McEwen Mining Falls 8% After Missing Estimates

McEwen Mining (TSX: MUX) reported its financial and operational performance in Q2 2022. The mining firm saw quarterly revenue of US$30.6 million, up from Q1 2022’s US$25.5 million but down from Q2 2021’s US$40.7 million and also failing to meet the consensus estimate of US$35.0 million.

Gross margin, however, increased to 13.8% from last quarter’s gross loss and last year’s 10.0%. But the firm widened its operating loss this quarter at US$16.6 million last year’s US$8.9 million, but an increase from last quarter’s US$24.1 million. The year-on-year decline is mainly due to a jump in operating expenses driven by “US$14.4 million investment in [the] Los Azules copper project.”

Corollary, the firm ended the quarter with a net loss of US$12.4 million, up from a US$19.3 million net loss in the previous quarter but down from the US$6.0 million net loss incurred in the year ago period. The bottom line figure translates to US$0.26 loss per share, also failing to beat the consensus US$0.15 loss per share.

Following the earnings announcement, the firm’s share fell 8.1%, sinking to a new low not seen since before the recent stock split.

The company also incurred operating cash outflow of US$44.4 million, contributing to end the quarter with a cash balance of US$47.8 million, down from a beginning balance of US$63.8 million of the three-month period. This puts the balance of the current assets at US$72.3 million while current liabilities ended at US$44.2 million.

On the production side, the firm 36,100 gold equivalent ounces, up from Q1 2022’s 25,100 ounces but down from Q2 2021’s 40,700 ounces. While silver production was higher during the quarter at 704,600 ounces from last year’s 611,700, gold production fell to 27,600 ounces from last year’s 31,700 ounces.

These were produced at an average cash costs of US$1,169 per gold equivalent ounce and at an all-in sustaining cost of US$1,549 per ounce, compared to previous quarter’s counterparts of US$1,696 per ounce and US$2,146 per ounce, respectively. The two figures for the quarter are both below the firm’s guidances of US$1,380 per ounce cash costs and US$1,740 per ounce AISC.

The firm maintains the full-year 2022 production guidance of 153,000 – 172,000 gold equivalent ounces. For the first six months, the company has so far produced 61,200 ounces.

McEwen Mining last traded at $4.27 on the TSX.

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