McEwen Inc. ($MUX)

Hello, ladies and gentlemen. Welcome to McEwen's First Quarter 2026 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner; Ian Ball, Executive Vice Chairman; William Shaver, Chief Operating Officer; Perry Ing, Chief Financial Officer; Jeff Chan, Vice President, Finance; Stefan Spears, Vice President, Corporate Development; Kevin Bromfield, Project Director, Grey Fox; Michael Meding, Managing Director of McEwen Copper; Carmen Diges, General Counsel and Secretary. [Operator Instructions] I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining us today for McEwen Inc.'s first quarter 2026 results conference call. Our vision is clear and ambitious. McEwen Inc. offers investors a unique and powerful combination, direct exposure to growing gold and silver production, proven hard money assets that have served as stores of value for millennia, along with large optionality to copper, a foundation metal of modern civilization, essential for electrification, renewable energy, electric vehicles, data centers and the infrastructure of the future. We are scaling the company to 250,000 to 300,000 gold equivalent ounces GEOs per year by 2030, while maintaining a strong balance sheet. We just released our Q1 results, and I'm very pleased to report that we delivered a strong quarter. We generated net income of $33.4 million or $0.56 per share. This compares to a net loss of $6.3 million or $0.12 a share in the same period last year. This is a significant turnaround and reflects our improving operational performance, higher gold and silver prices and a more disciplined execution. We are advancing our multi-asset growth strategy with internal funding positioning the company to nearly double production while minimizing dilution. Just like to talk about our operational and project highlights in Canada, at our Fox Complex in Timmins, Ontario, we're making good progress. And the Stock Mine, underground development remained on budget in Q1. Initial production is expected in late '26 and commercial production starting next year. Grey Fox, we're finalizing a pre-feasibility study expected in the next coming months. And so combined, Stock and Grey Fox are targeted to deliver 75,000 to 90,000 gold equivalent ounces annually by 2030. We are also advancing the Tartan mine project in Manitoba with an updated resource of 309,000 indicated ounces and 303,000 inferred gold ounces. We're targeting initial production of 30,000 ounces per year with the potential to reach 45,000 to 55,000 ounces per annum. Overall, in Canada, we expect production to grow from 16,000 to 19,000 ounces this year to 105,000 stretching to 120,000 by 2030. At Gold Bar in Nevada, operational optimization and exploration success are driving increased outputs and extended mine life with gold production expected to reach 90,000 to 100,000 ounces by 2030. And in Mexico at El Gallo, ongoing improvements, we expect to boost production up to 20,000 ounces again by 2030. Together, Canada is scaling to 105,000 to 120,000 GEOs plus continued growth at Gold Bar, El Gallo and our Argentina assets, San Juan positions us to achieve our company-wide target of 250,000 to 300,000 gold equivalent ounces by 2030. I'd like to talk about our investment in McEwen Copper. As shareholders, we benefit from our 46.3% interest in McEwen Copper. Based on the most recent financing of McEwen Copper, this stake is valued at approximately $456 million or roughly USD 7.67 per McEwen Inc. share. Los Azules is on track to become one of the world's first regenerative copper mines and carbon neutral by 2038. Coming into production, we're looking at 2030. It's delivering significant embedded value and upside to McEwen Inc. Gold prices remain supportive. Our operations are cash flow positive, and we have a strong project pipeline. Our strategy is straightforward, execute development projects safely and on budget, aggressively explore to grow resources and reserves, self-fund growth to protect shareholder value, deliver consistent production increases and rising cash flow. I'd like now to turn the conversation over to Perry, our CFO. And before that, I'd just like to thank the entire McEwen Inc. team for their work this year. We're excited about what lies ahead and remain committed to disciplined growth and long-term value creation. Perry?

Good morning. Thank you, Rob. So I think I'll just touch on a few highlights from our first quarter earnings and then talk a bit about the financing of the growth plans that Rob just outlined for us. So starting with the quarter, as Rob said, we had a great quarter. We earned $0.56 a share basic and $0.47 a share fully diluted. Our revenues from our 100% owned operations more than doubled from a year ago, given high gold and silver prices. We also noted the benefits in this quarter of the capitalization of our equity recorded investment in McEwen Copper. So having published a feasibility study last year, we now capitalize those costs on a U.S. GAAP reporting basis. So we only record a small net loss compared to having to expense our share of all of their exploration costs in the past. I'll note that we did receive an $8.8 million dividend during the quarter from our MSC mine in -- from Minera Santa Cruz from the San Jose Mine in Argentina. We expect on the balance of the year to receive an additional $30 million to $40 million in dividends given strong silver and gold prices. I'll note our cash increased during the quarter despite our continued spend to complete the stock ramp. Our cash balance at the end of the first quarter was $57 million versus $51 million at the beginning of the year. And I'll note that our cash cost and all-in sustaining cost guidance, we believe we're well on track to meet our full year targets as we expect to increase ounce production for the balance of the year on a quarterly basis. And as well, we expect the costs -- our development costs at the Froome mine to decrease as we finish ramp development towards the end of mine life, which contributed this quarter about $800 to the all-in sustaining cost at the Fox Complex. So just taking a look and kind of expanding on Rob's point in terms of how we're going to build our operations to 250,000 to 300,000 ounces from our current basis. So in terms of projects we have on the go right now for 2026, we see total project CapEx this year of approximately $50 million remaining to be spent from Q2 to Q4. We have approximately $35 million remaining for the Stock mine to complete development and other related costs there. And we expect in the second half of this year to begin construction on Mexico. For El Gallo, we are currently budgeting about $15 million. So all of that will be funded by our existing cash flows as well as the dividends we expect to receive from the San Jose mine. Looking forward to next year, 2027, we see the CapEx profile approximately double to about $100 million as we finish Mexico as well as begin work on the Grey Fox as well as expansion projects in Nevada. We expect free cash flow from our operations as well as dividends from MSC to exceed $200 million at current gold prices. So we do have a significant buffer even at lower gold prices, say, to the $4,000 level at which we can still sufficiently fund from -- easily from free cash flow. In 2028 and 2029, we see those costs subject to permitting time lines increasing to approximately $150 million. But at the same time, we'll have the benefit of production from Mexico as well as increased production from the Fox Complex, providing additional cash flow of over $250 million annually, which will provide more than sufficient cash flow to achieve the growth stated. So with that, I think that provides kind of a high-level overview of how we can achieve this growth without additional dilution to our shareholders. And with that, I'll turn the presentation to Michael Meding in Argentina.

Thank you, Perry. Good morning, everybody. I will keep my remarks focused on Los Azules and specifically on the question that matters most to the project of the scale. How we finance the path from where we are today through construction? A quick word on Q1 execution before I turn to financing. Q1 was about putting the building blocks for FID, the final investment decision stage in place. Our integrated owners team is up and running with Samuel Engineering, an engineering firm that has supported us over the last 4.5 years very successfully to PE feasibility and now their personnel embedded alongside McEwen Copper staff. Jim Solomonson, who served as Study Director from the feasibility study has stepped in as Project Director. Jim brings with him a 45 years of experience in mining, including significant roles building large-scale multibillion-dollar mining projects like Cerro Blanco, Galarza, Cefa, Loreto and Florence. Together with more than 10 years of mine operating experience, including Vice President role in New York Mining Corporation. Detailed engineering is advancing across every major work stream, drilling access roads, heat leach pad, stockpiles, major equipment packages, trade-off studies and our EPC and partner selection process. On the regulatory side, the RIGI, the large infrastructure investment incentive regime in Argentina, the VAT section was fully operational during Q1 and is already delivering a meaningful cash flow benefit. We also had a productive international finance cooperation part of the worldwide site visit with our conversation advancing on the lineage to the IFC, the International Finance Corporation. The technical and regulatory foundation for FID are in place. Now towards financing. The total financing cost from FID to full operation is approximately $4 billion. That number gives you a scale of what we are building. To-date, we have raised over $450 million in private financing between 2021 and 2025. The capital came from a strong group of McEwen, Rio Tinto, Stellantis, McEwen Inc. and others. Together with McEwen Inc.'s early exploration investments, this funding carried the project to PEA feasibility study and into the detailed engineering phase. Our shareholders have already invested substantially behind the conviction in this project. The next step is bridging to FID. In January 2026, we established a $240 million secured loan facility structured with an according feature, so additional participants can join. Rob McEwen, McEwen Inc. and Will Shaver have committed approximately 1/4 of the facility and about 3/4 remains open, and we are having several conversations with potential investors to close the remaining part. The facility comfortably covers our pre-FID budget of about $197 million with a cash need there that we have of approximately $161 million. In short, this funding takes us cleanly through to FID. Post-FID, the construction ramp-up package is approximately $4 billion. We are working with a target capital structure of 40% equity and 60% debt. We see that as a realistic and bankable structure for a project of this scale in Argentina. On the debt side, we are in the final stages of appointing debt financing leads, primarily focused on export credit agency financing alongside other debt financing components. The IFC has expressed interest in serving as arranging financing, and we are progressing the steps required to formalize the growth. We expect the debt side to be anchored by an ECA-backed senior tranche complemented by traditional project finance. On the equity side, we are in active conversations with several potential strategic partners. Our preference is to bring in a senior mining partner together with an industrial or trading counterparty for offtake alignment and to round out this contract with other equity participants. These discussions are advancing well. Putting it together, the technical work is on plan, the regulatory framework is delivering, the bridge to FID is in place and partially subscribed and the FID financing is taking shape with high-quality counterparties on both sides of the capital structure. Our objective is to reach final investment decision by the year-end of 2026 with construction commencing in early 2027, obviously, subject to project financing and customary approvals. We are advancing well toward FID. Thank you so much. And now I hand it back over to you, Rob.

Thank you, Mike. We're going to move to Ian Ball to talk about one aspect of Los Azules, another value we have there.

Yes. Thank you, Rob. Yes, one of the assets inside McEwen Mining, which I think is often overlooked is the 1.25% royalty that we have on the asset. And in the quarter release we put out yesterday, we wanted to highlight some of the cash flow possibilities there once Los Azules is in production. If you look at the royalty based on the spot price of copper, you're looking at total cash flows well in excess of USD 0.5 billion, and that's based on the 22-year mine life that was outlined. There's also a scenario using the Nuton technology that would add an additional 33 years of mine life on top of the 22, getting you to 55 years of life that we don't factor into that $0.5 billion. And then there's resources beyond that. We've also excluded all the gold and silver, because currently there's no plans to extract that, but it is an additional possible revenue stream. We bring these numbers up because if you look at the biggest royalty company in the world was Franco-Nevada, based on the Goldstrike royalty. If you look at the revenue they generated from Goldstrike from 1985 to when they were acquired by Newmont, it was approximately $1 billion of cash flow. If you look at Los Azules, we have a profile that, although it would be over a longer period of time, could generate something similar. When you look at the world today, there's not many world-class royalties available. If you look at Franco and Wheaton River and the price they're paying to acquire these royalties, the valuations of these have been going up. We want to highlight this because we do think it's going to be a very meaningful asset for the company going forward. I also want to touch upon our exploration as we put out results at all of our sites. I just want to highlight a few items for you. We put out a new resource for our Windfall deposit in Nevada. So if you look at reserves resources right now at the Gold Bar Mine Complex, we're about 1 million and a quarter ounces now with one more resource to come out from Trinity Ridge. We think that number is going to go up. We put out some good exploration holes today at Windfall. With the recent acquisition of Golden Lake, we think that deposit is going to continue to grow in size. That's going to be important because we have a run rate of about 100,000 ounces per year we're going to have to be able to sustain, and we think the exploration is going to be able to achieve that. We're also looking to drill south of Barrick's Fourmile and Goldrush discovery. That's a 15 million ounce deposit, probably one of the most exciting discoveries out there today where we have the fault, the Cortez fault that goes directly south of that, so we're looking to drill there for lower plate rock. We have put out some good results at Grey Fox, approximately 90 meters below, where we're going to be looking at a pre-feasibility study for mining, showing that once we put the infrastructure in place, there's additional high grade that we think we can access that will be well in excess of what we're putting in our pre-feas. And I just want to touch upon just 2 things quickly. At Tartan, we put out a number of drill results today. I think what's interesting at Tartan, we're seeing now 4 or 5 drill holes at depth that are somewhere between 15 and 50 meters wide at 4 to 5 grams per ton. It's starting at approximately 1,000 meters depth. And if those drill results could continue and we're able to find some strike length to that, we go from being a small operation to something potentially of a much larger size. We've hit on all 5 holes that we put down at depth, and we are drilling down there currently. So we have pretty meaningful expectations of what could come there. Lastly, I just want to update on future resources. We have our Stroud deposit, which is part of the Grey Fox Complex or the Fox Complex. An initial resource is coming out there with the pre-feasibility study. We're going to be putting out an updated resource for El Gallo, which I think is going to show a resource base there that would support a mill for a considerable period of time. We have our Trinity Ridge resource coming out in early 2027, which will support the Gold Bar Complex. Lastly, although a non-core asset, we're going to be putting out a resource on our Buffalo Ankerite deposit also in Timmins. Previously, that resource was approximately 1 million ounces at a lower gold price and we're going to be updating that just to highlight some of the value that has currently not been updated in quite some time. So based on that, I will turn the call back over to Rob.

Thank you, Ian. Thank you, Mike. Thank you, Perry. Just before moving into Q&A, I always like -- since I started in the gold industry, I always like looking at other assets and saying, what's the gold equivalent And it changes. So looking at Los Azules, just to give you a sense of its size, and Ian was talking a little bit about how Franco-Nevada was formed on the back of Goldstrike. Our Los Azules property has estimated resources of 35.7 billion pounds of copper. If you take the current gold price, which is right now about $4,753 an ounce and the copper price right now at $6.02, you end up there's 790 pounds of copper equivalent to 1 ounce, the value of 1 ounce of gold. You divide that into the 35.7 billion pounds, you're looking at the equivalent of a 45 million ounce gold deposit. And based on the feasibility study of cash and all-in sustaining, you would get numbers of below $1,400 cash cost and below $1,700 all-in sustaining, and you'd be producing at least in the first 5 years, in excess of 500,000 ounces a year. That in anyone's book is a terrific gold asset. But we're looking at a long-life asset here. And I just wanted to point that out that we're very fortunate to own, control a world-class copper asset. I'd now like to open the session to questions and answers.

Your first question comes from the line of Jake Sekelsky from Alliance Global Partners.

So starting with the stock, how should we be thinking about the ramp-up there as we head into the second half of the year? Do you have a throughput target in mind that you'd like to be at by, let's say, the first quarter next year?

Okay. I'll ask Will to answer that question.

Yes, what we see is that the transition from the Froome mine will continue until the end of the year and the ramp-up of the Stock East mine will start relatively early in the second half of the year and hopefully, by the end of the year, be ramped up to its full production. So we see the continuity of the gold production to be relatively the same in 2027. And I think the important aspects of that are the kind of the optionality that we have with regard to the ongoing development at Froome, which has performed very, very well in the first quarter of this year, and we see that continuing to the end of this year at relatively the same gold production as we had in the first quarter. So that will make that transition kind of very smooth. And I think that's the critical part of the whole story with the Fox Complex. Did that answer the question?

It does. That's helpful. And then just switching gears to Tartan. I mean, you mentioned the possibility of expanding capacity there. I'm just curious, what does the permitting process look like for that, and wouldn't the expansion happen prior to a restart decision or would that come after?

Kevin?

Kevin Brownfield here. We're currently embarking upon a notice of alteration for permits so that we can do some site cleanup and continue with our activities. We've got a lot of excitement coming out of the drills there. And so we're currently evaluating the path forward. Does it consist of an advanced X program and also challenging aspects of the validity of past permits. And so we're understanding that landscape right now and making sure that we have the baseline data to support a decision that we're going to be making as the exploration activities go on.

Do you want to add to that?

I do want to add a little bit to that. So the reason why we're looking at it from the 500 tonnes per day and then looking to expand to the 1,000 is that we do believe that we can utilize the existing 500 tonne per day permit that was put in place in the mid-80s. So we want to get the mine up and running at that run rate. And then if we were to expand to 1,000 tonnes per day, that might require a major alteration to the permit, which obviously had more time inherited to it. So we want to be able to phase it to open the 500 to the 1,000, but we use the existing permit, we think we can get there a lot faster than trying to expand it all in one go.

Your next question comes from the line of Mike Kozak from Cantor Fitzgerald.

A few questions from me, if I could. First, I think the CapEx for El Gallo Phase 1 is in the MD&A. I think it's at $25 million, if I'm right on that. My question is, what is the expected CapEx on Phase 2? Have you refreshed that recently at all? I know it will be over a longer time period, but I was just curious what that number might be.

Yes. So we've been looking at that as well. It's a number that's well into the future. Right now, we have a plan that 10 years into the future, but we're doing approximately $40 million is what we've been looking at, and that would be consisting of a haul road connecting the 2 sites from El Gallo to the mill, converting it from a CIL to a Merrill-Crowe and also switching parts of the plant from gold to silver. So right now, that's kind of what we're thinking. But we can move that ahead if we wanted to or we can keep it where it is. But the $40 million is generally what we've been thinking about.

So it's not in the hundreds of -- it's a manageable number. That's kind of what I was getting at.

We do believe it's a very manageable number.

And then second, I just noticed quarter-over-quarter that the cash is really starting to build up in the San Jose JV. And I got your guidance for dividends from the JV this year, $40 million to $50 million on the year, $30 million or $40 million remaining. My question is based on your discussions with your partner there, can I assume that run rate of dividends will continue in '27 and '28 if we were to hold gold and silver prices around these levels, or have you not had those discussions yet.

Mike, it's Perry. We are having ongoing discussions. So I think the first thing is satisfaction of the reclamation obligations, which will take a significant portion of kind of the existing cash balance and kind of move that to sort of a restricted cash balance, if you call it that. But I would say, on balance, we can expect similar levels going into '27-'28. If you just look at kind of the proven and probable reserves, they only extend into '27. But given where silver and gold prices are, we think this mine can go into 2029 and hopefully beyond. So I think that's a reasonable assumption to make, Mike.

Okay. And then third, if I can. And Michael, I appreciate all the detail you provided on the funding strategy for Los Azules, the pre-FID bridge loan, the export credit agencies, OEMs on the debt side, et cetera. And you spent a bit of time talking about a new potential large cap partner on the equity side, if I heard that right. What I didn't hear and maybe I missed it, was mention of the potential IPO of the copper subsidiary. Is that less likely of an outcome now or how should I think about that or has nothing changed?

Nothing has changed. Go ahead, Mike.

No, nothing has changed, as Rob said. I mean, we are going full steam ahead with the separation of everything required to be able to do the IPO in the second half of the year.

Your next question comes from the line of Jeremy Hoy from Canaccord Genuity.

So for me, I'd just like to touch on Gold Bar. There's a lot of pieces coming together there with the acquisitions you've done. We're looking at initial resource estimates for Windfall and Trinity Ridge later this year, if I recall correctly. Can we expect some sort of study that provides visibility on how that's all going to come together or could you provide an update on your thinking on how those different pieces come together at that complex and ultimately, what are the production rate could end up being there?

We see the permitting of that project taking perhaps a couple of years. From that perspective, what we're trying to do at the present time is to do the drilling that's required to bring those resources up to the proper status in terms of being able to put together a mine plan and then, you know, creating the study, if you like, of how we're going to approach that. But basically, the strategy that we have at this point is to create a heap leaching operation that really would only be a leach pad with the carbon recovery of the gold and then bringing that carbon to our present day plant out at the Gold Bar operation for recovery of the gold. So that would keep the capital cost relatively low in terms of, you know, a significant leach pad that's capable of holding ore for couple of years is somewhere in the $10 million to $15 million range. So that is kind of the initial strategy. There is a lot of potential gold to understand where it is in those properties. I guess, we're proceeding with the permitting, and that permitting, as you know, permitting in the U.S. has schedules that are not definitive, but we see that as building optionality in the whole organization, and we're also, on the drilling that we're doing at Gold Bar itself, we see that as extending so that we won't have a gap in between those two. It all good at this point. While we're seeing that production coming out of Gold Bar, which I suppose was your original question, that's carrying on at the rate that we're -- at the level that we're at this point.

Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research.

Could you review the human resources development as you've added assets in the past year who are some of the key managers or technical people that came on board or stayed on board as you consolidated assets in Central Nevada and consolidated assets in Manitoba or anywhere else in Canada. Could you elaborate on the challenge of coordinating several small or medium-sized properties in Canada and Nevada and Western Mexico, assuming that McEwen Copper and the Rothschild partnership manages themselves. And just give us confidence as to the human resources development as you grow and they're a little more complicated.

Well, I'll ask Kevin to speak to that point. He brought in to deal with the Grey Fox expansion and is overseeing the Tartan development. Kevin?

You know, competing for talent in the current mining market is a challenge. One of the things I guess one of the people added would be myself. I'm located in Sudbury. We're in the process of building a Sudbury projects team that's going to support Canadian projects and beyond, so we're a growing group. We've also added government relations support. We've added to our human resources capabilities here at headquarters in Toronto. We are putting some pieces into place, and so far we've been able to assemble what I think is a very good team. And I would say that the growth needs to be ongoing as we get toward execution as we ramp up our capital spends.

I might just add that we've also added resources in terms of our permitting group, and our technical group, overseeing all of the projects. We've been fortunate enough to bring on people like Kevin. Kevin and I have a history, having worked together for about 10 years. I think we're building a foundation of a really good group, going into the future. We see Northern Manitoba as being an opportunity in part because around Flin Flon, there's a big mine that has closed there, but there's still a significant number of mining people who live there and are traveling now to work at other places, so they'll come back home. It won't be easy, but I think we have the rudiments of a really good team that we're building and that's the fundamental part of it at this stage.

John, I'd say we've been centralizing a number of the skills such as procurement, IT, looking at how do we incorporate more of that technology into our future operations and AI as well.

And it's impressive that you manage costs while you're metamorphosizing the organization.

Your next question comes from a line of [indiscernible].

The McEwen Copper IPO has been on the roadmap for a while. Given that the feasibility study is done, the RIGI approval is secured, and the FID is targeted for year-end, the de-risking work appears largely complete. My question is, has a bank been mandated for the IPO? And if so, which exchange is being targeted? If a bank has not yet been mandated, what is the specific remaining gate item before that happens? Is it the FID itself, a copper price threshold, or something else? And what should investors treat as the single most important milestone to watch between now and year-end that tells us whether the IPO is on track or slipping?

We haven't chosen a banker. We've had discussions with many. And in terms of listing, we're still debating that. It appears that you can get to market faster by doing a Canadian listing. It's considered faster and cheaper than doing a listing in America. Although, my preference is to go to America first, just because of the size of the market, and the pricing tension that would probably appear in the IPO. Those two have to be decided. In terms of catalyst, it's completing the financing for funding FID and we're getting close to having that funded. So I guess we announce that and then moving it on to getting all the engineering done to start construction in 2027. Did that cover off your question?

Yes.

And there are no further questions at this time. Mr. Rob McEwen, I turn the call back over to you.

That's very nice of you, operator. I'd just like to close by saying we're excited about what lies ahead and committed to pushing the company forward and building long-term value.

This concludes today's call. You may now disconnect.