MUX - Earnings call transcript Q1 2020

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Operator

Hello, ladies and gentlemen and welcome to McEwen Mining’s Q1 2020 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner; Peter Mah, Chief Operating Officer; Meri Verli, Chief Financial Officer; and Sylvain Guerard, Senior Vice President of Exploration. [Operator Instructions]

I will now turn the call over to Mr. Rob McEwen, Chief Owner. ahead. go Please

Rob McEwen

late the Good of been operator. Organization shareholders, and shutdown Starting ladies the our early Thank were employees we employers to of our none this compliant operations two government of contractors morning because months rapid in our that It’s temporarily of with in pandemic. global part, over we virus, protect Health imposed biggest and since gentlemen. action into say restriction. COVID-XX in virus. have April is result all and contracted or you, to place. a fellow March hope our measures the I’m the declared World In put delighted our employees that the

is is to is Gold Fox XX% operating a government restrictions operating of capacity restrictions will production. with activities mine our today, starting mine We increase on our El back Bar lifted limited preparing June. focus for in at residual be these and in reach. Government Black normally, think up José to San As Gallo

Bar. experienced year to behind Gold would but far have, we hope our Last sure hit. turn was problems be I a us, year, this and a Let’s significant I’m have disaster. you

the it to mine large but enormous us, is and are we This a reduced star reporting geological structural far, write-down quarter, deposit. is This Gold a one interpretation the was a noncash size a Mine. revised an asset our that so model This very of screwup. Bar of result be a clearly for of

that we today. technical us who where consultants for work to compounded us are professionals Many others and to were made bring decisions to the tend

later there speak to additional write Peter and and opportunities and will as defined ready to costs also Sylvain issues are the very believe to the resources several for it presentation. not Both in through bad off reasons. the improve reducing these and We close operation, We’re benefit decision a mine exploration.

the our Let’s talk for financial results about quarter.

$XX million end year. of liquidity at end our the $XX.X First, Working to the $XX.X the compared liquid were capital million. was million assets at QX, our of

that working the capital required levels refinance alternatives an extend in debt we below are covenants. are working in capital turns our will several shortfall. evaluating addresses risk and the by Therefore, we our have working by order of financing to Materially, However, debt. forecasting a the required amend we $XX our potential to place, which alternative capital created million decrease

that QX concern auditors a added XX-K and reflected in our statement, Our have report. our growing financial is language to

remains the extended – Assuming current been we oil amend fund a had the the the estimate related mine. and of to constant the churn, through turn statement price XXXX. the sheet on able Gold and adequate income said, have our – The is cash to of balance to we constant, refinance consequence to Bar company believe changes and impairment we’ve Mine. a We item big our debt resource

discounted cash information performed put a method, a debate. recoverability Our external flow auditors department, and evaluators, an finance we test then discount together property employing X% and a that using our

interest and find we the that impaired, by also long-term carrying be a $X.XX $XX.X million million of we noncash share. or plus a with the plant value or $XX.X the combine on first projects $X.X The to hard net It million and excluding net loss and for which share, I $X,XXX spent QX equipment conclusion recording annual per impairment the uses impairment, quarter. $XX.X million of some price was the When to a a as consolidated in G&A, ounce. exploration $X.XX was gold loss reducing impairment, a needed assumption believe are property

the joined new accomplished engineering now Chief an believer who very Corp. Mah, provide company on a is has is I worked executive, Peter to our is Gold before to introduction with has He Officer, six X. innovation, believe to at strategies like April who a to working in have for going would a who I Operating he been someone Mining performer. are Peter that likes place last weeks turn the out put flat in challenge and that into McEwen to say conventional we to wisdom

with ask the will Peter I now to continue presentations.

Peter Mah

future. very alongside Thank joining be Mining you opportunity a work you, Rob. the to to excited has again. and McEwen McEwen Mining I’m bright

near-term some and stellar pipeline have resources operational overcome which of a grow. We challenges to discoveries with to

my the can at operations providing how the experience background to update, challenges applied Before projects my and and to of be and some opportunities Mining. share like I’d McEwen

a with degree underground processing in and and in rock open engineer earned an mining master’s pit mechanics. and mineral I’m background a

as My a Over in supervisor, engineer, the mine worked Lake varying designed optimize Diamond in executive Mine XX General Victor a I’ve spans the rich years, systems capacities. in manager, Manager has the to worked me at around. the also for challenging expansions taught and of Mine turn My efficiencies past and underground blending pit feasibilities, open operations. Red and an throughput. builds, and an importance years I experience as handling Mine material experience processing clay nine ores new

transition Froome At transverse conveying efficiencies the to open Mine project. production Musselwhite stopeing new will in at the and support our

of firm development store of stope method. years resource XXXX. to expected The advanced mill feed low ramp is deposit the to cost a per grams XXXX in open first Froome QX expected three in ton mining and productive grade X provide transfers as QX is two of Speaking

the growth Stock take open growth set the high Permitting at Box Fox to update the and High represent the utilize and Fox the the in grade expected being with on the excess mine Grey Stock evaluated to pits project. at the is XXXX mill. approximately Grey Black potential Black capacity are of years. at QX mineralization two begin Fox to Mine complex, Continuing high project, grade

the into to core long addition expected for In the are Fox open being life scenarios grow to a pits asset Grey project underground The is evaluated. company.

discovery. reductions shaft permit more stock development the and trials, through and rates. capable to the use this there development reducing High or rehab was Fox definition intercepts boosted underground include and The in grade via is to encouraging are exciting evaluating access in and upper advance options of to received is the increased and to required dilution potential QX the the Resource open to and to west Mine shaft. haulage strong dewater areas or received improvement costs Black optimization, existing for through the drilling reaccess is and of stoping productivity control Other new the stock lateral mine at reduce exploration the mining side company At faces and/or has also costs and plans mining. the improved pit in permit control part focused stope costs, in improving ground mine drill mine. further

expected. be early for improved business Moving gold costs the the Key of ounces case in at is pick contained Nevada. rising and deposit updates best is drivers in in Mine resource to expected and XXXX Bar were Gold being disappointing. underperformance Results reduction determination the going completed forward XX% solutions. and modeling in for estimated ongoing QX. An to to Drilling XX% is analyzed

stockpile and dispatch productivities control blast improvement of management for and a to mine delivery, drilling unit with costs and practices. our better system, improve grade being areas heap assessment run-a-mine definition Some improved resource reserve planning ore mining leaching, examined blending, improved

work is and stripping South in returned plans operations the ready drill pick Ore stage indicates the and heap the operations. to leaching. in began is Gold to excess included limited that remaining plan production site permit the a half and of of mind for metallurgical maintenance, begin ongoing favorable stage for April in at recoveries exploration Bar targeting second and as in next The extensions. starts stockpiled a XX% west for remains adjust with XXXX, is on In the processing hold ore. metallurgical cleanup ore mineralization potential expected of surface management run-of-mine

The travel to continue demonstrates the mine at project our joint XXXX. operations José finalize gold study Gallo we produce second and XX% venture Phoenix Argentina the leaching. capacity mine government El At in our San of remain Mexico, this to restrictions. to due from economics expect study in robust half residual In

will now call Sylvain through the update. turn exploration I take to to you over the

Sylvain Guerard

Thank you, Peter.

last and Stock two and exploration weeks focus is Fox three Ontario Black the Bar Nevada. properties, Our in interment, Gold over on

through time, results we that clearly this strong commitment beginning of had the and quality high our our to the During are exploration, projects.

Our drill is that of process resource a driven to the establishment discovery programs project to and have an of development pipeline. contributing outstanding our growth quickly the definition

Gold Here to West in Pick Gold and March emphasis now the open which our reverse the the core model the pit. led grades revision of consisting Nevada. QX. is at geological and we expected are and circulation drill in-pit structural indicated some exposed derisk organization, designed mining, At been controls RC with far with late about of review the an have has have To key highlights program on This drilling. lower model short-term assess more with and tonnage Bar meters mining completed startup drilling so than to resource the the in started XX,XXX of and starting of in and better Mine,

and per X.X and revised X.X tonne we as be update Southwest X.X to beneath over and XX X gold shown pits new the outside Significant of completed plan mineralization ton ton to ton to pit where defining, strong all feet results gram the confirming feet. significant gram and XXX have intersection grams XX expected Gold feet the area drilling on mapping mineralization as recent grams are drill feet, is over X.X gold and over potential XX per mine results, XX During up Also gold by over estimates revised slide, Pick, results of feet, with per our including resource over the are such XXX are the first, extend the reinforcing over mining a information at an pit mineralization feet been XX boundary. grams derisking XXX model. over to in-pit using X.X feet, assess will the recall per intersection QX. And that’s respect over

Gold confidence main cure understanding quality have Gold satellite or jobs called this Bar reinforcement Bar drilling operation. in resource increased the instructional where to the significant XXXX In of deposit, we the South deposit of and

upside main XX,XXX will start the remained South, strong later the The in to three drilling Gold expected QX grow which of the potential Bar program and on out resource measure targets. focus ounces to sends indicated

for drilling the is area as shown this First, returning – last a extension the open results in on slide. the this significant as deposit South

mineralization. partially and finally, Northern Southwest that the was portion of which the tested, grade Second, structures control deposit only higher Northeast

West Moving Fox now the to meter XXX the Timmins, reverse and our mine depth. about Mine, the is of on to side from resource XXX expansion at Black focus or

XX as positive increase suggesting a drill The pits high per targets mineralization gold highlights Fox are of meter grade grade significant multiple the figure results. have recent intersection, losses shown including high such typical area. We potential style these pits the XXXX other generated gram indicating intersection Black and where the of over tonne X.X on yellow are over most

at to resource Grey estimate XXX,XXX announce drilling and estimate to XX% Grey has now, increase X.X Indicated and we Fox gold the At ounces The in in per gram completed XXX,XXX category, that XXXX. estimate. in updated mineral are X.X for tonne been category, respectively the late gold Fox compared the pleased tonne updated previous exploration per with XX% the at deposit contained the Inferred gram gold ounces resource representing

underground X.XX the gold of of the information five property, an scenarios above these being kilometer of on located – it's the XXXX. distinct grow potential covering potential deposits pit area kilometer in evaluated Fox the the resource Fox compose is Black evaluations later Grey of and by is believe mineralized mining to and would kilometers Fox deposit. excellent. our mineralization Open for are Grey We Grey provided More large Fox mine. system be X.X Southeast The developing X.X

strong On significant at on main of organization all West. Stock discovery XXXX-year is use defined the that and mine highlight a kilometer the of newly our X Stock trend zones property, of of program exploration on the the our the system reflecting The focused Stock mineralization. the gold is

is and mineralization of with [indiscernible] holes associated rock. have completed total pyrrhotite into The coarse-grained hosted the We clastic a quartz area. XX in this gold veining drill

our area intersections During underground is development XXX the the mine around and tonne a less kilometer in per than the XXX from existing strike new from X XX along XXX widths measuring and mineralized ranging meter vertically. from XX average within The at and meter gold located meter is zone gram to over meters west occurs mill.

the The discovery. assess estimate order directions, extension exploration Stock initial of in to size is to to produce an all in mineralization program remains open potential the designed and mineral of West the our and test also resource the

Our of and at located to produce shallow east end the East our we the upgraded of one effort mill. at XXXX indicated resource mineralization XXXX. of gold of exploration Stock XXX,XXX Stock Stock in then thing results infra first category it of resource East a kilometer with quickly zone within is processing ounces late

Our generated potential zone over and tonne East X.X of at per so far gram suggesting meter shoots. tonne program intersections XX.X XXXX per some the including best over gram X.X XX.X meter

The that Stock it's that the over include drilling XXX have called tonne mineralized per the system per with open historical meter prefer, a depth approximately tonne gram XX is mine, I gold meter. deep intersection X.X of XXX we of demonstrated extension which gold gram old the X meter, of mine gold.

in based established that on payments. developed target during a which testing are only I resource and exploration estimations. to would to say strong two delineation have going we we goes exploration from but years, we In foundation adding well positioned have To solid forward keep conclude, pipeline value

Our success rate is of increasing. deal

remain positive development targets the Stock and high potential We including at have strong West momentum on focused few discoveries and Fox. upside excellent and are quality showing Grey that new

mining Gold be on gold in-house geological property. prospective feasibility is the filling Pick scale Gold new understanding the a our team then mineralization was control our Bar, around deposit In found the foundation the different of Gold at of Bar our this there technical to Nevada, and geological reveal of and With believes more of gold highly district setting study. at

That presentation. our concludes

the questions. call Thank We you. to open now will

Rob McEwen

session open please questions. Operators, the for Sylvain. you, Thank

Operator

much. you ROTH comes the Thank of Jake first question [Operator Instructions] Sekelsky Capital Partners. line from very Our of

Your open. line is

Jake Sekelsky

plan? need well. good to any work hope environmental the the to mean, permitting done on at Thanks into there. able and I questions provide resources work mine pretty that for I as Are like Grey just taking see looks It be my and everybody's towards to it well. you might is studies it's expand work you Fox color bringing progressing

Rob McEwen

Sure. I'll just on ask that Peter to jump question. in

Peter Mah

Yes. information AFE We that project so South water that of and North movement studies have works management, pits, in sort mine our approve on draft early all we'll various actually the water development our description. our Creek the baseline ready form baseline, the to and through of of

Jake Sekelsky

have pandemic environment that And with Okay. or? you operating at in slow all just given now seen the we're process the right

Peter Mah

our working the we've various impacts There's through the and on RFP virtually been process actually haven't we any No, seen departments. that. and – been all with engaging consultants

So we've any there. real not seen impact

Jake Sekelsky

Gold at now That's helpful. Okay. it And Bar, on then just focused drilling stripping are Gold looks right at like activities. and some input Pick activities

the Just trying QX and forward. during handle to these get going a for on budgeted costs

So on you provide to able insight that? are any

Peter Mah

in No. Not time. this

the and at evaluating forward As come QX forward we'll mentioned, end the that. QX, of we're plans And as mentioned. with early

Jake Sekelsky

had again. I end. Thanks all That's enough. fair on Okay, my

Operator

And Alliance. our next with from the question of Bhakti comes line Pavani

Your line is open.

Bhakti Pavani

of about would Good like Gold question. morning XX,XXX understood I had taking correctly meters you Golden Pick. you guys. my to I completed drilling if Bar, with Thank for start at

enough understand, put updated Just do the resource the drilling further you an think that sufficient de-risk plan out to do drill is to you and to deposit? or wanted

Rob McEwen

Sylvain, to you would answer questions? like these back

Sylvain Guerard

Good Yes, so sure. seeing far where have part focused deposit, Gold morning, because West drilling been of the mining. Bhakti. on Yes, are Pick the this Bar term short of we is our

including the our Gold falling testing additional Bar the deposit. the want is follow pit to see back increase to under drilling lost there we that currently to on for pits and we is scenarios we up of side upside So extensions We revised same de-risk. good things also those the the hopefully also answers drilling, land to critical Gold come other time. is and regain the want and the This South, at East the Bar resource move for up reasons that to where to around

information. end We the have at on based will new of revise structural based historical the the a resource of drilling setting the on available QX update also all of interpretation

is resource this will answer by QX. be would completed key to of So contribute to end question, information your the that that new

Bhakti Pavani

that Okay. slowly what mention have have stripping do processing you One you prepared this did stockpiles to stockpiles. you At remarks and level in you. started Gold question at your of regards Thank more stage, with site? Bar, currently

Rob McEwen

you that question? address Peter, could

Peter Mah

that contemplating some next stockpile we XX,XXX taken yet. to tonnes in haven't or that that below shutting five days. Yes, will up for material just decision had COVID have broken four milling. be used we about West left before we then of down the stockpile And tonnes we're ore in another XX,XXX But Pick

Bhakti Pavani

Could some you of maybe provide color on kind grade? the

Peter Mah

hear I couldn't Sorry, question. the

Bhakti Pavani

on kind stockpile maybe could ore? what the said, of is I broken in some the grade there of does color provide

Peter Mah

of don't you. sorry. top I have have yes, my the don't I I'm that for that answer head. But off

Bhakti Pavani

worries. No

good Moving pretty good. Fox Fox, to Black results shown slides and at you the the have drilling Grey in looks pretty results

this for you with on developing imply to the that mean, the Black plan what at So drill still guys Fox? point it you are that access Froome, over life date, is I or Black results do does be for expanding you see target present the Black think mind replacing do Fox next do the will the within Fox – the mine see Froome years? two mine you and

Peter Mah

Yes.

discoveries drilling currently XXX and is decline taking the on of additional line – into we're hits. to first I that earlier, hopefully QX mining Black schedule got mentioned would West in I new is XXXX. will in, where found and that The about get idea targeting account extend the well. this it Black meters we'll that Fox area have Flank straight we've now the Froome that would quoted So and earlier meters the Sylvain’s targeting some about The that success good that was Flank ore. to XXX initially having West extend the But out planned. mining for is as and on of team we development in actually about itself decline exploration area Black finish Fox start the Fox Western are

is side expectations see we’ll as some my So, Fox the mine improvement well. Black on

Bhakti Pavani

at That’s to development in development with Canada, And I’m projects, in about for question is charge the great. is the to to Thank remaining regards million cost $X million assuming how related advanced more regards a Froome. this Froome you. which there Mexico, Phoenix. development related is, to was regards $X With QX Question the for of is with actual that’s to second of much cost Project the point?

remains this point? of incurred much to at cost in how So, that Mexico be still

Rob McEwen

if to numbers, Meri, could ask you I those provide please.

Meri Verli

Sure.

So Froome, of in just have around of it for $XX.X another costs. the includes rest terms year. And forecasted we $XX to Phoenix, know million, the Phoenix could million holding there also property then for be,

So, the we similar might have year. for the something of rest

Bhakti Pavani

So, $X a to quarter? is be it going a million

Meri Verli

not the similar, at quarter. it think the Not Like, year. for No, quarter. the of something half I the comes second

really another amounts. around million $X be small there like So, some may and

Bhakti Pavani

That’s Got you it, perfect. my Thank it very guys. much. side, from

Rob McEwen

Bhakti. you, Thank

Next question.

Operator

line from question FBR. Adam Your of next comes the Graf Riley of B.

line is Your open.

Rob McEwen

Adam. Hello,

Adam Graf

guys. for Hello call. Thanks my taking

on you I plan? Black Has schedule? about that Western update been time. graphical any development there little there the bit potential Rob, for any Fox presented been you on question, us development. updates the guys think plan on to overall there last coordinated there Has overall this mentioned Just guys a

Rob McEwen

it’s couple of Not still schedule. in terms being years out, of production. possible a No,

Adam Graf

to broken or Froome And holding plan Stock the off development to there Stock West? then the as – far are over drift to breaking guys through just West, your what’s as until on you just over the development

Rob McEwen

do want Peter, comment on that? you to

Peter Mah

Yes.

development, received better inventory we’d on We pull that but we’re And ounces be decline enough is potential to is Stock the I mineral as the which definition that at dewater of main we’re drilling shaft to at remnant mine. have targeting, permit that another in to first. a into stock mentioned would like the resource the we mining get the well any about and to could looking connect shaft trigger – done option that XXX,XXX there that

the the drilling what’s further that we’re of go the required. to while costs and trade-offs evaluating best So, is about way

Adam Graf

the Could the there permits mining to for get Grey achieving into Stock Fox? some mine prior you to guys do remnant

Peter Mah

as The stages. examining mentioned, I exactly Yes. opportunity have permits the the dewater to And now. is Stock and we mine permitted early that’s its we’re

getting restore We’re some dewater to on your shaft and or to shaft take it quotes what production shaft. an would exploration the it

over I’m the going of So, evaluations next through just quarter. some those

Adam Graf

or to looking And would that that and be test West at mining drifting at and prior structural development to to over least prior confirmation all do be – you’d – to Stock that? to underground of

Peter Mah

from a fairly possibility, X.X Stock previous That’s development a for West. lengthy, about as aware you It’s kilometer – program are probably communications.

quicker on would if Is especially, any to mill some more get provide the levels So, for mine, deeper down we be there. access bring drilling, the existing at of it and Sylvain way get the the we’re opportunities. targets helpful could looking that drill there platforms mentioned, to lower of some

on those forward things So, develop that can some hopefully, some and at the of to you with looking we’re come how options are exciting mine.

Adam Graf

but Would East? you need is sudden And for gold pit were if grade, it’s – interesting, what much didn’t, become you a have all at additional extra you because if kind of lower so of capacity. to price I you open kind ore that Stock at mill permits know of what

Peter Mah

would need extra Yes. permits. We

We areas river and there It’s open to haven’t water low lying there. a and to nice some they’re depth. fairly advanced further though some and near in even a at well it’s proximal actually that resource east as

sheets. the size sure, go and not be some of well really as we’re hit permit to it able high-grade to intersections yet, and So, we’ve to as

versus underground take and So, trade-off an there’s pit more drilling to decision. a that

Adam Graf

very All Thank right, great. much. you

Rob McEwen

Adam. you, Thank

Operator

Heiko Please our Ihle Mike it ahead. from go And Fitzgerald]. next sorry, – [Cantor question comes Kozak from comes

open. is Your line

Mike Kozak

Hi guys. there. for Thanks – taking hi,

on impact And So, looking on the sustaining discretionary mean here back then Gold cutting CapEx? by challenge is cash can fact, degree G&A, how And in you company, just so, the back looking spending? you, near-term some what to cut to much? if I sheet at on for are with flows like the at Bar balance things going exploration

Rob McEwen

$X been we can our a about $X in capital refinance our under higher has adequate of at price go through changed when We gold looking Gold current the should exploration the year. and Fox then Bar assuming we million debt. at the or both and about stays We’ve price and million plans Black to and terms with have them. goes Mexico I’m change

Mike Kozak

I And QX. principal think I Got the it. on think started, repayments first debt that

mean guess want to that presumably, refi So, debt, the in I you months? I coming

Rob McEwen

That’s Yes. correct.

Mike Kozak

Okay. All from That’s right, thanks. it me.

Rob McEwen

Okay, good.

Next question.

Operator

And our question comes line H.C. Ihle of next Wainright. Heiko from of

line Your open. is

Rob McEwen

Hello, Heiko.

Heiko Ihle

name questions, over families safe for Hey, of sort there. ask over. got guys. to got my longer-term on to I’m staying guys ready then taking and exploration still hope of the mine everyone I skipped Thanks grateful given their this you $X call are potential and assets million and of the

mining on Should and totally we in that, mean, bit. follow essentially is and just questions West little in I one there the in Jake’s area on at of the to Just regards regard pre-stripping to elsewhere? amount decent that see your expect that earlier Pick move on you to Sylvain how a expenditures Gold potential a pit. remarks, much in building spent up QX in mean and it QX; on I

Rob McEwen

that? do want to talk Peter, you about

Peter Mah

pit positive a know business. we Well, West is

the from your optimization of pit rerun there’s past the of part major looking overall cost model to and and we’ll our strip. and improvements of better view what Sylvain the on question? was stripping before nothing we the mine just resource But make second to we’re get updated and best a the So, we for change current, way about go that in restart. at Once then mentioned, forward, productivities carry that’s terms the the

Heiko Ihle

How much to got to think much pretty well. is do expenditures there in – it I possibly – order you’ve mining could was it and you you I how mean, delay how seem there? much

Peter Mah

the Delay mining?

Heiko Ihle

it elsewhere. move like Just

Peter Mah

East something. Oh, Pick and go after or like

Heiko Ihle

Correct.

Peter Mah

we’re there is be and right of East. down on differently our mean, and Pick opportunity move previously. to than then Pick it I mountain top current an thinking come may there, Pick ore, do to West the mine But Yes. out the to West

the at once update, we��ll looking those So, be scenarios. we see resource

Heiko Ihle

[ph] XX% walk willing clearly, is XXX,XXX processes close disclose, through Toronto. the reverse have your you you a can in Can timelines on is to have that X.X needed there I the a regards average us you were make but listing morning, important. variety is per do In of would on it. mean options of the that listed I be NYSE, order volume versus you in it to to to But like if day given million look that Got tougher was the pool the this you’d of other when or stay some consider you’re split extremely some listing, choices? a like to to any that sure of shares

Rob McEwen

to intention a Sure. And being Exchange has Well, to virus of and before notice out got yet October. to you COVID early December. neither one, that into and it’s months deadline two not that, compliance issues over give to do have in We’ve have looking a our $X probably so split. New reverse good be the requirement York runway to the that Stock shareholders pushed for terms of early timing, so you’d

Heiko Ihle

Okay.

I presumably, I you’ve would actually got point, sounds actually happen. thought it be. come months compressed that’s to because more half but like much left that’s and to back and a six mean than So at mean, it this four months, going I

Rob McEwen

Yes.

Heiko Ihle

think a you can how of you a you venture and everybody Are a meaningful guess attendance. is stoppage your QX, to do office and topic, during think same little on downsize do can sustainable your please? to conference home with thereafter, that get you number from How travel, looking G&A On working bit? you it you maybe, savings given essential of

Rob McEwen

had want all some of what but the I the gather, time. people – a home when I sure I’m Well, it our we do time, mean don’t can to lease our mind lease. office expires. working From not head lease office they from don’t

we need presence. still office So, an

although getting We thought are been have remotely. investigated that moved because with downsizing work people the of not using the has to familiarity technology office, around,

– or can’t haven’t number a QX might achieve savings time. the QX We where give this on I to you at as can we – we

Heiko Ihle

to safe, back house up office I point who in Fair else Stay an we time. Excellent. someone let’s have at scooped Thank you. the go all – guys. some enough. at can

Rob McEwen

Heiko. Thank bye. you,

question. Next

Operator

Yes.

Our Tumazos Independent from Research. next John Very question of comes

Your open. line is

Rob McEwen

Hello, John.

John Tumazos

you none Good the for wipe PP&E, Thank morning, Rob. but the of out Did all Bar of working the call. Gold taking my charge capital?

Rob McEwen

Meri? add? Is there anything to

Meri Verli

Yes, of course.

million. haven’t and it charge fair between be we’ve determined But in mineral let’s We is it the interest. of allocated – say, mineral assets, basically and certain value between allocating splitting really point finally the corporate it QX. $XX or that a at net PP&E We’ll

John Tumazos

me for is issue graduate in, student of Company. Rob, officers commercial with reminds Trust a a Guaranty Class was bank covenants the Morgan bank and at the Thank you. lending training I

Rob McEwen

Yes.

John Tumazos

It And named banks to presentation seem Chatfield they’re that if I’m to at time, and they the like little a sort to or III, concern. in like can of write triggered a drilling to extent uncomfortable covenants lenders have understand an lot assembling seek banking situation. events. triggered these money enforcing down give than And exploration? winning your with Charleston it’s privately million the enough to charged just any make appreciate bit all just Or I’d just you like awkward managers a more loan? sort Are strategy Or a the trying loan of And now confused remedy settle you you fee they our a of insight. waive relationship managers make back which the to assets that company your $XX account. and the your the firestone on yourself, before for and are fellow the it check the It’s fees different do weird departed you going the with you would a covenant, the fundamentally simpler and sort sat you of situation comments, to just to if lenders a they place? a personal charge

Rob McEwen

Sure.

violated haven’t second the repayment we the – of a not three-year on a for was first and forward. on but The We’re anniversary. the the gap principal starting structured the about quarter. covenants second with term, going concerned that loan partial It’s we’re quarter

minimum are lenders impairment. or that had issues. – – they month haven’t So about that’s amount $XX and start we the principally there’s year, a But that’s where it’s this the a covenant concern partially that looking and say payment each the the million to months. And capital concerned, over working next getting ahead. million to auditors capital and working capital XX maintain clause $X would had a at the in of end just got you of $XX into just about growing million the the quarter. They we’re for to That working where that

gotten should I saying, write to And haven’t a check. we

have Creditors of their that We another half another And up have two. XX. XX was or yet. creditors, I to and for creditor party put I talked

said, “Well, and to And So agreement and looked I have could we we’re think at light the that to I or we can extend lighten the they refinance. some where and extend the that looking term refinance, creditor the repayments. partial That’s And of problems and in like the the if we seem got. we it but half we’d expect debt with to that did Gold there they didn’t moment encountered Bar. as at just it, we nor

John Tumazos

good. per you Thank really ton The the Fox for seven-gram explanation. material seems Grey

Given get to the that from into mill? all How is into other some ramp do or or seven-gram dewatering, many infrastructure the the need to to going ventilation, material it quarters through development years it. logistics, out and

Rob McEwen

to that to like of Peter, would speak John? question you

Peter Mah

Yes.

So just the week. out came last resource

the from updated Sylvain. scenarios pit you’ve we So actually the and open just haven’t underground for announcement heard

can’t really So, yet. speak that to I

then one, say transition and I around best XXX, and is at underground what new the the pits exciting returns what at and can open and is, how to of undergrounds think margin has and doing the combinations open trade-offs Gibson those looking and discovery have the mining. I what at another fit look those we Gibson, contact potential pit or discovery an third and

coming a work bit there. of us ahead of So quite

John Tumazos

think out a you year Do it to then it longer? or years of figure get and it’s a couple into to

Peter Mah

probably I to Fox the with that it’s where mine of evaluations work, and we’re roll and in but we XXX six are proceeding work permits Grey it in other No, take going description. long, and that months on technical think pit initially probably include project won’t Gibson pit the the the the planning on expedite contact, the

open would ore how fits that there, not happen then our but so good still So need the with footprint trade-offs for how sterilizing number together we’re to be together making those pits. sure pit. first the the fits and priority are permitting pits with we open a the And of underground our proceeding

John Tumazos

a in the you’re like mills, the bit requirements three-point loan little bench pressures same going bank you a the and where shooter you the need with basket? the game on basketball seven-gram material listing your got It’s on different three-point NYSE these all company, through is the that

Rob McEwen

Yes.

ore, quantities capacity. in bit bring have harder how in excited in, the it. but we be It we is to to relative a We’re measured about what very mill

parts all blends and together. of So the trade-off that’s how other it

very on mean, With the the hard ore, underground to we’re feed. yes, it rest and be But we’re attractive going as and very very certainly as can. it. about we of high-grade excited pits going I

John Tumazos

you. Thank

Rob McEwen

John. Thanks,

Next question?

Operator

Power, question And go your of ahead. from comes the next Private line Bill Investor. Please

Bill Power

taking call. for my Thanks Yes.

Rob McEwen

Bill. Hi,

Bill Power

that it a like you would lines. any the aware, had they my internally have you along write-down different a would Bar out that those prices if higher, guess Hi, one I’m you along I of taking its this or sound by been doesn’t strip something assume using future use couple you’re those forward using or anything were in different? Gold Rob. were it what And substantially morning. that of auditors of worked guess, – going I – sure as materially the forward But the you I thanks strip lines? is have for or price questions. the be call I would the XX, first XX said that

Rob McEwen

apparently, still than looked would probably look projections I the a were of down – have and believe It your don’t I analysts America, mean said, at different. Bank employed XX. They know, XX, I into endless beyond answer $X,XXX $X you they but prices we that higher be I going and million, question, to future. have around

Bill Power

Okay.

they to in – all. future’s impact They market. basically, were what using seem didn’t actual weren’t That the And they as, so is using at pricing analysts. as didn’t far

Rob McEwen

no. No,

Bill Power

time analysts, of And accounting is this they like the Mexico using a a we write-downs? kind is, – what in category future’s for it had could talked of wanted to less it’s Or second asking to as a you about up it? a you well doing appears this – mine price put telling change is market year little that new go – is though is what to wanted by as as the of the random seems they that do into. made the to reason not the way the traditional than that that end And to in life to I’m they – because this

Rob McEwen

Yes. this I I price view have would my mean. but would I picked probably market, have – on a higher is different the

Bill Power

you – very pricing the X.XX, industries, quarter, some still anyway to light very And you a on that’s quarter And fine. How to is seem the X.XX little or to did it’s bit the you in I move able of yet those a actually it’s there on in you guess, kind come had the seems If of Comex a could how average you mine, though when and for whether to first but of numbers? sustaining in – Fox other that materially an costs. lower. from shed the down did to established, were with well – process last all-in well cash was and – come year, that just whatever. I on that, rate of that’s last that. it Black grade as clear getting from But is

Rob McEwen

were We their occur. problems buyer. they’re improving it XXXX followed bit. a Then down. that So, in half lot operations coming There are why had events. flood, of didn’t a That’s by those the was weren’t crusher costs reoccurring first the of a

Bill Power

improvements for do to down at higher further? least costs, cash there return coming the later And this are I grade further see that And Okay. the to a guess, expect you costs year? you can

Rob McEwen

better to we So, have recoveries. hope

has ground mine mining the want control, at a Solution problem you or some jump dilution that. and due to entries to we there? have hope to we been the do and Peter, in

Peter Mah

Yes.

dilution falls related in [ph], walls. hanging to to the here as are and the we On the

start once of that been onset the marketing So, of in being minimize it lower a a at the sort the that for and the around challenge, which historical with aren’t mine, different are of I’ve the capable West to discussing These techniques starts implementing thing team try at up of of old areas traveling an especially mining. to trials areas remnant new of areas XXX. mine, and lot the this Flank, least and upper

should I’m And help so expecting development solution. our reason access we’re But the get another targeting overall in to areas new not yet. to

Bill Power

Okay.

wise and it improvements Is control going say? you have to on under at sounds that least the grade like – the are that forward. So expecting fair

Rob McEwen

that, I take is it. time There opportunity and out targeting we’re hone going improve there Yes, good it’s to to things. it think to prove a

Bill Power

Okay. all And last question your appreciate today. patience. I

whether As but the Jack I’m reading through be the Grey were that discovery or there the – was announcement at – down to in some discovery, Fox, I included know Whiskey don’t seems in, in that updated included done be it the resource. to something Whiskey it put was specifically at Was it Jack included in drilling wasn’t future? that is didn’t the the or mentioned –

Sylvain Guerard

updated is good can yes Sylvain this And Jack I Whiskey included speaking, revised resource. questions. Well, that. answer in Yes,

point the to to a we part host But included host. the cut in the now be a Fox. all to of syenite. vein Grey the for can the mineralization that rocks structure It’s contact with Whiskey is Gibson, different It’s in potential all sediment time as West, We that from it, mafic have X.X have rock. control first that It’s Gibson there new syenite, in of XX in this hosted included And units is Whiskey spectacular results volcanic to we know zone part you we merge be is resource. know have at of it’s grams updated discovery a this and And in zone Jack. revised what so Jack meter can we just as added this but starting in contact resource to shown resource.

Bill Power

this your Okay. answers morning. Well, for very thank you all much

Rob McEwen

Thank you, Bill.

Operator

question next open. line of line your from go comes your ahead, is And Please the [Mike Hawkins].

Unidentified Analyst

have for my on just Gold Thanks I guys. Hi call. questions a Bar. taking few

year? helpful. to I mine structurally this comments about similar, ratio strip you was would Pick. controlled some Gold mineralization there provide on the stripping think and more the some Given level for being at that least on what expect on any be comment Can about grade dilution be and high at guidance comments but the you impact

Rob McEwen

you about Peter, want do that? to talk

Peter Mah

come waiting the I in we’re those out provide towards as numbers order of the those resort next the mentioned, end and on to Yes, will update quarter.

Unidentified Analyst

But Okay. and structurally least least it’s geometrically, of bedding at at sort controlled. you can less controlled more on comment

that zones does be have that? that narrow So around to commentary they’re that fashion any narrower more a mean or mined in

Rob McEwen

drill waste all the think hasn’t pit. a I Yes, the It required significantly showed development actual of intercepts Sylvain slide to good gives the changed that West idea. you access

are the our So current shells, some pit results optimized to we the mentioned Sylvain have, or we’ll drilling the with intermodel. so old of of – have that outside full access

of comment pit waste we the some or to we’re good anticipating blocks stuff. and do both So cones transition West until then into really model those I all such in see can’t resource that

Unidentified Analyst

and going the intercepts. on initially wide just than commentary the guess And Okay. are and showed you zones some thinking controlled anticipated structurally drilling follow-up being different the impression has the the the that anticipated, in geometry pretty you in reduction what be to that you narrower. But around I’m It I that. to given the, gives maybe – ounces just reduction or it

wondering So reconcile what’s just think you on what is going there? you help me – if could

Rob McEwen

in majority call stripping in the East much. hump of West The ounces pit the the West – Right. and of lost the focus pit Yes, drilling Central zones near-term have is East the write haven’t you the moved West, that mining. mentioned from well area the we the that actual, mineralization we been the pit. the the The and that’s in all were most down it’s program towards in three confirming the Sylvain changed and what

probably I could issue? that think, speak color a that. that to on Sylvain, you better give can so

Sylvain Guerard

Yes, sure.

mineralization of Sorry, and was the sweaty has graphic all way the both the I mute. controlled. control been on Yes, structurally

the the model resource there. been has – that big way has past. has So bedding in and The impacted the the designed the is the bidding across stratigraphical weight difference model structured stratigraphic control. to been course, right or the the the versus structural rock allocated this control of mineralize And horizon

bench with coming pit lot answers better a just we better rock core, also more we oriented get and definition to to and better course core immunization. control Cabin, of less and go We and was understand As overall, we to upper okay we of we exposure reconciliation mining, bits but with and get going when from the decided detail on. to saw the moved drilling, of what’s the the drilling, look started not last back detail less of the West in the hole

grade right there, this and based business, or revision together now. we resource revise based far submission on what see and so that doing said, are plan those what Bar. there, that what is mine update wait global as that is Gold And is with – new on we drilling our for The we’ll the to where stand gold of we showing would Peter course, be have the revised

Unidentified Analyst

structures that And of in those on of wits bedding what controlled could saw the see mineralization? sort the carrying comment you grade you you Okay. versus

Rob McEwen

than to that complex, multiple are and not is understood significant there less so zone as of we biggest what from still to them different structures, structures is was the seeing structure away The understood. of the of but do or more it estimation. spreading than structure formation mineralization. it’s interpreted is wider interpreted thing, associated more last was setting lot structures model actually realize it the get impact More bad which itself to a width we previously is intersection necessarily the how we parts we a have generating structural used a would Yes, be

Unidentified Analyst

Right. Okay.

Rob McEwen

you real was laterally plan the much. built feasibility Oh, was blindside. the interpretation and says, and foundation and study It’s same party that on came spread. then more along the controlled. a not well mine Thank their on the was the it and did then based I It basis for mining Mike. or vertically structural in very mean Yes, that it’s dispersed

Unidentified Analyst

Yes.

– rate on to you look little And on And ounces the the get forward that think correct? cumulative comment leaching. have a the on more just one about after on recovery going and compares placed feasibility produced, I recoveries Okay. cumulative the it Gold XX% about of how If project? I pad a over you the Is does been at it just Bar. question can a and how of year maybe

Rob McEwen

like April? would Peter, with that? since Peter us been you is to only answer

Peter Mah

think my was in I do I’ll Yes. numbers we recall, ran If the recovered. XX% I April, about it best.

– pretty close the we’re there. FS So actual slower The are than you’re forecasted. what recovery rates

But are of FS get time. So of you’re life, more and with by less levels. it largely end life and a longer some each expectation obviously the a up lag FS mine mine to to shorter the the There get is level impacts seeing a cumulative. towards takes bit to

update resource as be and So of understand life we’ll this that to able better. we model mine, the

model leaching on is some – Forte tests run-of-mine middle and agglomerated, our production placement the and to well. reflect in updating done recovery with following the and the have We combined so those curves are far, of the very

the will the and and for carbonaceous material. August work to in has we’re updated Forte model, So clay model and preg-robbing culminate complete which include a will new through going that study also a take

best of net feed We’re find going to of [indiscernible] value and agglomerated present agglomerated hybrid assessment into approach for the all to versus that [indiscernible]. an economic

Unidentified Analyst

or this is Or do Is the else? work point? it it causing recovery it the Okay. pad at is what’s into? test the something difference on being initial – that that’s you And clay understand carbonaceous versus in placed

Rob McEwen

in internally and carbonaceous placed that’s and was been small segregate them was in model portion of so model. some why tonnes which to And what the out. the area the but preg-robbing the taken getting right, amount, models I over of all It can’t the was of account we’ve planned build, I we hence, there out And in can But those with the blending. a has in-pit – recall segregation, material the a we but I there. refine combination. terms out our early on into mapping, create taken think on

Unidentified Analyst

me. that’s Thanks much very Yes, it Great. Okay. guys. for

Rob McEwen

Thank Mike. you,

question. Next

Operator

concludes today’s session. Q&A this Actually

them If you call I our McEwen. you in over have turn any open Mr. further Thank management the to questions, back please to direct rock Rob forum. very much. back

Rob McEwen

Thank joining and for strong everyone you Stay Thank Bye. healthy. operator. you, you. us. Thank

Operator

call. conference today’s concludes this And

disconnect. now may You

McEwen Mining (MUX) 19 May 202020 Q1 Earnings call transcript