All posts from in,

McEwen Mining's (MUX) CEO Robert McEwen on Q2 2015 Results - Earnings Call Transcript


Good morning, ladies and gentlemen. Welcome to the McEwen Mining Second Quarter 2015 Financial and Operating Results Conference Call. At the end of the presentation we will take questions from participants on the conference call and the webcast.

I would now like to turn the meeting over to Mr. Rob McEwen, Chief Owner. Please go, Mr. McEwen.

Robert McEwen - CEO

Thank you, operator. Good morning, ladies and gentlemen. Welcome to our second quarter 2015 conference call, where we're going to cover our operating and financial results for the quarter.

I'd like to start saying we had an excellent quarter, strong productions generated very healthy operating profit from cash flow. And our star performing asset was our El Gallo Mine in Mexico that delivered outstanding production cost per ounce and here with me today to give you the details are Perry Ing, our VP and CFO and Nathan Stubina, our Managing Director. Perry?

Perry Ing - CFO

Thanks, Rob. Overall as Rob mentioned, we experienced some excellent quarter from production standpoint, which helped to drive down our cost and increase our cash flow and our treasury.

Our consolidated gold equivalent production was up 36% to 39,000 ounces in the quarter compared to 29 ounces in the same quarter in 2014. As a result, our earning from mine operations doubled to $13.4 million compared to $6.6 million in the same period of 2014.

This strong performance despite a weaker metal price environment is reflected in our growing treasury, as we ended the quarter with cash and gold of $27 million, compared to $17 million at the end of the first quarter and $15 million at the beginning of 2015.

I am also pleased to report that with the collection of $6 million in insurance proceeds resulting from the robbery at our mine in Mexico, we collected this balance in July and our cash and gold balanced now stands in excess of $32 million.

Looking into the performance from a cost standpoint, we report a consolidated gold equivalent cash cost of $700 an ounce which is $200 less than the prior year and all-in sustaining cost are about 50 ounce which is $350 less from the prior year.

This is driven by the exceptional performance at our El Gallo 1 Mine where we produced over 17,000 ounces of gold at a cash cost of $350 an ounce and all-in sustaining cost of $550 an ounce.

This compares to production of over 8,000 ounces at a cost of - at a cash cost of 850 and all-in cost of 1250 in the same period in 2014. So therefore you see that the strong production combined with savings and in put cost and recent Mexico peso devaluation are all contributing factors to our low cost.

In Argentina, at the San José Mine despite difficult operating conditions our partners have been able to keep cash cost flat at just over $930 an ounce and have been able to decrease all-in sustaining cost by nearly $100 to 1215 an ounce. We are able to report that we received a small dividend of approximately $0.5 million during the second quarter from the San José Mine.

Overall looking at our overall financial statements, we did report net loss of $14.5 million or $0.05 a share. However, the majority of this was due to non-cash asset impairments reflecting claims - certain claims that are we dropping in Nevada, which will result in annual savings of $600,000 per year and do not impact any of our mineral resources in Nevada.

Our adjusted net income, stripping out the results of this impairment, as well as foreign exchange currency effects, we did report adjusted net income of $1.8 million of $0.01 a share.

Couple of other things I'll touch on before I turn the presentation over to Nathan. To enhance our liquidity we did enter a credit facility during the second quarter with a local Mexican bank of approximately $5.5 million secured against our outstanding VAT receivable balance. This facility will be retired as VAT amounts collected during the year.