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McEwen Mining releases 2Q18 production results

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Global Mining Review,

McEwen Mining Inc. has reported consolidated production for 2Q18 of 36 959 gold oz. and 772 432 silver oz., or 47 258 gold equivalent oz. (GEOs), using a 75:1 gold to silver ratio.

Highlights of the second quarter from the company’s four mines, including a new mine under construction in Nevada, US, are as follows:

Gold Bar Mine, US (100%)

Construction activities at Gold Bar focused on the heap leach pad, and installation of the crushing and process facility. All major equipment and bulk materials are either on site or purchased. Engineering for the project is complete and approximately 90% of contracts are awarded. Construction is advancing on schedule for completion by the end of 2018, targeting production in 1Q19. During the first three years of operation beginning with 2019, Gold Bar is projected to produce 55 000, 74 000 and 68 000 oz. of gold respectively.

Black Fox Mine, Canada (100%)

Black Fox produced 14 055 GEOs, in line with full year production guidance for 2018 of 48 000 GEOs. A US$15 million exploration programme is on-going across the Black Fox Complex, drilling results and other developments will be released quarterly, with the next update planned in the coming weeks.

El Gallo Mine, Mexico (100%)

El Gallo produced 10 808 GEOs, in line with budget and full year production guidance for 2018 of 32 000 GEOs. By the end of 2Q18, mining and crushing activities ceased and contractor equipment has been demobilised from the mine site. Closure, reclamation and residual heap leach activities are on-going and will continue for several years.

A new Preliminary Economic Assessment (PEA) study on the potential restart of production from the El Gallo Complex at some point in the future was published on 9 July 2018. The proposed development plan evaluated in the PEA is called Project Fenix. The key outcomes of Project Fenix include an average annual production rate of 47 000 oz. gold equivalent (AuEq), a 12-year mine life, low initial capital cost of US$41 million for Phase 1 and US$30 million for Phase 2, and pay-back period of 4.1 years. At current gold and silver prices the after-tax internal rate of return (IRR) is 28%, and the net present value (NPV) at a 5% discount rate is US$60 million.

Capital cost estimates for Project Fenix are to a level of accuracy that is consistent with a PEA technical report. During the next 14 months the company will continue to review mineral processing, mine sequencing, material transportation and tailings storage options; and the flow sheet will be optimised by undertaking trade-off studies, updating cost models and additional metallurgical testwork.

San José Mine, Argentina (49%)

Attributable production from San José was 12 139 gold oz. and 769 197 silver oz., for a total of 22 395 GEOs. Production is on-track to achieve full year guidance for 2018 of 91 000 GEOs. The company received approximately US$2.4 million in dividends from its interest in San José during Q2.

First Quarter Financial Results

Operating costs for 2Q18 will be released with the 10-Q Quarterly Financial Statements in early August. As of 9 July 2018 the company is debt-free with liquid assets of approximately US$30 million.

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