Name of the Project
Project Fenix.

Location
El Gallo Complex in Sinaloa, Mexico.

Client
McEwen Mining.

Project Description
A preliminary economic assessment (PEA) has evaluated the potential extension of production from the El Gallo Complex called Project Fenix.

The project will be developed in two phases.

Phase 1 involves the reprocessing of material on the gold heap-leach pad at the existing El Gallo gold mine, and Phase 2 includes the processing of openpit gold and silver mineralisation from several deposits, including El Gallo Silver, Palmarito, El Encuentro and Carrisalejo. The process plant will use conventional and proven mineral processing and precious metals recovery technologies.

Phase 1 will have a throughput of 5 000 t/d. During Phase 2, fresh mineralised material from the higher-grade silver deposits (El Gallo Silver primarily) will be processed at a maximum of 3 250 t/d. The selected process-recovery methods are based on separate treatment of heap-leach material (Phase 1) and fresh mineralised material from other deposits (Phase 2). Phase 1 operation will target gold recovery from the heap-leach pad material using a conventional ball grinding mill and a hybrid carbon-in-leach (CIL) circuit to recover gold onto activated carbon. Industry standard elution, electrowinning and smelting circuits will be used to produce a doré product.

In Phase 2, the process facility will be modified to allow for the treatment of mineralised material from El Gallo Silver followed by other deposits in the complex. Phase 2 operations will use conventional flotation technology followed by intensive leaching and zinc precipitation using the Merrill Crowe process for silver and gold recovery. The Phase 1 CIL plant will continue to be used for the leaching of the flotation tailings to maximise overall silver recoveries during Phase 2. This phase will also use the existing three-stage crushing plant to prepare material for delivery to the grinding circuit. Tailings produced during the operation will be stored in a mined-out openpit at the El Gallo gold mine.

As part of this process, tailings deposition will include a delivery system designed to maximise tailings consolidation and water recovery. The proposed process plant and the El Gallo Silver deposit are separated by about 6.5 km. This will require the construction of a dedicated haul road for the transport of mineralised material. A new substation and power line will connect both projects to the national electrical grid.

Over the life-of-mine, production will total 17.23-million tonnes of mineralised material at an average head grade 1.20 g/t gold equivalent containing 667001 oz gold equivalent, and recovering a total of 562 950 oz gold equivalent.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at a 5% discount rate, of $60-million and an internal rate of return of 28%, with a payback of 4.1 years.

Value
Phase 1 has an initial capital cost of $41-million and Phase 2 $30-million.

Duration
Not stated.

Latest Developments
Phase 1 requires the amendment of the current permits to include the construction of a mill and leach circuit at the location of the existing El Gallo gold mine for the reprocessing of the heap-leach pad material. The permit amendment will also include the backfilling of the Samaniego pit, with mill tailings as part of an integrated concurrent closure plan for the El Gallo mine. Phase 2 permitting will require authorisation to augment the tailings volume to be stored in the Samaniego pit, and El Gallo Silver permits require amendments to change the processing location to El Gallo Gold.

McEwen plans to obtain approval of the Phase 1 El Gallo permit modifications by the fourth quarter of 2018 and Phase 2 approvals by the third quarter of 2019. Further project advancement in 2019 is subject to permit approvals.

Key Contracts and Suppliers
GR Engineering Services (PEA).

On Budget and on Time?
Not stated.

Contact Details for Project Information
McEwen Mining investor relations Mihaela Iancu, tel +1647 258 0395 ext 320 info@mcewenmining.com.