McEwen Mining has released its year-end results for 2020, and although it bluntly admits it was a “brutal” year financially, the company is due for a rebound in 2021.
They report a consolidated net loss of $152.3 million in 2020, or $0.38 a share.
Rob McEwen, chair and chief owner, said, “2020 was a brutal year but we more than survived and have come out stronger from it. The ‘Going Concern Note’ has been removed from our financial statements.”
The Toronto-based mining company currently has seven operations on the go. Two in Argentina, two in Mexico, one in Nevada, and two in the Timmins area: The Lexam Property, and the Fox Complex, located 11 kilometres east of Matheson.
There are currently 168 people employed at Black Fox Mine, which is approximately 36 kilometres east of Timmins city centre.
Production from Black Fox in 2020 was 24,400 gold equivalent ounces (GEOs) from the total 114,800 total GEOs company wide. That total was down from the 174,400 GEOs produced in 2019.
McEwen said the biggest contributor to the 2020 losses was the impairment of its Gold Bar Mine in Nevada, which was heavily impacted by the COVID-19 pandemic, to the tune of $83.8 million.
At Black Fox, the focus continues to be on exploration, although that was slowed in 2020. An independent preliminary economic study on expanding production at the Fox Complex is expected to be completed by the end of the second quarter of this year.
“We incurred $6.5 million in 2020 for exploration initiatives, compared to $25.8 million in 2019. We remain focused on our principal exploration goal of cost-effectively discovering and extending gold deposits adjacent to our existing operations to contribute to near-term gold production,” said McEwen.
In 2020, 13,000 metres of drilling was completed at Black Fox.
“The future of our Fox Complex is becoming more visible. Access to the Froome deposit is nearly complete and commercial production is planned to start in Q4.”
He added “This will extend the life of the Black Fox mine by 2.5 years, providing a bridge to our second phase of growth at Fox, which we will unveil in Q2. Given our large gold resource base in the Timmins area, we expect it to support a potential 10-year mine life with annual production of 100,000 to 150,000 ounces of gold.”
The Froome deposit, which is also part of the Fox Complex, is accessed from two declines starting at the Black Fox pit and is located approximately one-half mile west of the Black Fox mine. The mineralized material from Froome will then be hauled approximately 32 kilometres to the Stock Mine mill for processing. That mill also processes material from Black Fox.
The company said development of the vent drive that will provide initial access to the Froome underground deposit has advanced 95 per cent by the end of February 2021, and that they are on track to reach the main deposit before the start of the second quarter, which will allow them to reach the commercial production phase by the fourth quarter of this year.
“We have engaged an independent engineering group to complete a Preliminary Economic Assessment (PEA) on the Grey Fox-Black Fox, Stock and Timmins resources utilizing our existing central milling capacity,” said McEwen.
The completion of the PEA is expected later this spring.
Mining from the Froome deposit is expected to bridge gold production, and provide cash flow while McEwen continues to drill and assess additional potential resources at the Black Fox, Grey Fox, Stock and Timmins projects for future development towards expanded production.
McEwen is forecasting its 2021 gold equivalent production to be in the range of 141,000 to 160,400 GEOs, which would represent a 23 per cent to 40 per cent increase over 2020.
“While I am deeply pained by our awful financial performance in 2019 and 2020, I recognize that those years are behind us, and the past cannot be changed, but we can and are shaping a better future. This year will not be stellar as we continue to fix operating issues and continue to invest in exploration and business systems, the foundations for a strong mining company,” said McEwen.
Andrew Autio is the Local Journalism Initiative reporter for The Daily Press. LJI is a federally funded program.
Andrew Autio, Local Journalism Initiative Reporter, The Daily Press