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TORONTO, Dec. 31, 2020 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to announce the highlights of a positive Feasibility Study (FS) for its 100%-owned Fenix Project, which is located in the State of Sinaloa, Mexico.
“The Fenix Feasibilty Study envisions a 9.5-year mine life with an attractive after-tax IRR of 28% using $1,500/oz gold and $17/oz silver. At current gold and silver prices, the project’s after-tax IRR almost doubles and the NPV more than triples versus the base case.
The project will incorporate an environmentally progressive method of tailings management, using inpit storage that creates multiple benefits, most importantly a secure containment of tailings enabling better reclamation results.
Average annual production is projected at 26,000(1)oz gold in Phase 1 and 4,200,000(4)oz silver equivalent in Phase 2. The critical path environmental permits are in hand for the first phase of production. Our next steps will involve detailed engineering, assessment of procurement options, and the evaluation of financing alternatives,” said Rob McEwen, Chairman and Chief Owner.
Fenix FS Highlights
| Base Case(1)$1,500/oz Gold, $17/oz Silver | Upside Case$1,900/oz Gold, $25/oz Silver | ||
| After-Tax IRR | 28% | 55% | |
| After-Tax NPV (8% discount) | $32 million | $98 million | |
| After-Tax Payback Period | 3.6 years | 2.8 years | |
| Average After-Tax Cash Flow per Year of Full Production | $12 million | $25 million | |
| The FS for project Fenix development involves two phases: | |||
| Phase 1: Years 1 to 6, Gold Production | |||
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| Phase 2: Years 7 to 9.5, Silver Production | |||
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Feasibility Study Report
The complete Fenix Project FS NI 43-101 Technical Report will be available on www.sedar.com and www.mcewenmining.com within 45 days. The FS was prepared by GR Engineering Services Limited (“GRES”) of Belmont, Western Australia, in accordance with the requirements of Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”) and SEC Industry Guide 7.
Permits
The current operation at El Gallo Gold is a fully permitted site; permit for the Phase 1 was granted by the Federal Environmental Authority (SEMARNAT) in September 2019, for the addition of a mill and leach circuit in the location of the existing facilities for the reprocessing of the heap leach pad material. The permit amendment also includes the backfilling of a previously mined pit with mill tailings, as part of an integrated concurrent closure plan for the El Gallo Gold Mine.
Further project advancement for Phase 2 is subject to permit approvals. Phase 2 project permitting will require authorization to expand the process plant footprint at El Gallo Gold and the haul road, and to augment the tailings volume to be deposited at the depleted pit.
The Fenix Project has CONAGUA approval for the extraction of groundwater and land-use permits for the construction of wells required for the life of Fenix Project.
Resource Estimates
Estimated resources for the Fenix Project are comprised only of material within the boundaries of conceptual pit shells, except for the El Gallo heap leach pad, which is considered completely available for reprocessing.
For the purposes of mine scheduling, the contained gold ounces in the Heap Leach Material has been depleted from the resource model estimate defined by drilling by an amount of 23 koz Au, to account for the production from heap leach operations and gold in circuit assessments between the timing of the resource estimate up until December 2020.
Table 1: Fenix Project Resources Estimate(5)(6)
| Heap Leach Material(7) | Tonnes | Silver Grade | Silver | Gold Grade | Gold | |||||
| Potential COG = 0 g/t Au | Mt | (g/t) | koz | (g/t) | koz | |||||
| Measured | 8.8 | 1.59 | 451 | 0.59 | 167 | |||||
| Indicated | 1.2 | 1.74 | 67 | 0.60 | 23 | |||||
| Measured and Indicated | 10.0 | 1.61 | 518 | 0.59 | 190 | |||||
| Inferred | 0.1 | 1.64 | 7 | 0.66 | 3 | |||||
| El Gallo Silver | ||||||||||
| In Optimized Pit Shell | Tonnes | Silver Grade | Silver | Gold Grade | Gold | |||||
| Potential COG = 58 g/t Ag | Mt | (g/t) | koz | (g/t) | koz | |||||
| Measured | 1.0 | 155.38 | 4,791 | 0.08 | 3 | |||||
| Indicated | 3.5 | 126.55 | 14,228 | 0.13 | 15 | |||||
| Measured and Indicated | 4.5 | 132.76 | 19,019 | 0.12 | 18 | |||||
| Inferred | 0.1 | 128.92 | 286 | 0.14 | 0.3 | |||||
| COMBINED RESOURCES | ||||||||||
| In Optimized Pit Shells | Tonnes | Silver Grade | Silver | Gold Grade | Gold | |||||
| Potential COGs variable | Mt | (g/t) | koz | (g/t) | koz | |||||
| Measured | 9.8 | 16.68 | 5,242 | 0.54 | 170 | |||||
| Indicated | 4.7 | 94.58 | 14,295 | 0.25 | 38 | |||||
| Measured and Indicated | 14.5 | 41.98 | 19,536 | 0.45 | 208 | |||||
| Inferred | 0.2 | 46.50 | 293 | 0.48 | 3 |
Table 2: Fenix Project Reserves Estimate(8)
| Heap Leach Material | Tonnes | Silver Grade | Silver | Gold Grade | Gold | |||||
| Mt | (g/t) | koz | (g/t) | koz | ||||||
| Proven | 8.8 | 1.59 | 451 | 0.59 | 167 | |||||
| Probable | 1.3 | 1.57 | 67 | 0.54 | 23 | |||||
| Proven + Probable | 10.1 | 1.58 | 517 | 0.58 | 190 | |||||
| El Gallo Silver | ||||||||||
| Proven | 0.7 | 165.71 | 3,708 | 0.05 | 1 | |||||
| Probable | 3.7 | 126.61 | 15,017 | 0.13 | 16 | |||||
| Proven + Probable | 4.4 | 132.82 | 18,725 | 0.12 | 17 | |||||
| COMBINED RESERVES | ||||||||||
| Proven | 9.5 | 13.60 | 4,159 | 0.55 | 168 | |||||
| Probable | 5.0 | 93.46 | 15,084 | 0.24 | 39 | |||||
| Proven + Probable | 14.5 | 41.19 | 19,243 | 0.44 | 207 |
Table 3: Assumptions for Heap Leach Pad and El Gallo Silver Pit Optimization Phase 2(6)(9)
| Assumptions for In-Pit Resource Shells | Deposits | Values |
| Gold Price | All | $1,300/oz |
| Silver Price | All | $16.00/oz |
| Mining Cost | Heap Leach Pad | $0.53/t |
| El Gallo Silver | $12.06/t | |
| Processing and G&A | Heap Leach Pad | $12.88/t |
| El Gallo Silver – Oxides | $26.90/t | |
| El Gallo Silver– Sulfides | $25.93/t | |
| Recovery - Au | Heap Leach Pad | 85.90% |
| El Gallo Silver | 79.40% | |
| Recovery - Ag | Heap Leach Pad | 45.0% |
| El Gallo Silver – Oxides | 82.5% | |
| El Gallo Silver– Sulfides | 88.1% | |
| Cut-Off Grade | Heap Leach Pad | 0 g/t Au |
| El Gallo Silver | 58 g/t Ag | |
| Inter-Ramp Pit Slope Angle | El Gallo Silver | 45 degrees |
FOOTNOTES (1) The Base Case utilizes the three-year moving average prices for gold and silver (approximate value). Estimated 26,000 oz Au per annum production assumes full production from years 2023 to 2027. Average after-tax cash flow per annum from full production years 2023 to 2031 is approximately $12 million per annum. Average after-tax cash flows per annum for the period from start-up of production to closure (2022 to 2032) is approximately $8.6 million per annum. These cash flows assume the use of all eligible tax loss carry forwards from the El Gallo Gold Mine.(2) Cash cost is calculated by dividing total life-of-mine production costs, general and administrative expenses and royalties by total ounces produced.(3) All-in sustaining costs (AISC) are calculated by dividing the sum of all cash costs plus sustaining capital and reclamation costs by total ounces produced.(4) All references to AgEq are based on an 88 Ag oz to 1 Au oz ratio. For Phase 1 silver accounts for
