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MUX

McEwen Mining NYSE:MUX Stock Report

Last Price

US$3.85

Market Cap

US$182.6m

7D

24.2%

1Y

-64.0%

Updated

05 Oct, 2022

Data

Company Financials +
MUX fundamental analysis
Snowflake Score
Valuation1/6
Future Growth2/6
Past Performance0/6
Financial Health2/6
Dividends0/6

MUX Stock Overview

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver deposits in the United States, Canada, Mexico, and Argentina.

McEwen Mining Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for McEwen Mining
Historical stock prices
Current Share PriceUS$3.85
52 Week HighUS$12.20
52 Week LowUS$2.81
Beta1.24
1 Month Change24.60%
3 Month Change-3.32%
1 Year Change-64.02%
3 Year Change-76.52%
5 Year Change-81.84%
Change since IPO-97.32%

Recent News & Updates

Aug 10

McEwen Mining Q2 Earnings Preview

McEwen Mining (NYSE:MUX) is scheduled to announce Q2 earnings results on Thursday, August 11th, before market open. The consensus EPS Estimate is -$0.15 (-1400.0% Y/Y) and the consensus Revenue Estimate is $34.99M (-14.0% Y/Y). Over the last 3 months, EPS estimates have seen 0 upward revisions and 0 downward. Revenue estimates have seen 1 upward revisions and 2 downward.

Aug 02

McEwen Mining: Cheap For A Reason

McEwen Mining has slid more than 70% from its June 2021 highs, which might make some investors anxious to rush in and buy the dip on this junior miner. However, while McEwen Mining might appear cheap at first glance, the stock continues to be cheap for a reason, with this thesis even worse at current metals prices. This is because MUX has two mediocre assets that do not benefit from economies of scale, making it very difficult for them to consistently operate at sub $1,500/oz all-in costs. In a rising cost environment, it is a mistake to own the highest-cost producers with a track record full of blemishes, suggesting that investors should look elsewhere if they want precious metals exposure. It's been a tough start to the year for the Gold Juniors Index (GDXJ), with the ETF down over 20% year-to-date, massively underperforming the gold price. Fortunately, outside of Argonaut (ARNGF) and a couple of others, some laggards can hang their hat on the fact that their returns look great when stacked up against McEwen Mining (MUX). After a 70% plus share decline in barely a year and a recent share consolidation, some investors might be anxious to go bottom-fishing, believing this is finally the spot where an investment in MUX might pay off. While miracles do occur, I see continued degradation in the investment thesis and believe there are dozens of better places to park one's money. Black Fox Operations (Company Website) While some analysts have suggested that MUX should be "accumulated" at prices ranging from $5.00 to $10.50, I have continually warned against owning the stock. This is because the company has one of the worst track records of share dilution sector-wide and has been unable to consistently meet production targets. Worse, even in satisfactory quarters, costs are coming in above $1,500/oz on an all-in cost basis, translating to razor-thin margins in a strong gold price environment. In a weak gold price environment (like the 18% correction we saw recently), it's hard to justify mining at these prices. If we factor in labor tightness and materials/fuel inflation, MUX's future looks bleak. Let's take a closer look below: McEwen Mining Article (Seeking Alpha Premium - August 2021) Operating Costs Looking at the chart below, we can see that McEwen Mining's all-in sustaining costs [AISC] have averaged ~$2,070/oz at Gold Bar on a trailing-twelve-month basis and ~$1,620/oz at Black Fox in the same period. While these figures are above McEwen Mining's guidance of $1,570/oz to $1,690/oz, I am not optimistic that McEwen Mining will be able to deliver on this guidance. The reason is that more than 30% of producers reporting in Q2 have raised their cost guidance, and not by an immaterial amount (5% plus). McEwen Mining - All-in Sustaining Costs (100% Owned Operations) (Company Filings, Author's Chart) Historically, most of these companies raising cost guidance this quarter have a much better track record than McEwen Mining of meeting guidance. In addition, nearly all of them operate larger mines and have much stronger balance sheets. Hence, they can invest at a level that McEwen Mining cannot to combat inflationary pressures, and they still misjudged the impact of inflationary pressures on operations. Additionally, as we've heard in separate conference calls this year from Barrick (GOLD) and Newmont (NEM), the labor situation is tight in some areas of Nevada and Ontario (Canada), which is where McEwen Mining has its operations. It is possible that McEwen Mining might be the exception here, and somehow it will manage to avoid labor shortages in Q2 and the remainder of 2022 to avoid productivity losses. However, the company already discussed labor shortages in Q1 related to COVID-19. Besides, I would argue that when it comes to choosing who to work for, McEwen Mining is one of the least attractive choices for employees. The reason? It has some of the shortest mine lives and the highest operating costs within the sector. This combination (short mine lives, high costs) does not provide much visibility into long-term employment if there is a risk of operations being curtailed or temporarily suspended. Hence, if large operators are dealing with a tough labor market in Ontario/Nevada, I would expect similar for MUX, potentially leading to productivity losses and higher labor costs. In summary, this could lead to slightly lower production than planned, and if the company can't beat its guidance mid-point, it becomes much harder to offset inflationary pressures on a unit cost basis. Black Fox vs. Stock Mill (Company Presentation) Meanwhile, from a fuel and consumables standpoint, McEwen Mining is trucking ore more than 25 kilometers to the Stock Mill, which is not that significant but becomes more significant when diesel prices rise to the extent they have this year. Given that McEwen Mining provided guidance shortly after the invasion of Ukraine, it might have baked in some assumptions related to higher fuel prices. However, given their aggressive nature with previous forecasts, I would be surprised if they were conservative enough. Meanwhile, at Gold Bar, McEwen Mining operates one of the least attractive types of operations in a rising cost environment: a heap-leach operation. This is because heap-leach assets operate at much lower grades, moving considerably more tonnes of rock per ounce of gold produced. When they benefit from economies of scale like Marigold, Round Mountain, and Fort Knox, these operations can operate at all-in costs below $1,300/oz. However, Gold Bar is a tiny operation, producing less than 40,000 ounces of gold per annum. So, with rising cyanide costs reported by some operators, rising fuel costs, and a tight labor market, I'm less optimistic about Gold Bar being able to operate at below $1,600/oz on an all-in cost basis. This is especially true when the company reported higher costs related to mining carbonaceous material at Gold Bar in Q1, which was later classified as waste. So, with neither of its operations being in great shape to endure a period of extreme inflationary pressures, it's not clear how sustainable these operations will be long-term without a rise in gold prices. Gold & Silver Prices In a rising gold price environment, operators can get away with operating relatively high-cost mines with inconsistent performance. This is because the gold price is bailing them out, allowing them to generate profits. McEwen Mining is unique in that it didn't generate a profit in Q1 2022 despite the sharp rise in the gold price, reporting a cash gross loss of $2.3 million and a gross loss of $6.0 million. Unfortunately, if it can't make money at a $1,895/oz gold price, it will be very difficult to generate profits at an average realized gold price below $1,800/oz in Q3 (barring a sharp recovery in gold). Gold Futures Price (TC2000.com) In fact, even if we assume that McEwen Mining manages to meet the mid-point of its FY2022 cost guidance ($1,630/oz - I would gladly bet that it won't), its AISC margin outlook has taken a beating. This is because, at a $1,900/oz FY2022 gold price assumption as of the Q1 rally, AISC margins would have come in at $270/oz this year. Under a more conservative outlook ($1,800/oz average price), AISC margins will come in at just $170/oz. This translates to less than 10% margins which are not viable in this business, given that AISC does not incorporate corporate G&A costs. In fact, I believe it's best to avoid any producer with sub 20% AISC margins, let alone sub 10% AISC margins. Finally, while McEwen Mining has benefited from dividends from its investment in its 49% interest in Minera Santa Cruz [MSC], which refers to the San Jose Mine operated by Hochschild Mining (HCHDF), the outlook for dividends here isn't great at current silver prices. In 2021, McEwen Mining received just shy of $10 million in dividends, but this was when the average realized silver price was above $25.00/oz vs. all-in sustaining costs of $16.70 - a great year for the asset that certainly benefited MUX in another disappointing year for its 100% owned operations. However, all-in sustaining costs are estimated to come in above $19.00/oz in FY2022 at San Jose based on Hochschild's guidance, leaving little room for margins at the one asset that actually has been benefiting McEwen Mining's bottom line. Like gold, we could see a sharp increase in the silver price, and I don't think sub $20.00/oz silver prices are sustainable. However, with AISC margins at this asset looking like they'll shrink from $8.00/oz to $3.00/oz or less year-over-year, this should lead to a decline in MUX's attributable profits from this asset. To summarize, McEwen's cost guidance looks too ambitious (in my opinion) due to rising costs, and it's getting hit on the other end with declining metal prices. When it comes to large companies operating Tier-1 assets that can buy in bulk, invest in technology/innovation, and are employers of choice, I'm not worried about their ability to wade through a weaker gold environment. However, I would be quite worried about MUX's ability to avoid additional share dilution in this environment, especially given that it's a serial diluter even in a stronger gold price environment. Let's take a look at the valuation:

Jul 25

McEwen Mining: 1 For 10 Reverse Split Was The Last Blow

McEwen Mining's first-quarter revenues were $25.54 million, up from $23.74 million in the same quarter a year ago. One crucial issue is that the company has been forced to declare a 1 for 10 reverse split to stay listed on the NYSE. I recommend buying a small position between $0.32 and $0.33 on Monday as a bet for a potential small rebound later next month. Introduction The Toronto-based McEwen Mining (MUX) released its first-quarter 2022 results on March 1, 2022. On March 10, 2022, the company provided 2022 guidance. Note: This article is an update of my article published on March 31, 2022. I have followed MUC on Seeking Alpha since July 2021. Also, I will be using the most recent presentation published in July 2022. 1 - 1Q22 Results Snapshot McEwen Mining counts four producing mines and five development Projects. MUX Assets location presentation (McEwen Mining) McEwen Mining came out with a first-quarter loss of $19.33 million or $0.04 per diluted share compared to a loss of $12.47 million 0r $0.03 per share in 1Q21. The net loss included $14.4 million invested in exploration and advancing the Los Azules project. Revenues were $25.54 million, up from $23.74 million in 1Q21 but down 27% sequentially. However, generic free cash flow from operations was a loss of $19.67 million. MUX Quarterly production comparison 1Q21 versus 1Q22 (Fun Trading) CEO Rob McEwen said in the conference call: We encountered a cash squeeze during Q1 as a result of our revenue shortfall. Then, however, I feel confident enough that the future value -- in the future value of the company to personally step up and provide the company with $15 million. 2 - Investment Thesis McEwen Mining is struggling right now, and looking at the stock as a trading tool is essential. However, I see some great potential down the road, but the balance sheet is not encouraging, with a free cash flow recurring loss and dismal AISC. CEO Rob McEwen admitted in the conference call that the company experienced a cash squeeze in the first quarter with a weak gold equivalent production. However, one crucial issue is that the company has been forced to declare a 1 for 10 reverse split to stay listed on the NYSE. The reverse split 1:10 will be effective starting Tuesday, July 26, 2022. Thus, It is prudent to trade short-term the stock here and keep only a tiny core position long-term. 3 - Stock Performance MUX is down 71% after a long slide that started around November 2021. MUX has significantly underperformed the VanEck Gold miners (GDX). Data by YCharts CEO Robert McEwen said in the conference call: This year, our results have been mixed. The Fox Complex started strong and then was slowed down by manpower shortages induced by COVID and that was followed by an equipment failure in the mill. But despite these issues, Fox produced more gold at lower cost than it did in the first quarter of 2020. MUX - Financial Snapshot 1Q22: The Raw Numbers Note: Numbers are indicated in US$. MUX 1Q21 2Q21 3Q21 4Q21 1Q22 Total Revenues $ million 23.74 40.71 37.13 34.97 25.54 Quarterly Earnings $ million -12.47 -5.99 -17.40 -20.86 -19.33 EBITDA $ million -9.31 0.19 -10.77 -12.56 -16.63 EPS (diluted) $ Per Share -0.03 -0.01 -0.04 -0.04 -0.04 Operating Cash Flow $ million -10.14 2.07 -11.00 -1.15 -15.62 CapEx in $ 10.09 10.29 8.11 6.41 4.05 Free Cash Flow -20.23 -8.22 -19.11 -7.55 -19.67 Total Cash in $ million 47.40 44.01 64.94 56.09 66.21 Total LT Debt in $ million 48.33 48.50 46.68 48.87 63.55 Shares Outstanding (diluted) 441cash 459.19 459.19 459.24 464.02* Gold and Silver Production 1Q21 2Q21 3Q21 4Q21 1Q22 Quarterly Gold Equivalent Oz GEOs 30,600 40,800 42,860 40,150 25,170 Quarterly Au Production Oz 23,300 31,700 32,100 31,300 20,850 Quarterly Silver production Oz 493,200 611,800 792,000 682,700 336.500 Source: Company release 10Q filing *Post split, the shares outstanding diluted will be 46.4 million shares. McEwen Mining - Gold Production and Balance Sheet Details 1 - Revenues and Trends. Revenues were $25.54 million in 1Q22. MUX Quarterly revenues history (Fun Trading) The first-quarter revenues were $25.54 million, up from $23.74 million in the same quarter a year ago. Net loss was $19.33 million or $0.04 per diluted share, of which $9.8 million was related to the Los Azules project expenditures and $3.8 million on the continued exploration at Canadian and US operating sites. Cash from operations was a loss of $15.62 million. 2 - Free cash flow was a loss of $19.67 million in 1Q22. MUX Quarterly Free cash flow history (Fun Trading) Note: Generic free cash flow is the cash from operations minus CapEx. It may differ from the company calculation. Trailing 12-month free cash flow ttm was a loss of $54.55 million, and the free cash flow for the first quarter was a loss of $19.67 million. 3 - Debt situation MUX Quarterly Cash versus Debt (Fun Trading) The total cash (including investment of $1.806 million, but not the precious metal owned of about $1.018 million) was $56.09 million at the end of December 2021. Long-term debt is $48.87 million. From the 10Q: The increase in cash and cash equivalents and restricted cash balance during the three months ended March 31, 2022, was driven by the cash provided from financing activities totaling of $29.5 million, partially offset by $15.6 million used in operating activities and $4.0 million used in investing activities. $35.6 million of the current cash balance is attributable to McEwen Copper to advance the Los Azules Copper project. The Los Azules project (76% owned by MUX) has been the main focus of the company: MUX Los Azules Project (McEwen Mining Presentation) It is an excellent copper project but with an initial CapEx of $2.4 billion that could go much higher with the recent inflationary pressure. MUX PEA Los Azules (McEwen Mining) 4 - Gold Equivalent production details. The company produced 25,111 GEOs in 1Q22. 4.1 - Production in GEOs MUX Quarterly GEO Production history (Fun Trading) Gold Equivalent production was 25,111 Au Eq. Oz, down significantly from 30,600 Au Eq. Oz in 1Q21.

Shareholder Returns

MUXUS Metals and MiningUS Market
7D24.2%7.8%1.9%
1Y-64.0%-6.3%-18.8%

Return vs Industry: MUX underperformed the US Metals and Mining industry which returned -6.2% over the past year.

Return vs Market: MUX underperformed the US Market which returned -18.2% over the past year.

Price Volatility

Is MUX's price volatile compared to industry and market?
MUX volatility
MUX Average Weekly Movement10.9%
Metals and Mining Industry Average Movement8.9%
Market Average Movement7.0%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.9%

Stable Share Price: MUX is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 11% a week.

Volatility Over Time: MUX's weekly volatility (11%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
1979430Rob McEwenhttps://www.mcewenmining.com

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver deposits in the United States, Canada, Mexico, and Argentina. The company also explores for copper deposits. It primarily owns a 100% interest in the Gold Bar mine in Eureka County, Nevada; the Black Fox gold mine in Ontario, Canada; the El Gallo Project and Fenix silver-gold project in Sinaloa, Mexico; the Los Azules copper deposit in San Juan, Argentina; and a portfolio of exploration properties in Nevada, Canada, Mexico, and Argentina.

McEwen Mining Inc. Fundamentals Summary

How do McEwen Mining's earnings and revenue compare to its market cap?
MUX fundamental statistics
Market CapUS$182.60m
Earnings (TTM)-US$71.44m
Revenue (TTM)US$128.28m

1.4x

P/S Ratio

-2.6x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MUX income statement (TTM)
RevenueUS$128.28m
Cost of RevenueUS$151.14m
Gross Profit-US$22.86m
Other ExpensesUS$48.58m
Earnings-US$71.44m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-1.51
Gross Margin-17.82%
Net Profit Margin-55.69%
Debt/Equity Ratio16.7%

How did MUX perform over the long term?

See historical performance and comparison