McEwen Inc. is a Colorado-incorporated, Toronto-based gold and silver producer whose second-quarter profit is a metal-price and joint-venture story more than an owned-mine turnaround. The San Jose silver-gold mine in Santa Cruz, Argentina, in which the company holds a minority stake, sent a large cash dividend that more than covered exploration and development outlays. Meanwhile the wholly owned Gold Bar complex on Nevada's Cortez Trend produced fewer ounces and posted all-in costs that Chairman Rob McEwen himself called unacceptable. The debate is whether Argentine cash and a still-elevated gold price can carry a multi-year production build while Nevada metallurgy remains broken.
Consolidated owned-mine gold-equivalent ounces were essentially flat, so the $59 million quarterly revenue print is a price story rather than a volume story. Gold Bar's carbonaceous ore and a down assay laboratory forced a cut in Nevada guidance and pushed all-in costs above $3,000 per gold-equivalent ounce. Fox Complex in Timmins lifted its own guidance and is advancing the Stock underground mine toward a fourth-quarter start of mining. Equity-method income from San Jose flipped the operating line after a year-ago loss, which is why reported profit expanded even as owned-mine unit costs deteriorated.
Cash at mid-year sat well above the prior year-end after the San Jose dividend, and McEwen Copper later closed a $240 million term loan that includes a large personal advance from the chairman. The next several quarters resolve whether Stock start-up and the Grey Fox prefeasibility plan convert that cash into lower-cost ounces. They also resolve whether Gold Bar's recovery problem and the Los Azules financing path keep absorbing it. The equity is a gold-price coupon attached to a copper option, and the coupon is doing more work than the mines the company actually runs.