Citing lower-than-expected revenue in the first quarter of 2019, McEwen Mining is suspending a dividend payment to shareholders.
The company said on March 7 it was suspending distribution of a half-cent per share, which was slated to be paid to shareholders on March 15.
“We have experienced operating issues at our Black Fox Mine and with the startup of our Gold Bar Mine. While viewed as temporary, these issues have resulted in much lower revenue this quarter than planned,” chair and chief owner Rob McEwen said in a release.
“As a result, we decided the prudent and responsible course of action was to conserve our cash and suspend the distribution.”
The news reflects details in the company’s 2018 full-year and Q4 report, released Feb. 21.
Production at Black Fox in 2018 was 48,928 gold equivalent ounces (GEOs), in line with its production guidance of 48,000 gold equivalent ounces. Its total cash costs were $845, while all-in sustaining costs (AISC) per GEO were $1,137.
Production guidance at Black Fox in 2019 is 50,000 gold ounces at cash costs of $905 and AISC per GEO of $1,080.
“The Black Fox Mine is undergoing significant changes in management, workforce and mining practices, with the objective of improving the overall economic performance of the mine in 2019-2020,” the report notes.
“So far in 2019, the mine has faced some challenges reaching targeted productivity levels, although we believe these issues are temporary and should not impact our planned output in 2019.”
McEwen spent $21 million in exploration at Black Fox in 2018, while the exploration budget for 2019 is $17 million.
The company has also updated its mineral resource and reserve estimates for Black Fox to “reflect mine depletion, additions from exploration, and the deletion of certain resource blocks that are deemed inaccessible due to prior mining activity,” the report notes.
Resources at Black Fox decreased by 19 per cent, while reserves decreased by 21 per cent.
The mineral resource for the company’s Stock East exploration project was updated and increased by 32 per cent. Resource estimates for other deposits at the Black Fox Complex including Froome, Grey Fox and Tamarack are unchanged.
In addition to its Black Fox Mine in Timmins and the Gold Bar Mine in Nevada, McEwen Mining’s principal assets include the San José mine in Santa Cruz, Argentina (49 per cent interest); the Fenix Project in Mexico; and the Los Azules copper project in Argentina, which is advancing towards development.
McEwen has approximately 345 million shares outstanding. Rob McEwen owns 23 per cent of the shares.