McEwen (NYSE:MUX) said its second-quarter operational performance fell short of expectations, citing lower production and elevated costs, while management outlined steps to improve recoveries at its Gold Bar mine and advance the Los Azules copper project toward a final investment decision.
Chairman and Chief Owner Rob McEwen said the company’s results were disappointing but argued that the company’s longer-term value depends on resolving operational issues, expanding its resource base and advancing its copper-development portfolio.
Gold Bar Recovery Issue Drives Operational Focus
The principal operational issue during the quarter occurred at Gold Bar, where the company encountered more carbonaceous material than expected in portions of the ore body. Carbonaceous ore can absorb dissolved gold during leaching, reducing recoveries in a process known as preg-robbing.
McEwen said the company is expanding metallurgical testing, improving geological modeling to identify carbonaceous zones before mining, modifying mine sequencing and blending strategies, and evaluating processing improvements. He cautioned that the measures are not immediate fixes but described them as practical actions intended to improve recoveries over time.
Chief Operating Officer William Shaver said Gold Bar’s geological model is being continually updated using blast-hole drilling and routine sampling. He said blast holes are spaced roughly 12 to 14 feet apart and are used to distinguish ore, waste and carbonaceous material in operating benches.
Shaver said the company did not change the overall conservatism of its model but encountered a significant amount of waste during the period. McEwen is increasing overall production activity to move more waste while seeking to maintain ore volumes, he said.
“We just didn’t mine the right amount of ore during the period,” Shaver said.
Chief Financial Officer Perry Ing said the production shortfall at Gold Bar was the main driver behind higher all-in sustaining costs, as the operation has a relatively fixed cost base. He said the company expects AISC to decline in the second half as recovered ounces increase, even as Gold Bar moves more material.
Ing also said Gold Bar is McEwen’s primary consumer of fossil fuels and therefore its main exposure to U.S. diesel prices. He estimated that the rise in U.S. diesel prices from about $3.75 per gallon in 2025 to about $4.75 per gallon so far in 2026 had an approximately $100-per-ounce effect on overall AISC. A further $1-per-gallon increase could add close to another $100 per ounce, he said.
Gold Bar Expansion Permitting Seen About Two Years Away
Asked about Gold Bar’s multiyear production target of 90,000 to 100,000 ounces annually and permitting for surrounding deposits under a hub-and-spoke model, McEwen said permitting is “about two years away.”
He said water-well studies remain necessary and that the company expects to provide further production details during that process. McEwen added that exploration results from the company’s Eureka properties could make a large contribution to the targeted production level.
Los Azules Financing and Engineering Advance
Management also discussed the financing and engineering work underway at Los Azules, McEwen Copper’s proposed copper project in Argentina. McEwen said the asset has the potential to be a major source of future value as demand grows from artificial intelligence, data centers, electrification, power-grid investment and energy-security initiatives.
Michael Meding, managing director of McEwen Copper, said the company had completed about 27% of its planned final investment decision work program as of June and is targeting completion in the fourth quarter. Major process packages for the SX/EW plant, sulfuric acid plant and crushing system have been awarded to Metso, he said.
Meding said recent geotechnical work could improve the mine design. New data allowed the company to consolidate the pit design from eight sectors to four and reduce by roughly 22% the area requiring flatter pit-wall angles. He said the changes could increase mineable ore and reduce stripping requirements.
The company also plans to drill-test three exploration targets—Franca, Lonita and Austral—during the 2026/2027 season beginning in September, with roughly 8,800 meters of drilling contemplated. Meding said the exploration work will not alter the feasibility, final investment decision or engineering timetable, but could add future opportunities beyond the project’s initial 22-year mine life.
McEwen Copper is evaluating an overall financing package of about $4 billion, including the feasibility-study capital expenditure estimate of approximately $3.2 billion, working capital, interest payments and potential overrun capacity, Meding said.
- Management is considering a financing structure of about 60% debt and 40% equity.
- Export credit agencies could provide 80% to 85% or more of the debt package, according to Meding.
- The company is also working with the International Finance Corp., other development finance institutions and potentially commercial banks.
- McEwen Copper estimates an equity requirement of about $1.6 billion.
Meding said potential export-credit financing could range from $200 million to more than $500 million per agency, depending on equipment and engineering sourced from each country. He said Finland’s export credit agency is involved because Metso, a key potential supplier of mining equipment and SX/EW-related systems, is headquartered in Finland.
Rob McEwen said the company is targeting an IPO in the latter part of the year as one component of the equity financing requirement. He said management intends to minimize dilution and retain as large an ownership interest in Los Azules as possible.
Royalty Portfolio and San José Distributions
Executive Vice Chairman Ian Ball said McEwen is considering retaining its Los Azules net smelter return royalty within the company until the project begins generating payments. He said placing the royalty in a separate U.S. corporation now would add governance and general-and-administrative costs, while moving it to a Canadian corporation could create taxable consequences for shareholders.
Ball said McEwen could build a broader royalty portfolio, including a recently created royalty related to its agreement with Paragon, and potentially consider an IPO or other distribution to shareholders in the future. Such a structure could trade at a higher valuation relative to the operating company, he said.
Separately, Ing said the San José joint venture held roughly $130 million in U.S. cash and investments at the end of the second quarter. McEwen does not expect another dividend from the venture this year because of central-bank regulations and the need to distribute dividends from audited surplus earnings. The company currently expects dividends to resume next year.
McEwen concluded that management’s priorities are improving operational execution and recoveries, growing the resource base through exploration, advancing Los Azules and allocating capital with discipline.
About McEwen (NYSE:MUX)
McEwen Mining Inc (NYSE: MUX) is a Canada-based precious metals company focused on the exploration, development and production of gold, silver and copper. Headquartered in Toronto, the company pursues a diversified portfolio of assets across the Americas, with operations and projects spanning Argentina, Mexico, Canada and the United States. McEwen Mining employs an integrated approach that combines in-house technical expertise with strategic partnerships to advance its assets from resource definition through to commercial production.
The company’s flagship producing asset is the San José mine in Argentina, a high-grade silver-gold operation.
