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Welcome to El Gallo Complex Mine Tour 1
Ian Ball – Senior Vice President Introduction
2
Taking a Phased Approach Original Plan
El Gallo + Magistral + Palmarito
Production 2014 3
Taking a Phased Approach A Better Way Forward
Magistral Phase 1
Production 2014 Production 2012
El Gallo + Palmarito Phase 2
4
Key Benefits • Cash flow now
• Build operational team
• Test costs assumptions (labour, mining, etc.)
• Prove success through phased approach
5
Magistral Mine 2007 6
Background • Operated 2002-2005
• Produced 70,000 oz Gold
• Placed on care maintenance
• Operating permit remained in place
7
Background • 2007: McEwen Mining acquired project
• 2009: El Gallo Phase 2 discovered
• 2012: Rebuilt Phase 1
• 2012: Positive Phase 2 feasibility study
8
Past Operational Issues 1. Poor recoveries: crush size / soluble copper
2. Long leach times
3. Low mining rates
4. Minimal working capital
Could we fix it? YES! 9
What Did We Do? 1. Installed 3 stage crusher: 3/8 inch
2. Cold strip for soluble copper
3. Contract mining
4. Strong balance sheet
10
How Did We Do? Great!
Budget: $15 Million
Final cost: $13.5 Million
Completion date: Q3, 2012
Under Budget, On Schedule 11
El Gallo Phase 1, 2013 12
El Gallo I EPCM Contractor Overview
Sonoran Resources 13
Cerro Prieto Project Sonora Mexico • EPCM – Gold Silver Mine • Oversaw permitting • Negotiations for surface and water rights
Santa Elena Mine Sonora Mexico • Procurement and Construction Management • Constructed and commissioned mine
Oatman Mine Arizona U.S.A. • Dewatering underground • Upgrades to electrical • Recommissioning ventilation
Golden Summit Alaska U.S.A. • Fabricated gravity circuit • Installed crushing circuit
Mesquite Mine California U.S.A. • Construction of ADR Plant • Recommissioned refinery • Development of truck shop • Electrical upgrades
La Bolsa Project Sonora Mexico • Prefeasibility Study • Scoping Study
Sonoran Resources Previous Projects
14
Initial Assessment - September 2011 15
1. Process Plant
2. Crushers
3. Heap Leach Expansion
4. Process Pond Upgrade
Key Areas of Rebuild
16
Process Plant
Before After
17
Assay Laboratory
Before After
18
Refinery
Before After
19
Vault
Before After
20
Generators
Before After
21
Installed Cold Strip & Acid Wash Circuit 22
Crushers
2 Stage Before 3 Stage After
23
Heap Leach Pad
Before After
24
Increased Capacity and Gold Recovery 25
Process Ponds 26
Increased Capacity and Reliability 27
Gold Pour 28
29
El Gallo 1
A Team That Builds Success!
John Read – Senior Geologist Exploration
30
M&I Resource 345,000 oz Au
0 500
Meters N
M&I Resource 113,350 oz Au
M&I Resource 46,600 oz Au
Samaniego Pit
Lupita Pit
Sagrado Corazon Pit
San Rafael Pit
Phase I Resources
31
Lupita Deposit + Pit Design
0 200
Meters N
32
NW SE
46.1m @ 2.1 g/t Au Incl. 5m @ 9.9 g/t
12.8m @ 3.0 g/t Au Incl. 1.1m @ 23.3 g/t
Lupita Deposit
SECTION LUP-74 44.4m @ 1.1 g/t Au Incl. 2.5m @ 9.5 g/t
0 100
Meters
33
65.2m @ 0.5 g/t Au
NW SE
41.2m @ 1.3 g/t Au Incl. 1.7m @ 13.4 g/t
11m @ 0.96 g/t Au
Lupita Deposit
SECTION LUP-58
0 100
Meters 34
Guamuchil
Pacific Ocean
El Gallo Complex
0 100
Km N
Sonora
Sinaloa
Chihuahua
Durango
Zacatecas
Nayarit
Jalisco
Baja California
McEwen ExploraGon Project
McEwen ExploraGon Project
35
N
Mines in Western Mexico
36
37
El Gallo Complex Production Areas + New Potential
Mina Grande
Haciendita
0 500
Meters N
38
Blast Hole Rig Diamond Drill Rig 39
40
SW NE
17.8m @ 1.78 g/t Au
16.4m @ 2.07 g/t Au
23.8m @ 1.3 g/t Au
5.4m @ 1.49 g/t Au
Haciendita Exploration Project SECTION HC-10
0 100
Meters
41
Mina Grande
Haciendita
0 500
Meters N 42
43
SW NE 4.65m @ 12.35 g/t Au Incl. 1m @ 44.1 g/t
12.5m @ 6.43 g/t Au Incl. 1.2m @ 49 g/t 5.1m @ 5.72 g/t Au
Incl. 1.3m @ 18.6 g/t
Mina Grande Exploration Project SECTION MG-13
0 100
Meters 44
Patricia Angulo – Human Resources Community Relations
45
Mining brings prosperity to communities where economic activities are limited.
46
Compañía Minera Pangea in Region since 1995
McEwen Mining Acquired Project 2007
47
Three main municipalities surround the mine: Mocorito, Salvador Alvarado and Sinaloa.
48
49
El Tule de Arriba El Tule
Los Medina
Cerro Agudo
Los Becos
El Mezquite San Miguel
Las Milpas de los Gonzalez
Villages Around the Mine
Projects Villages
Mission To develop profitable mineral
deposits and enhance the community where we work.
50
Since 2007
McEwen Mining Contributed
US $3,000,000
51
McEwen Mining helps sponsor traditional holidays such as: Child´s Day, Mother's Day, Teacher’s day, and Christmas.
52
Providing Water for the Local Community
53
In 2010 US$20,000 donated to 24 schools Consisting : Air Conditioners Water Coolers Construction Material Fans Education Material Sports Equipment
54
School Supplies
Children’s Day
Christmas
Educational Material
Schools Donation Program
55
DESPUES 56
Making Schools Better
Before After
El Gallo Multipurpose Court
In 2011 a multipurpose court was built for the El Gallo community.
57
ANTES
El Valle Road Paving (2 km) Investment US$650,000
2012
58
El Valle Paving Road Inauguration April 2012
59
El Magistral, Mocorito, Sinaloa In 2012, 4 houses built to relocate residents
60
61
Bill Faust – COO / Fernando Aguilar – Operations Manager El Gallo Phase 2
62
El Gallo Complex
63
El Gallo Phase 2 • Conventional Open Pit, Mill, Agitated Leach
• Est. Capex $180 Million
• Est. production 5 Million silver oz / year
• Est. cash cost $10 / oz
• Mine life est. 6.5 years 64
Looking North Towards Process Plant 65
Looking South Towards Open Pit 66
El Gallo Open Pit Design
Leach Ore
Waste Dump
Stockpile
Open Pit
67
68 View of Historic Palmarito Pit 68
Palmarito Open Pit Design
Waste Dump
Open Pit
N
69
El Gallo Phase 2 Reserve
70
Classification Tonnes (000’)
Silver (g/t)
Gold (g/t)
Silver (000’oz)
Gold (oz)
Proven Mineral Reserve 11,185 101.0 0.125 36,336 44,816 Probable Mineral Reserve 534 107.2 0.075 1,840 1,286 Proven and Probable Reserve 11,719 101.3 0.123 38,176 46,102
El Gallo - Construction
• Pits mined using contractor
• Permitting underway submittal Q1 2013
• EPCM Contractor – M3 Engineering
• Construction start expected Q3 2013
71
Process Flowsheet
72
BALL MILL
CYCLONE CLUSTERS
3-STAGE CRUSHING
LEACH TANKS
MERRILL CROWE
CCD CIRCUIT
REFINERY DRY STACK
TAILINGS
STOCKPILE
DORE
El Gallo Phase 2 Site Layout
Mill Tailings Storage
Open Pit
Surface Rights
73
N
El Gallo Phase 2 Process Plant Layout
Substation
CCD Tanks
Surface Rights Boundary
Crushers Ball Mill
Leach Tanks
Water Storage
Merrill Crowe
N
74
Planned Site for Process Plant 75
Dry Stacked Tailings 76
Future Substation Site – Project Power 77
Ian Ball – Senior Vice President El Gallo Phase 2 Economics
78
El Gallo Phase 2 Initial Capital - $180 M
79
Process US Dollars (x000) Site Prep. Crushing Ore Storage Mill Leaching Merrill-Crowe Refinery Tailings Water Power Reagents Tanks Buildings Freight
$3,867 $15,686
$3,435 $12,836 $28,552
$9,688 $4,168
$20,195 $4,765 $8,382 $3,570 $2,632 $8,590
Subtotal $126,365 Indirect Costs Mobilization EPCM Commissioning / Spares Owner’s Cost Contingency (14.4%)
$1,856
$19,903 $2,345 $8,766
$18,813 Subtotal $51,683 Total $178,048
El Gallo Phase 2 Operating Costs Production Cost $10 / oz Silver
80
Cost Per Ore Tonne
Processed Mining Processing Refining Royalty G&A Gold By-Product Credit ($1,415 per ounce)
$7.40 $21.37
$1.43 $1.01 $2.16
($4.63) Total Operating Costs $28.74
El Gallo Phase 2 Mine Plan Avg 5.2 Million oz Silver / yr
81
Year
Silver Production
(000’)
Silver Grade (gpt)
Gold Production
(oz)
Gold Grade (gpt)
Strip Ratio
(Waste:Ore)
Ore Tonnes (000’)
1 2 3 4 5 6 7
6,113 5,540 5,562 4,241 4,632 4,749 1,182
135.1 113.4 113.6 86.0 94.4 95.5 47.8
4,030 11,754 6,189 5,271 4,949 4,152 1,964
0.095 0.248 0.123 0.106 0.099 0.088 0.078
1.99 2.65 2.89 3.22 2.53 1.84 2.22
1,669 1,825 1,825 1,825 1,825 1,825 925
Total 32,019 101.3 38,309 0.123 2.61 11,719
El Gallo Phase 2 Metallurgical Testing
82
Area Silver Recovery (%)
Gold Recovery (%)
Silver and Gold Recovery
84.3
83.2
Cyanide (kg/tonnes)
1.52
Lime (kg/tonne) 6.77
El Gallo Phase 2 Financial Returns
83
After Income Tax Base Case ($25 Silver / $1,415 Gold)
Spot Case ($32 Silver / $1,700 Gold)
IRR NPV 0% NPV 5% NPV 10% Annual Cash Flow Payback (yrs)
26% $184 $118 $73 $56 2.6
44% $354 $248 $174 $82 1.8
*Dollar figures in millions
Simon Quick – VP Projects Permitting, Water Rights and Supply
84
Experienced Team
• MS Chemical Engineering • Permitted: Alamo Dorado,
La Bolsa Mine • Good relationship with
SERMANAT
• Ph.D. in hydrology • Current projects:
Torex, Timmins Gold, Goldcorp.
• Specializes in Water Rights Registration
Permit Specialist: Patricia Aguayo
Water Rights + Supply: Dr. Miguel Rangal
85
Sinaloa Permitting Favourable Marlin Gold permit submitted: (May 1st, 2012)
• Located in Sinaloa
• Granted 140 days
• Positive sign…!
El Gallo Complex
86
3 Required Permits: (MIA) Manifestacion de Impacto Ambiental
• EIS equivalent USA (ETJ) Estudio Justificativo Para Cambio Uso Suelo
• Change of Land Use
(ER) Analisis de Riesgo • Risk Analysis
87
Q1 2013 Q2 2013 Q3 2013 Q4 2013
MIA
ETJ
ER
Permitting Schedule
Permit Submission Expected Approval
(60 – 120 Days)
(60 – 120 Days)
(60 – 120 Days)
88
Regulators Like Safe & Simple
Dry Tailings Eliminates dam failure
Reduces environmental impact Lowers reclamation costs
89
Well 1 2.2 l/s
Well 5 6.3 l/s
Well 3 3.3 l/s
Well 4 40.4 l/s
Water rights secured: 1 Million M3 / Year x 2 Water requirements satisfied: 17 l/s
- Production well - Litre per second l/s 90
Filter Press – Dry Stack Tailings 91
