In a May 24 research note, ROTH Capital Partners analyst Jake Sekelsky reported that McEwen Mining Inc. (MUX:TSX; MUX:NYSE ) achieved commercial production at Gold Bar in Nevada and announced drill results from its Timmins assets in Ontario. "We expect management to shift focus towards high-value exploration targets in Timmins and Nevada," he added.
The declaration of commercial production means the problems that delayed construction, primarily adverse weather, now are moot. Recoveries are coming in as expected, according to McEwen, and it reiterated 2019 production guidance of 50,000 ounces of gold at an all-in sustaining cost of $975 per ounce. The company intends to modify Gold Bar's crushing and stacking system to lessen the effects of future inclement weather.
In terms of exploration, McEwen already started this year an aggressive, $17 million program at its Black Fox complex in Ontario's Timmins gold camp. Results from some of its Q1/19 efforts, an initial seven holes at Grey Fox, "appear encouraging," Sekelsky noted. "Exploration success at Grey Fox could pave the way for the delivery of higher-margin tonnage to the Black Fox mill in the future."
Also this year, McEwen plans to spend $15 million on exploration at Gold Bar to identify Carlin-style mineralization there. "A discovery at depth could transform Gold Bar," Sekelsky commented. An exploration update for that Nevada property is expected in H2/19, which could catalyze McEwen's stock.
ROTH has a Buy rating and a US$3 price target on McEwen Mining, whose stock is currently trading at around US$1.24 per share.
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Disclosures from ROTH Capital Partners, McEwen Mining, Company Note, May 24, 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.
