McEwen cuts guidance as production at new mines disappoints

Production at McEwen Mining’s (NYSE: MUX) (TSX: MUX) new Gold Bar and Black Fox mines has been a “big disappointment,” chairman Rob McEwen stated in an exploration and operations update Tuesday.

The Gold Bar mine is situated in the southern Roberts Mountains of the Battle Mountain-Eureka-Cortez gold trend in Eureka County, central Nevada. The Black Fox mine is a key component of the Black Fox Complex, located in the Timmins gold mining camp of northern Ontario.

As a result, the company has lowered its 2019 guidance for Black Fox to between 36,000 and 40,000 oz, and Gold Bar to between 30,000 and 33,000 oz. Overall, the company’s gold production guidance has been reduced to between 131,000 oz and 138,000 oz, while the guidance for silver remains unchanged.

“Unanticipated natural and operational issues coupled with start-up delays at Gold Bar have pushed some of its production from 2019 into 2020,” McEwen said. “At Black Fox, production has been adversely impacted by slower-than-planned underground development.”

“However, site management has been making steady progress towards resolving these production issues,” he added.

Meanwhile, positive performance at the company’s operations in Argentina and Mexico, as well as recent exploration drilling results at the Grey Fox deposit of the Black Fox Complex, gave the chairman reasons to smile.

Based on a resource estimate published in July, the Grey Fox deposit contains 567,000 oz of gold at a grade of 7.10 g/t in the indicated category, with an additional 135,000 oz at a grade of 6.19 g/t in the inferred category.

The economic viability of the Grey Fox and Froome deposits would benefit from their close proximity to the Black Fox mine and its infrastructure. Preliminary results regarding the economics and potential development plans these deposits would be presented later this year.