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MUX

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+0.08 +4.1% Volume: 2,398,834 November 17, 2017
TSX:
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Gold
$1,294.35
+0.00 +0% Volume: November 19, 2017
Silver
$17.06
+0.11 +0.63% Volume: 1 November 16, 2017
Copper
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-0.01 -0.18% Volume: 338 November 16, 2017

Gold Bar

About Gold Bar

Located in Eureka County, Central Nevada

The Gold Bar Project is located within the Battle Mountain-Eureka-Cortez gold trend of Eureka County, Central Nevada. The property has seen historic mining from 1990 to 1994 by Atlas Precious Metals Inc. The nearest mines are Waterton Global’s Ruby Hill Mine at approximately 25 miles to the Southeast and Barrick’s Cortez Mine at approximately 35 miles to the Northwest. In 2016 the Cortez Mine produced 1.06 million ounces of gold at all-in sustaining costs of $517 per ounce.

About Diagram About Diagram
Gold pille

UPDATED RESOURCE
ESTIMATE

MEASURED & INDICATED

611,000 OZ

INFERRED

111,000 OZ

Overview

The Project is located on both patented lands and public lands managed by the Bureau of Land Management (BLM) Battle Mountain Field Office. The BLM and the Nevada Division of Environmental Protection will be the primary regulatory agencies responsible for ensuring environmental protection as the Gold Bar Project progresses through permitting and approval processes.

The Project was secured with approval from the Nevada Division of Water Resources for adequate water rights necessary to conduct mining activities. The approved water rights will be sufficient for life-of-mine operations.

The Plan of Operations submitted by the Company was assessed complete and the Bureau of Land Management (BLM) has determined that an Environmental Impact Statement (EIS) is necessary to fulfill the requirements under the National Environmental Protection Act (NEPA). Upon completion of the environmental analysis the BLM will be able to proceed with the approval determination of the Plan of Operations. Stantec Consulting Services based in Reno, Nevada is the third-party contractor that will assist the BLM in the preparation of an EIS for the Gold Bar Project.

During 2015 $1.3 million were spent at the Gold Bar Project, primarily for the advancement and completion of the EIS, as well as an infill drill program of approximately 13,300 ft (4,000 m). The drill program was designed to increase the resource confidence level by converting certain portions of the pit resources from inferred to measured and indicated categories, consequently helping to drive stronger mine economics for the Mineral Resource Estimate and Feasibility Study released in 2015.

The scope of the feasibility study is a conventional open pit mine with oxide gold heap leach recovery circuit, with key estimates including initial capital of $60 million; after-tax internal rate of return of 20% at $1,150/oz gold and of 36% at $1,300/oz gold; an average annual production of 65,000 ounces; and an estimated cash cost of $728 per ounce. The complete report was filed on December 4, 2015 on the Company's profile on SEDAR.

In January 2016 McEwen Mining acquired a property, Gold Bar South, consisting of 109 mining claims located approximately 3 miles (5 km) from the Gold Bar Project. Gold Bar South hosts a near surface, oxide gold resource and has an immediate exploration potential based on several historical higher-grade drill intersections open laterally and at depth. Based on a budget of $1.5 million for 2016 in Nevada, an exploration program for 16,000 feet (4,900 metres) of drilling was conducted with the objective to increase the known mineralization of our land packages and to further develop Gold Bar South into a satellite resource that will contribute to the future Gold Bar production.

Gold Bar development activities are to accelerate in areas such as final design engineering for the process plant and conveyor stacker system necessary for State and Federal permit documents. For 2017 $2 million are allocated for the completion of the permitting activities. $37.2 million will be allocated for initial stage construction, which is expected to commence at the end of 2017.

McEwen Mining continues to advance the permitting process for construction and production at Gold Bar. On October 6, 2017, the Environmental Protection Agency published a Notice of Availability of the Final EIS in the Federal Register. Following a regulated review period, a signed Record of Decision will be published, signifying the completion of the NEPA process. The Record of Decision is expected in early November this year and development of Gold Bar is planned to begin upon receipt. Mine construction is anticipated to take approximately 10-12 months to complete.

Highlights
of the
Feasibility
Study

Following an infill drill program of approximately 13,300 ft (4,000 m) designed to increase the resource confidence level and to further help drive stronger mine economics, in 2015 McEwen Mining completed an updated Feasibility Study for the Gold Bar Project (the report was filed on SEDAR on December 4, 2015 and is also available for download here). The scope of the study is a conventional owner operated open pit mine with run-of-mine oxide heap leach processing.

Capex $60 million
Pay-back period 3 years @ $1,150/oz gold, 2 years @ $1,300/oz gold
After-tax IRR 20% @ $1,150/oz gold, 36% @ $1,300/oz gold
Mine Life Production 13 million tons @ 1.1 gpt diluted grade for 325,000 oz gold
Production Profile 65,000 oz gold/ year
Cash Cost $728/oz
NPV $30 million
Updated in-pit resource estimate 611,000 oz M&I and 111,000 oz Inferred
AFTER INCOME TAX BASE CASE
($1,150 / oz gold)
UPSIDE CASE
($1,300 / oz gold)
IRR (%) 20 36
NPV @ 5% Discount ($ millions) 30 67
Average Annual Cash Flow ($ millions) 22.5 31.5
Average Operating Margin Per Ounce ($) 395 537
Payback Period (years) 3 2

The Feasibility Study's base case uses a gold price of $1,150 per ounce and generates an after-tax net present value (NPV5%) of $30 million, an IRR of 20%, and an average after-tax cash flow from operations of $22.5 million per year of operation.

Feasibility Study results are disclosed on an after-tax basis, taking into consideration all internal tax attributes available to the Company at the time of the filing of this study. Given the size of the internal tax attributes, pre-tax results are not significantly different from after-tax results.

Further Optimization, Cost Reductions & Project Potential

The Company believes there are opportunities to further improve the economics of the Gold Bar Project through continued exploration, capital cost reductions, and potential process plant engineering synergies with our El Gallo Mine in Mexico.

In 2015, a drill program consisting of 38 in-fill holes was completed at Gold Bar. The focus of the program was to increase the mineral resource confidence by converting Inferred gold ounces to the Measured and Indicated categories. In addition to upgrading our confidence, several holes returned significant results including 4.65 gpt gold over 41.1 m and 2.2 gpt gold over 52 m. Exploration has been limited since 2012 due to ongoing mine permitting activities. Once the mine permit is received, several priority targets will be aggressively tested with the objective of expanding the known resource and reserve life.

Capital cost estimates for the project at this level of study are conservative. During the next months until permit approval, the Company will study ways to reduce capital expenditures. For example, the El Gallo Mine uses an ADR plant of a very similar size and design to the one required at Gold Bar. By reusing the engineering design we may be able to realize significant savings. Other key areas of focus to reduce costs will be the ancillary infrastructure and activities related to the heap leach pad construction.

McEwen Mining will continue to optimize areas relating to leach kinetics, permeability, and blasting fragmentation with the aim of increasing the proportion of RoM ore versus agglomerated ore reporting to the leach pad. This could lower operational costs and increase pad loading efficiency. Metallurgical test work is ongoing while permitting progresses.