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8-K - 8-K - McEwen Mining Inc.a15-6423_28k.htm
EX-99.4 - EX-99.4 - McEwen Mining Inc.a15-6423_2ex99d4.htm
EX-99.3 - EX-99.3 - McEwen Mining Inc.a15-6423_2ex99d3.htm
EX-99.1 - EX-99.1 - McEwen Mining Inc.a15-6423_2ex99d1.htm

Exhibit 99.2

 

 

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands of U.S. dollars, except per share amounts)

 

 

 

Three months ended December 31,

 

Year ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

REVENUE:

 

 

 

 

 

 

 

 

 

Gold and silver sales

 

$

13,683

 

$

10,247

 

$

45,303

 

$

45,982

 

 

 

13,683

 

10,247

 

45,303

 

45,982

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Production costs applicable to sales

 

10,184

 

7,816

 

40,608

 

34,594

 

Mine operating costs

 

 

 

 

 

Mine construction costs

 

 

721

 

1,723

 

1,383

 

Mine development costs

 

75

 

193

 

1,829

 

847

 

Exploration costs

 

3,709

 

2,765

 

11,332

 

24,829

 

Property holding costs

 

1,797

 

507

 

6,365

 

4,584

 

General and administrative expenses

 

3,080

 

3,096

 

12,069

 

14,001

 

Acquisition costs

 

 

 

 

 

Depreciation

 

286

 

211

 

979

 

942

 

Accretion of asset retirement obligation and reclamation expenses

 

98

 

114

 

407

 

461

 

Loss (income) from investment in Minera Santa Cruz S.A., net of amortization

 

5,434

 

(594

)

5,284

 

(846

)

Impairment of investment in Minera Santa Cruz S.A.

 

21,162

 

 

21,162

 

95,878

 

Impairment of mineral property interests and property and equipment

 

233,338

 

28,947

 

353,736

 

62,963

 

(Gain) loss on sale of assets

 

 

2

 

(26

)

6,743

 

Total costs and expenses

 

279,163

 

43,778

 

455,468

 

246,379

 

Operating loss

 

(265,480

)

(33,531

)

(410,165

)

(200,397

)

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income, net of interest expense

 

(197

)

63

 

259

 

262

 

Loss on sale of marketable equity securities

 

 

 

 

 

Other-than-temporary impairment on marketable equity securities

 

 

 

 

 

(Loss) gain on sales of gold and silver bullion held as investments

 

 

(223

)

 

(223

)

Unrealized loss on gold and silver bullion held as investments

 

 

223

 

 

 

Registration taxes

 

(76

)

 

(6,788

)

 

Gain (loss) on litigation settlement

 

 

 

 

560

 

Foreign currency (loss) gain

 

(1,487

)

(215

)

(2,419

)

(1,309

)

Total other income (expense)

 

(1,760

)

(152

)

(8,948

)

(710

)

Loss before income taxes

 

(267,240

)

(33,683

)

(419,113

)

(201,107

)

Income tax recovery

 

54,465

 

22,340

 

107,170

 

53,365

 

Net loss

 

(212,775

)

(11,343

)

(311,943

)

(147,742

)

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS):

 

 

 

 

 

 

 

 

 

Reclassification of unrealized gain on marketable securities disposed of during the period, net of taxes

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities, net of taxes

 

418

 

(4

)

419

 

(1

)

Comprehensive loss

 

$

(212,357

)

$

(11,347

)

$

(311,524

)

$

(147,743

)

Net loss per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.71

)

$

(0.04

)

$

(1.05

)

$

(0.50

)

Diluted

 

$

(0.71

)

$

(0.04

)

$

(1.05

)

$

(0.50

)

Weighted average common shares outstanding (thousands):

 

 

 

 

 

 

 

 

 

Basic

 

299,009

 

297,125

 

297,763

 

297,001

 

Diluted

 

299,009

 

297,899

 

297,763

 

297,001

 

 

 

1



 

 

MCEWEN MINING INC.

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

 

 

 

December 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

12,380

 

$

24,321

 

Investments

 

1,082

 

2

 

Value added taxes receivable

 

11,739

 

11,591

 

Inventories

 

12,404

 

8,800

 

Other current assets

 

2,096

 

2,057

 

Total current assets

 

39,701

 

46,771

 

 

 

 

 

 

 

Mineral property interests

 

287,812

 

642,968

 

Restricted time deposits for reclamation bonding

 

 

5,183

 

Investment in Minera Santa Cruz S.A.

 

177,018

 

212,947

 

Property and equipment, net

 

17,896

 

15,143

 

Other assets

 

531

 

54

 

TOTAL ASSETS

 

$

522,958

 

$

923,066

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

21,655

 

$

9,797

 

Current portion of asset retirement obligation

 

2,427

 

1,392

 

Total current liabilities

 

24,082

 

11,189

 

 

 

 

 

 

 

Asset retirement obligation, less current portion

 

5,044

 

5,855

 

Deferred income tax liability

 

51,899

 

158,855

 

Deferred rent expense

 

319

 

 

Other liabilities

 

400

 

400

 

Total liabilities

 

$

81,744

 

$

176,299

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, 500,000 shares authorized;

 

 

 

 

 

Common: 271,579 as of December 31, 2014 and 264,913 shares as of December 31, 2013 issued and outstanding

 

 

 

 

 

Exchangeable: 28,521 shares as of Deceber 31, 2014 and 32,246 shares as of December 31, 2013 issued and outstanding

 

1,360,668

 

1,354,696

 

Accumulated deficit

 

(919,578

)

(607,634

)

Accumulated other comprehensive income (loss)

 

124

 

(295

)

Total shareholders’ equity

 

441,214

 

746,767

 

 

 

 

 

 

 

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY

 

$

522,958

 

$

923,066

 

 

2



 

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

 

 

 

Three months ended December 31,

 

Year ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Cash paid to suppliers and employees

 

$

(17,693

)

$

(16,006

)

$

(68,993

)

$

(90,365

)

Cash received from gold and silver sales

 

12,192

 

9,705

 

43,812

 

44,416

 

Dividends received from Minera Santa Cruz S.A.

 

 

584

 

9,483

 

1,826

 

Proceeds from sale of gold and silver bullion held as investments

 

 

 

 

1,467

 

Lease incentive

 

 

 

328

 

 

Interest received

 

8

 

123

 

464

 

262

 

Cash used in operating activities

 

(5,493

)

(5,594

)

(14,906

)

(42,394

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Cash and short-term investments received from acquisition of Minera Andes Inc.

 

 

 

 

 

Short-term investments (net)

 

 

 

 

 

Acquisition of mineral property interests

 

 

 

 

(150

)

Additions to property and equipment

 

(97

)

(596

)

(2,788

)

(4,306

)

Investment in marketable equity securities

 

(446

)

 

(446

)

 

Proceeds from sale of marketable securities

 

 

 

 

 

Decrease to restricted time deposits for reclamation bonding

 

2

 

 

5,183

 

 

Deposit for surety bonds for reclamation bonding

 

 

 

(481

)

 

Proceeds from disposal of mineral property interests and property and equipment

 

(1

)

6

 

38

 

1,455

 

Cash provided by (used in) investing activities

 

(542

)

(590

)

1,506

 

(3,001

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Sale of common stock for cash, net of issuance costs

 

 

 

 

 

Exercise of stock options

 

910

 

 

2,292

 

171

 

Cash provided by financing activities

 

910

 

 

2,292

 

171

 

Effect of exchange rate change on cash and cash equivalents

 

(117

)

(557

)

(833

)

(1,376

)

(Decrease) increase in cash and cash equivalents

 

(5,242

)

(6,741

)

(11,941

)

(46,600

)

Cash and cash equivalents, beginning of period

 

17,622

 

31062

 

24,321

 

70,921

 

Cash and cash equivalents, end of period

 

$

12,380

 

$

24,321

 

$

12,380

 

$

24,321

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss to cash used in operating activities:

 

 

 

 

 

 

 

 

 

Net loss

 

$

(212,775

)

$

(11,343

)

$

(311,943

)

$

(147,742

)

Adjustments to reconcile net loss from operating activities:

 

 

 

 

 

 

 

 

 

Loss (income) from investment in Minera Santa Cruz S.A., net of amortization

 

5,434

 

(594

)

5,284

 

(846

)

Impairment of investment in Minera Santa Cruz S.A.

 

21,162

 

 

21,162

 

95,878

 

Impairment of mineral property interests and property and equipment

 

233,338

 

28,947

 

353,736

 

62,963

 

Other-than-temporary impairment on marketable equity securities

 

 

 

 

 

(Gain) loss on sale of assets

 

 

2

 

(26

)

6,743

 

Loss on sale of marketable securities

 

 

 

 

 

Lease incentive

 

 

 

328

 

 

Income tax recovery

 

(54,465

)

(22,340

)

(107,170

)

(53,365

)

Gain on litigation settlement

 

 

 

 

(560

)

Loss (gain) on sale of gold and silver bullion held as investments

 

 

223

 

 

223

 

Unrealized loss on gold and silver bullion held as investments

 

 

(223

)

 

 

Proceeds on sale of gold and silver bullion held as investments

 

 

 

 

1,467

 

Stock-based compensation

 

472

 

417

 

1,324

 

1,382

 

Shares issued to supplier for mining services

 

 

 

1,004

 

 

Shares issued to TNR Gold Corp.’s to terminate back-in right

 

1,352

 

 

1,352

 

 

Depreciation

 

286

 

211

 

979

 

942

 

Accretion of asset retirement obligation

 

98

 

114

 

407

 

461

 

Amortization of mineral property interests and asset retirement obligations

 

313

 

286

 

1,236

 

1,530

 

Foreign exchange loss

 

117

 

557

 

833

 

1,376

 

Change in non-cash working capital items:

 

 

 

 

 

 

 

Increase in VAT receivable, net of collection of $5,049 (2013 - $3,438; 2012 - $720)

 

(865

)

(3,420

)

(148

)

(2,441

)

(Increase) in other assets related to operations

 

(3,296

)

375

 

(3,638

)

(703

)

Increase (decrease) in liabilities related to operations

 

3,336

 

610

 

10,891

 

(11,528

)

Dividends received from Minera Santa Cruz S.A.

 

 

584

 

9,483

 

1,826

 

Cash used in operating activities

 

$

(5,493

)

$

(5,594

)

$

(14,906

)

$

(42,394

)

 

3



 

About McEwen Mining (www.mcewenmining.com)

 

The goal of McEwen Mining is to qualify for inclusion in the S&P 500 by creating a profitable gold producer focused in the Americas. McEwen Mining’s principal assets consist of the gold/silver San José mine in Santa Cruz, Argentina (49% interest); the El Gallo complex in Sinaloa, Mexico; the Gold Bar project in Nevada, US; the Los Azules copper project in San Juan, Argentina. McEwen Mining has 305 million shares fully diluted at March 9, 2015. Rob McEwen, Chairman, and Chief Owner, owns 25% of the shares of the Company.

 

TECHNICAL INFORMATION

 

This news release and the company and project information that is linked above has been reviewed and approved by William Faust, PE, McEwen Mining’s Chief Operating Officer, who is a Qualified Person as defined by National Instrument 43-101 (ÒNI 43-101).

 

El Gallo: for additional information about the El Gallo complex see the technical report titled “Resource Estimate for the El Gallo Complex, Sinaloa State, Mexico” dated August 30, 2013 with an effective date of June 30, 2013, prepared by John Read, C.P.G., and Luke Willis, P. Geo. Mr. Read and Mr. Willis are not considered independent of the Company as defined by NI 43-101 Gold Bar: For information about the Gold Bar project see the technical report titled ÒNI 43-101 Technical Report on Resources and Reserves Gold Bar Project, Eureka County, Nevada” dated February 24, 2012 with an effective date of November 28, 2011, prepared by J. Pennington, C.P.G., MSc., Frank Daviess, MAusIMM, Registered SME, Eric Olin, MBA, RM- SME, MSc, Herb Osborn, P.E, Joanna Poeck, MMSA, B. Eng., Kent Hartley P.E. Mining, SME, BSc, Mike Levy, P.E, P.G, MSc., Evan Nikirk, P. E., Mark Allan Willow, M.Sc, C.E.M. and Neal Rigby, CEng, MIMMM, PhD, all of whom are qualified persons and all of whom are independent of McEwen Mining, each as defined by NI 43-101. San José: for additional information about the San José mine see the technical report titled “Technical Report on San José Silver -Gold Mine, Santa Cruz, Argentina” dated August 15, 2014 with an effective date of December 31 2013, prepared by Eugene Puritch, P.Eng., David Burga, P.Geo., Alfred Hayden, P.Eng., James L. Pearson, P.Eng., and Fred H. Brown, P.Geo., James K. Duff, P.Geo., all of whom are qualified persons and all of whom except James K. Duff, are independent of McEwen Mining, each as defined by NI 43-101.

 

The foregoing news release and technical report are available under the Corporation’s profile on SEDAR (www.sedar.com).

 

There are significant risks and uncertainty associated with commencing production or changing production plans without a feasibility, pre-feasibility or scoping study. The expansion to El Gallo 1 has not and may not be explored, developed or analyzed in sufficient detail to complete an independent feasibility or pre-feasibility study. Further, although the subject of a 2012 feasibility study, the Company does not have a current feasibility study on the El Gallo 2 project. As such, each of the foregoing may ultimately be determined to lack one or more geological, engineering, legal, operating, economic, social, environmental, and other relevant factors reasonably required to serve as the basis for a final decision to complete the expansion or construction of all or part of these projects.

 

RELIABILITY OF INFORMATION REGARDING THE SAN JOSÉ MINE

 

Minera Santa Cruz S.A., the owner of the San José mine, is responsible for and has supplied to the Company all reported results from the San José mine. McEwen Mining’s joint venture partner, a subsidiary of Hochschild Mining plc, and its affiliates other than MSC do not accept responsibility for the use of project data or the

 

4



 

adequacy or accuracy of this release.

 

CAUTIONARY NOTE REGARDING NON-GAAP MEASURES

 

In this report, we have provided information prepared or calculated according to U.S. GAAP, as well as provided some non-U.S. GAAP (“non-GAAP”) performance measures. Because the non-GAAP performance measures do not have any standardized meaning prescribed by U.S. GAAP, they may not be comparable to similar measures presented by other companies.

 

(1)   Total Cash Costs and All-in Sustaining

 

Total cash costs consist of mining, processing, on-site general and administrative costs, community and permitting costs related to current explorations, royalty costs, refining and treatment charges (for both doré and concentrate products), sales costs, export taxes and operational stripping costs. All-in sustaining cash costs consist of total cash costs (as described above), plus environmental rehabilitation costs, mine site exploration and development costs, and sustaining capital expenditures. In order to arrive at our consolidated all-in sustaining costs, we also include corporate general and administrative expenses. Depreciation is excluded from both total cash costs and all-in sustaining cash costs. Total cash cost and all-in sustaining cash cost per ounce sold are calculated on a co-product basis by dividing the respective proportionate share of the total cash costs and all-in sustaining cash costs for the period attributable to each metal by the ounces of each respective metal sold. We use and report these measures to provide additional information regarding operational efficiencies both on a consolidated and an individual mine basis, and believe these measures provide investors and analysts with useful information about our underlying costs of operations. A reconciliation to the nearest U.S. GAAP measure is provided in McEwen Mining’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

(2)   Adjusted net income (loss)

 

Adjusted net income (loss) excludes the following items from net income (loss): impairment charges, net of tax; foreign currency gains and losses, including the impact of the devaluation Argentine peso relative to the U.S. dollar; other non-recurring items, if applicable. We use and report this measure because we believe it provides investors and analysts with a useful measure of the underlying operating performance of our core mining business. A reconciliation to the nearest U.S. GAAP measure is provided in McEwen Mining’s Quarterly Report on Form 10-Kforthe fiscal yearended December 31, 2014.

 

CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE ESTIMATION

 

McEwen Mining prepares its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101 (NI 43 -101). These standards are different from the standards generally permitted in reports filed with the SEC. Under NI 43-101, McEwen Mining reports measured, indicated and inferred resources, measurements, which are generally not permitted in filings made with the SEC. The estimation of measured resources and ind icated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves. U.S. investors are cautioned not to assume that any part of measured or indicated resources will ever be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.

 

5



 

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

 

This news release contains certain forward-looking statements and information, including “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as at the date of this news release, McEwen Mining Inc.’s (the “Company”) estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward- looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, factors associated with fluctuations in the market price of precious metals, the ability to meet objectives set out with respect to updated feasibility st udies (including projected capital cost reductions and the availability of appropriate used equipment), mining industry risks, political, economic, social and security risks associated with foreign operations, the ability of the corporation to receive or receive in a timely manner permits or other approvals required in connection with operations, risks associated with the construction of mining operations and commencement of production and the projected costs thereof, risks related to litigation (including ongoing inquiries by regulatory agencies such as the SEC Division of Enforcement), the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral resources and reserves and other risks. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. See McEwen Mining’s Annual Report on Form 10 -K for the fiscal year ended December 31, 2014 and other filings with the Securities and Exchange Commission, under the caption “Risk Factors”, for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information regarding the Company. All forward-looking statements and information made in this news release are qualified by this cautionary statement.

 

The NYSE and TSX have not reviewed and do not accept responsibility for the adequacy or accuracy of the
contents of this news release, which has been prepared by management of McEwen Mining Inc.

 

For further information contact:

 

 

 

Sheena Scotland

 

Director, Investor Relations

Mailing Address

Tel: (647) 258-0395 ext 410

150 King StW, Suite 2800

Toll Free: (866)441-0690

P.O. Box 24

Fax: (647) 258-0408

Toronto, ON M5H 1J9

 

E-mail: info@mcewenmining.com

Facebook: facebook.com/mcewenrob
Twitter: twitter.com/mcewenmining

 

 

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