TSX- and NYSE-listed precious metals and copper developer McEwen has confirmed in a prefeasibility study (PFS) on the Grey Fox project its viability to become a major source of ore for the Fox Complex and play a key role in increasing the group's production near Timmins, in Ontario.

With the addition of Grey Fox, gold production at the Fox Complex is anticipated to reach 100 000 oz in 2029 and average 87 000 oz/y from 2028 through 2041.

This production growth will support the company's near-term objective of increasing total yearly production to between 250 000 and 300 000 gold equivalent ounces across its portfolio by 2030.

McEwen also has a stake in the advanced-stage Los Azules copper development project in Argentina, as well as gold and silver projects in various stages of development or production in Nevada, Manitoba and Mexico.

Using a gold price assumption of $4 000/oz and a silver price assumption of $50/oz, the PFS confirms production from Grey Fox will generate sufficient cash flow to self-fund production growth with limited to no share dilution.

Grey Fox will benefit from the combination of using the company's existing Stock mill and tailings facilities, along with its existing workforce.

Grey Fox will extend the Fox Complex mine life by 15 years to 2041, with mine reserves totalling about 40% of the current resources - which leaves opportunity for further extension of the mine life.

The project can contribute an average 43 000 oz to the Fox Complex's production every year from 2028 to 2035.

From 2035 to 2040, Grey Fox will become the sole source of production, averaging 87 000 oz/y before tapering off in 2041. For comparison, the Fox Complex production guidance for 2026 is set at between 16 000 oz and 19 000 oz.

The PFS outlines an initial capital expenditure requirement of $181-million for Grey Fox, which McEwen says can be funded primarily from treasury and operating cash flow. The capital requirements can be divided as $17-million in 2026, $60-million in 2027, $80-million in 2028 and $24-million in 2029.

Grey Fox can reach this production at an all-in sustaining cost (AISC) of $2 212/oz over the life-of-mine, at a gold price of $3 000/oz as the base case scenario. In a higher price scenario of $4 500/oz, AISC will amount to $2 421/oz.

At the lower end price scenario, Grey Fox has an after-tax net present value of $282-million, an internal rate of return (IRR) of 25% and a payback period of 4.6 years. In the higher gold price scenario, Grey Fox is valued at $841-million after tax, IRR increases to 55% and the payback period reduces to 2.3 years.

McEwen plans to mine Grey Fox through a combination of two independent underground operations accessed from two portals. The mineral zones will be mined using a longhole mining method supplemented with cut and fill mining. The Stock mill will process both the Grey Fox ores and the Stock mine ores, with expected recovery rates of 87.5% based on laboratory testing.

The company has advised that development at Grey Fox will require amendments to the current operating permits within the Fox Complex. For example, water permit and closure plan amendments will be initiated in the coming weeks.

With the small footprint and existing facilities at the Fox Complex, McEwen is targeting receipt of permits for development work at Grey Fox within 12 to 18 months.

The company will also be evaluating optimisation opportunities to increase cash flow from the project, incorporate new mineralisation as exploration progresses and examine opportunities to reduce initial capital requirements.

The next steps at Grey Fox include detailed engineering and ordering of long-lead items and submitting water permit and closure plan amendments. McEwen targets a construction start date in Spring 2027 and underground development by the third quarter of 2027. Commercial production is expected in 2029.