McEwen Mining Inc. (MUX, Financial) reported the third-quarter financial results on Nov. 2 following those on production that were released by the miner on Oct. 18.
A presentation of the company’s third-quarter operating results can also be found in my previous article on McEwen Mining.
The company closed the quarter with a loss – on a consolidated basis – of 3 cents or a loss of $8.1 million. This result was a negative turnaround from a net profit of 1 cent per share or a net profit of $4.2 million that McEwen Mining reported in the comparable quarter of fiscal 2016.
“The company experienced increased cost and reduced income as a consequence of an unexpected drop in production at the El Gallo mine due to an equipment failure. Our portion of income from the San José mine was also reduced on lower production,” McEwen Mining reports. These were the factors of the third-quarter loss.
Revenue for the quarter in question came in at $13.43 million, a 0.1% decrease on a year-over-year basis.
During the quarter McEwen Mining sold 21,900 ounces of gold at a price ranging between $1,269 per ounce and $1,281 per ounce and sold 735,000 ounces of silver for $16.70 per ounce of the gray metal.
The company sold a total volume of 31,700 ounces of equivalent gold in the quarter versus a total volume of 35,900 ounces of equivalent gold sold by the company in the comparable quarter of 2016.
The lower sales volume depended on – of course – a lower number of ounces of gold and silver produced by the miner. The decline in the price realized by the miner from the sale of one ounce of silver and gold also impacted on the economics of McEwen Mining during the third quarter.
During the quarter the company raised financial resources for $43.2 million through the sale of shares in McEwen Mining. This determined a massive increase in the net cash flow from $2.1 million in the third quarter of fiscal 2016 to $44.2 million in the third quarter of fiscal 2017. As of Sept. 30, McEwen Mining had approximately 332.98 million shares outstanding, of which about 233.84 million (or 70.23%) was float, and had approximately 348.34 million of fully diluted shares.
CEO Rob McEwen has 24% interest stake into the ownership of the company. Approximately 28.54% of the company’s shares outstanding is held by 159 institutions.
Among the top institutional holders, Van Eck Associates Corp. stands out with a volume of 28,504,538 shares held in McEwen Mining or about 8.63% of the company’s total volume of shares outstanding as of June 29.
The company closed the quarter with $82.3 million in cash on hand, securities and precious metals held and valued at a spot price. This is a 31.7% increase on a year-over-year basis. McEwen Mining doesn’t have any debt.
For 2017 the company guides to produce 99,700 ounces of gold and 3.324 million ounces of silver. These two figures on gold and silver production expected by the company for full fiscal 2017 lead to a total production of gold equivalent of 144,000 ounces.
As it was in 2016, McEwen Mining used a silver-gold ratio of 75:1 for 2017 as well.
McEwen is trading at $1.93 with a market capitalization of $652.65 million, a price-book (P/B) ratio of 1.28, a price-sales (P/S) ratio of 10.68 and an EV-EBITDA ratio of -58.78.
The Canadian junior gold mining company has a forward price-earnings (P/E) ratio of 13.76.
According to the most recent figures on the company's reserves and resources, McEwen Mining holds 13.328 million ounces of proven and probable reserves of silver and holds 621,000 ounces of proven and probable reserves of gold. These two figures lead to a total volume of approximately 798,707 ounces of proven and probable reserves of equivalent gold according to a gold-silver ratio of 1:75. The EVO – McEwen Mining's Enterprise Value per ounce of proven and probable reserve of equivalent gold – is $759.69.
The company has also about 14.3 million pounds of copper inferred resources, of which 5.4 million pounds are indicated.
Disclosure: I have no positions in McEwen.
