In a Feb. 8 research note, analyst Jake Sekelsky reported McEwen Mining Inc. (MUX:TSX; MUX:NYSE ) should reach first production by the end of February 2019 at Gold Bar, its open-pit, heap-leach operation in central Nevada.
Currently, McEwen has placed 150,000 tons of mineralized material on the pad at Gold Bar, and initial leaching work is in progress. The company intends to attain steady state production by the end of March. ROTH expects Gold Bar to produce just under 53,000 ounces (53 Koz) of gold in 2019 and about 72 Koz in 2020.
Sekelsky noted that in 2019 the output from Gold Bar should offset the expected drop in production from El Gallo, where mining is "concluding with residual leaching activities." Production at El Gallo in 2018 was 39,106 ounces (oz) of gold equivalent (Au eq). ROTH anticipates production at Black Fox and San José to stay about the same. In 2018, those numbers were 48,848 oz of Au eq from Black Fox and 87,607 oz of Au eq from San José.
Overall, ROTH forecasts a "year-over-year consolidated production increase of 15% to just under 198 Koz Au eq, primarily driven by Gold Bar."
Along with the ramp-up at Gold Bar, this year McEwen will likely concentrate on exploration at Black Fox and its Timmins assets, wrote Sekelsky, using funds from the $15 million flow-through financing that closed in Q4/18 to do so.
ROTH anticipates McEwen might leverage the excess capacity at the Black Fox mill should additional exploration in the region be successful. "We view this as a key driver of growth for the company over the next year," Sekelsky commented.
ROTH has a Buy rating and a US$3 per share price target on McEwen Mining, whose stock is trading at around US$1.92 per share.
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Disclosures from ROTH Capital Partners, McEwen Mining Inc., Company Update, February 8, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of McEwen Mining Inc. and as such, buys and sells from customers on a principal basis.
Shares of McEwen Mining Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
