McEwen Inc. (MUX) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. Welcome to 2022's Annual Meeting of Shareholders of McEwen Mining. Please note that today's meeting is being recorded. [Operator Instructions] We will begin with the formal part of the meeting that will be followed by a company presentation. It is now my pleasure to turn the meeting over to Rob McEwen, Chairman and Chief Owner of McEwen Mining. Mr. McEwen, the floor is yours.

Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining us today. Our agenda for today will start with the formalities of an Annual General Meeting, and this will be led by our General Counsel, Carmen Diges. There are several special matters to vote on that Carmen will lead you through. After Carmen concludes the meeting, we will move to a corporate presentation. It will begin with our Director and Interim Chief Operating Officer, Bill Shaver, who will provide an update on our operations. He will be followed by our Senior Vice President of Explorations, Stephen McGibbon, who will review our exploration activities and the areas that we believe will grow our resource base and future production. Next will be Michael Meding, our VP Argentina and General Manager of our subsidiary, McEwen Copper, who will talk about our large copper asset and the advances we have made in enhancing its value. After which, Perry Ing, our interim CFO, will review our financials of 2021 and the year-to-date. I will conclude the presentation with a summary and then open the meeting for questions. Carmen?

Thank you, Rob, and good morning. I am Carmen Diges and General Counsel and Corporate Secretary of McEwen Mining. It's my pleasure to welcome all shareholders to our audio webcast this morning. At Rob's request and in accordance with our bylaws, I'll act as Chairman for the meeting; and Mihaela Iancu, Investor Relations Manager of our corporation will act as secretary for this meeting. A representative from Computershare is the inspector of election for our meeting and is also in attendance today. Today's virtual-only meeting is really here for you so that we can engage with our shareholders as much as possible wherever they are located. And this technology enables us to reach you and safely hold our meeting as I know a number of people are still in areas where health concerns with COVID may be rampant. Today, we'll consider the election of directors for the ensuing year, proposed amendments to our Second and Amended and Restated Articles of Incorporation, proposed amendments to our incentive plan and the ratification of our independent accountants. For convenience, certain persons have been asked to propose and second the resolutions. You do not need to vote if you've already voted by proxy unless, of course, you wish to change your vote. All owners of record as of the close of business on April 28, 2022, are entitled to vote at this meeting. Those wishing to vote will receive ballot when they registered with the scrutineers and will need to sign in using the link provided online as well as your 15-digit control number provided on the proxy card or notice of availability of proxy materials previously received by you. If you would like to post a question or comment, you will need to click on the Messages icon that you can see on your screen. Our Vice President of Corporate Development, Stefan Spears, will be managing questions for this meeting. A complete list of the owners of McEwen Mining as of the record date for the meeting of April 28, 2022, has been on file as required by law at McEwen Mining's office and was open to inspection by any owner at our office and upon request by e-mail since April 28, 2022. The list is also available online for inspection by any owner during this meeting. I have an affidavit from Computershare Trust Company, our stock transfer agent, attesting that the notice of this meeting, proxy statement and report on Form 10-K and proxy were made and mailed -- made available to shareholders of record as of April 28, 2022, in a manner prescribed by law on June 16, 2022. Copies of these documents are available today to any owner who would like them. If you'd like a copy of our annual report or our proxy statement, the links are provided online for you. There were a total of 474,275,626 shares outstanding and entitled to vote today. I received the interim inspector's report on attendance. Our articles require 1/3 of the outstanding shares entitled to vote at this meeting for a quorum, and on that basis, I declare that a quorum is present. I also declare that this meeting is duly convened. The first item of business is the appointment of our election judge. I have appointed Computershare Trust Company of Canada to act as election judge and inspector of election for the purposes of tabulating votes at this meeting. The next item of business is the approval of the minutes of our last meeting held on June 29, 2021. Copies are available for inspection by any interested owner. With your consent, I propose we dispense with the reading of these minutes. Is there any objection? You may submit objections or questions online by clicking on the Messages icon on your screen.

No questions or objections have been raised.

Thank you, Stefan. The polls have been open for voting since April 28, 2022, and will remain open until 5 p.m. today as declared on our proxy statement regarding this meeting. We will vote on these matters by online ballots and provide an interim result of voting on each item of business today. Management believes it has sufficient proxies to carry each of these proposals, and as such, the outcome is expected in favor of management's recommendation. If you did not vote by proxy and intend on voting at the meeting and you have not yet been informed of the procedure for online voting, please read the online voting instructions available to shareholders in the File section on your screen. The first item of business is the election of directors to serve until the next annual meeting of owners and until their successors are duly elected and qualified. Mr. McEwen, McEwen Mining's Chairman and CEO, will now recognize the 8 persons nominated for election to the Board of Directors.

Thank you, Carmen. The Board has nominated the following persons to serve as directors of the corporation to hold office until the next annual meeting of McEwen Mining and until their successors are duly elected: Allen Ambrose, Ian Ball, Richard Brissenden, Robin Dunbar, Dr. Donald Quick, Dr. Merri Sanchez, William Shaver, and myself, Robert McEwen.

Is there a second to the nominations?

I second the nomination.

The corporation has received no other nominations for directors in the manner prescribed by the corporation's bylaws. I therefore declare that the nominations for directors are closed. Is there any discussion regarding this matter? If so, again, please communicate using the Messages icon on your screen.

No questions or points of discussion have been raised.

Thank you again. We will now move on to the next item of business, which is the proposed say-on-pay compensation, the frequency with which shareholders of our company shall be entitled to vote on the compensation of our named executive officers receiving the highest number of votes will be approved. Robert McEwen will make the necessary motion to approve the amendments.

I move that the following resolution be adopted. Resolve that the proposed amendments to the frequency with which shareholders of our company shall be entitled to vote on the compensation of our named executive officers be approved.

Thank you very much, Rob. Is there a second to the motion?

I second the motion.

Thank you. You've heard the motion. Is there any discussion regarding this matter?

No questions or points of discussion have been raised.

Thank you. We'll now move on to the appointment of auditors. This is the ratification of the appointment of Ernst & Young LLP as auditors and independent registered public accountants of the corporation for the year ended December 31, 2022. The Audit Committee of the Board of Directors has approved the appointment of Ernst & Young LLP and recommends ratification of their appointment. Robert McEwen will make the necessary motion.

I move that the following resolution be adopted. Resolve that the proposal to grant the Board of -- the Board the discretion to amend the Second and Amended and Restated Articles...

Not quite there yet, Rob. I know everyone is chomping at the bit to get through the exciting part of the business here.

Sorry about that. I move that the following resolution be adopted. Resolve that the appointment of Ernst & Young LLP as the corporation's independent registered public accountants for the year ending December 31, 2022, be ratified and approved.

Thank you, Rob. I'm sure Ernst & Young appreciate that resolution. Is there a second to the motion?

[indiscernible]

I second the motion.

You've now heard the motion. Is there any discussion regarding this matter?

No questions or discussion.

Thank you. The next item of business is the proposal that would grant the Board the discretion to amend our Second Amended and Restated Articles of Incorporation to effect a reverse split of our outstanding common stock on a ratio of not less than 1-for-5 and not more than 1-for-10.

I move that the following resolution be adopted. Resolve that the proposal to grant the Board the discretion to amend the Second Amended and Restated Articles of Incorporation to effect a reverse split be ratified and approved.

Thank you, Rob. Is there a second?

I second the motion.

Thank you, Mihaela. You've heard the motion. Is there any discussion?

No questions or points of discussion have been raised.

Thank you, Stefan. The last item of business before this meeting formally is the ratification of amendment to our Second Amended and Restated Articles of Incorporation to reduce the number of shares of common stock that we were authorized to issue from 675 million to 200 million.

You want me again?

I would like you again, Rob. Thanks.

I move that the following resolution be adopted. Resolve that the amendment to the Second Amended and Restated Articles of Incorporation that would reduce the number of shares of common stock from 675 million to 200 million be ratified and approved.

Thank you very much, Rob. Is there a second?

I second the motion.

Thank you, Mihaela. You've heard the motion. Any discussion?

No questions or points of discussion have been raised.

Thanks again, Stefan. If you've not voted or wish to change your vote, you may do so by clicking on the link provided online. Any shareholder who has already voted and does not want to change their vote need take no further action. As I said earlier, the online voting will remain open until 5 p.m. today. The final tally of the vote and report on ballot of the election judge will be published on the SEC website and on SEDAR within 4 business days of the meeting and in the minutes of the meeting as well. Based on the preliminary review of the votes cast, the election judge has informed me that all nominees for the Board of Directors have been elected. The amendments to the Second Amended and Restated Articles of Incorporation have been approved, and the appointment of Ernst & Young as the company's auditors has been ratified. We will safeguard any ballots, proxies, affidavit of mailing, oath and certificate and report of inspector and save them with the records of this meeting. On the basis of the election judge's preliminary report, I'm pleased to announce that Robert McEwen, Allen Ambrose, Ian Ball, Richard Brissenden, Robin Dunbar, Dr. Donald Quick, Dr. Merri Sanchez and William Shaver have all been elected as the corporation's directors. The amendments to the named executive officer compensation have been adopted. The amendments to the frequency with which shareholders vote on executive compensation have been adopted. The ratification of the appointment of Ernst & Young LLP as the corporation's independent registered public accountants for the year ended or ending December 31, 2022, is approved, and the proposal of the reverse stock split is approved. Finally, the ratification to reduce the authorized number of shares is approved as well. Thank you. Are there any other items to be considered at this owner's meeting? If not, I would entertain a motion to terminate the meeting of McEwen Mining.

Before terminating the meeting, I would like to recognize the contributions of 2 long-standing directors that are no longer with us, Michael Stein and Michele Ashby, who have been with us for this long journey, and we will miss them immensely. I hereby move that the meeting be terminated.

I second that motion.

Unless anyone is opposed, and I think that would be a precedent for any meeting, the formal portion of this meeting is now terminated. And Stefan, just if you could confirm there are no oppositions.

Confirmed.

Thank you. So I declare the formal part of the meeting terminated, but don't go anywhere. I know you're all going to be excited to hear from my colleagues about the updates and their anticipated plans and guidance for the coming year.

Thank you, Carmen. I'd now like to turn the meeting over to our Director and Interim Chief Operating Officer, Bill Shaver.

Thanks, Rob. Good morning, shareholders. So the first part of this presentation has to do with the 2022 production and guidance. So for the Fox Complex in Timmins, the gold equivalent ounces for the year-to-date is 19,600 ounces, and you will note that the production of gold in the second quarter was significantly higher than the first quarter, that being 11,900 ounces versus the 7,700 ounces in the first quarter. We anticipate that this production -- higher production rate will continue in the third and fourth quarter, which will lead us to a position where the Fox Complex will meet guidance for the year. The cash costs -- well, maybe I'll go to the Gold Bar Mine first. The Gold Bar Mine in the second quarter had a lower ounce production of 5,300 opposite to 6,300 ounces, and I'll make some comments with regard to that later in the presentation. The total production for year-to-date is 11,600 ounces, and we anticipate higher production in Q2 or Q3 and Q4, which will again put us in a position to meet probably the lower end of guidance. The 2 operations in North America have cash cost in $1,310 and $1,410 per gold equivalent ounce and all-in sustaining costs of $1,570 to $1,690 per ounce. The San Jose Mine in Argentina, which is a 49% joint venture with Hochschild had again, a very good second quarter relative to the first quarter with a total production for the half year being 18,550 ounces of gold and 971,000 ounces of silver for a total gold equivalent of 30,500. And you will note the production was significantly -- almost double the second quarter relative to the first quarter. And we expect production in the third and fourth quarter to follow the second quarter, and this will allow us to meet guidance for the year. The all-in sustaining cost at San Jose is -- will be between $1,330 and $1,370 per ounce. So the total production for the organization -- this will be our share is for the half year 61,535 ounces. And with improvements at Fox, Gold Bar and San Jose in the second half of the year, the guidance will stay between 153,000 gold equivalent ounces and 172,000 gold equivalent ounces. Next, thank you. In Timmins at the Fox Complex, which includes the Froome Mine, Froome production is ahead of schedule, both in terms of tonnes and ounces, and mine development is on target, and total mill recovery is slightly higher than budget. And we also have -- because of the better production from the mining operation, we have approximately 60,000 tons of ore sitting on surface ahead of the mill. We are, in fact, in a process of improving the productivity of the mill by debottlenecking some of the processes within the mill. And we anticipate completing that work in the third quarter, which should improve the number of tonnes that we're able to put through the mill. This will help us through to year-end and allow us to meet guidance for the year. We also are having reasonable success with our exploration program at Froome, and we anticipate that this will allow us to produce into 2025. Steve McGibbon, our VP of Exploration, will bring you up to date on our exploration program. On the right of this slide, you can see the mining operations that we are involved in. The present operations are the ones that are noted primarily above the 225 level, and the ones that will help extend the mine life are those between the 225 level and the 260-meter level. And as you can see from the size of that pink area above 260 level, we anticipate being able to follow some of that or lower into the mining operations. On this next slide, we have the gold production opposite the guidance for the Fox Complex. And as you can see, early in the year, we were not meeting our production guidance, and we weren't meeting our schedules. The last 2 months have been significantly better, and we anticipate that this trend will continue through to year-end, again, allowing us to meet guidance for the year. At the San Jose operation, which, as you know, is a large property position that we have adjacent to the Cerro Negro Mine, we are on track to meet annual guidance. The reserves at the present time are 3 -- are over at 342 grams per tonne, and the gold grade is 5.7 grams per tonne. And as you can probably see that these are significantly higher grades, say, than our operation in Timmins. Also, the mine life in Argentina will extend for at least 6 more years. The 2022 estimate of production is 2.5 million to 2.8 million ounces of silver and 34,500 to 38,500 ounces of gold with costs for silver at between $18.50 and $19 and gold between $1,330 and $1,370 ounces -- equivalent ounces. Moving on to the Gold Bar operation. We have included a picture of the principal elements of the mining operation at Gold Bar. To the left of the picture, you can see the snow in the far hills, but directly in front of that is the heap leach operation. And that's where the gold is extracted from the material that we bring out of the pit. In the middle of the page is the office and warehouse complex. And to the right of the page is the processing plant and the mechanical maintenance shop. So you can see it's a very well laid out and organized site. To the right of the picture is the mining operations in general in terms of their location in Nevada and also to give you some notion of all of the faults that are involved. And again, Steve McGibbon will give us a very good update later in the presentation. In the first half of 2022, the mining contractor was troubled with manpower recruitment, which is an issue in all parts of Nevada and also, as you know, in other parts of the world. The manpower recruitment is being addressed by the contractor with help from the Gold Bar staff. And we're doing that both in terms of financial support and also in terms of human effort support. In Q2, the production was less than scheduled due to some carbonaceous ore that we encountered in one of the open pits, which required a drilling program to identify the location of this carbonaceous material. So we've also taken some opportunities to start mining in the second half of the year in some areas where we are pretty confident that we will not hit any of this carbonaceous material. We are also organizing in the fourth quarter to start mining in the Gold Bar South pit operation. This ore has no carbonaceous material, and the ore in this pit will be significantly higher than the grades in the operations that we have been running up to this point. So again, we anticipate that this will improve production in the third and fourth quarter and allow us to meet guidance for the year. So on this slide, we see the actual production in the orange columns versus the budget. And you can see that in the months of April, May, June, we've fallen short of meeting our guidance in those particular months. But we anticipate that the production in the last 6 months of the year, both from the Gold Bar operation and from Gold Bar South will be higher than anticipated. And therefore, we will meet guidance for the year. So with that, we will -- I will turn it over to Steve McGibbon, who will give us some insight into our exploration activities.

Thank you, Bill. Good morning all. I think the Fox Complex is not just a good address, but a great address. Our Fox Complex properties have more than 3.3 million ounces of historic and recent gold production and enjoy consistent exploration success that includes growth of mineral resources that offset mining depletion. The map above shows our property locations well-situated along the prolific Destor-Porcupine Fault zone just south of Timmins, east of Matheson and at the stock property midway between the two. The Destor-Porcupine Fault zone and Timiskaming sediments are recognized as key geological elements associated with most of the 70 million ounces of gold that have been historically mined in this camp. These key geological elements reside on all 3 of our properties. Gold mineralization is structurally controlled in primary faults and secondary displays in this region, and we have more than 30 kilometers of such structures on our properties. Mineral resources on the Fox Complex properties include nearly 2 million ounces of gold in the measured and indicated categories and a further 500,000 ounces in inferred. At the beginning of the year, we earmarked some $7.5 million for exploration in 2022 at the Fox Complex. Next slide. On surface, we again highlight the location of key fault structures that have influenced creation of 3 mineral deposits, including Froome, Grey Fox and Black Fox. At the southeast end of the property, Grey Fox is our largest and highest grade mineral resource, comprised of nearly 1.2 million ounces of gold degrading 4.8 grams per tonne in the indicated category and 236,000 ounces of inferred material at 4.35 grams per tonne. Despite the size of the resource at Grey Fox, we still see real opportunities to grow it further. Two holes drilled in 2021 are profiled on the western edge of the deposit. They include 21 GF-1350 and 1333, having returned 7.29 grams per tonne over 15.4 meters and 5.33 grams per tonne over 21.2 meters, respectively. This target area will be further drill tested during the current Q3 period. I also want to draw your attention to the elongated ellipse, which highlights the Froome Mine and the Gibson-Kelore Fault that continues to the southeast. Exploration along this trend toward Grey Fox remains attractive. The Froome Mine is hoisted in sedimentary rocks, and we believe similar conditions can exist along the Gibson-Kelore Fault zone generally. Gold mineralization is also hoisted proximal to the A1 and Destor faults to the east. Part of our flow-through funds raised early this year will support additional exploration at Grey Fox. The Froome Mine has been producing gold for just over a year now on our easternmost property. In 2021, we successfully extended the mine life by a year and have a goal to replace mining depletion in 2022 as well. We believe the greatest opportunity to do that is to drill at depth. Results have been trending positively in 2022, and the mineralization remains open. When compared to Black Fox, mineralization at Froome is shallower, more consistent and overall a little wider. The image shown is a longitudinal section of the mine profiling a heat map of grades times thickness. Warmer colors highlight higher values. The heat map is a simple way to show the distribution and nature of gold mineralization at Froome and is a very good backdrop to profile selected drill intercepts that we've -- are showing on our longitudinal section drilled during Q1 and Q2. Our budget for the Froome exploration program in 2022 is $3.6 million and includes more than 37 million -- or 37,000 meters of drilling. The stock property resides midway between Timmins and Matheson and has 8 kilometers of the Destor-Porcupine Fault Zone tracing through it. In addition, a splay or fault known as the Nighthawk Fault also tracks through the property for an additional 5 kilometers. Again, heat maps are used to portray the location of gold mineralization that includes 137,000 ounces of past production at the historic Stock Mine and initial mineral resource estimate at the Stock West deposit of 144,000 ounces of indicated resources at 3.83 grams per tonne and 111,000 ounces of inferred mineralization at 3.3 grams per tonne, supported by the preliminary economic assessment reported on in Q1. The Stock property is the location of our Fox Complex mill and is not encumbered by gold streaming agreements. If we now change from plan view to a longitudinal view looking to the north, you can see several areas with attractive drilling results that warrant more exploration. We see potential for the Stock West deposit to grow further. In the center of the image to the left, the cluster of holes located below old mine workings dominated by S21-202, S18-31 and S19-095 are currently poorly understood and remain highly attractive. This area will see additional drilling before the end of the year, and that drilling will target trend lines shown by 2 red lines along the trend of the Stock West deposit and down plunge of the Stock Mine that we use as a guide to search for areas that may be our next discovery, be it along the trend or at intersections of multiple trends. Next slide. Let's now leave Canada and review our exploration program underway in Nevada at our Gold Bar property. As with the Fox Complex properties, our Carlin deposit properties in Nevada are influenced by important structural controls. Nevada is, of course, a Tier 1 gold jurisdiction with large world-class deposits occurring in both the Carlin and Cortez Trends. South of Nevada gold mines Cortez cluster of deposits are 2 property holdings of McEwen Mining: Tonkin and Gold Bar. Tonkin hosts an indicated mineral resource of 1.45 million ounces grading 1.41 grams per tonne gold. Gold Bar's indicated resource of 452,000 ounces of gold at 0.19 grams per tonne augments historic and recent production of 575,000 ounces. These deposits are on trend with the Cortez cluster to the north and have similar rocks, alteration and mineralization styles as well as major faults and structural traps recognized as important to the elements of those world-class deposits. This schematic plan view of the Gold Bar property profiles the many faults that have been traced through it, where our geologists have identified and ranked multiple attractive exploration targets that will see work in 2022. I want to now focus on the Atlas target short to the left of the image as it is at a more advanced stage of understanding than both Canyon and Cabin South and is currently being drilled to test a number of attractive sets. Next slide. The Atlas Mine has passed production of 286,400 ounces of gold and was the highest grade producer of all previous mining sites on the Gold Bar property. Its production grade of 2.5 grams per tonne gold is more than 3x the higher -- or is more than 3x higher than the current mining at the Gold Bar mine. Hole DH5-303 at the southeast end of the pit is the highest grade historic drill intercept of the Atlas ore body and highlights the attractiveness of potentially making a similar discovery in the current campaign. Four areas shown on the map are being tested in 2022 and include Atlas East, which is following up on a 2021 drilling recept of 3.1 grams per tonne gold over 27.4 meters, the footwall fault target that host mineralization sporadically drilled in the past, and Atlas South where a 2021 gravity survey suggests potential may still exist in that direction. We have also conducted an initial sonic drill program on the west dump to the southwest of the Atlas Mine. The mine had a cutoff grade that was much higher than typical cutoff grades at Gold Bar today, and it is possible the waste material from the past could be an opportunity for McEwen Mining today. Assay results on this are pending. Next slide. I mentioned the 2021 gravity survey on the previous slide. The warmer yellow and red colors shown here are interpreted to highlight a shallower bedrock depth and thus, potential for open pit mining. The historic open pit is shown in the black outline, along with a series of faults to the west, east and south as shown on the image in red circles and suggest the mineral potential at Atlas remains attractive. We rank this target area very highly, and we'll continue to work here in the second half of the year. And finally, Bill mentioned our San Jose Mine. Our San Jose property, which is a joint venture with Hochschild, our 49% interest, will have total exploration of $8.8 million in 2022 on a 100% basis. San Jose Mine proper and Saavedra are the 2 target areas that have been drilled during the course of the first half of the year, and we plan up to 12,000 meters of drilling overall this year. In Q1, a little over 2,000 meters of exploration drilling was conducted. And we show at the bottom left some of the better results that came from that program. That concludes the exploration portion of the presentation. Thank you.

Thank you, Stephen. Continuing with Argentina. My name is Michael Meding. I'm the VP for McEwen Copper, an upcoming copper developer, majority owned by McEwen Mining. I'm also the General Manager for the huge Los Azules copper project in San Juan in the highly prolific copper gold wells in the Andes between Argentina and Chile, where a significant part of the world copper has produced. I'm happy to present Los Azules, which is located in the province of San Juan, where I worked in executive positions for Barrick Gold Corporation in the past and that I know quite well as my family and I have lived there for about 10 years. What you see in this slide is the picture of the body where the currently discovered mineralization is located. What is additionally important to see is there are no white places surrounding our project, and it is at low attitude. We are showing you now a short video about the project and our thinking related to it before I continue with the presentation. [Presentation]

I hope you like the impression. Mining Intelligence has ranked Los Azules as a top 10 undeveloped copper project by resource. Some of the other projects in very challenging environments either geographically or jurisdictionally. Los Azules is located at relatively low altitudes between 3,200 and 3,600 meters above sea level in the mining-friendly jurisdiction of San Juan that has seen mining with major companies for more than 15 years. San Juan in Argentina being rated consistently highly for investment attractiveness as rated by the well-known Canadian Fraser Institute, the latest rating of San Juan was #1 in Latin America, the basket of countries such as Chile or Peru. This slide compares different mining projects by cost, incentive price versus paid cumulative production that was done by Goldman Sachs based on information from each company at the respective time. The circle number compared to the prior slides ranking of mining products by resource as was done by Mining Intelligence. As you can see, Los Azules is in the lowest cost quartile and is very attractive even at lower copper prices. This is mainly due to its low altitude location and low stripping ratio, initial higher grade for quick payback of up to 0.9% copper. El Pachon and Josemaria, both projects in the same province boxed on the right side in red, sit on the highest quartile in terms of cost for comparison. Josemaria was just acquired by Lundin Mining for about $485 million with less life of mine and lower grade. So what is our vision? Our vision is to create a mine with a net positive impact that is mindful of the ecological and social environment. And for us, this means to be a regenerative mine, and that will bring copper, a critical mineral for the future of our energy transition, towards more sustainable living for all. Chile and Peru, countries that have added significant uncertainty over the last years, combined produced about 40% of the annual copper production, which is around 20 million tonnes. As I mentioned before, San Juan is in the mining-friendly jurisdiction with several important projects operating and developing. This is where we are located. Copper, as per Goldman Sachs, is the new oil. And CAE viewed -- business intelligence company for mining and metals, expects world copper demand to rise 2.1% year-over-year to about 28.5 million metric tons by 2030 in a recent publication. There are strong copper fundamentals for demand going forward. With worldwide falling grades of operating mines, falling productivities and ever more difficult permitting in the top producing countries for expansions of new projects, we believe this will support positive copper price developments going forward. And at the same time, Argentina has become more attractive and now sees mining as key for economic development also on national level. We are currently in process of updating our preliminary economic assessment from 2017 to be finished beginning of 2023, which will be forming the technical documents compliant with NI 43-101 and S-K 1300 standards and will be used in our IPO in the first half of 2023. We are incorporating new drill results as well as our learnings from our hyperspectral scanning of all historic and new core. Hyperspectral generates significant amounts of data. It's big data technology that will help with AI and machine learning to optimize our understanding of the mine. With the drilling and hyperspectral data, we update our mineral resource estimate, expect to upgrade our resources, improve on our mine and processing plan and from the beginning, work with little enterprise from Australia to design a mine that suggests to be significantly bigger than what was outlined before. Next slide, please. As you know, Los Azules is among the largest copper deposits in the world. What is presented on this slide on the left is what are the steps that have been taken in the past to 2021, what have we done in the first half of the year, and what are we going to do forward technically on the ground? So far to 2021, this deposit has seen 66,000 meters of drilling with 202 holes with 26 of them stopping in mineralization. In 2022, we drilled 13.5 kilometers in 29 mostly inclined holes to better understand the structure of the deposit, 6 of them ending in mineralization. We have incorporated high-tech, big data analyzers for core scanning to improve geological and mining and metallurgical knowledge for more efficient PA and sufficient technical study work. On the right side, you see the pit shell. And in green, you can visualize the first resources that we aim to upgrade, almost 2.7 billion tonnes at copper estimated grade of 0.33%, 3.8 million ounces of gold and 135 million ounces of silver. In orange, you see our indicated tonnage, almost 1 billion tonnes, 962 million at a grade of 0.48 estimate with 1.7 million ounces of gold and 55.7 million ounces of silver. To give you an idea about the size of the inferred resource extend north to south is about 4.3 kilometer or 43 football fields and extend 1.2 kilometer wide or 12 football fields. You see across the deficits 4 sections: 30, 36, 40 and 48, which I'm going to talk about in the next slide as there you can see our encouraging drilling results. The distances between the section lines, those are the red lines on the right side, from 30 to 36 is about 300-meter or 3 football fields. 36 to 40 is about 200-meter or 2 football fields. 46 -- 40 to 48 is 400-meter or 4 football fields. Let's talk about the section number 48. This slide represents a cut through the deposit from overburden to leached to enriched to primary and shows the different drill holes and the assay results. The blue line is the 30-year pit shell. This is important because you can see that there is significant mineralization below that pit shell. Our drill hole AZ22149 shows 298 meters or about 3 football fields of 0.55% copper, including 54 meters of 1.38% of copper and ends in mineralization below the 30-year picture you can see in blue. This is the next section 48. In light blue on the left side, you see the results from the prior section, approximately 400 meters from this section. And you can observe that drill hole AZ22146 has corresponding results with 330 meters or 3.3 football fields of 0.83% copper, including 103.4 meters of 1.31% copper and ends in mineralization below the 30-year pit outline, suggesting high-grade continuity between those sections. On this section, approximately 200 meters or 2 football fields south of the prior section, we show drill hole AZ22142, which resulted in 419 meters of 0.79% copper, including 46 meters of 1.59% copper with a significant part of the drill hole below the 30-year pit line with high-grade mineralization. On this slide, we show drill hole results from hole AZ22158, which resulted in 220 meters of 0.95% copper, including 44 meters of 1.38% copper, suggesting again a continuity of high grades in this zone. As on prior slides, you also see deeper holes with mineralization, some of them touching interesting anomalies that I'm not going to talk about. In this slide, you see on the right a 3D outline in gray of the topography and of the pit outline in green. The crosscut section represents tightened geophysical survey results from south to north that I'm going to talk about in the next slide, and that suggests interesting further exploration targets going forward. Next slide please. What we see here in this slide are drill holes touching certain parts of geophysical anomalies in the southern part of the deposit. Some of them touching anomalies is showing higher grades. Therefore, we believe that on the lower left-hand side, where we see a significant anomaly, this could be an interesting deeper exploration target with further information from our current drilling campaign compared with the significant data that we get from our hyperspectral analysis of our drilling costs, those can be better defined as priority for further exploration work. Next slide please. As mentioned, we have a significant amount of anomalies as future exploration targets. Beyond having already one of the top 10 mines measured by resource according to Mineral Intelligence as I said before. First priority anomalies are generally larger targets at least 200 meters across and are consistent with classic porphyry and near porphyry mineralization and alteration model seen as well. Four of the priority anomalies are generally deeper and larger. And to recap, at the southern end of the deficit, 2 deep anomalies represent significant targets consistent with mineralization models seen at other porphyry copper deposit in the prolific and [indiscernible] comparable to [indiscernible] and Chuquicamata. Our upcoming drilling campaign is focused on resource delineation, geotechnical, hydrogeology and hydrology. We have now a second road access established, and we are doing metallurgical test work to increase the robustness of our PEA as well as to evaluate different flow sheets to further optimize our business case with the aim of being more economic producing better products. So far, we have raised $55 million in the first 2 tranches and are adequately funded to complete the updated preliminary economic assessment to NI 43-101 and S-K 1300 standards. Have a strong team in place for this work, the upcoming drilling season and the planned IPO in the first half of next year. I'm handing over to my colleague, Perry, our CFO. Thank you.

Thanks, Michael. I'll finish the presentation with a brief review of our prior operating and financial results. Production in 2021 of 154,400 gold equivalent ounces was towards the high end of our guidance range of 141,000 to 160,000 ounces and up 34% for the year compared to 2020 despite continued challenges from COVID-19. On a financial basis, this translated into a consolidated net loss of $56.7 million or $0.12 a share primarily related to $35 million spent on exploration expenditures at the Fox and Gold Bar properties as well as expenditures to advance the losses on [indiscernible] project. From the company's 100% owned operations, we reported a gross loss of $5.6 million in Mexico and $3.3 million in Nevada, offset by $2.4 million in operating gross profit at Fox. At our San Jose Mine, we reported a $7.5 million loss on the operations in connection with our 49% ownership. I would note, despite the GAAP loss reported, the company received total dividends of $9.8 million during 2021 from San Jose. G&A expenses totaled $11.4 million for the year, and partially offsetting these amounts was $3.7 million of other income, including COVID-19 relief amounts received of $3.5 million. Flipping forward to 2021 -- 2022 first quarter. The first quarter of the year was a challenging quarter -- yes, thanks -- a challenging quarter from the production standpoint due to COVID-19 and other operating issues encountered, which Bill Shaver noted earlier and is reflected in our lower-than-planned ounces produced, elevated cash costs and all-in sustaining costs for the quarter. Since then, Q2 production has recovered well, and production is up approximately 50% compared to the first quarter attributable to strong operating performance at both Fox and San Jose. And as Bill noted, Gold Bar is expected to have a much stronger second half of 2022. Turning to our final slide. In terms of strengthening our balance sheet, in the first half of 2022, we were busy from a capital raise perspective as the company successfully raised a total of $45 million. $15 million was raised as flow-through financing for the Fox Complex to fund exploration through the end of 2023. $15 million was raised from Rob as unsecured debt to augment the company's working capital position, and a $15 million tranche was raised from our McEwen Copper subsidiary to advance Los Azules as Michael just described. Thus, the company has a strong balance sheet going into the second half of the year. So with that, I'll now turn the presentation back to Rob.

Thank you, Perry. Last year, we made a strategic decision. We reviewed our portfolio of mines and properties to identify which one had the potential to be world-class and producing the most powerful positive impact for all of us shareholders in the intermediate term. The decision was easy. It was Los Azules because the copper price had more than doubled to over $4 a pound in the past 2 years. And Los Azules preliminary economic assessment calculated at $3 a pound copper had robust economics and a 36-year mine life. To realize this potential, we needed a substantial amount of money, $60 million to $80 million, to advance the project, money that McEwen Mining didn't have and would be expensive for McEwen Mining to raise. So we decided to create a copper development company in order to raise the funds necessary to showcase and build the value of our giant Los Azules copper project. I personally provided the lead order of $40 million, and to date, we've raised $55 million. We were convinced that by addressing the areas for further improvements pointed out by the majors who looked at Los Azules that we would be able to increase Los Azules' value and in doing so, significantly strengthen McEwen Mining's balance sheet since McEwen Mining would be the majority shareholder and retain a royalty on the property. As you heard from Michael, based on the preliminary economic assessment, Los Azules is considered one of the world's largest undeveloped copper projects and would be in the lowest quartile of the cost curve for such projects. So what could it be worth? To try to answer that question, let me compare Los Azules to another copper project located in the same mining-friendly province of Argentina as Los Azules. The Josemaria deposit was purchased for $485 million earlier this year. Now when compared to Los Azules, Los Azules' total resources are 116% larger. Its copper grade is 13% higher. Its projected CapEx is 23% lower. Its after-tax NPV is 46% higher. Its internal rate of return is 31% higher than Josemaria. Los Azules also has the benefit of being located at a lower altitude, both for its man camp, 600 meters lower and the open pit, 900 meters lower. This is much better for the health of the workforce, the efficiency of the equipment being used, and it's important to note, it is below the important Placer law limits. Los Azules is also closer to highways and the provincial power grid. Los Azules is advancing to a prefeasibility while Josemaria is at a feasibility stage of development. If you said Los Azules in its present stage of development was worth at least Josemaria's $485 million or, given its attributes, it might be even 50% more valuable at -- representing a value of $728 million, then McEwen Mining's current interest of 76% would be worth anywhere from $370 million to $553 million versus McEwen Mining's current market cap of $200 million. I believe the operational challenges of the past several years has severely obscured the underlying value of our assets. So let me do some calculations for you to show you the value that I see McEwen Mining having. Our turnaround is progressing, although it's a little bumpy. But I'll start with the value of Los Azules, the $370 million to $553 million. And then I'll add that to the value of our other assets, our gold and silver assets. Well, none of these assets at the moment have a projected 36-year mine life like that of Los Azules. However, our continuing investment in exploration is developed, delivering the prospect of longer mine lives. At Fox, we have a 9-year-plus from -- mine life projected from relatively shallow depths in a prolific gold district known for its deep-rooted gold systems. As Steve illustrated, in the Fox Complex, we have gold resources of over 3 million ounces in one of the great gold districts of the world. What could this large resource plus a producing mine that is turning around and possessing some interesting exploration properties, what could be its potential worth? If you valued it at, say, $50 an ounce, you'd have $150 million value. In Q2, Fox had a strong performance and recovered from the challenges we experienced in Q1. And the mine is operating well and looking good to hit our guidance for the year. At Gold Bar, the first half was definitely a disappointment. However, as Bill said, we're planning to start development of our Gold Bar South property this quarter with production beginning in Q4. This production from Gold Bar South should allow us to hit our production guidance for the year. Our exploration efforts there are focused on increasing our near mine ounces. Our total resources at Gold Bar and the adjacent Tonkin properties exceed 1.9 million ounces. If you went out to buy ounces in Nevada, what would you pay for those ounces when you had a defined resource on one of the major gold trends of the world? Recent purchases would suggest $50 to $80 an ounce. Based on these numbers, Gold Bar could have a value of $80 million to $150 million. So we have that. Now we look at our 49% interest in San Jose. It's located in an important emerging gold district in Southern Argentina. It's a high-grade silver, gold mine that started production 15 years ago. It's been a consistent performer. It's located on a large property holding. And as you saw in Circles Newmont Cerro Negro gold mine. What's it worth? We've approached our joint venture partner and operator of the mine, Hochschild, and they're not selling below $150 million. But why don't we say it's worth $80 million to $100 million? So putting those values together, Los Azules between $370 million and $553 million; Fox, $100 million to $150 million; Gold Bar, $95 million to $150 million; San Jose, $80 million to $100 million come to a total of $645 million to $953 million. Based on our current 475 million shares outstanding, that represents a value of $1.36 to $2 a share. I looked at this, and I say, I've invested -- just invested another $15 million in the company in the form of an unsecured promissory note. This cash injection brings my total financial commitment to McEwen Mining and McEwen Copper to over $220 million, greater than our current market cap. I think the consolidation we're going to do. Despite my initial hesitation to endorse such, the Board and I believe that the benefits of this decision outweigh my earlier concerns. It will allow us to remain on the New York Stock Exchange, where our highest trading volume occurs. Our higher share price post consolidation will likely expand our investor appeal and audience. So now I'd like to take your questions and comments.

So we currently have 2 questions. I'll direct both of those to Michael as they are concerning Los Azules. The first question was about the source of funding for Los Azules and specifically whether the income from San Jose Mine is being used for Los Azules' expenditures.

Okay. So the funding, as Rob had mentioned before, was a Series B financing were put in order of $40 million. And in the meantime, we have secured another $15 million from different investors, and that is used as a financing for the Los Azules project going forward, and which should bring us to the IPO next year and to our drilling. So monies from San Jose are not used for financing at Los Azules. That goes through different shareholding chains.

Thank you. The second question relates to interest in Los Azules from automotive OEMs. And whether you've seen any increased interest as a result of promising an environmentally conscious approach to copper mining.

Yes. So what we have seen after doing PDAC was that there was a very broad interest in this specific project. We had several conversations from automotive companies towards big copper producers and smelters. So there is an increased awareness that copper is a critical mineral for the upcoming energy transition. We had conversations with Asian automakers, and we are continuing on those basis. We just need to decide who would be an ideal partner for this project to go forward.

Thank you. There are no other questions at this time. [Operator Instructions] Which we'll direct to Bill with regard to the company's all-in sustaining costs and how we propose to reduce the all-in sustaining cost, and what reduction do you think is achievable?

Thank you very much for your question. Yes, the long-term objective of the company is to reduce the all-in sustaining cost. And from the presentation, you can see that as we go forward, the critical changes that are required are the increase in mill capacity at the Fox Complex and the higher grade from the Gold Bar operation in Nevada. And if we can increase those production ounces in the latter part of 2022 and going into the future years, that will be the key to lowering the operating cost down into the range of, I guess, what -- of what [indiscernible] in the mining business, which I think is getting our all-in sustaining cost closer to our cash costs that we're seeing today, which is a change of a couple of hundred dollars per ounce.

Thank you. Next question, direct to Rob. It's concerning the July 6 cutoff date for the McEwen Copper funding and whether that's a hard cutoff date or whether you consider extending that for the right investor.

Good question. For the right investor, we'll cut a deal, go to the end of the month. We expect to complete an updated preliminary economic assessment by Q1 of next year and do an IPO, initial public offering, in the first half of next year.

There's a question with regard to drilling, although it doesn't specify which project. The question is whether we are reporting true width or drill hole length. So in the case of Los Azules, those values are core length regardless of whether it's a vertical hole or an angle hole. In the case of the results from Ontario, those would be true width. In the case of the results in Nevada, those would be downhole width. There's another question about Timmins, which I'll direct to Bill. What is the capacity that's being added to the mill in Timmins? And do you think if -- do you think the -- we'll replace our production at Froome this year?

Thanks for the question. Yes, the bottlenecking of the process plant and some of the other changes we will -- are in the midst of making are intended to raise the daily production to a range between 1,400 and 1,500 tons a day. So -- and we anticipate that this will happen in -- kind of in the fourth quarter or third to fourth quarter as there are a number of steps in the process of increasing the tonnage. The operation now has a capability of running at that rate into 2025, and we anticipate that we will have some exploration success in the lower part of Froome, which will extend that again. And I guess there's the opportunity also to -- between now and the time we would, say, notionally run out of ore if we don't find significantly more ore at Froome to bring some of the operation either at Stock West or at Grey Fox into the picture between now and 2025.

Thank you. There are no other questions at this time.

All right. Since there are no other questions, I'd like everyone -- thank everyone for joining us. And wish you well. Thank you for your confidence.

Ladies and gentlemen, this concludes the 2022 Annual Meeting of Shareholders for McEwen Mining. Thank you for your attention. You may now disconnect.