McEwen Mining closes strong week; appoints Xavier Ochoa as president, COO

VANCOUVER (miningweekly.com) – Owner-led gold producer McEwen Mining was up 13.5% on the TSX by Friday, ending something of a roller coaster week on a positive note.

The stock started the week at C$3.12 a share, before climbing 18% to an intraweek high of C$3.68 a share on Wednesday, and falling again 13% to C$3.20 apiece on Thursday, when it reported financial results for the third quarter. From noon Thursday, the stock again gained 11% to C$3.55 apiece on Friday afternoon, when it announced the appointment of a mining veteran to the senior management structure.

NYSE- and TSX-listed McEwen on Friday announced the appointment of Xavier Ochoa as president and COO, after joining the company in September.

Being a mining engineer, Ochoa brings more than 25 years of international experience in the mining industry, having worked for several large companies in the past such as Xstrata, Goldcorp, Barrick and Glencore, including senior management positions where he led project and operational teams, both at underground and openpit operations.

McEwen advised that Ochoa would focus on extending the mine life at the El Gallo complex, in Mexico, where recent advanced geophysics and information collected from exploration work had been developed, confirming the geological potential.

At the El Gallo silver project, the company is revisiting the project and conducting new studies to improve the project economics in light of stronger silver prices and its ongoing exploration programme on the El Gallo district.

Ochoa will continue to oversee the advancement of the permits required for a speedy construction decision at the Gold Bar project, in Nevada, while implementing the ongoing work programme to improve the economics of the significant Los Azules copper project, in Argentina.

Q3 RESULTS
For the three months ended September 30, McEwen reported net income of $4.2-million, or $0.01 a share, compared with a net income of $2.6-million, or $0.01 a share. for the third quarter in 2015.

The company attributed the improved performance to the combined result of the improvement in earnings from mining operations from the investment in Minera Santa Cruz and the absence of impairment charges in the 2016 period, partially offset by lower earnings from mine operations at the El Gallo I mine, as a result of fewer ounces produced and sold and increases in exploration and mine development costs incurred during the quarter.

During the period, McEwen produced 24 281 oz of gold and 916 168 oz of silver, compared with 31 689 oz of gold and 877 517 oz of silver in the same period of 2015. Gold output fell as a result of the expected lower average grades processed at the El Gallo 1 mine, following the higher-grade Samaniego pit being substantially mined out early this year, after which mining at the lower-grade Lupita pit started.

Gold and silver sales in the quarter totalled $13.4-million, compared with $22.5-million for the same period in 2015, which was mainly attributable to a 50% slump in the number of gold ounces sold from the El Gallo 1 mine, partly offset by a 19% year-on-year increase in the average realised sales prices of gold during the quarter.

Consolidated all-in sustaining costs (AISC) fell 3% to $884/oz of gold equivalent, compared with $914/oz in the same period in 2015, based on a silver to gold ratio of 75:1 used in both periods. McEwen stated that the overall decrease is the result of a higher number of gold equivalent ounces sold this year so far, compared with 2015, resulting in consolidated AISC being spread over a greater number of ounces.