McEwen Mining: Exploration and Operations Update

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10/09/2019 13:59
147NE Zone Continues to Deliver Good Results.
Reduced Guidance for Black Fox and Gold Bar Production

TORONTO, Sept. 10, 2019 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to report positive exploration drilling results from its 147NE zone within the Grey Fox deposit. This deposit is part of the Black Fox Complex, which is located in the prolific Timmins gold district in Canada (see Figure 1). Highlights of the new results are shown below in Table 1. While the assay values are good, management continues to work on resolving production delays at our Gold Bar and Black Fox mines.

“I am delighted with the exploration assay results we are generating this year. The geological potential of the Black Fox Complex is being clearly demonstrated. Our big exploration push has allowed us to see the opportunity to develop three new sources of production on our properties.

While exploration is giving me a big smile, and production at our operations in Argentina and Mexico (representing 60% of our guidance) are delivering as planned, production at Gold Bar and Black Fox has been a big disappointment. Unanticipated natural and operational issues coupled with startup delays at Gold Bar have pushed some of its production from 2019 into 2020. At Black Fox, production has been adversely impacted by slower than planned underground development. However, site management has been making steady progress towards resolving these production issues,” said Rob McEwen, Chairman and Chief Owner.

The objectives of the ongoing exploration drill program at the 147NE zone are to infill and extend the mineralization, which was discovered in 2018. New drill results are confirming the continuity of the high-grade mineralization, and indicate an extension of the main zone (mineralized shoot) down plunge by approximately 100 m (330 ft) (see Figure 2).

Table 1 – Selected Drill Results from the 147NE Zone

HOLE-ID From (m) To (m) Core
Length (m) Estimated True Width (m) Gold Grade (g/t) Gold Grade (opt)
19GF-1121 168.00 170.00 2.00 1.56 78.58 2.53
Including 168.70 169.30 0.60 0.47 261.00 8.39
19GF-1134 241.00 250.00 9.00 6.90 4.79 0.15
And 256.70 269.12 12.42 9.49 3.64 0.12
And 371.36 373.36 2.00 1.53 13.66 0.44
And* 466.00 481.50 15.50 11.71 6.98 0.22
Including 466.00 470.00 4.00 3.02 9.35 0.30
And Including 474.24 481.50 7.26 5.49 9.57 0.31
19GF-1146* 97.00 111.00 14.00 10.37 4.68 0.15
Including 97.00 100.40 3.40 2.52 16.98 0.55
19GF-1151* 229.80 243.00 13.20 9.56 10.04 0.32
Including 231.00 242.00 10.90 7.89 11.87 0.38
And Including 237.80 239.78 1.98 1.43 15.59 0.50
19GF-1155 205.40 211.24 5.84 4.52 9.66 0.31
19GF-1159* 112.00 116.00 4.00 3.26 6.43 0.21
Including 112.00 114.00 2.00 1.63 12.08 0.39
19GF-1161 170.00 172.00 2.00 1.46 20.66 0.66
19GF-1164 292.61 300.00 7.39 5.33 5.71 0.18
And 308.61 315.00 6.39 4.61 5.20 0.17
19GF-1167 241.00 246.00 5.00 3.38 6.05 0.19
And* 250.00 264.89 14.89 10.06 5.21 0.17
Including 259.36 264.89 5.53 3.74 11.76 0.38

* Calculated with cut off grade 1.0 g/t Au, minimum length of 3 m, and maximum consecutive internal waste 3 m.

Geological Explanation

At the 147NE zone the highest grades and largest widths occur at the intersections of NE-SW trending structures and favorable iron-rich host rocks. This zone starts near surface and is interpreted to extend to a depth of at least 400 m. Following the review of past drilling, targets with the same geological setting have been drilled at the Contact and South zones. While assay results are pending, this recent drilling intersected visible gold-bearing quartz-carbonate veins and breccia structures.

Economic Assessment

The current Grey Fox deposit resource estimate (published in July 2019) is 567,000 gold ounces at a grade of 7.10 grams per tonne (g/t) in the Indicated category, with an additional 135,000 gold ounces at a grade of 6.19 g/t in the Inferred category.

The economic viability of the Grey Fox and Froome deposits will benefit from their close proximity to the Black Fox mine and its infrastructure. Preliminary results regarding the economics and potential development plans for Grey Fox and Froome and will be presented later this year.

Production Guidance

2019 production guidance for Black Fox and Gold Bar is being further reduced. Revised production ranges are 36,000-40,000 gold ounces for Black Fox and 30,000-33,000 gold ounces for Gold Bar. Globally with our two other operations, we now expect to produce 131,000-138,000 gold ounces and 3,225,000 silver ounces, or 169,000-176,000 gold equivalent ounces at an 85:1 gold to silver ratio.

At Black Fox, we have continued to experience production problems. In 2019, we planned to source production from both new areas and past production areas (remnant stopes) that make up part of the mine’s reserves. These remnant stopes are located in areas of the mine that have been inactive for a number of years. Prior to being able to extract the ore from these areas we must make the access safe for our workers, and this rehabilitation work is taking longer than planned. The delay has resulted in some higher-grade stopes, planned for extraction in late 2019, being pushed into 2020.

At Gold Bar, despite the fact that the mine is now running well, as evidenced by: the tonnage on the heap leach pad that is currently 115% of the feasibility study design, ore grades reconciling with our reserve model, and gold recoveries in-line with our forecast; it was the startup delays that have pushed some of 2019 planned production into 2020. Gold Bar’s forecast production for 2020 is 65,000-70,000 gold ounces.

Complete assay results from the latest drilling on the 147NE Zone:

Figure 1 – Black Fox Property Map

Figure 2 – 147NE Exploration Drilling: Inclined Longitudinal Section Looking SE

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