent financing and increased cash position for McKeown Copper, I'm just wondering if this has changed your thinking on, you know, the IPO timeline. With a longer cash runway, obviously, I think you'd have a bit more flexibility, you know, and kind of take a market-dependent approach. Any thoughts here would be helpful.
spk12: Sure, Jake. With the financing, well, I'll go back a bit. We had thought we'd complete the updated PEA and use it as a basis for going public in this first half of the year. And as you mentioned, with the financing now completed, the urgency to do a financing is no longer there. And so we'll have the ability to Think of it financing later this year or into early next year, but in a more buoyant marketplace.
spk02: Got it. Okay. That makes sense. That's all on my end. Thanks again. Thank you.
spk11: Your next question comes from the line of Heiko Ill from HC Wainwright. Your line is open.
spk13: Hey, Rob. Thanks for taking my questions.
spk09: Go ahead. One of our questions, or the primary question really, is the contractor at Gold Bar South. I mean, you've got new people there. What kind of efficiencies have they brought with them already to improve production? How much more do you think you can see? And even more importantly, do you think any of those efficiencies can be extrapolated to other sites?
spk12: Bill, again, could you jump in?
spk08: Yeah. So I guess the potential upside at Goldbar South is that we will have, once we get up to full operations, which we're very close to now, we will have the ability to ramp up production to a higher level. I don't think we've completely figured out exactly what that capability is, and one of the things we have to be a bit careful with is that the life of this pit is relatively short. It's between 12 and 18 months, so we want to make sure that we run the operation in in a very efficient manner to make sure that we optimize the, optimize not necessarily maximize the production out of the pit. And we also have to make sure that we get the right recoveries from the operation. At the same time, at Gold Bar, we also need to expand our leach pad this year, and that work is now getting underway and will be completed sometime in the late summer, August, September. So those are some of the complicating factors, but so far, As I mentioned earlier, we're right on budget and on schedule in terms of production. Now I guess the thing we're not absolutely clear on is what the recovery will be from this ore, although early indications are that the recovery will be higher than what we have in our study. So I think we're looking good for the future. It's a question of managing all of our operating costs. We need a little bit of cash to do some exploration work. And I think all of that can happen out of Gold Bar to ensure we know where we're going next, after Gold Bar South.
spk12: Heiko, in terms of applying what we're doing at other sites, this contractor is specific to this mine, and I don't think we'll be using them at other sites at this point.
spk09: No, I didn't mean physically move them over. I meant more of the techniques. But that was helpful, nonetheless. My next question was going to be pointing out your market cap, that you own 52% of McEwen Copper, and that that's $286 million right there, which puts $100 million on the rest of the company. When you're including net debt, you're still looking at $100, $120, $130 million, whatever. You did a... I think terrific job describing how you plan on unlocking all of this earlier on that call. For that, I thank you. The one thing I think I'd like to see just a touch more color on is the management time priorities for the senior team, for the company. I assume there's at least some people that are going to have some overlap and how you expect time priorities to be spent, please.
spk12: Michael has done a wonderful job of assembling a very seasoned Argentinian management team, which are handling much of what's going on in McEwen Copper at Los Azules. And then we have oversight from Toronto on the financing and also the other property, Elder Creek, which is largely in The program will be run by Rio Tinto's Kennecock Copper Arm over the next number of years. Michael, perhaps you could talk about the team you've assembled and their background.
spk00: Yeah, sure, Rob. No problem. So what Rob has said is that we set up a local management team. So in Argentina we have myself for the majority of my time I have about 16 years in Latin America and 10 in San Juan in Argentina. I spent about seven years with Barrick, being responsible in finance and operations for all of their assets in Argentina. Then we have our project director, who's American, but who also relocated to San Juan in Argentina to be directly connected with the team. And then the next line of management, from human resources, with a person more than 16 years in Taiwan-Taiwan operations, to our legal manager, 20 years of experience with Barrick and in natural resources, our environmental and health and safety manager, 20 years experience in Taiwan operations with Barrick. Through all the different functions, we have a very, very strong team that is capable of bringing this project from where it currently is over to feasibility, engineering, and construction and operation.
spk02: Rob? Yes.
spk13: So, does that cover your... Yes, it does. Thank you very much. I appreciate it. Thank you.
spk11: And your next question comes from the line of Mike Kozak from Cantor Fitzgerald. Your line is open.
spk06: Yeah, good afternoon, everybody. Thanks for hosting the call. A couple of questions from me. First one, you put out 2023 cash cost and ASIC guidance in your December 21st press release last year, but that guidance was noticeably absent from your press release this morning. Was that just an unplanned omission, or should I interpret that as your previous 2023 cash cost guidance should no longer be relied upon?
spk12: I'm sorry to say, an omission.
spk06: Okay. Okay. So you can just reiterate the cost guides. Good. All right. Second one. Yeah, so, and Michael, you mentioned it. The PEA at Los Azules is now expected in Q2, which is a small delay from Q1 from before. Now, on the site visit a few weeks ago, it's abundantly clear just how much work is going on there, right? Exploration drilling, MET testing, the geotech drilling. new iterations of the Life of Mine plan that seem to be changing almost constantly. So my question is, by pushing the PEA to Q2 from Q1, how much and what type of extra data might you be able to jam into that PEA that you otherwise wouldn't have been able to that could presumably improve the project economics there?
spk12: Mike? Sorry. I was just going to say one aspect is deciding on the base case. We've done a number of optimization runs and we're just finalizing that base case and getting agreement across the board on all of our consultants. Mike, do you want to add further information?
spk00: Yeah, what we looked at beginning of this year was that we had some interesting additional drilling information that we wanted to include And this requires update on the work around the mineral resource estimate from the works of the geostatisticians over to the geos to the mine planning. And while we said, well, we're going to publish, we're going to complete the PEA by end of Q1, we now think, okay, we are going to complete it end of this month, beginning of next month, depending on the optimization work that Rob just mentioned, because we still think that we can do some further work that will warrant a couple of weeks later publishing of the PEA, especially in the framework of the obtaining financing that gives us more headroom to look for, as Rob said before, a buoyant financial market. So we have the time, so we want to make sure that we get the best possible outcome for this PEA. I think we owe that to our shareholders.
spk06: No, that makes perfect sense. Thanks for that, Collar. Maybe just one follow-up, and You touched on this briefly. I was going to ask on it anyway, but you mentioned that now you've upgraded that exploration road so that you can get 18-wheeler trucks in there. Can I then assume that if you wanted to, you would now be able to winterize the camp? I'm not saying if you will or if you won't, but is that possible now to enable drilling year-round?
spk00: Yeah, so as we had highlighted before and Rob had mentioned in prior press releases, one of the things that is critical for us is access to sites. And access to site we have through the exploration road and through the southern road. And on top of that, we upgraded the exploration road, as you said, to bring tractor trailers to site. Now, this means that a potential construction of a winter camp, a true four-season camp with fixed installations, is now possible much more efficiently. So should we decide to go forward and construct this camp, We could think about winter drilling this season, but we're currently evaluating that and look for what is the most cost-effective and efficient solution and also what is required from a study program point of view to be able to complete the feasibility study by end of 2024.
spk06: Okay. Very good. Very helpful. Thanks. That's all for me. Thanks, Mike.
spk11: Your next question comes from the line of John Tomasos from John Tomasos Berry Independent Research. Your line is open.
spk07: Thank you very much, and congratulations on all the progress. In your press release, you mentioned 42 meters of 2.78% copper and hole AZ23191 at Los Azules. Could you tell us how deep that was and whether it was oxide, leach, mill, open pit, or underground ores?
spk02: Mike, here to cover that question.
spk00: Sure. The section is in our press release, where you can see where the copper mineralization is. So best is to open that up. The 174, the exploration one, is mostly primary, and the 3191 is mostly secondary and then goes into primary.
spk07: Is primary mill ore or leach ore?
spk00: Primary would be either mill ore or using a technology such as Newton's heap leaching technology or Jetty's technology.
spk07: So it's not an old-fashioned leach, but it might be a tomorrow heap leach.
spk12: Yes. Today it's a mil. It would be a mil today. But thinking there's advances taking place in recovering metals that We're hoping we'll see a heat leach alternative.
spk07: Thank you for clarifying and helping me. Could you just repeat the 2023 cost guidance that was omitted from the release? I didn't get it down quickly.
spk01: Hi, John. It's Stephan Spears on the line. Yeah, so in December, we guided on a consolidated basis, so about 100% owned operations, cash costs of $1,200 and all-in-sustaining of $1,500. Gold bar, we guided cash costs of $1,400, all-in-sustaining of $1,680. Fox was $1,000 cash cost and $1,320 all-in-sustaining and San Jose at $1,250 cash costs and $1,550 all in sustaining.
spk07: Thank you. Concerning the mill at El Gallo and the ramp at Stock, could you give some indication as to what month in 2021 for or early or late 2023 that might begin production and what the monthly production rate might be.
spk02: Bill, could you address that question?
spk08: Yeah, so with regard to Phoenix, we anticipate that we would have that plant running say in the first quarter of 2024. And the tons per day is somewhere around 3500 to 4000 tons a day. And with regard to. Fox and the start of the ramp there. What we hope to be able to do is to. construct the portal in the last quarter of this year and then be in production sometime late in the first quarter or the second quarter of next year from ore that's relatively close to surface that we have been drilling feverishly over the last couple of months. I guess basically what I'm saying is that there is ore very close to surface, which will take something less than three months to develop. And then we'll continue driving the ramp down towards, well, towards Stockwest but also with the possibility of heading to stock east, where we also have some ore that's relatively close to surface. And of course, as you probably know, the better ore in the stock west deposit is quite deep, anywhere from 200 to 400 meters deep.
spk07: Bill, if I could follow up. Maybe it's too much to ask you what the gold output could be in 2024 from stocks since you're still infilling the gold to finalize the grade. Concerning El Gaia, At 3,500 tons per day, how much gold per month or per quarter would that be given the grades and recoveries?
spk08: With regard to FOX, we anticipate that we would be able to continue production at the same rate. As we are planning for 2023 at Fox. So that's somewhere in the range of about 4000 ounces per month. And to tell you the truth, I don't remember the production number from Algaio, but it's 496 is 24 times 30.
spk01: be 1,500 a month?
spk08: Yeah, it's about 1,500 ounces per month. 18,000 per year. Yeah, so it'll, from a cash generation perspective, Phoenix will be a very, very good project with a relatively short payback period because we've basically worried the capital costs down to something in the range of $12 million.
spk07: Thank you for all those explanations, Michael and Bill.
spk02: No problem. Pleasure. You're welcome, John.
spk11: Your next question comes from a line of Bill Powers from a private investor. Your line is open.
spk04: Yes, thanks for such a great conference call today, but A question on the stock. I know you were planning to do quite a bit of drilling, and it sounds like from Bill's recent comments that you're planning to drive a shaft down and then start producing ore. I guess, is this at the point where froom production is, I guess, continued to go forward, or is this going to be produced along with frooms?
spk08: So that's a really good question. So just for your interest, we'll do 100,000 meters of drilling this year at stock, with possibly some of that, in fact, not at stock, but at Gray Fox and a couple of other projects. But a substantial amount of drilling will be completed at stock. So conceptually at this point, Froome will continue at least to the first quarter of 2026. And so the transition across to stock will be one where we will be mining at stock before we're out of ore at Froome. And so that's where we hope to increase the tonnage, you know, in 2024, increase the tonnage coming from the FOX complex, which will increase the total amount of coal that we are producing. However, at this point, I can't tell you what that coal production might look like, in part because we haven't, all of the resources put together in mine plans for that period of time. But I would venture that it'll be a couple of thousand ounces a month once we get it ramped up.
spk04: Okay. And so the idea would be that, I mean, it sounds like Froome There's still a fair bit of exploration that keeps getting extended as far as its terminal date. It sounds like there's still a fair bit of exploration you're planning to do there. And so would additional adjustments need to be made to the mill to accommodate this ore, or is that in your plans for this year to accommodate the increased throughput since it sounds like that's kind of a bottleneck as of right now?
spk08: That's correct. The mill has been a bottleneck. Crushing the ore at the mine has significantly lifted the pressure on that because we're basically, the plan going forward there is to basically crush down to six millimeters, haul that across, and put it directly into the ball mill and leaching part of the circuit. What we have to determine this year is what the long-term configuration of that mill will actually be. Will we go to, you know, crushing at the stock site as well, or will we do something innovative at the front end of that plant such as, you know, a larger ball mill some other kind of tower mill to do grinding. But at the present time, part of our task this year is to figure out what that long-term solution is and then to implement that so that we can take advantage of not only ore from prune, but also, of course, dock, but also to have a a view on what the future might hold at Gray Fox.
spk04: Okay. And one last question. As far as getting back on track in San Jose, I know there was a drop-off in production last year. What changes are Hochschild or you and Hochschild planning to make to kind of get production back up, or is it planning to operate at a lower level this year?
spk01: Sure. So it's Stefan speaking. So production should rebound. Obviously, they're not anticipating any of the issues they had in early 2020 to be repeated in 2023. And our partner, Hochschild, is projecting a significantly lower cost as well relative to last year. If you look at Hochschild's guidance, I believe they're guiding around $1,400 all sustainable And, yeah, so I'd say overall a substantial improvement at San Jose.
spk04: Are you expecting dividends, I guess, if production goes where things do rebound? Is that something that they've given guidance on so far?
spk01: It's certainly something we're expecting, but we don't have the ability to provide any real color on that at this point. Okay. Thank you so much.
spk04: Thanks, Bill.
spk11: And there are no further questions at this time. Mr. Rob McKeown, I turn the call back over to you.
spk12: So it was a year of big numbers over the past 15 months. large losses that were largely a function of the consolidation of the work being done at Los Azules. And we will expect that to continue as long as McEwen Mining is over 52% of the ownership and up to the feasibility study at Los Azules. which we expect to have at the end of 24, but we consolidate all of the expenditures, as Perry said, that occur at Los Azules, and it has an adverse impact on our earnings. We also have a large exploration program this year that probably will not be as large next year at our other properties, and that contributed to the loss. The mines are generating operating profits. And we're looking at increased production and an improved cost per ounce. I do think the copper asset will continue to play a very large role in building the value of McEwen Mining. But I'm not discounting at all the precious metal assets catching up and We hope to surpass our peer group valuation. With that, I'd like to thank everyone for attending and look forward to our next exploration updates. Thank you, Operator.
spk11: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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