McEwen Inc. (TSX: MUX) swung to a third quarter net loss of US$36.7 million, or US$0.60 per share, as weaker output at all three of its producing mines ran into sharply higher unit costs.
Comparably, in the second quarter, the company earned US$9.6 million, or US$0.16 per share.
Revenue fell to US$43.6 million from US$59.2 million in the second quarter on 10,689 gold equivalent ounces sold, even though the average realized price climbed to US$4,151 per ounce. Adjusted EBITDA was negative US$10.9 million, compared with positive US$22.2 million the quarter before. US$14.3 million of the net loss came from largely noncash income and mining tax differences.
Sponsored · Silver47 Exploration Inc.
Cash ended September at US$49.1 million, down from US$78.9 million at the end of June, while debt principal held at US$130.0 million. After the quarter, McEwen sold its non-core Fuller and Paymaster properties for US$5.0 million in cash and US$50.0 million in Discovery Mining shares, boosting the balance sheet.
Attributable production came to 22,852 gold equivalent ounces, down from 29,662 a year earlier. Gold Bar produced 6,215 ounces and the Fox Complex 4,427, McEwen’s 49% share of San José contributed 11,786, and El Gallo added 424.
San José has paid US$58.3 million in dividends so far this year, above the company’s US$40 million to US$50 million estimate.
Costs rose at every site. Consolidated cash costs reached US$3,107 per ounce, up from US$2,394 in the second quarter and well above the full year guidance range of US$2,200 to US$2,450. All-in sustaining costs were US$3,520 at Gold Bar, US$3,725 at Fox and US$3,414 at San José. With gold selling for US$4,150 an ounce, that left far less margin than the company earned earlier in the year.
The company blamed Gold Bar’s results on poor management oversight, which led to leadership changes in late August. At Fox, finishing underground development at Froome and processing a low grade stockpile added about US$930 per ounce. At San José, heavy snowfall forced a switch to lower grade ore with weaker recoveries.
“These problems are temporary and the Company is anticipating much better operating results during Q4,” McEwen said. It pointed to October estimates showing all-in sustaining costs down to US$2,873 per ounce at Gold Bar and US$2,618 at Fox.
The fourth quarter still has to deliver more than the third did. McEwen produced 84,195 ounces in the first nine months, so it needs at least 24,805 more to reach the low end of its 109,000 to 120,000 ounce guidance. Fox, whose guidance was raised to 20,000 to 23,000 ounces, needs fewer than 2,800. Gold Bar needs more than 10,000 after producing 6,215 in the third quarter, and San José needs roughly 15,600.
McEwen Inc last traded at $22.84 on the TSX.
