McEwen Mining Announces Resource Update at the El Gallo Complex in Mexico
TORONTO, ONTARIO -- (Marketwire) -- 06/05/12 -- McEwen Mining Inc. (NYSE: MUX)(TSX: MUX) is pleased to announce an updated resource estimate for the El Gallo Complex (100% owned) in Sinaloa State, Mexico, where Phase 1 production is scheduled to begin during the Third Quarter. New drilling by McEwen Mining from November 2010 to April 2012 (approximately 100,000 meters) has increased the level of confidence associated with the mineralization and increased the size of the resource. This update reports both global and in-pit resources. The updated resource estimates were generated using a silver and gold price of US$28.50 and US$1,500 per ounce, respectively.
El Gallo Complex Resource Highlights
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%
Feb 2011 Resource Estimate June 2012 Resource Estimate Change
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M & I Silver: 39.8 Million oz. M & I Silver: 53.1 Million oz. +33%
Inferred Silver: 19.7 Million oz. Inferred Silver: 31.0 Million oz. +57%
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M & I Gold: 543,728 oz. M & I Gold: 566,508 oz. +4%
Inferred Gold: 23,764 oz. Inferred Gold: 271,081 oz. 1,040%
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(i) Detailed tonnes, grade and ounces for each resource category are
highlighted in the tables below.
(ii)M&I is short form for Measured and Indicated.
"Our exploration team in Mexico has done a tremendous job at El Gallo. This growth in resources is even more important as we look to begin production during the Third Quarter. The goal for our exploration during the remainder of 2012 is to continue to grow our silver and gold resources," stated Rob McEwen, Chairman and CEO.
The first objective of the Company's exploration program since the last resource update in February 2011 was to increase the Measured and Indicated silver resources. This was done in order to raise the confidence level associated with this mineralization as the company is currently finalizing production plans for Phase 2, which will include the El Gallo and Palmarito (part of the El Gallo Complex) deposits. This was successfully achieved as the majority of the in-pit mineralization has been converted to Measured and Indicated for these two areas.
The second objective was to establish an inferred resource on a number of new veins that were discovered throughout 2010-2012. These veins contain both silver and gold. Although much of the Inferred mineralization was closely drilled and high degree of confidence exists, it was given an Inferred classification because additional geological modelling is required to gain a full understanding of the mineralization or because it fell outside of the conceptual pit design.
The resource calculation for the El Gallo deposit in Table 1 and 2 was estimated based on the lower cut-off grade of 12 gpt (grams per tonne) silver using a heap leach recovery process. Cut-off grade for mineralization that would be processed at the mill was 23.75 gpt silver. Table 3 shows the resource estimate for the El Gallo deposit at various cut-off grades that would be contained inside of a conceptual pit in order to highlight the higher-grade core.
Table 1. El Gallo Complex - In-Pit and Out of Pit Resource Calculation
In order to determine the mineralization that was contained in and out of a conceptual open pit design, the resource models were assigned various mining parameters (located at the end of the this news release) such as mining costs, processing costs, silver and gold recoveries and slope angles. The resource numbers below show mineralization both in and out of the conceptual pits for each area.
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Tonnage Silver Gold
('000 Silver Grade Gold Grade
Resource tonnes) (oz.) (gpt) (oz.) (gpt)
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El Gallo (Cut-off Grade 12
gpt Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 6,072 4,564,947 23.4 3,539 0.02
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Palmarito (Cut-off Grade 30
gpt Ag Eq.)
Measured 4,069 12,045,234 92.1 30,089 0.23
Indicated 129 219,948 53.2 794 0.19
Inferred 10,302 15,562,152 47.0 74,991 0.23
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Palmarito (Cut-off Grade 44
Tailings gpt Ag Eq.)
Measured 147 763,761 162.0 638 0.14
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Palmarito Dumps (Cut-off Grade 26
gpt Ag Eq.)
Indicated 145 805,556 172.5 1,298 0.28
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Chapotillo (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 1,475 1,740,941 36.7 21,905 0.46
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Haciendita (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 1,649 1,244,510 23.5 42,083 0.79
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Mina Grande (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 3,801 2,883,040 23.6 74,179 0.61
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Mina Grande (Cut-off Grade 0.58
Tailings gpt Au Eq.)
Inferred 463 804,333 54.1 7,523 0.51
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San Dimas (Cut-off Grade 0.41
gpt Au Eq.)
Inferred 846 576,580 21.2 19,325 0.71
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Los Mautos (Cut-off Grade 24
gpt Ag Eq.)
Inferred 965 1,323,642 42.7 3,637 0.12
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San Jose del (Cut-off Grade 0.38
Alamo gpt Au Eq.)
Inferred 501 35,539 2.2 13,162 0.82
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Las Milpas (Cut-off Grade 24
gpt Ag Eq.)
Inferred 678 964,316 44.2 1,724 0.08
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CSX (Cut-off Grade 27
gpt Ag Eq.)
Inferred 672 1,262,048 58.4 846 0.04
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(i) Magistral was previously calculated and disclosed in the Technical
Report Titled "Preliminary Economic Assessment for the El Gallo
District" dated February 11, 2012. See "Technical Information" below.
The Magistral gold resource totals Measured & Indicated: 502,466 oz.
(10,397,000 tonnes @ 1.50 gpt) and Inferred: 8,167 oz. (223,000 tonnes @
1.14 gpt).
(ii)"Tonnes" is stated in metric and equal to 2,205 lbs.
Table 2. El Gallo Complex - In-Pit Resource Calculation
In order to determine the mineralization that was contained in and out of a conceptual open pit design, the resource models were assigned various mining parameters (located at the end of the this news release) such as mining costs, processing costs, silver and gold recoveries and slope angles. The resource numbers below show only the mineralization that is contained within a conceptual pit for each area.
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Tonnage Silver Gold
('000 Silver Grade Gold Grade
Resource tonnes) (oz.) (gpt) (oz.) (gpt)
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El Gallo (Cut-off Grade 12
gpt Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 170 436,216 79.8 107 0.02
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Palmarito (Cut-off Grade 30
gpt Ag Eq.)
Measured 4,069 12,045,234 92.1 30,089 0.23
Indicated 129 219,948 53.2 794 0.19
Inferred 2,980 6,258,456 65.3 18,491 0.19
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Palmarito (Cut-off Grade 44
Tailings gpt Ag Eq.)
Measured 147 763,761 162.0 638 0.14
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Palmarito Dumps (Cut-off Grade 33
gpt Ag Eq.)
Indicated 145 805,556 172.5 1,298 0.28
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Chapotillo (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 845 1,388,412 51.1 15,652 0.58
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Haciendita (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 1,252 1,055,983 26.2 36,421 0.91
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Mina Grande (Cut-off Grade 0.44
gpt Au Eq.)
Inferred 2,713 2,514,179 28.8 61,130 0.70
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Mina Grande (Cut-off Grade 0.44
Tailings gpt Au Eq.)
Inferred 462 804,333 54.1 7,523 0.51
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San Dimas (Cut-off Grade 0.41
gpt Au Eq.)
Inferred 788 548,322 21.7 18,700 0.74
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Los Mautos (Cut-off Grade 23.8
gpt Ag Eq.)
Inferred 767 1,170,406 47.5 3,026 0.12
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San Jose del (Cut-off Grade 0.41
Alamo gpt Au Eq.)
Inferred 167 10,842 2.0 6,636 1.24
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Las Milpas (Cut-off Grade 24
gpt Ag Eq.)
Inferred 399 620,467 48.4 1,157 0.09
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CSX
Inferred 438 1,017,155 72.2 417 0.03
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(i) Magistral was previously calculated and disclosed in the Technical
Report titled "Preliminary Economic Assessment for the El Gallo
District" dated February 11, 2012. No in-pit resource was calculated for
Magistral in the Technical Report and its resource has been excluded
from the above table. See "Technical Information" below.
(ii)"Tonnes" is stated in metric and equal to 2,205 lbs.
Table 3. El Gallo Complex - "El Gallo Deposit Various Cut-off Grades Inside Conceptual Pit"
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Tonnage Silver Gold
('000 Silver Grade Gold Grade
Resource tonnes) (oz.) (gpt) (oz.) (gpt)
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El Gallo (Cut-off Grade 12
gpt Ag)
Measured 17,134 35,966,692 65.3 28,937 0.05
Indicated 2,356 3,307,711 43.7 2,286 0.03
Inferred 170 436,216 79.8 107 0.02
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El Gallo (Cut-off Grade 20
gpt Ag)
Measured 13,284 34,033,372 79.7 26,879 0.06
Indicated 1,638 2,935,712 55.8 1,795 0.03
Inferred 135 418,439 96.6 66 0.02
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El Gallo (Cut-off Grade 40
gpt Ag)
Measured 8,434 29,522,668 109.1 22,464 0.08
Indicated 644 2,037,257 98.4 1,013 0.05
Inferred 74 367,533 152.7 48 0.02
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Details on the parameters of the resource estimates are as follows:
-- The resource estimation was based on data from 2,150 holes comprising a
total of 284,381 meters of drilling completed by the end of April 2012.
-- There were a total of 131,045 samples assayed. The samples were assayed
by ALS Laboratory Group for gold, silver and 32 other elements. Gold was
assayed by fire assay with atomic absorption finish; over-limit
intervals were analyzed by fire assay with gravimetric finish. Silver
and other elements were assayed using ICP with a 4-acid digestion. Over-
limit silver intervals were assayed by fire assay with gravimetric
finish.
-- All estimates were done using Ordinary Kriging (OK) interpolation,
except for Magistral, which used Inverse Distance.
-- In-pit Mineral Resources for the El Gallo deposit were estimated by
Pincock, Allen and Holt, and all other Mineral Resources were estimated
by McEwen Mining using the CIM (Canadian Institute of Mining) Standards
on Mineral Resources and Reserves, Definitions and Guidelines prepared
by the CIM Standing Committee on Reserve Definitions.
-- The Magistral resource was previously calculated and disclosed in the
Technical Report Titled "Preliminary Economic Assessment for the El
Gallo District" dated February 11, 2012 by Pincock Allen and Holt. See
"Technical Information" below.
-- Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability.
-- The quantity and grade of reported Inferred resources are uncertain in
nature and there has been insufficient exploration to classify these
inferred resources as Indicated or Measured, and it is uncertain if
further exploration will result in upgrading them to an Indicated or
Measured category.
-- A US$28.50 oz. silver and US$1500 oz. gold price was used to establish
the in-pit resource using a Whittle or Vulcan shell.
-- Mining costs for mineralized material were estimated at $1.75 per tonne
and $1.65 per tonne for waste material. These costs are based on actual
mining costs at the El Gallo Phase 1 area.
-- Silver and gold processing costs for milling where estimated at $18.50
per tonne. Silver heap leaching costs were $6.50 per tonne. Gold heap
leaching costs were $13.20 per tonne. Milling and silver heap leaching
costs are based on estimates used to establish a reserve estimate in the
upcoming El Gallo Phase 2 Feasibility study. Gold heap leach costs are
based on estimates being used for El Gallo Phase 1 production.
-- Gold and silver recoveries were based on metallurgical tests or, in some
cases, were estimated based on similarity of mineralization type to
areas with established recoveries based on metallurgical testing.
-- The maximum overall slope angles used to establish the in-pit resource
was 60 degrees based on feasibility level geotechnical studies and
current mining experience.
-- Search parameters on high-grade composites for silver and gold at the El
Gallo deposit were restricted versus previous estimates. The search
radius was reduced to an average 19 meter influence for composites
greater than the third standard deviation.
-- Density values and silver/gold recoveries varied based on each
particular area and are shown in the table below.
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Resource Density Silver Gold Process
Recovery Recovery Method
(%) (%)
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El Gallo Milling 2.50 85% 75% Mill
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El Gallo Heap Leach 2.50 60% 60% Heap Leach
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Palmarito 2.58 68% 88% Mill
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Palmarito Tailings 1.51 50% 60% Mill
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Palmarito Dumps 1.20 85% 80% Mill
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Chapotillo 2.49 85% 88% Mill
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Haciendita 2.59 85% 88% Mill
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Mina Grande 2.59 85% 88% Mill
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Mina Grande Tailings 1.51 80% 73% Mill
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San Dimas 2.60 80% 94% Mill
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Los Mautos 2.50 85% 85% Mill
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San Jose del Alamo 2.50 72% 25% Heap Leach
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Las Milpas 2.50 85% 75% Mill
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CSX 2.35 75% 85% Mill
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Gold Zone 2.40 85% 75% Mill
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(i) Magistral was previously calculated and disclosed in the Technical
Report Titled "Preliminary Economic Assessment for the El Gallo
District" dated February 11, 2012. See "Technical Information" below.
ABOUT McEWEN MINING (www.mcewenmining.com)
The goal of McEwen Mining is to qualify for inclusion in the S&P 500 by 2015 by creating a high growth, low-cost, mid-tier gold producer focused in the Americas. McEwen Mining's principal assets consist of the San Jose Mine in Santa Cruz, Argentina (49% interest); the El Gallo Complex in Sinaloa, Mexico; the Gold Bar Project in Nevada, US; the Los Azules Project in San Juan, Argentina and a large portfolio of exploration properties in Argentina, Nevada and Mexico.
McEwen Mining has 267,919,384 shares issued and outstanding. Rob McEwen, Chairman, President and CEO, owns 25% of the shares of the Company. As of March 31, 2012, McEwen Mining had cash and liquid assets of US$66.7 million, comprised of cash of US$41.1 million, silver and gold bullion at market value of US$21.4 million, short-term investments of US$3.1 million and marketable securities of US$1.1 million. The Company continues to hold a significant portion of its treasury in bullion with the belief that prices will continue to rise.
Technical Information:
The technical contents of this news release has been reviewed and approved by John Read CPG, Senior Geological Consultant to the Company and a Qualified Person in accordance with Canadian Securities Administrators National Instruments 43-101 "Standards of Disclosure for Mineral Projects" ("NI 43-101"). In-pit resources for the El Gallo deposit, which is one of the mineralized areas that make up the El Gallo Complex resources, was prepared by Brian Hartman P.Geo and signed by Richard J. Kehmeier, CPG of Pincock, Allen and Holt, each an independent Qualified Person in accordance with NI 43-101. All other resources were prepared by John Read CPG, Senior Geological Consultant. Mr. Read is not considered independent of the Company.
John Read has visited the property on numerous occasions and most recently during January 2012. Mr. Read has reviewed resource modeling, the drill hole database, QA/QC for verification of Silver and Gold grades. Site visits data review and QA/QC revealed no issues of concern regarding the resource estimate.
For additional information about the El Gallo project see the "Preliminary Economic Assessment for the El Gallo District, Sinaloa State Mexico" dated February 11, 2011 and prepared by Paul Gates, PE, Richard Addison, PE, Aaron McMahon, PG of Pincock Allen & Holt of Denver, Colorado ("El Gallo PEA"). All three individuals are independent Qualified Persons as defined by NI 43-101.
The El Gallo PEA and the resource estimates contained herein do not constitute a feasibility or pre-feasibility study and contain no mineral reserves within the meaning of NI 43-101 or SEC Industry Guide 7. The mineral resource figures referred to in this press release and the El Gallo PEA are estimates and therefore insufficient to allow meaningful application of the technical and economic parameters to enable an evaluation of technical or economic viability and no assurances can be given that the indicated levels of gold and silver will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While the Company believes that the resource estimates included in this press release and the El Gallo PEA are well established, by their nature, resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company. In addition, the El Gallo PEA and this news release includes inferred resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the El Gallo PEA will be realized.
Cautionary Note to U.S. Investors:
McEwen Mining reports its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to NI 43-101. These standards are different from the standards generally permitted in reports filed with the SEC. Under NI 43-101, McEwen Mining reports measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. According to Canadian NI 43-101 criteria, the estimation of measured resources and indicated resources involve greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves. Under SEC Industry Guide 7 criteria, measured, indicated and inferred resources are considered Mineralized Material. The SEC considers that in addition to greater uncertainty as to the economic feasibility of Mineralized Material compared to proven and probable reserves, there is also greater uncertainty as to the existence of Mineralized Material. U.S. investors are cautioned not to assume that measured or indicated resources will be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.
Caution Concerning Forward-Looking Statements:
This press release contains certain forward-looking statements and information, including "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as at the date of this press release, McEwen Mining Inc.'s (the "Company") estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, risks related to business integration as a result of the business combination between US Gold and Minera Andes, factors associated with fluctuations in the market price of precious metals, mining industry risks, political, economic, social and security risks associated with foreign operations, risks related to litigation including specifically but not limited to ongoing litigation with respect to the Los Azules property which if resolved adversely to the Company, would materially affect the Company's ability to develop the Los Azules project, property title, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral resources and reserves and other risks. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. See McEwen Mining's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other filings with the Securities and Exchange Commission, under the caption "Risk Factors", for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information regarding the Company. All forward-looking statements and information made in this news release are qualified by this cautionary statement.
The NYSE and TSX have not reviewed and do not accept responsibility for the adequacy or accuracy of the contents of this news release, which has been prepared by management of McEwen Mining Inc.
Contacts:
McEwen Mining Inc.
Jenya Meshcheryakova
Investor Relations
(647) 258-0395 ext 410 or Toll Free: (866) 441-0690
(647) 258-0408 (FAX)
Mailing Address: McEwen Mining Inc.
181 Bay Street Suite 4750
Toronto, ON M5J 2T3
PO box 792
info@mcewenmining.com
www.mcewenmining.com
