On April 26, 2017, McEwen Mining Inc (NYSE:MUX) completed the acquisition deal of Lexam VG Gold Inc., which showcases a strategic acquisition of previous producing mine properties in the heart of Timmins gold mining district based in Canada.
The Timmins brownfield sites boasts good access to power, roads and adjacent experienced workforce. Some of the assets have mine infrastructure in place, like ramps, pits and existing shafts from previous mining plans. This should mitigate future development costs. The prevailing NI 43-101 resources are gold of 1.5 million ounces in the Indicated and Measured categories, and one million gold ounces in the Inferred segment.
For 2017, McEwen have budgeted $3 million for development and exploration related activities in Timmins. Of main interest are the top grade drill intercepts of previous exploration programs.
McEwen reported that production at the El Gallo Gold mine declined QoQ to 9,808 gold equivalent ounces in for Q1 2017, due to poor access to higher grade ore. Still, the mine is on track to hit its 2017 production projection of 50,000 gold equivalent ounces.
The company’s El Gallo gold mine comes in the list of mature operations. While ore grades processed in the reported quarter averaged 1.28 gpt gold against 3.62 gpt gold in Q1 2016, it is estimated to jump to 2.5 gpt in 2H2017. Optimization work is underway to increase the profit in respect of the declining production profile.
Exploration measures are now focused on determining resources in sulfide and provisional mineralization that could lengthen the asset life, and, as such, the company have budgeted $1.8 million for exploration operations at the El Gallo mine, and $2 million for sustaining capital expenditures for FY2017.
In the last trading session, the stock price of McEwen Mining declined more than 7% to close the day at $2.52.