We use cookies (including third-party cookies such as Google) to remember your site preferences and to help us understand how visitors use our sites so we can improve them. To learn more, please see our privacy policy and our cookie policy.

To agree to our use of cookies, click 'Accept' or choose 'Options' to set your preferences by cookie type.

Options Accept
BullionVault

CHARTS

  • English
  • Deutsch
  • Español
  • Français
  • Italiano
  • Polski
  • 日本語
  • 简体中文
  • 繁體中文
  • Daily audit
  • Help
  • Contact
  • Deposit
  • Login
  • Open account
  • ABOUT US
    • About BullionVault
    • In the press
    • Reviews
    BUY/SELL BULLION
    • Vaulted gold & silver
    • -Live order board
    • -Daily Price
    • Coins for delivery (UK)
    INVESTMENT GUIDE
    • Guide to gold
    • -How to buy gold
    • -Gold investment
    • -Gold investment plan
    • -Investment insurance
    • -Compare asset performance
    • Guide to silver
    • -How to buy silver
    • Guide to platinum
    • -How to buy platinum
    GOLD NEWS
    • Gold news front page
    • -Gold price news
    • -Opinion & analysis
    • -Market fundamentals
    • -Gold/Silver Investor Index
    • -Infographics
    CHARTS
    • Gold price
    • Silver price
    • Platinum price
    • Price alerts
  • Login
  • Open account
  • BUY/SELL BULLION
  • Vaulted gold & silver
    • ⤷
    • Live order board
    • Daily Price
  • Coins for delivery (UK)
  • INVESTMENT GUIDE
  • Guide to gold
    • ⤷
    • How to buy gold
    • Gold investment
    • Gold investment plan
    • Investment insurance
    • Compare asset performance
  • Guide to silver
    • ⤷
    • How to buy silver
  • Guide to platinum
    • ⤷
    • How to buy platinum
  • GOLD NEWS
  • Gold news front page
    • ⤷
    • Gold price news
    • Opinion & analysis
    • Market fundamentals
    • Gold/Silver Investor Index
    • Infographics
  • CHARTS
  • Gold price
  • Silver price
  • Platinum price
  • Price alerts
  • ABOUT US
  • About BullionVault
  • In the press
  • Reviews
  • Help
  • Contact
  • Daily audit
    • English
    • Deutsch
    • Español
    • Français
    • Italiano
    • Polski
    • 日本語
    • 简体中文
    • 繁體中文

Gold News

Live support

NEED HELP? ASK US NOW

Search form

Gold News front page

Gold Price News

Gold Prices 'Caught' Between Covid and Massive Stimulus Ahead of Chinese New Year

More...

Gold Investing In Depth

Learn about gold bullion bars

Learn about gold bullion coins (and costs)

Gold investment: Why & how?

Gold Investment Analysis

  • Latest Gold Investor Index
  • Diversification: Gold as investment insurance
  • 40-year Asset Performance Comparison Table

Gold Articles

Opinion & Analysis

Gold Price News

Investment News

Gold in History

Gold Books

Gold Investor Index

Gold Infographics

Archive

  • January 2021 (18)
  • December 2020 (24)
  • November 2020 (23)
  • October 2020 (25)
  • September 2020 (25)
More...

List of authors

Gold Mining: 'A Great Place to Be Investing'

Wednesday, 9/23/2020 09:01
Or so says the CEO of this under-performing gold stock...
 
ROB McEWEN, chairman and CEO of McEwen Mining Inc. (TSX: MUX, NYSE: MUX) and founder and former chairman and CEO of Goldcorp, doesn't mince words, says The Gold Report in this article reposted here at BullionVault Gold News.
 
"In the last year, what we went through at McEwen Mining could almost be described in Biblical terms: we had a fire, a flood and Covid is sort of a plague."
 
McEwen Mining has operations in four countries – the US, Canada, Mexico and Argentina – and produces gold and silver and has a large copper deposit in Argentina. Last year the company produced 135,000 ounces of gold and 3.4 million ounces of silver.
 
"I'll start by saying our properties are well located in very productive gold mining districts. It is good real estate to be exploring in," Rob said. "I have experienced the enormous and explosive creation of wealth due to a successful exploration effort. That why I am such a big proponent and funder of exploration and attracted to distressed situations in areas where there is a history of a lot of gold being produced.
 
"The precious metal space is a great place to be investing today."
 
Last year, McEwen Mining started up the Gold Bar Mine in Nevada and ran into difficulties.
"We built the mine based on a geological interpretation by SRK Consulting but we weren't getting the results we were expecting. We called them back in to review the situation. We were shocked that they changed their geological interpretation, which resulted in a significant reduction in the estimated size of the deposit. As a result, we took a $83 million write down in Q2."
Since then, the company has continued to produce gold as well as conduct exploration drilling at Gold Bar. "We expect to have new resource and reserve estimates and an updated feasibility study by the fourth quarter," Rob said.
 
McEwen Mining's Black Fox Mine is located in the prolific Timmins Gold Mining district in Ontario, Canada. "Early last year a fire on a contractor owned and operated crusher shut down gold production for seven weeks. That event was followed by a heavy spring run-off that flooded one half of the mine and cut gold production in half for more than an additional eight weeks," Rob noted.
 
"These events significantly reduced our gold production and thus our revenue. Fortunately, these events were unique and not expected to reoccur. This year production was returning to normal levels when the Covid pandemic struck. We chose to protect the health of our employees and their communities and suspended operations for much of Q2. Since then operations are returning to normal levels."
 
"The good news is that we've had a very good exploration year at Black Fox, particularly the Grey Fox and Stock zones, which we believe should have a very positive impact on production over the next three to four years. Also at Black Fox, we're developing a ramp down to a satellite deposit called Froome. We expect that we will be producing gold from Froome by the end of next year," Rob said.
 
In Mexico, "We are working on a feasibility study for the Fenix project that contemplates a 10-year life of mine," said Rob. In the second quarter, McEwen Mining produced 1,900 gold equivalent ounces from residual leaching of the heap leach pad.
 
McEwen Mining also holds a 49% interest at the San José Mine in Argentina. "It is one of the highest grade silver and gold mines in the Americas. Government imposed measures designed to stop the transmission of Covid have materially increased the cost of mining," Rob said. "As such, the San José mine is operating well below its required manpower needs for an efficient operation."
 
Also, in Argentina is the company's large, 100%-owned Los Azules copper project. "To give you a sense of its size I will convert the pounds of copper to gold equivalent ounces (by dividing the gold price by the copper price, then take the product and use it to divide the number of Indicated and Inferred pounds of copper to arrive at the number of gold equivalent ounces) and to that number add the gold and silver ounces in the deposit. Based on current metal prices, Los Azules has a resources of greater than 50 million gold equivalent ounces. We have focused on derisking this asset, improving the access, and improving its attraction for a potential JV partner," Rob explained.
 
"With all of these issues, needless to say, our share price has unfortunately been going in the opposite direction to most gold stocks. We've significantly underperformed in part due to these issues," Rob said.
 
"I hired a new chief operating officer in April, Peter Mah. He is a very skilled mining professional with a broad base of senior international experience building mines from scratch to turning around challenging mines. Peter was a member of the senior management at the Red Lake Mine when I was building Goldcorp. The Red Lake mine was the engine that drove the growth of Goldcorp, but when we started it was a high cost mine, with a very short life
 
and a troubled history with unions. I see many similarities with Black Fox and the opportunities."
 
Rob McEwen's confidence in the company remains strong. "I believe we've turned the corner, our assets are performing better and the trend is up. Please note that it's going to take a couple of quarters of stronger results to rebuild the confidence of our shareholders and the market," Rob said.
 
"We are in a transition period setting up for future growth. We have a large resource base, four operating mines and we see an exciting organic growth pipeline of projects ahead that could potentially push our production to 300,000 ounces per year," he said. In the last quarter, Rob purchased 2 million shares, taking his ownership to 82 million shares, about a 20% stake.
 
In a ROTH Capital Markets report dated July 17, analyst Jake Sekelsky wrote, "we continue to view MUX as an undervalued producer at current levels and believe management is taking prudent steps to unlock value from the portfolio of assets."
 
In addition to McEwen Mining, McEwen invests in a number of junior mining companies. "I like buying juniors," Rob said. "I like buying them when they are out of favor. It's a sector that really powers up when the gold market starts running; they can run and deliver amazing returns."
 
When deciding on investing in a junior, McEwen says he uses broad guidelines. Most of his investing has been focused on the Americas and a little in Northern Europe. "I like to hear the story, meet management and I reflect on their ownership and degree of financial commitment. I look at the financial position of the company and how the market views it," he explained.
 
"I am attracted to companies that the market doesn't like or just doesn't look at. These situations you can buy it at an advantageous price. When I buy, I buy 5%, 10% or more of a company. And then I will wait. I am long-term buyer. I believe there will be many more discoveries and I am convinced the precious metal space is a great place to be investing today."
 
One that McEwen has bought is Abitibi Royalties Inc. (RZZ:TSX.V), run by Ian Ball. "At Goldcorp I hired Ian out of school. He is very bright and he progressed through the ranks at McEwen Mining up to becoming its President. He left to be the CEO of Abitibi," Rob noted.
 
"This company has a very small number of shares outstanding, 12 million. Its biggest asset, other than a large treasury, is its 3% net smelter return royalty on the eastern portion of the Canadian Malartic Mine, Canada's largest gold mine, which is operated by Agnico Eagle and Yamana Gold; it also holds royalties on numerous other projects. Ian has done a great job building value."
 
McEwen has also invested in Labrador Gold Corp. (LAB:TSX; NKOSF:OTCQX), Northern Shield Resources Inc. (NRN:TSX.V) and New Found Gold Corp. (NFG:TSX.V). "What attracted me to them was their properties in Newfoundland," Rob said.
 
"There's a geological structure that comes over from Finland, across Greenland, down Labrador and Nova Scotia, and down to the Carolinas. Newfoundland hasn't had a lot of history of gold mining but these companies have come across a wide structure that has some really interesting gold values. All of these companies are working in that area that I think is going surprise a lot of people with its wide zones and good grades."
 
He also holds a 9% interest in Royal Road Minerals Ltd. (RYR:TSX), which has a massive land package in Colombia. "Colombia is a country famed for its historical abundance of gold. The company picked up this big tract of land that AngloGold-Ashanti had poured quite a bit of money into. Royal Road has joint ventured with Mineros SA on the gold skarn project. And in Nicaragua, they have a property that produces some interesting results," Rob said.
 
McEwen owns HighGold Mining Inc. (HIGH:TSX.V; HGGOF:OTCQX) shares; the company's properties in Alaska and in the Timmins Gold Camp in Ontario are notable for their historical high grades of gold. "In Timmins," Rob noted, "HighGold's property, the Munro-Croesus Gold project, includes the Croesus Mine that produced some of the highest grade gold ever mined in the region. And in Alaska the company has an arrangement with the Cook Inlet Region Inc. (CIRI), an Alaska Native Regional Corporation, on an area that has significant potential given the historical mining in and around the area."
 
Another holding is Inventus Mining Corp. (IVS:TSX.V). "The company has a curious story; its Pardo project is paleoplacer," Rob said. "I liken it to the types of deposits you might see in South Africa. It's a shallow conglomerate bed that begins at surface and goes down only three to five meters. So mining costs should be quite inexpensive. Sampling has in places encountered gold grades in excess of an ounce. The trouble with paleoplacer deposits is the difficulty estimating the size of the resource. It is a very drill intensive exercise that can be very expensive for a junior to fund.
 
"I look at it this way: this is a very shallow deposit that they could just peel back the vegetation and take out the gold and practically roll back the vegetation."
  • Reddit logo
  • Facebook logo
  • Twitter logo
  • Google logo
  • Yahoo logo
  • LinkedIn logo
  • Digg logo
  • StumbleUpon logo
  • Technorati logo

The Gold Report is a unique, free site featuring summaries of articles from major publications, specific recommendations from top worldwide analysts and portfolio managers covering gold stocks, and a directory, with samples, of precious metals newsletters. 

See the full archive of Gold Report articles.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

Mobile apps

 - live trading 24/7

 - buy & sell instantly

 - up-to-the-second charts

 

 

 

Daily news email
Go to 'communications settings' 

Get the latest daily gold price news free by email

Latest gold news by email

 

 

 

Gold Investor Index
5 January 2020

Gold Investor Index

Gold investing +58% in NY21

 

 

 

LBMA webinar
21 January 2021

LBMA

London gold trading

 

 

 

International
Investment

16 December 2020

Gold 2021

Gold in 2021

 

 

 

LBMA Alchemist
1 December 2020

Newton

True Gold/Silver Ratio

 

 

 

  •  Email us

Market Fundamentals

  • 'Cut Bullion Duty to Cut Smuggling': India's Gold Industry
  • Platinum Price Hits 4-Year High Even as Electric Beats Diesel Cars in Europe
  • Record Investing Pushes 'Industrial' Silver and Platinum into Deep Deficits
More...
  • Cost calculator
  • Cookies
  • Terms & conditions

©BullionVault Ltd 2005-

  • Twitter
  • Facebook
  • LinkedIn
  • YouTube

Save your cookie preferences

We use cookies to remember your site preferences, record your referrer and improve the performance of our site. For more information, see our cookie policy.

Please select an option below and 'Save' your preferences.

Save

You can update your cookie preferences at any time from the 'Cookies' link in the footer.

Secure auto-logout warning

You have not been active for some time.

For your security you will be logged out in   minutes unless you take action.