McEwen Mining Inc.
Q2 2019 Earnings Call Transcript

Published: 1 Aug 2019

[Operator:]

Hello, ladies and gentlemen. Welcome to the Q2 2019 Operating and Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.I will now turn the phone over to Rob McEwen, Chief Owner.

[Rob McEwen:]

Thank you, operator. Welcome. Hello, share owners and interested investors. With me today are three members of our senior management

[Meri Verli:]

Thank you all. Good afternoon everyone. Thank you for joining us today. In the second quarter, McEwen Mining achieved commercial production at Gold Bar, continuing its exploration and development as Black Fox and Gold Bar as well as continued work on Los Azules and the feasibility study for the Fenix Project. Our production and sales in the first half of the year were lower than planned with Black Fox production impacted by the heavy spring melt and Gold Bar Q1 delays impacting our Q2 production.The combination of lower than planned sales in addition to the project investments resulted in the company reporting net loss of $23.2 million, or $0.07 per share for the first half of 2019. We invested over $24 million in mine development and plant and equipment and raised $25 million from equity financing. Regarding our overall operating results, for the first half of the year, the company had total production of just over 82,000 gold equivalent ounces, which was lower than our forecast and impacted our cash cost per ounce, our cash margins from mine operations and our operating loss.The operating loss for the first half of 2019 was $8 million higher compared to the first half of the previous year, impacted by lower cash margin or revenue from sales less production costs from our 100% owned mine operations, higher depletion and depreciation, a higher loss from the investment in Minera Santa Cruz, partially offset by lower spending on exploration. Our cash margin for the first half of 2019 was expected to be lower than the 2018, as lower planned ounces at El Gallo as the mine transitioned to residual heap leaching, were expected to be replaced by Gold Bar production at a higher cash cost per ounce. Our cash margin came approximately $3 million lower than planned, with the impact of lower production at Black Fox and Gold Bar, partially offset by higher production at El Gallo and higher price average realized per gold equivalent ounce.Moving on to the outlook for the rest of 2019, we have revised our forecasted production at each of our 100% owned sites reflecting results from the first half of the year, operational improvements during the second quarter, as well as the impact of adopting variable gold

[Chris Stewart:]

Thank you, Meri. Good afternoon everyone. During Q2, we produced 36,200 ounces of gold and 850,000 ounces of silver, which amounts to 45,900 gold equivalent ounces using a gold

[Sylvain Guerard:]

Thank you, Chris. And good afternoon everyone. Here are the key points I will discuss. First, at the Black Fox mine, our drilling intersected significant to high grade gold, with multiple intersection of plus 30 gram per ton, on targets located on the west extension and depth of the mine, we are improving geological model and will produce a resource and reserve estimation update by year-end.At Grey Fox, we have generated a significant Indicated resource increase of 22% to 567,000 ounces of gold. The new 147 North East zone remains open and is being drilled right now and other targets with similar setting will be tested in the second half of the year. At the Stock property, we have intersected visible gold on the depth extension of the Stock Mine. At Gold Bar now, infill and pit definition drilling was mostly completed in July at the Gold Bar South deposit, in the objective to add this deposit to the mine plan and reserve by year end. Drilling results are positive and new mineralized structures were identified and drilling is ongoing to better assess this higher-grade mineralization that has the potential to extend the planned open pit design. Over the Western part of the property area, drilling is ongoing to test shallow and deep potential mineralization.Our surface exploration drill program started in early April in Timmins and in mid-May at Gold Bar with 49,000 meters drilled during the quarter. In Timmins, our focus was on Grey Fox and Stock. At Grey Fox 147 and the nearby 147 North East zones, we have high-grade results and an Indicated and Inferred resource increase of 135,000 ounces gold.We believe there is good potential to discover additional mineralized shoots in similar setting over the Grey Fox target area. It is important to note that most historical holes at Grey Fox were drilled in parallel and in week angle with the main structure controlling mineralization and may have missed or only partially intersected potential mineralized shoots. Our approach is to drill perpendicular to the main structure to more effectively test the targeted mineralized zones.The Grey Fox deposit now hosts a total 567,000 ounces Indicated resources at an average grade of 7.1 grams per ton. And in addition, 135,000 ounces in Inferred resource category. The gold mineralization is defined at shallow depth, with road access and other infrastructure, offering a significant underdeveloped deposit sitting next to our Black Fox mine.Just to the west of Grey Fox, we are also drilling the Gibson target, where we have a gold mineralization hosted in a syenite intrusion, similar to many other mines in the Abitibi such as Malarctic, Young-Davidson or Hold-McDermott, that have enjoyed a great mining track record. The type of mineralization in geological setting at Gibson is different than all other deposit at Black Fox. So far, eight widely spaced holes drilled below 300 meters had a 100% rate of success, intersecting wide zone, tens of meters of alteration and low-grade gold mineralization that include more narrow intervals of higher grade gold, such as 11 grams over 6 meters intersected last year and 17 grams per ton gold over 3 meters and up to 519 grams per ton over 0.4 meters reported earlier in Q2. We continue drilling this target to better define the size, continuity of the mineralization and economic potential of this target, that offer high upside potential near the Grey Fox deposit and near existing underground ramp access.At Stock our drilling focused on the 3 kilometers segment of the structure that hosts the historical Stock mine. Our 2018 drilling on the depth expansion of the mine intersected several zones of significant mineralization with grade of up to 30-gram per ton at about 700 meters vertical below the mine. This year follow up drilling intersected zone of alteration hosting coarse visible gold at about 200 meters down dip from last year’s positive intersections. Although at too early stage demonstrate potential continuity of the mineralization, the visual drilling observation combined to last year’s positive results suggests that the mineral system remains open at depth.We are continuing to drill the debt extension of the mine and also the Stock East deposit, which represent quality exploration targets near our mill.At Gold Bar now

[Rob McEwen:]

Thank you, Sylvain. So, there you have it. Our balance sheet will provide us with a good level of liquidity, our large exploration program is taking place in two prolific gold districts, our operations have turned the corner and improving, and we have a growing organic pipeline of development projects. I must say that I’m a big believer in the potential benefit of concerted exploration programs. Our exploration success at the Black Fox properties has enabled us to see opportunities for newer – new near-term sources of production.Again, organic growth at Froome and Grey Fox. The beauty of these deposits is twofold. First, their close proximity to our existing mine. And second, starting production of these sites will allow us to cut back production of the Black Fox mine, to give us more time to explore, to build its reserve base and develop an efficient mine plan. I’m fascinated by the number of high-grade assay values that we have encountered in the Black Fox mine, plus 10 grams per ton, plus 100 grams per ton and a few plus 1,000 grams per ton.This is nuggety orebody that needs more drilling and analysis to determine a good geological model and develop a mine plan that looks ahead more than five years. Other areas of excitement for us are

[Operator:]

[Operator Instructions] Your first question comes from Jake Sekelsky with Roth Capital Partners. Your line is now open.

[Jake Sekelsky:]

Hey, guys. Thanks for taking my questions.

[Rob McEwen:]

You’re welcome, Jake.

[Jake Sekelsky:]

I think you’ve touched on this briefly, but can you just provide a little bit more color on the deep hole plan at Gold Bar? What you’re hoping to see here? What the budget is for the planned hole, and when we should expect to see some news from there?

[Rob McEwen:]

Certainly. Sylvain, could you address that question for Jake?

[Sylvain Guerard:]

Yes. For sure. Thanks for the question. Gold Bar, you know the story, you know the location, this project is perfectly located along strike. And for the very first time since we reactivated, we’ve got the permit first and reactivated the side there. We put together the key information to develop a full understanding of the situation we have at Gold Bar, and we had different surveys and got all of the information together and put a quality team around that. And what has been generated has been extremely positive, the more we’ve been learning about this place, the more we liked it.And we have a full pipeline of targets near our mine. Gold Bar South that is coming along as the next satellite open pit, and over the Western part of the property and there is an extension, I mentioned, of the Cortez Fault that extends to the south and becomes the Wall Fault over our area. We have a near surface mineralization in this sector. We have some oxide intersection over a gram, over 40 meters and historical RC. And we believe that this mineralization is coming or is driven from this Wall Fault. So, as reference to this fault, we started our first deep hole. We have two deep holes planned this year on the property.We expect that those deep holes will go around 1,000 meters depth, may be a bit more. We are not fully sure at what depth exactly will hit lower part of the stratigraphy, which is the Roberts Mountain a very good hole in the sector. So, the first hole started in collared into the upper mineralization going through visually nice-looking rock, we don’t have assays yet. And keep going to test the deeper target, as I said, expected at 1,000 meters.We have the right geology, we have the right set of mineralization, we are well located along the trend, and we have so far, as part of this budget of $5 million, two holes. We allocated about $1 million to the deep drilling. One is ongoing over this part of the property, and the next hole will be more to the east side – east of the series of pits we have there at Gold Bar.

[Jake Sekelsky:]

Got it. That’s very helpful. And I guess, just staying in the exploration reign, given the positive results at Grey Fox, over the last couple of weeks, maybe kind of walk us through the timeline for the scoping study there. It seems like there’s potential for that to be a good source of stream-free tonnage in an important piece of the longer-term story of Black Fox?

[Rob McEwen:]

Sure. Chris, would you like to answer that part of the question?

[Chris Stewart:]

Yes, for sure. Yes, we’re quite excited about the exploration success we’ve had there in the Grey Fox area. We have our own in-house resource model now and we’ve gone through entering all the data that we’ve obtained over the last 18 months into the new updated resource and we’ve handed that off, we are working with Stantec, and we’re moving that right now with a scoping study. We expect to have that completed by end of Q3 - early Q4.And then at the same time, in parallel to that, we’re also starting down the permitting path to look at reopening, there’s an existing portal there at the Gibson deposit. This path has been closed off, but we’re pursuing the option of reopening that and getting ourselves underground as an advanced exploration project to do bulk sample and learn a bit more about the deposit while we continue to push ahead from the scoping study into more detailed engineering work. So, timeline, we should have results coming in end of Q3 - early Q4 with respect to Grey Fox.

[Jake Sekelsky:]

Okay, perfect. And then just lastly a similar question at Los Azules, obviously the approval for the northern access route is a big win for the project, when should we see news on that front, just related to estimated costs and to touch whole economic impacts for that?

[Rob McEwen:]

Okay. On cost that would be later in Q3 this quarter. And we expect to start construction before year-end.

[Jake Sekelsky:]

Perfect. That’s all for me. I’ll hop back in the queue. Thanks guys.

[Chris Stewart:]

Thank you, Jay.

[Operator:]

[Operator Instructions] Our next question comes from John Tumazos with John Tumazos Very Independent Research. Your line is now open.

[John Tumazos:]

Thank you very much for taking my question. I’m looking at the table, one of your press releases where you just go through output and guidance. And for the six months Black Fox and Gold Bar, while the volumes were light, the costs were good. Black Fox costs were $79 less than guidance and Gold Bar was $6 less than guidance despite the low outputs. Should we expect the cost to fall more as volume rebounds in the second half? And maybe is that cost guidance of $975 and $930 respectively maybe stale and easy to beat?

[Rob McEwen:]

Chris, could you answer John’s question.

[Chris Stewart:]

Yes. Hi John, you’re correct in the fact, we’ve done a good job managing our cash costs within the business, there’s a number of changes and a number of cost-savings coming in that to Black Fox, for example with respect to our power, we expect to save just over $2 million in the next 12 months based on work that was done in the previous year to mitigate our global adjustment, which is a fee you pay on top of your hydro costs based on your usage.So, we’ve been managing that closely and that’s reflected in what we’re seeing now coming in with our cash costs. With respect to the all-in sustaining, it’s a bit higher than what we planned and that’s a function of capital development work and some additional items that we need to do at Gold Bar with respect to weather protection and some adjustments with the order handling system.So, with the production that’s expected to be increased here in the second half of the year, I would expect to see definitely all-in sustaining costs drop. We are taking on some other projects within the operations. I think, when we came out with the cash cost at the beginning of the year, I would say that was based on our budget, we have managed to make some improvements. So, I would expect that we will see, or we will beat our cash cost numbers overall for the year. Whether it’s, easy beat, I’m not sure everything seems to be a bit of a challenge to Black Fox, especially Gold Bar is certainly starting to hit a stride there. Now, we’re pleased with the performance there. Black Fox will continue to challenge us a little bit, although we’ve dealt with the crushing issues and the water from spring melt is sort of a one-off, so we’re getting a much better handle on the Black Fox as well.So, I think we’ll have to take another look at that. But I would expect as your divisor gets larger, you’ll certainly see a reduction in the cost in the second half of the year.

[John Tumazos:]

This is a small question, Chris, but the cash costs are almost $100 higher than budget at El Gallo and for residual reaching there shouldn’t be a lot of activity of costs and I know it’s a small amount of ounces and a small amount of dollars, but what’s the cost variance there?

[Chris Stewart:]

Well a lot of that was related to the project Fenix works that we’re doing and we kept the additional people on site and we did a bit more exploration/metallurgical work to support project Fenix and that was something that wasn’t originally planned at the beginning of the year, but to increase our level of confidence and a couple of things we’re looking at project Fenix we needed to spend a bit more money on that.And same with all-in sustaining costs, the bump up there was related to the additional carbon leach tank that we installed to improve our gold recoveries or speed up our gold recoveries within the system, which is why we’re seeing a better performance at El Gallo – here we increased the guidance to 16,000 ounces. So again, they’re minor costs, but that’s kind of what we’ve been up to there.

[John Tumazos:]

Chris, I’m going to unfairly put you on the spot for a second. Rob dropped a hint about maybe lowering the output next year at Black Fox to catch up on some things. I know you’re not issuing formal guidance for 2020 yet, but is there a rough range of what Black Fox, Gold Bar production might be?

[Chris Stewart:]

I would say it’s a bit too early to put a number out there. With respect to Black Fox, we are looking at the overall concept of what we want to do with that operation. We’ve got Froome sitting there with 180,000 ounces in resource. We’ve got Grey Fox, which has got 700,000 ounces of resource. And then we’ve got Black Fox, which we are continuing to work through and what Rob was speaking about is our scoping study on Froome. We are going to be coming out with some results from that area in the next month or so. And the idea is to look at bringing on these other deposits to basically reduce production coming in at Black Fox, but again, sort of maintain kind of 50,000-ounce production level for the next little while. While we get Black Fox figured out and then the concept is to bring two deposits on at one time as we have talked about, I think, last quarter. But essentially try and get our mill full, so we are putting 1,800 - 2,000 tons a day into our mill, which would move our production profile up in the coming years to more the $90,000, $100,000, $110,000-ounce range, depending on the grades.So that’s kind of a high-level concept of what we are looking at with respect to the Timmins area and I think Black Fox has a lot of potential. Again, the exploration program has a lot of really high-grade hits, but we need that time. There’s a lack of capital investment in that operation over the years and that’s why you see here all in sustaining cost is higher because we are having to do a whole bunch of development.We are mining right on top of ourselves. So really you need to buy yourself time to push it to development, get the drilling done, get all your mine plans fixed up, stope designs done and have all that stuff sitting in front of you, rather than trying to move ahead with one year of reserve all the time. So Froome and Grey Fox, I think will give us that opportunity as we work through the engineering work here over the next few months.And then down at Gold Bar, we are actually in the process – we are looking at our recovery model based on performance to date and revamping the life of mine plan for Gold Bar going forward. So, we’ll have to wait to see what the guidance looks like, but that certainly suggest that this year the original plan is around 55,000 ounces, I think that would probably be the bottom for where we’re looking at going forward. The plan, I think is around 60,000 to 62,000 ounce per year average production coming out of Gold Bar and recovery seem to be lining up with feasibility study at the moment. So, we can’t put a number on it yet, but things are looking positive for Gold Bar in my view.

[John Tumazos:]

So, Rob, if I could impose and ask one last question, to Sylvain.

[Rob McEwen:]

Yes.

[John Tumazos:]

Sylvain, you are drilling as you said 25 miles south of where Barrick found tens of millions of ounces of gold and several times a few years ago at my annual conference, I hosted NuLegacy Gold that had a JV with Barrick on the south side of Gold Rush, maybe 20 miles closer or more, and there a famous geologist Roger Steininger here. And that’s sort of been a nothingburger. And Barrick seemed to be more interested in drilling on the North Side toward words Fourmile and not on the south side. Could you tell us a little bit – tell us a little bit about the structures to the south and the dips and valleys and cuts and faults and all that stuff, because some of my clients lost money in this other guy that was lot closer to you guys.

[Sylvain Guerard:]

Okay, yes. I’m happy to talk about Gold Bar and thanks for asking. What we have there it’s, as you know, well located along the trend. It’s one thing like in the Abitibi along the brakes for gold mineralization and the same applied to the trend in Nevada, but you have to be at the right place along those trends. And we have some distance between the big deposits to the north and our property there and the good news about Gold Bar is that we are sitting on a proven gold system.It’s not just the right rock, it’s not just along the trend. We also have a gold system there. There’s the close to two million ounces total endowment if you look at historical mining, resource reserve, altogether. So that gives you some indication of the size system. And those Carlin gold deposits, or mineralization are a special type of deposits.Statistically, they are not very abundant, there’s not a lot of those. But especially in Nevada - this is where they are, if you are sitting on a good system, they can grow significantly and get to 10 million ounces size mark. So, if you look back – and people forget that sometimes - all of the big deposits, the Goldstrike, the Cortez and the others, they all started as small heap leach low-grade open pits. So, this is the way all the systems start their life and then through development of the understanding and quality exploration and deeper drilling, the companies were highly successful to take those smaller systems to large and higher-grade gold deposits that we see today in Nevada.So, we believe that at Gold Bar, we had the right geology, we have the right location. We have many, many similarities with the big deposits, and we stand a fair chance, through exploration success, to hopefully see Gold Bar growing to the next level to a bigger size of deposit. As I said, we have a bunch of targets. Some are near mine to extend and provide organic growth. Gold Bar South is a different deposit, very silica-rich, very poor in clay, so potentially good blend material for Gold Bar.And the deep potential, and I’m talking here of significantly deeper holes, remain untested at Gold Bar. So, we have our concept well-defined. We’ve been calibrating ourselves with a bunch of former Barrick geologists and geophysicists very familiar with this type of deposit in Nevada. And everybody’s on-board to say, let’s go for the deep potential and here we go and let’s see what happens there.

[John Tumazos:]

So, if you were to just traverse the 25 miles between the Big Gold ounces and your ounces, how many faults or valleys or large structures are there between you and them?

[Sylvain Guerard:]

I mean, there’s significant distance in between and actually we have our Tonkin project that sits somewhere in between there. It’s a low-grade sulphide as you know but it’s still a large development there, another 2 million ounces close that we have there. There is a fair distance, but as I said along the extension of the Cortez Fault, you get to Gold Bar and your own new gold mineralized system with the right construct, with the right structure and significant size. And this place remains under explorer. As I mentioned earlier, this was worked by previous companies using pieces of data, it was not a complete coverage. So what we did is putting together all of the available information and also covered and added a bunch of different surveys, geophysical surveys, geochemical surveys, to make sure we have all of the pieces of key information to first develop the understanding and develop the quality targets for our drilling and last year we’ve been starting around the open pit, it is always a good place to start, and we’ve been increasing significantly our resource. And this year we are still close over our mines but stepping out a bit outside of those pits and going to go far south and also testing other parts of the property.

[John Tumazos:]

Thank you, Sylvain and Rob and Chris. Thank you very much.

[Rob McEwen:]

Thank you, John.

[Operator:]

Our next question comes from Mike Kozak with Cantor Fitzgerald. Your line is now open.

[Mike Kozak:]

Yes, good afternoon everyone. Thanks for hosting the call. Two questions from me. First, and this one’s probably for Chris. With the primary crushing at Black Fox now taking place at the Stock Mill, as opposed to at the mine, with the presumably lower re-handling you’ll now be doing - any idea yet as to how much gold in the fines you hope to save as a result or do we have to wait a couple of months before we can tell?

[Chris Stewart:]

Yes, it’s difficult to quantify that. We just want to make sure that we’re being diligent in how we’re handling the ore, given its nuggety ore body and we do have visible gold. So, the shipping from the mine to the mill with larger chunks of ore, for lack of a technical term, you’re essentially safeguarding any chance of losing.We’re not sure how much gold we’ve lost over the years by crushing at Black Box but we’re going to be cleaning up that area once the crusher demobes from our Black Fox mine and that’ll give us an idea on what we see with respect to the grade in the muck there as we clean that up, as to how much potential gold loss we did incur. So that would be the potential savings, I guess when they get to that, but that will be a few months away before we’d have an idea around that. Again, it’s all about being diligent in making sure that you reduced any chances of losing any gold by, again, crushing at our mill facility rather than doing it with the mine and shipping down the road a very fine product.

[Mike Kozak:]

Got it. Thanks. And the second question or maybe before you have a comment, for Rob, I mean, Rob your name synonymous with gold investing. We’ve had a great quarter here for the gold prices, the gold stocks, silver has finally woken up. I’m sure you saw, I mean, the 20 minutes ago the Fed just cut by 25 basis points. The initial knee-jerk reaction was lower but now in the last few minutes the gold is bounced right back to where it was before, and stocks bounce back. I’d love to get your thoughts, maybe short-term and longer-term with just the current state of the gold market. What’s changed and just your thoughts on the macro if you wouldn’t mind?

[Rob McEwen:]

Certainly, I’d like to talk about that Mike. I’ve a very positive view on price of gold and silver. In a low real interest rate environment, the opportunity cost of holding gold is very low. And then if you want to take some real extremes you could look at gold – when it was basically freed in 1971 it went from about $40 to $800 or better at 20 times increase and then from 1999 and 2001 it reached a low of $250, and it ran just over $1,900, that was 7.5 times, and this is going to sound really outrageous, but if you took the low $1,050 and applied that 7.5 times your are almost at $8,000. And if you [take] by that factor of 20 times, well a lot further north.What am I seeing in the market that’s positive about gold? No, they haven’t slowed down, I mean the U.S. is still putting on a lot more depth where it picked up to $22.5 trillion right now and doesn’t show any signs of slowing down. Other areas student loans are now up over $1.6 billion, you’ve got the cost to service the debt has dropped dramatically but if interest rates were to return is very difficult to service that.And right now, interest rates as a percentage of the outstanding national debt is just hovering around the 3%. We’re still seeing rather anemic homeownership numbers and the propensity to consume, which is just the indication of expectation in the market [indiscernible] is at a low point, lowest point it’s been since 1960. We’ve had financial assets, have grown disproportionately to disposable personal income. You had your first big correction from 1970 and in 1999 with the .com bubble, then we had the Housing Bubble in the global financial crisis 2008-2009. And right now, we’re approaching what might be called the Everything Bubble. We’ve seen lots of IPOs done, large number 80% of the IPOs done in 2018, where for companies with negative earnings.If you look at growth, stock versus value, we’re looking at the levels now that we haven’t seen since .com bubble. So, I just think there is real reasons to be looking at gold commodities since the 1,900 relative to the dollar, the lowest point almost 120 years and 190 years. We have Central Banks, Russia, China, India, Kazakhstan, Turkey all adding to their gold reserves, why are they doing that? They appear to be wanting to get out of the dollars because they think the dollar is going to correct, so it would correct, price of gold will go up.Gold has been moving up in many currencies around the world beyond the dollar. And money is moving into ETF again, getting now sales to the level that we saw at the end of 2011 and beginning of 2012. And then when I look at gold equities, we’ve got some really interesting performance numbers showing up. While gold is only up about 35% over the last three years, since the beginning of 2016 and so it’s underperformed The Dow and the S&P, but it’s the GDX and the GDX are up over a 100%.So, they’re doing – the gold stocks are three times better than gold and 100% better than the Dow and the S&P. So, there is money moving into gold and I think you’re going to see a lot more moving into gold.

[Mike Kozak:]

Got it. I hope you write this; I appreciate that commentary. Thanks, Rob and thanks to your team as well.

[Rob McEwen:]

Thank you very much.

[Operator:]

Our next question comes from Bhakti Pavani with Alliance Global. Your line is now open.

[Bhakti Pavani:]

Good morning guys. Thanks for taking my questions.

[Rob McEwen:]

Hi Bhakti.

[Bhakti Pavani:]

Just a quick question, I know you are very focused on exploration drilling at Black Fox and Gold Bar, but given the recent increase in metal prices both gold and silver, what’s your view on Project Fenix?

[Rob McEwen:]

Chris, would you like to…

[Chris Stewart:]

Yes, hi there. As I mentioned earlier, we’re down to the shorter strokes on the feasibility study. We anticipate having the results, I would hear later in Q3. Certainly, the movement in gold price and silver prices was certainly making the outlook for that project even more positive. We’re being a bit conservative on the pricing that we’ll be using within the study itself. But certainly, when you look at what we have there in Mexico, we have quite a bit of potential, looking at what the PEA was targeting a 12 year mine life, we think it’s probably going to be a little bit smaller than that, when you move from PEA to feasibility you have to drop your inferred ounces, you cannot use those in a feasibility study. So that’ll result in a sort of decrease in the overall life of the project, based on what we know now.But certainly, it’ll have a positive impact on that project. Timing on when we would actually move ahead to decide on whether we’re going to build it or not or again is depending on a number of factors, including our cash position and access to capital to move that project forward. So that’ll be decisions that get made later this year or early in 2020, I would think.

[Bhakti Pavani:]

Okay. But at least in the past you had mentioned, or you had talked about potentially selling the asset or selling the project, is that still on the table?

[Rob McEwen:]

It is at the right price Bhakti, I think it is an improvement in value coming, as Chris said, we expect to get a permit to proceed with construction or proof to construct in this quarter. And there’ll be a feasibility study. So much tighter analysis of the cost, the capital involved and what the payback will be in the return. And then also having permit to go, so it would be ready to build, so I think that would improve the value of that property.

[Bhakti Pavani:]

Got it. And talking about the price, at this point do you have any interested suitors or interested parties willing to take the project off your hands?

[Rob McEwen:]

Not yet. But you might want to direct some towards it.

[Bhakti Pavani:]

All right. Thank you very much. That’s it from my side.

[Rob McEwen:]

Thank you very much.

[Operator:]

And there are no further questions at this time. I’ll now turn the call back to the presenters for closing remarks.

[Rob McEwen:]

Thank you very much for joining the call. Just want to wish you much success investing in gold and keep your eye on McEwen Mining, I think that we should start moving.

[Operator:]

This concludes today’s conference call. You may now disconnect.