McEwen's Black Fox has best quarter in nearly three years

Fox produced 11,200 GEOs in Q2 at total cash costs and AISC of $985 and $1,290 per GEO sold, respectively. This compares to 7,100 GEOs at total cash costs and AISC of $917 and $1,088 per GEO sold, respectively, in Q2 2021.

Fox achieved the highest quarterly production since Q3 2018 of 11,200 GEOs, as the mine rebounded from a slow start to 2022, resulting from mechanical issues at the mill and a COVID-related labour shortage. Fox production benefitted from the large stockpile accumulated during Q1 and increased during Q2, and the effects of the ongoing mill debottlenecking process. Mill throughput is expected to continue to improve during the remainder of the year resulting in strong H2 production. Drilling below the mineral resources envelop at Froome has been successful and is expected to extend the mine life.

In Q2, we incurred $2.6 million for exploration. Our exploration spend at Fox for 2022 & 2023 is forecasted to be $10.0 million and $15.0 million, respectively. During the remainder of 2022, exploration will complete up to 39,000 m (128,000 ft) of drilling and will focus on: 

• Continuing delineation and expansion of the Stock West deposit, particularly toward the West;
• Expansion of shallow mineralization identified near the Stock Mine; 
• Test areas of high grade from 2021 drilling at the Gibson and Whiskey Jack targets at Grey Fox to potentially expand the resource;
• Follow up on deeper priority targets at the Stock property, where attractive results from initial drilling show significant potential.

The objective of all our work is to continue to improve upon the Preliminary Economic Assessment (PEA) for the Fox Complex (see news release dated January 26, 2022). The PEA presents estimates for a positive business case for the Fox Complex expansion project, with potential average gold production of 80,800 gold ounces per year over nine (9) years, after the depletion of Froome. The economic analysis estimates an after-tax IRR of 21% at a gold price of $1,650 per ounce and average cash costs and AISC per ounce of gold sold of $769 and $1,246, respectively. Ongoing exploration is designed to reduce the funding requirements and improve the payback period by delineating additional resources in strategic locations to facilitate a greater degree of internal funding.
 
Recent encouraging drill results at the Stock Property that may support improvement to the PEA include:

• 5.47 g/t Au over 7.7 m true width (TW)   (Hole SM22-070)
• 6.62 g/t Au over 8.3 m TW                     (Hole SM22-090)
• 5.62 g/t Au over 11.4 m TW                   (Hole SM22-089)

Holes SM22-070 and SM22-090 intercepted shallower footwall green carbonate mineralization between 250 m to 300 m (800 to 1,000 ft) below the surface. Hole SM22-089 intersected mineralization 457 m (1,500 ft) below surface in the separate footwall grey carbonate host unit.

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