McEwen Inc.

Hello, ladies and gentlemen. Welcome to McEwen Mining's Q4 and year-end 2023 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner, Harry Ng, Chief Financial Officer, William Shaver, Chief Operating Officer, Stephan Spears, Vice President, Corporate Development, Michael Medding, Vice President and General Manager of McEwen Copper, Jeff Chan, Vice President, Finance, and Carmen Diaz, General Counsel and Secretary. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question during this time, press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now turn the call over to Mr. Rob McEwen, chief owner. Please go ahead, sir.

Thank you, operator. Good morning, ladies and gentlemen, and welcome. I'm delighted to say we had a great year. Not only did our strategy to surface value of McEwen copper and its very large copper project, Los Azules, deliver large gains, but also our gold and silver mines increased production and met guidance and reduced their production cost per ounce closer to industry averages. In addition, our exploration efforts delivered solid gains at Los Azules, And that's our properties in Timmins. And all of this allowed us to report a net income of $54.7 million or $1.15 per share versus a net loss of $81.1 million or $1.71 in 2022. These big swings in our bottom line are largely due to our investment in McEwen Copper. and its 100% ownership in our massive Los Azules property. Prior to last October, we own more than 50% of McEwen Copper. And as a result, McEwen Mining's financials represented the consolidation of its financials with that of McEwen Copper, where we have been spending hundreds of millions of dollars advancing the Los Angeles project, first to an updated preliminary economic assessment, which we released in June of last year. And now we're driving towards completing a bankable feasibility study in the first quarter of 2025. In October of last year, we completed our third financing of McEwen Copper. And as a result of that, our ownership dropped below 50% to 48%. And that led to us no longer consolidating the financials of McEwen Copper. And it generated a significant gain, which is reflected in our financials, which was the strategy from the very beginning to surface value for McEwen Mining. The biggest, I think we're trading at a substantial discount and I can see a price that although we're trading around $6 a share and it is biased, we have a management view that we're trading at anywhere between $7 and $29 a share. So I think there's a lot of room on the upside and that's driven by We have basically three sets of assets, and that's the sum of the parts. We have McEwen Copper, which we own 48% of. We have a royalty portfolio. And we have our gold and silver assets. So we have values ranging from $8 to $30 a share. So I think there's, you can look at it and say we're trading at a big discount, or there's a lot of upside. Now, it's been a hard couple of years for us as shareholders. From September 18 to the end of August 22, our share price was going in one direction, and that was not the direction I ever wanted it to go. And that was down. And I call that the road to hell. Right now, I'll call it we're on the road to redemption. And if we compare our results, and maybe it's a false cheer, but when you look at how we performed against the price of gold, the price of copper, the NASDAQ, the Dow, since September 22, when we did our first financing in McEwen Copper, McEwen Mining is up 107%. The NASDAQ is up 37%. Silver, 27%. The Dow, 23%. Gold, 20%. GDX, 14%. GDXJ up 13%. And copper is up 12%. We're clearly outperforming. I think we have two drivers. One is our copper, which I think is and have long considered a potential copper unicorn, and that is we're seeing shape out. And then the second is the turnaround in our gold and silver assets that are delivering positive cash flows and financing our exploration programs there. And we have some exciting development programs, one in Timmins where we expect to put a ramp down and start production in 25 on a discovery we made several years ago, Stock West. Stock East, we recently put out some results, some intriguing high grade over there. And the importance of the stock mine is threefold. One, it's right beside our mill, so it would eliminate the transportation costs we currently have of about $10 a ton. Two, it doesn't have a royalty on it, so we're going to save on that royalty of about $1,500 an ounce that we have to give up. And three, the rock is softer, which means we should be able to process a higher volume of material through the mill and, in theory, produce more gold as a result of that and bring down our costs. at Los Azules in McEwen Copper, we delivered a very robust preliminary economic assessment in June. We've got a project there that I can't help myself, but I always look at something that's not gold and try to convert it into gold to try to get a sense of its scale. So when I do that with Los Azules, it's indicated and inferred resources, you get a resource of 37.6 billion pounds of copper. If you were to take today's price of gold and divide it by the price of copper to find out how many copper pounds equals one ounce of gold, it's about 536 pounds of copper, one ounce of gold. Divide that into 36.7 billion pounds of copper, And you're looking at a gold equivalent deposit of 70 million ounces. The average production of 321 million pounds of copper per annum would translate into about 600,000 ounces a year. And with a cash cost of $1.07 a pound, the gold equivalent of that would be just under $600 an ounce. By my book, that is a big difference. gold equivalent deposit and reflects the size and I think the power of Los Azules. We're looking at a 27-year life and I think there's still quite a bit of room in improving the value of that asset and that improving the value of McEwen Mining. And then you look at the gold and silver assets where we're doing exploration. I'm quite pleased with what we're getting there. It's taken a while, but we're moving in very much the right direction. Our press release outlines it pretty well. We have another project in Mexico that we're looking at advancing later this year. And I want to come back to Los Azules for a moment because what we're trying to do there is a bit different than what's in the market right now. Mining generally is held in poor opinion by most of the world. They feel it's very damaging to the environment and it's not important to life. But I can assure you, if all the mines stopped tomorrow, modern civilization would grind to an abrupt halt. And somehow we have to put that message out there that we can mine the Earth's resources in a manner that is viewed as responsible and sensitive to the environment. So at Los Azules, several years ago, we engaged the services of an architect who's very prominent in the green living building space and asked him to help us redefine mining, to look at it so that we could hopefully move in the direction of shifting the perception of the public's perception of mining. And so we're looking to create the future. And in order to create the future, it has to look like the future, both in terms of its buildings. We have some wonderful renderings very comfortable, safe, attractive accommodations for the workforce, but also looking at how do we treat the world, and we're looking at a project that will have a much lighter impact on the environment, initially emitting one-third of CO2 emissions using less than one-quarter of the water of a comparable-sized conventional copper mine, being powered by 100% renewable energy source from hydro, water, and wind, and producing a sustainable copper cathode. Most of the mines, copper mines today in the world, produce concentrate that has to be shipped to a smelter, then converted into a product that is usable by industry. With our copper cathode, it can go directly to industry and cut out the transportation costs. And we think that will attract a premium in the marketplace as well. So with that, I'd like to open it up for questions.

As a reminder, to ask a question, you will need to press star followed by the number one on your telephone. To withdraw your question, press star one again. Your first question will come from the line of Heiko Ehle with H.C. Wainwright. Please go ahead.