VANCOUVER — Partners McEwen Mining (TSX: MUX; NYSE: MUX) and Hochschild Mining (LSE: HOC; US-OTC: HCHDF) more than replaced the mined-out reserves at their San Jose mine in Argentina in 2013, despite the operation producing 33% more gold and silver than it did in 2012.
An updated reserve estimate for San Jose boosted the mine’s gold and silver reserves by 12% each. The mine now hosts 1.8 million proven and probable tonnes grading 7.03 grams gold per tonne and 515 grams silver per tonne.
The San Jose mine is an underground operation in Santa Cruz province.
The mine churned out 98,827 oz. gold and 6.36 million oz. silver in 2013 — 7% more than expected. Net of this production, the reserve metal count at San Jose increased by 12%, helped by a gold reserve grade that climbed 9% and a silver reserve grade that rose 10%.
San Jose is a joint venture: Hochschild Mining owns 51% of the mine and McEwen Mining holds the other 49%. Together the partners completed 10,500 metres of drilling in 2013 to boost the reserve count.
McEwen also owns the El Gallo mine in Mexico’s Sinaloa state, which reached production in September 2012. In 2013 the open-pit, heap-leach operation produced 30,733 oz. gold and 20,635 oz. silver.
The numbers will be notably higher this year, with McEwen nearly finished an expansion. The work was expected to cost US$5 million and take until June, but it is now expected to wrap up in early April at a cost of just US$3 million.
McEwen says the increased capacity will combine with higher grades, as mining moves deeper into the pit to increase production from 37,500 equivalent oz. gold in 2013 to 75,000 equivalent oz. gold in 2014. Meanwhile, all-in sustaining costs are forecast to fall from US$1,100 to US$850 per equivalent oz. gold.
At the end of 2013 McEwen Mining had US$24.3 million in cash and no debt. The company is also owed US$11.6 million from the Mexican government in the form of a tax refund.
McEwen’s share price rallied in recent weeks as the El Gallo expansion progressed, climbing from $2 at the start of the year to $3.87 at press time.
The company has 265 million shares outstanding.
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