McEwen Mining Inc. (MUX) Q2 2021 Earnings Report, Transcript and Summary

Hello, ladies and gentlemen. Welcome to McEwen Mining’s Q2 2021 Operating and Financial Results Conference Call. Presenting today are Rob McEwen, Chairman and Chief Owner; Anna Ladd-Kruger, Chief Financial Officer; Peter Mah, Chief Operating Officer and Steve McGibbon, Executive Vice President of Exploration. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.

Thank you operator. Good afternoon, shareholders and interested investors. I’m very pleased to welcome you to our Q2 2021 conference call. Over the past 15-months, we have rebuilt our senior management team at head office and other mines. And it is these talented individuals who are responsible for the turnaround we are currently experiencing. Today, Peter, Anna, Steve and I are going to share with you the significant improvements in performance of our operations and financial strength. Along with a review of the highlights of our exploration program and our plans for surfacing value of our giant copper project Los Azules. But first, I’m truly delighted to say that our mines are operating much more efficiently, such that we are back to delivering on our production guidance. We are building our treasuries and our share price are gaining some of the ground that lost last year. These are very encouraging indications that we are getting back on-track, and that the trend is definitely up. However, there is still a lot of ground to recapture and I want to assure you that we are fully committed and driving hard to do so to regain that ground. Now, I will ask Anna to share with you the positive transformation of our financial condition as seen in our results of Q2 for the first half of this year. Anna to you.

Thank you Rob and good afternoon, everyone. Q2 was the quarter demonstrating operational progress in our turnaround strategy, lower costs and a strengthening treasury. All resulting in improved financial. Strong production for our operations translated into solid revenues from our gold and silver sales for the quarter. Our revenues from 100% owned operations during the quarter was 40.7 million, which is an increase of 123% compared to Q2 of last year. Average realized sales prices in the quarter were 1,830 per gold equivalent ounces, compared to prices of 1,733 realized in Q2 of last year. Our cash gross profit which is a non-GAAP measures that excludes depreciation was 9.6 million for the quarter, an increase of 13.6 million from Q2 of last year’s cash gross loss of negative 4.9 million. The change in Q2 is attributed to increased production in sales, higher average realizable gold prices and decreased cash costs per ounce at both our Gold Bar and Fox Complex operation, which Peter Mah in a bit more detail shortly. We reported a net loss of six million or negative $0.01 per share for Q2. This does include a total of 7.7 million invested in our exports and advanced projects. This compares to a net loss of 19.8 million or negative $0.05 per share in Q2 2020. Again, an improvement primarily driven by the increase in improved operations. Our exploration activities wrapped up in 2021. And we have spent approximately 0.9 million to-date and in high potential targets in both Ontario and Nevada. We are also incurring eligible Canadian exploration expenditures in the two locations of Ontario. Steve McGibbon will give further updates on our various exploration programs shortly. We also spent just under $1 million on advanced projects during the quarter. This includes continue spending on our Fox Complex PEA or Preliminary Economic Assessment and the Phoenix project in Mexico. Our total liquid assets as of June 30th was 48.9 million, compared to 20.8 million for the same period last year. This is reflecting higher cash and cash equivalents, restricted cash, investments and our precious metals inventory. We also receive 2.6 million in dividends in Q2 from my interest in San José mine, for a total of 7.6 million in H1. This compares 0.3 million in the same period first half of last year. Net cash investing activities of 12.3 million in the first half of this year is largely attributed to the capital development costs at our Froome mine at our Fox Complex. We remain on-track to reach commercial production in Q4. We ended Q2 with 74.9 million in current assets and a positive working capital of 30 million. Thank you. I will now turn the call to Peter Mah, our Chief Operating Officer.

Thank you, Anna and good day to all. We are pleased to report on another good quarter of McEwen Mining, with production trending up on-track with our 2021 guidance. Costs are trending down with teams focused on continuous improvement and the expansion project that the Fox Complex is progressing well. Consolidated gold production in Q2 2021 was 40,700 gold equivalent ounces, over two times higher than production during the same period last year. Total production for the first half of 2021 was 71,300 GEOs in-line with the lower end of our guidance range of 141,000 to 160,400 GEOs. Q2 production from a 100% owned lines was 22,400 GEOs, which increased by 12,300 as compared to Q2 last year. Q2 consolidated costs per GEO for our 100% owned lines and operations was 12.86 for cash costs about 41% lower than last year, and 14.47 for all-in sustaining costs, which was 47% lower than last year. Moving on to each region. At the Gold Bar Mine in Nevada, Q2 production was 14,100 gold equivalent ounces, reflecting a 132% increase over last year. The production increased in the first half of 2021 to 21,500 gold equivalent ounces from 15,300 for the same period last year. Cash costs per GEO for the quarter reduced 18% to 14.63, while all-in sustaining costs reduced 35% to 16.19, compared to the same period last year. Improved production and costs were driven by the increased gold production, operational improvements to efficiencies and no COVID interruptions to the production. Moving on to Canada, Q2 production of the Fox Complex was 7,100 GEOs, reflecting more than a threefold increase from the 2,200 GEOs produced in Q2 of last year. Increased due to our expectations according to the mine plan as mining wound-down at Black Fox and transitioned to the ramp up at Fox Mine modestly better than expected. Cash costs per ounce in Q2 decreased to $917, compared to 31.21 in 2020, while all-in sustaining costs per ounce in Q2 decreased to 10.88 compared to 33.32 in 2020. The decrease in cost reflects improved gold production, better mining efficiencies, more consistent, more throughput, and more reliable grade control programs. In addition the Q2 2021 cost per ounce benefited from an optimized mine design reducing underground development costs and schedule at the Froome deposit and no production interruptions due to COVID. Froome remain on-track to reach commercial production in Q4 of this year, grade reconciliation is on plan, metallurgical recovery has slightly outperformed our expectations and further optimizations of recovery versus grind size was ongoing. Underground resource and reserve definition drilling is underway with the aim to extend the life of mine at Froome and help bridge gold production, while the Grey Fox and Stock projects are advanced. The Fox Complex expansion drill results and model updates are expected to be delivered in Q3 and the preliminary economic assessment subsequently in Q4 of this year. Plans are underway to select the mining contractor to start dewatering the stock mineshaft in Q4 this year. This will provide access to the existing underground developments from which the Company plans to conduct underground drilling at Stock. At El Gallo in Mexico, Q2 productions was 1,300 gold equivalent ounces from residual leaching of existing heap leach pad. Residual leach activities are projected to wind down towards early 2022. We are currently evaluating multiple strategic alternatives, including the potential divestiture of our Mexican business units. Shifting to Argentina as a San José Mine. Q2 production attributed to our 49% interest with 18,200 GEOs, nearly two times the production for the same period last year, due to higher ore tons process, and reduced impacts on COVID. Increases were slightly offset by lower process grades due to delayed timing of smelting and lower grade mill fields substituted development. Cash costs were 1,105 per GEO, slightly lower than Q2 2020 for reasons mentioned. While all-in sustaining we are on par for the same period last year at $1500 per gold equivalent ounces. Thank you, I will now turn the call over to Steve McGibbon our Executive Vice President of Exploration.

Thank you, Peter. Exploration activities ramped up significantly in Q2 across all projects in Canada, the United States and Argentina, with a total investment of some $6.9 million. As you know, nearly 35,000 meters of core and are seed driven equivalent to more than 114,000 feet once completed. The focus on exploration remained on cost effective discoveries and extending deposits adjacent to our existing operations in order to sustain near to medium term gold production. Firstly, I will update the work and our 49% San José property, which is operated by our joint venture partner Hochschild Mining. On a 100% basis, the 2021 exploration budget for San José is $9.3 million with 2.9 million spent in Q2 2021. Lease and exploration expenditures for the first half of the year to $5.2 million. Proximal to current San José operations, resource drilling is completed in Escondido and the timing of gains. From the 3410 meters of drilling, several encouraging drill intercepts of 1.5 meters to 2.5 meters, creating typically between 2.5 and 3.5 grams per tonne gold, and 200 to 300 grams per tonne silver were realized. One addition on these core monomers for SKD 2267 ran 18.4 grams per tonne gold and 1879 grams per tonne silver, along with a 1.4 meter core length. I will remind the listeners that gold and silver deposits at San José are epithermal and will often produce highly variable drill results through the normal course of a drill program. At the Timmins some 283 meters were completed and include a 3.1 meter intercept grading 5.5 grams per tonne gold and six grams per tonne silver involved SKD 2328. During the third quarter 3000 meters of drilling will be carried out the permanent structure, in addition to testing a geophysical target to the south of San José. At Gold Bar Mine in Q2 exploration incurred $1.3 million in expenditure to the Gold Bar Mine area, which included 4,700 meters or 15,400 feet of core and [indiscernible] this makes a part of our planned program for 2021 of about $5 million exploration spending. Drilling activities during the quarter were focused primarily on the ridge deposits located west of the active pit mine and at the nearby 30% Atlas Mine. Exploration efforts saw to reduce the risk known mineralization and to test potential deposit expansion of each area. The Ridge core drill program confirmed mineralization locally and return intercepts that were reported in our May 10th exploration and definition update. Exploration activities of the atmosphere included 1,500 meters in 10 RC goals after mine mapping and modeling identified several drill targets for evaluation. Some assays remain pending, but our best results to-date is a deeper intercept that comprises - that compasses at about 27 meters or 90 feet of 3.10 grams per tonne gold OGB 010. This includes a higher grade interval of about 10.7 meters, or 35 feet of 6.33 grams per tonne gold. Further three oriented core holes are planned for the third quarter, and will round out the initial phase of drilling efforts. Activities at the Tonkin property, including starting a property wide revaluations of regional geology, mineralization controls and their context in relation to other large carbon type systems industry. Revenue which is choose of this work suggests often has greater similarities to other properties hosting large carbon type systems to the North in previously thought, including the geological setting for the lower grade loss. And 19 for RC and four hole core drilling program, totaling some 1,500 meters has been underway during the third quarter, primarily testing oxide mineralization at the one - deposit. This work is being integrated into an updated geologic model that will dovetail with our improved property rights understanding. Ongoing exploration activities at Tonkin, East Deck, Cabin, Park Canyon are planned to continue throughout the second half of 2021. Exploration at Gold Bar South has successfully advanced the project and is expected to contribute to Gold Bar’s future production. At the Fox Complex in Canada, exploration will continue throughout 2021. As production area shifts to the frontline underground exploration zone on its East and West frame has been underway, with the objective of extending the Froome deposit near and assisting [indiscernible] structure. The Froome deposit also remains open at depth potentially exists for nearby sub-parallel mineralization in the hanging wall and footwall that will also be drill tested. Underground drilling that the Black Fox mine continued to return encouraging hybrid results at the 160 West and 130 East targets approximately remain -. Underground diamond drilling is being completed to identify additional mineralization adjacent to the Black Fox ore body that could be inserted into future mining plan. In the second quarter, we invested 3.5 million in exploration activities including some 26,500 meters of core drilling focused around Stock West, Stock lien targets at the Stock property and the Whiskey Jack and Gibson targets a Grey Fox. The Stock exploration area sits adjacent to ours stock home, which currently processes or from our Black Fox and Froome mines, the mill process ore from the historical underground Stock of mine which operated intermittently from the 1980s until 2004, produced 137,000 ounces in gold. The Stock was discovered in mid 2019 and in 2020 exploration activities were focused on follow-up drilling. Initial results suggested potential to define a significant result in mineralization, a half mile ore body 100 meters from our Stock processing facility. In Q2 2021 core drillings were secured as stock to infill and expand the main dimensions of gold mineralization. Total of 20,008 meters of surface exploration drilling was completed during the quarter at Stock West and Stock Main with the primary focus Stock West development. Two drill rigs also completed 1861 meters to test the extension of sheets below the underground workings of the Stock mine. Activities of a great box project including drilling targets, with a focus on the interpretation of local heating trends at the Whiskey Jack and Gibson targets. We expect the resource model to be updated in the second half of 2021. During the second quarter we reported new stock less assay results in our previously mentioned [indiscernible] update. We have made good progress improving sample analysis charter funded assay labs in both Ontario and Nevada, and on increasing drilling capacity with additional rims input jurisdictions. As a result we anticipate updating exploration and delineation results before the end of Q3. I now would turn the phone back to Rob.

Thank you Peter. I understood, I was silenced, the phone is silence during meeting on. I’m sorry. Now I would like to talk about how we are going to develop one of our assets in a way that I believe has the potential to create significant value for McEwen Mining. As you know, we have a large copper project, losses in it. It is a giant within our portfolios properties and a giant on a global scale. I do not believe the potential value of loss reserve is reflected in our price, in our share price, and that is something that we are determined to change. Furthermore, I believe there are several reasons why it has remained undervalued. First, loss of the list has a number of risks associated with it. It is remote with limited access with only road access five-months of the year. It is only at a preliminary economic assessment stage. So uncertainty remains about its resources, its economic projections, CapEx and permitting. Large investment is required to reduce these risks. And unfortunately, the funding requirements are significantly greater in the McEwen Mining’s Treasury. Without resorting to a financing that will lead to considerable share dilution. Second, McEwen Mining - the management debt and copper experience to develop at least perceived by the market. And we have done quite a bit to correct that situation putting together a large team very experienced copper people. The third, the market prefers, appears to prefer to invest in a pure copper play, pure copper development company over small gold producers such as ourselves with a large cash flow copper development facility. So to surface the values losses as we consider the number of alternatives. The first one was to self funded, but because of the large potential dilution involved with funding and ourselves, because that alternative is unattractive. The second was to seek out a joint venture or an outright sale. And we had discussions with a number of major mining companies where the treasury and the experience to build it. But we wanted to maintain a continuing interest and none of the companies we spoke to wanted to joint venture they all wanted to buy in 100%. And we would be left with no continuing interest in the property. We could suggest to all of them that we would like to retain a royalty, because this property is that a 36-year life with a very robust economics at this point. And it would be a shame to give it away at an early stage when the copper price seems to be going higher through to the electrification of the world’s transportation system, and renewable energies. All big users of copper and a projected deficit coming in the future in terms of the supply of copper. The third option was distributing to our shareholders with ideas been around since the days of [indiscernible] which we seeded cumulatively, and never gained traction for a couple of reasons. And they remain, there is a complex tax structure that needs to be dismembered and upon distribution to our shareholders, there would be a tax of them, both for McEwen Mining and for the shareholders receiving the development or the distribution. In addition, distributing it the company would have to go out and do some fundraising. And it is not at this stage right now, because of the issues I mentioned earlier on to get a large value for the assets. The fourth option we looked at, and have decided we want to go forward with is to privately fund a subsidiary that holds losses and advance the project, moving it towards a prefeasibility study, and then latterly on to a feasibility stage. But getting towards the pre feasibility getting year round access constructed, which is underway right now. And then within 12-months to 14-months taking it public. If you look at - we believe this is a good - the best alternative for maximizing value for shareholders. If you look at copper projects, that large copper projects that have been purchased between 2010 and 2018, you can see that the stage of development of the project is clearly reflected in the value paid per pound. So at the earliest stage where you have some drill results, and you come up with a resource, that is the lowest amount and when you go all the way from that to luminary economic assessment on to a pre feasibility and then on to a feasibility study, the value incrementally increases. And that is the strategy we have taken that we can see a significant increase in the value of the property by solving the access problems by doing more drilling and completing the studies environmental metallurgical with other to produce a pre feasibility study. And then go on to a feasibility study. To get the ball rolling, we didn’t have the money in, we are at a disadvantage in terms of going public. And I decided to personally get this ball rolling by committing $40 million of the up to $80 million. We are looking to raise and that will allow us to move the project quite aggressively. In fact, the road into the property the new route is now into its 15th day of construction. It will take a better part of a year to complete that. But it will be make a huge difference on this project. What might it do in reinvestment is a related party transaction. We asked the disinterested directors on board, which everyone is set myself to engage and independence in value. So look at what McEwen Mining was getting relative to the market. And so they are really looking at 175 million on the properties plus a royalty of 1.25%. And we think right now, the projects valued at about just under copper £29.5 billion of copper in the indicated and inferred category is valued at about 0.6 of a sense. Moving to a pre-feasibility and the feasibility, you can move to £0.03 to £0.06 and even higher than that, if you are in a strong market. And if you do the math, you can understand why we see this creating the biggest value in McEwen Mining, rather than selling out to a company today, at the early stage of what appears to be a strong bull market developing copper. At this point, I would like to thank you for your attending and invite you to our question-and-answer period. Operator, could you open up the phones for question-and-answers.

[Operator Instructions] And your first question comes from Jake Sekelsky of Alliance Global Partners.

Thanks for taking my question. So it is good to see that cost that gold bar are trending down. I’m just curious, if we should expect to see some further improvements here over the next few quarters. And if so, you are going to be touched on some of the operational improvements that are driving us?

Certainly. I will pass that question over to Peter.

Hi Jake thanks for your question. We released the feasibility as you are aware and we are driving towards that guidance, we are not providing updated trough guidance at this time. But we can certainly see from our production profile, and costs are trending quite well relative to the feasibility. That is best information we can share at this time. I think regarding where to improve this machine areas, we spoke on the last quarter’s regarding the mine, the process plant and just general administration, our areas of focus. We continue to look for improvements in our mining with their mining contractors. Regarding processing, we have been completing that program which I think we talked about last call. And that was targeting run of mine leaching. So those tests are just coming through. They have been fairly positive, but we are in the analysis stage of what that means to the split of how much we could place on the pad of ROM versus crushing. And lots of business improvements through amendments and areas working through synergy. Some of our synergies with our Mexican operation, we have been utilizing some of the team there to support our Nevada team. And we are going quite well.

Okay. That is helpful. And then speaking of Mexico and it looks like residual leaching at El Gallo is probably going to conclude in the first half of next year. I think you guys touched on this a bit earlier, but give any more color on sort of plans for the mix [Kynapse] (Ph) is going forward, whether it be on the M&A front or looking at development of both Phoenix? Just any color you have on Mexico would be helpful.

We are looking at Phoenix. We are just pushing a couple of leaders there to try to improve the economics of the project and also looking at first funding.

Started to lean one way or the other, whether it is M&A there or developing yourself.

That is right.

Got it. Okay, that is all in mind. Thanks again Rob and congrats on a good quarter.

Okay. Thank you.

Thank you. Your next question is from Heiko Ihle [H.C. Wainright & Co].

The Fox Complex, would you be able to give a little bit more color when you expect to see it? And more importantly, would you think and call of good to amazing all time scenario for the side would look like?

Peter would you care to answer Heiko?

Sorry, my potato fingers I hit the wrong button there. And I just got back and I didn’t catch that question Heiko.

I will repeat it. The PA at the Fox Complex, would you be willing to progress a little bit more color on AUM you think it is going to be shared with the marketplace? And but more importantly, also would be good to amazing outcome scenario for the site would look like we should expect to see?

Sure. Good, amazing. I will touch on that second. That we are reviewing, obviously some extra work in the grilling that Steve shared with you. We are targeting Q4 of releasing the PA likely to the earlier side about our current schedule shows. So I expect to see that before the year end. Good to amazing, well how big do we want to dream here. In the PA in the first step of our expansion we are targeting a 10 year mine life of something more so 100,000 ounces a year with this project charter which we are still analyzing resources and waiting on some results and optimizing our mind plan layers so, it is trending well. We don’t have everything consolidated yet to give you a view on that and that’ll come out before this year.

Moving on to making copper and the interest in losses. It is been tomorrow, it would have been a month since the initial announcement. How is the deal coming along? And is there any other future timelines that you can may be disclose, so I know you set to 12-months in the original press release that cannot in July. But is there any other may be hard in soft timelines that you are willing to talk about or what you think we should expect to see may be quarter-by-quarter?

We will probably close in two stages cycle. One, during this one around the middle of the month. I mean, it is a legacy of a lot of subsidiaries. That came as losses in list the previous owners losses in list and Andy said a labyrinth of subsidiaries and came in Canada and Argentina. And those all had to be cleaned up and taken a little longer than we thought they would. So we are looking to close that simplify that structure by mid-August. And then again by the end of September. In terms of a go public, we would be looking at up to 12-months after the September.

Got it. Very helpful. Thank you very much.

You are welcome.

Thank you. Your next question is from John Tumazos [Very Independent Research].

Thank you very much and congratulations both in new progress and the energy of all the members of the McEwen team. I’m thinking of the February 1 announcement, or another company, i.e. gold said they were creating a new management team, or been stronger management team and they hired a former CEO of Nevada Copper, for that one jurisdiction, Nevada company. And I’m just thinking how the Fox Complex has at least three deposits and the Stock Complex is at least three deposits, and the Timmins downtown Lexam VG projects, or at least three projects. Gold Bar is over three deposits and then there is El Gallo and an $80 million program up in the [indiscernible] in Argentina. Is there a whole new management structure to be rolled out for Argentina or are Peter and Steve and Stephen and the team working 72-hours a day or should we just assume that El Gallo and what I call the downtown Timmons, like Lexam VG properties are on a back burner, because there is only so much you can do at Fox and Stock and Gold Bar and it is just a remarkable treasure of opportunities.

Yes they are working 76-hours a day. Pete, did you want to talk about the team that is been assembled for loss of service. It is quite extensive, very deep in copper experience?

Absolutely. And thanks, John. Various deep questions and gather, because there are more than 76-hours in a day. We have assembled quite a support team around the project which includes some internal sort of consultants some additional people on the ground in San José, or sorry in the Miss Adlon and external consultants. So, internally, we have beefed up with a construction manager Gary Cochran, a former Anglo employee very decorated career of mine building. We brought on Bill Thomas, one of his last projects was Constancio. Dave Tyler, who has been doing work for us on all our technical projects was starting to get more involved. And then Jim Sorenson, from Samuel, who may have heard of, is quite a large project career. In addition to Samuel on the external side, and their team we brought on, we brought on - and their copper excellence group, Dave meadows, and Howe, who was the study manager for the Elton project. They have recently come into the fold. And then as our case is assembled, very tough team, Dr. Sullivan, and Sylvia for the resource development. So they are actively engaged with our team on developing growth plans. On the mind engineering side, we have involved the Gerald Whittle and his group and the enterprise optimizer and that actually that was kicked off today, we are looking at sort of optimizations around phasing and all of that. So we have quite an extensive group infrastructure, I guess, go on and on and on. But it is not in our last lap. It is over few years of experience in large corporate projects, successful projects, played a team advancing.

So you and Steve and Stephen, aren’t managing the Argentina theater of operations, where Nevada and Ontario are funny, with a touch?

Our management team, so myself and Steve and Reuben Wallin on permitting environmental health, safety, or providing the oldest site to that team, so they and sort of governance and controls. So we monitor and drive mode of justice through that team. There is an extensive team under each one of those areas that is actually executing.

Is it too much to, let’s just assume for a second that the management team is delegating and supervising Argentina, but you still have Froome the stock restart and all these different good zones and gold bar? you guys manage - of operation in North America?

Absolutely. I think our results we have been doing for this year results speaking for themselves. At Froome we are on-track, potentially a beat on commercial production. We have a very solid team. We beefed up our operating team as well brought in managers beneath the director of operations in Canada. We have a Director of Operations so there has been a lot of expansion of those organizational charts ahead of all of this. Now, of course, El Gallo doesn’t take a lot of our time and we are looking at strategic options. And I think we are fairly right fit for this year. We are not knowing any dire need of roles. There is always recruitment process going on. And we want to hire the right people to advance all of our regions. Once the TA is done, we will know more clearly what the next steps are, for the Fox expansion. And, as I mentioned earlier, without permission to select the contractor and go down the soft trap for dewatering and get the underground drilling, they are going to advance the project. But once we get more clarity on the strategic options and move forward. We will be able to write what’s remaining McEwen Mining in terms of our organizational structure. Anna can certainly speak to the finances inside and all the other areas where there is been significant recruitment, success and doubling up of our team.

John it is a very good question. We need people to run things. And just on sort of the admin on the things, we are seriously putting in systems to really help a lot of the streamline and automation so we have got actually ERP system, a budgeting and forecasting system, a number of other operational systems on the go this year by end of year one, that will certainly help. We are recruiting as Peter said, additional folks of director level, VP levels and thinking about succession planning. Also comment that your McEwen conference specifically, a path is to get it public, within a year or less. And the intention at that time is obviously going to support the public company. It will need a more dedicated management team with compliance and reporting for public companies as an example. So for now, we monitor and we work quite closely with some of the results to seen. We see some of that energy that is here today at the company.

I could ask the different follow-up. Thank you very much Anna. Your results improved to lose only a penny with all this activity and new hiring going on. Can you talk to what the CapEx was in the June quarter? And how many of these new people are capitalized versus expense?

There is different capital for the quarter really related to the free mine project that we just tried, I think 12 million tonnes. None of the individuals establish speaking of more we are capitalizing could be sort of ongoing management. A lot of them were the positions we set up already there. And we are going to some of them are replacements. Some of them are sort of combining positions and finding the right people to step up and take the phone. In terms of even just that your executive level, I didn’t think we have added any new positions at that level is replaced.

Or the Argentine consultants and team members capitalized for this as illustrate that expense?

At the moment, according to U.S. capital expense, when we go forward into McEwen copper, and at the moment we are thinking Canadian listing will be able to follow IFRS and will be capitalizing those expenditures.

So it is really amazing that you only lost a penny with all this activity going on. Congratulations.

Thank you.

Thank you. Your next question is from [David Dennison] (Ph).

Good afternoon Rob and team. David Dennison Individual Investor and author of his company since 2004 I think [indiscernible]. So a couple of questions again, just as an individual investor. First question is what can I expect as a current McEwen Mining investor in the next 12, 18, 20 months as the McEwen copper progresses, and things have different listen as you hope or expect? And then the second question is the 100% owned, maybe I misheard this or correct me if I’m wrong, but 100% owned property or assets that you have down next to the San José Mine that you are drilling. What does that mean that if you find something? Does that mean, it becomes subsumed under the current structure where you get 49%, or you don’t know that yet, over?

Okay. San José first. The properties that Minera Andy’s house, there were two sets of properties around the mine Minera Andy one off field had another. And a number of years ago, we merged those two interests together. So they are all contained within the San José mine property. And under the Minera Santa Cruz, which is the subject controls the mine. We own 49% of that company, which is the mine and the properties. And we chose cost shielding ourselves retain the 2% NSR on the properties we have ended in. So we don’t have any 100% on the properties in the vicinity of San José any longer.

Okay, I missed, I guess missed that, it was going out of here 100% owned or something like that. So okay, thank you for that clarification.

And on the copper project, because it is Argentina and because it is sort of limited access, we will gain access to the property in November. We have a plan to do 53,000 meters of drilling. There are ongoing studies for environmental permitting metallurgical economic community relations. We hope to advance the project significantly next year through the drilling increase the confidence in the resources as they are done. First, step will be updating the preliminary economic assessment that was done in 2017 and we are just looking at what the costs or costs has changed. Looking at how we had proposed to mine and their ways of reducing costs and lowering capital there and then moving on to a pre feasibility study. That would probably be completed no earlier in the end of next year. But we really want to go public before that. But you have a drill season right now that really run this from November to the end of March, early April, we are putting in camps that will allow us to operate through that period. Road construction has started on what we call the Northern route, which we believe will give us 12-months access to the property via lower altitude winds in less problems with the snow, the current with have to go over two passes one 4,000 meters, and the other 4,200 meters. And there is, again, we are suggesting snowing that even at 20 feet of snow in there. So [indiscernible] was all the way up and down from those passes. So we have really struggled for a long time trying to economically through the project, because we have this tiny little window where you can get in, set up the drills start drilling, and then you have to take them out each year. So it could be a huge boost to my mind this profit. So I would like to take a public within 12-months plus 14-months. Hope that answers you question.

Mostly, I guess, looking at your crystal ball, Rob in 12, 18, or let’s say 25 months from now. Things progress as you want and no big obstacles. And McEwen copper has gone public. There is interest from the markets. As a current McEwen Mining shareholder, do I get anything from that or do I simply have to buy into that as it develops over?

Under current plan there, we looked at distributions to shareholders of an interest. And that has tax consequences for both McEwen Mining and for shareholders receiving that distribution. They would have a taxable event many people will probably want to sell to cover off the taxes. So we have looked at it and sample the best way to get the value will be to advance the project. If you look at the financing, we are looking to raise $40 million to $80 million. At the current price of this issue. If we just raise 40, they would be McEwen Mining would continue to fall 82% interest in the company prior to going public and has a 1.25% interest on that property. If you look at the past 12 large copper transactions between 2010 and 2018, you can see a progression in value as you move from the resource and then the PEA then a pre-feasibility study and a feasibility study progression in value. So if we said, our drilling confirms and upgrade so these orders can we hit 29 - continue to hit 29.5 billion pounds copper grade. If you got $0.03 a pound for them, you would be looking at a value of $885 million. If you got $0.05 a pound you would be looking at 1.475 billion. And we have a large interest in that company. So there are, I think, loss reserves in this new vehicle would be a very attractive asset. And quite comparable to a number of the large, single asset developed software developers I would say right now to carry significantly higher market share. But we have to do the work first to justify the market cap.

Thank you, Robin. Sorry, if those questions were a little remedial, I’m not a mining expert by any stretch, just an individual investor. So thanks.

Not at all. You are welcome anytime.

There are no further questions at this time. I will turn the call back over to you Mr. McEwen.

Thank you operator. I would like to thank everyone for joining us today. Stay tuned as best is yet to come. Thank you.

Thank you. This does conclude today’s conference call. You may now disconnect.