Shares of McEwen Mining Inc. (MUX) fell 2.22% to $1.76 after the company reported production results for 2018 before the opening bell on Tuesday.
The Canadian miner recorded a nearly 23% year-over-year increase in gold production to 135,124 ounces and a 4.6% decrease in silver production to 3,032,727 ounces. Production of gold equivalent totaled 175,561, which was 23,232 ounces higher than in 2017.
McEwen Mining exceeded its full-year guidance on gold production by 7,124 ounces and gold equivalent production by 4,561 ounces. In contrast, the company missed its guidance on silver production by 192,273 ounces, disappointing shareholders.
In addition, McEwen's 49% interest in the Argentinian San José mine disappointed while the Black Fox mine in Canada performed as expected.
The stock looks cheap currently since the closing share price on Tuesday was far below the 200- and 100-day simple moving average lines and slightly below the 50-day line. Further, the stock is currently trading 4.8% above its 52-week low of $1.68 and nearly 45% below its 52-week high of $2.55.
The stock has a price-book ratio of 1.22 versus an industry median of 1.74, an EV-to-earnings before interest, taxes, depreciation and amortization ratio of -45.11 versus an industry median of 9.3 and a 14-day relative strength index of 45.33, which suggests the stock is neither overbought nor oversold.
The miner also has a short-term catalyst, which is the first gold production following the completion of the construction of the Gold Bar mine in Nevada. The company expects this to occur before the end of the current quarter, so the stock and its effects may be positively affected if gold continues to rise.Ă‚
The yellow metal closed at $1,294.4 per troy ounce on Tuesday on the London Bullion Market, up 0.9% from the price of the beginning of the new year and up nearly 8% from a year ago.
Let’s have a look at Wall Street’s appraisal of the company and its catalysts.
The stock has a recommendation rating of 2 out of 5 and an average target price of $3.46 per share, reflecting a 97% increase from the closing price on Tuesday.
The negative EV-to-EBITDA ratio, the imminent delivery of the Gold Bar mine project and highly volatility to changes in the price of gold are delineating the next investing strategy for McEwen Mining. The strategy consists of taking advantage of the uptrending commodity and the announcement of initial gold production in Nevada rather than from the publication of fourth-quarter financial results, which are expected at the end of February.
Investors can also profit from a declining share price following a probable miss on earnings for the final quarter of the year as lower metal prices and silver production have influenced activities.
Therefore, make the appropriate changes to your ownership of McEwen Mining accordingly.
Disclosure: I have no positions in any securities mentioned in this article.
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