McEwen exploring potential sale of Mexican assets
Toronto-headquartered McEwen Mining is considering selling its Mexican assets, which include the El Gallo mine in Sinaloa state.
The proceeds of a potential sale would be used to advance development projects and the balance would be used to retire a portion of its debt, the company said in a statement on Tuesday, without providing more details.
The El Gallo mine operated as an openpit until May last year and has produced 279 000 oz of gold and 134 000 oz of silver, equating to 281 000 gold-equivalent ounces (GEO), between 2012 and 2018. Owing to the transition to deeper sulphide mineralisation that is not amenable to leaching, mining and crushing activities ceased in the second quarter.
Residual heap leaching is continuing and delivered 5 413 oz of gold in the first quarter of 2019.
McEwen is working on a feasibility study to retool El Gallo to produce silver and gold for another decade or more. The results of the feasibility study will be published in the current quarter.
The preliminary economic assessment for the plan, called Project Fenix, was published in May last year, and calculated that a redevelopment will require $41-million for Phase 1 and $30-million for Phase 2. From year two, the redeveloped operation is expected to generate free cash flow of $12-million a year, producing an average of 47 000 GEO, at a cost of $598/oz and $797/oz for the first and second phases, respectively.
Meanwhile, McEwen reported that its Black Fox and Gold Bar mines had delivered a strong finish to the first quarter, after a “tough” start to the year.
Production at Black Fox, in Timmins, Ontario, was impacted by a six-week shutdown of a crushing plant at the Black Fox mine, owing to a fire. The mine produced 8 765 oz of gold in the quarter, 5 335 oz of which was produced in the month of March, resulting in the company achieving 93% of its budgeted production for the quarter.
The crusher has been repaired and is operating normally, McEwen reported on Tuesday, noting that the Black Fox mine’s guidance for the year remained unchanged at 50 000 oz.
At the Gold Bar mine, in central Nevada, the issues that pushed the start-up of commercial production from the first quarter to the second quarter have been resolved.
The first gold was poured in February, for a total of 2 052 oz for the quarter. McEwen, however, reduced its guidance by 10% as a result of the slower-than-expected startup, with its full-year target set at 50 000 oz.
At San Jose, in which McEwen has a 49% interest, attributable production was 10 559 oz of gold and 701 341 oz of silver, for total GEO production of 19 910. The Argentina-based mine should achieve its stated guidance of 92 000 GEO this year.
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