Good morning, all. We're so pleased to host Michael Meding, the VP and General Manager of McEwen Copper, who is the wonderful financier that brought Stellantis from Argentina in to finance the Los Azules project. It wasn't some fancy investment banker. It was Michael's LinkedIn message. Rob McEwen, the Chairman and Chief Owner of McEwen Mining and McEwen Copper. Please bring us up to speed on all the good news.
Thank you, John. Good morning to everyone. McEwen Mining, symbol MUX on the New York and Toronto Stock Exchange. I believe we offer a unique combination of precious metal production and exposure to a massive copper deposit. What you're seeing on the first slide is the start of a new chapter at our Fox Complex, and this is the Stock Mine. It's one of the mines we're operating at. We're driving a ramp to the underground that will usher in a new era where we won't have any metal streams on our production. The distance to the mine, to the mill, you can see the mill right above the portal or the decline rather than a 35 km haul. The ore is softer, so we can process a greater volume of ore through, and the grade's about the same.
We're expecting an improvement in our costs and an increase in production from the Stock Complex. The other insert is a picture of copper cathode. As John mentioned, Mike is managing the operations of McEwen Copper, and we plan to be producing London Metal Exchange Grade A copper cathode that won't have to go to a smelter, go right from the mine directly to the customer. We'll talk about that more. The next slide is just your customary safe harbor statement. You can read it at your leisure. Next slide is just a curious owl looking for an investment. Who are you looking for? It's supposed to be yours. Next slide. The time to be looking at commodities is now, and this is looking at a 50-year, 55-year history of the commodities, Goldman Sachs Commodity Index relative to the S&P 500.
You can see their low points, and right now off to the bottom right is where commodities are relative to financial assets. I believe that is turning, and this is an opportune time to be increasing your exposure to commodities in your portfolio. The next slide is just showing the price of copper since 2010, and it seems to be breaking out of a range and possibly heading higher. We can see the positive factors here are the growth of electrical vehicles, the use of renewable energy, the use of copper in that infrastructure, as well as AI and data centers, big users. There has not been a lot of investment in this sector, so there are projected deficits going forward, and they are bringing new mines on for extended periods of time. That deficit may exist for a while. The next slide is just showing that was copper.
The next slide is just looking at a very long history of 129 years of gold in the Dow Jones Industrial Average. You can see on this slide there have been periods when one or two ounces have bought the Dow. Currently, 13 ounces buying the Dow. Somewhere in the future, I believe you're going to see gold of one or two ounces buying the Dow again. If that were to happen overnight, you'd be looking at $20,000 an ounce, at two ounces buying the Dow. The next slide is just showing how gold relative to gold shares is breaking out. Gold in the gold color on this graph, these two lines, and the Dow below it. Gold has broken out relative to the Dow. One sector that's really lagged behind gold are gold equities.
You're seeing here gold in gold, and then the GDX, the ETF measuring the senior gold stocks, is in the darker color, and the juniors in red. There are times in a cycle, gold cycle, where the juniors outperform the seniors, and you can see them lifting with the price of gold. I think it's an attractive time to be adding some juniors to your portfolio. McEwen Mining happens to be one of those juniors. I think we're attractively priced. We have good trading liquidity on New York, averaging better than 600,000 shares a day. We have a massive copper auction. If you go to the next slide, Mike, our gold production and resources are increasing, so we have good leverage to the precious metals. My ownership is significant, over 16%, and maybe went to 15% now, and take a dollar a year.
We have good exploration upside. My personal investment is over $200 million between McEwen Mining and McEwen Copper. There are 54 million shares outstanding, and you can see the ownership distribution in the pie chart and the top holders over on the right. Our assets are in the Americas. If you go to the next slide, please. The Fox Complex, which is pictured on the front of this presentation, is located in Timmins, Canada, a very well-established gold mining district. Gold Bar is in Nevada, also a prime gold district, just south of what was Barrick's Cortez Mine, now Nevada Gold Mines' Cortez property. We also have a grassroots copper project in Nevada. We have a mine on care and maintenance in Mexico, a small gold-silver mine, a joint venture underground gold-silver mine in Argentina operated by our partners, Hochschild.
We own 49% and Los Azules, which is our large copper project, which Mike and I will talk about shortly. The next slide is just showing our share price since September of 2022 when we started financing, closing our first financing on McEwen Copper. We lifted out of the group of gold stocks in terms of performance with some global players coming into our copper story. One was the sixth largest car manufacturer in the world, Stellantis, that John mentioned earlier on that Mike brought into the fray, and Rio Tinto, the second largest mining company. Their investments are substantial. Since that date of September 2022, we have raised just over $450 million to advance our copper project in Argentina. You can see here over on the right that since September 2022, McEwen Mining is up 221%, and I think there is a lot more room on the upside.
I'll just speak briefly about the financing for McEwen Copper. On the next slide, you can see we've done four financings since August 2022. On the right-hand column is McEwen Mining owns 46% after all of these financings. On a per-share basis, it is valued at $8.60. That's the investment that McEwen Mining, the value of the investment of McEwen Mining's interest. Now, on the next page, we're looking at what management thinks is the value of McEwen Copper. It has three parts to it, or McEwen Mining. McEwen Copper is 46%. As you saw on the previous slide, there was a value of $8.60, and $8.47 kept in there, but the base is $8.60.
If we look at several other properties you're going to hear about that are in the same province that BHP and Lundin Mining own, if we were to take half the value, we could get up to $29 a share of value. A royalty portfolio of six non-performing royalties, the largest of which is 1.25% on our Los Azules copper project that over its life would generate about in excess of $400 million. We've valued that at $35 million or $0.65 a share. We have our gold and silver properties, and we've taken a discount of 50% on a peer group average enterprise value per annual production. You have an $8 there. Our low is $17, and yesterday we closed at $9.52 and a high of over $54 a share. A considerable improvement over where we are right now.
I'll jump into McEwen Copper and then just introduce its location. It's in the Andes, along the border with Chile and Argentina. It's in the province of San Juan, which is shown in orange on this chart. There are a number of large deposits in San Juan and also along the spine of South America. Chile and Peru produce 40% of the world's annual production of copper. Argentina is an emerging district that I think one day could produce as much as Peru. That's probably 15 years from now. I'd like to move into the next slide to give you a sense of the landscape and the vision we have for McEwen Copper. After that, Mike will carry on with the presentation. I don't hear any sound. Okay.
How do I enable the sound?
Let me just get Casper. Casper, could you help Mike?
He has no sound. Maybe you can.
Casper, if I put on the video, it doesn't sound.
John, can you help with that?
I think the issues are on your end, and Mike would be better if you narrated in place of the narration of the video. Okay. I wonder why.
What we're going to see is an overview of the project, where it's located. McEwen Copper is planning the first revenue-rated copper mine in Argentina. It goes without saying that we need to transform industry to provide us with the materials we need for a renewable society, but without the historic legacy of environmental damage. Copper is one resource that will only grow in importance as we replace fossil fuels with a decarbonized world. Electric cars, wind turbines, batteries, solar panels, and the computers that power everything all require copper.
That copper needs to be green copper, carbon-neutrally and ecologically responsible. When we started the project, we began by drafting a set of principles for the project that guide the team in its decision-making and approach. We did this work informed by the place itself. The Andes are an incredibly beautiful and sensible ecosystem. We knew it was our duty to be stewards of this place, protecting habitats, glaciers, waters, and life itself, while at the same time getting the copper resources that we need. We have been thinking carefully about the future first and our eventual legacy. We then focused on the people, the miners, and the community itself. We have been working on creating a new experience for the people living in San Juan and its surroundings. Over the life of the mine, over 1,000 high-quality jobs will be created.
These will be jobs unlike any others in the industry. We think people will covet working for McEwen Copper because not only do we focus on safety, but also on dignity and livability, creating a mining infrastructure that is an oasis in the sky. Here is our vision for the mine camp of the future. Beautiful, inspiring, and bold. A biosphere of health and life.
How is that? Wow.
After a long day of work, our people will return to a place completely powered by the sun and that creates an ideal condition for rest and sleep, recuperation, and the daily needs of miners. Imagine a place that grows its own food, collects and treats its own water, and generates energy without emissions on a giant solar superstructure.
We are placing specific emphasis on indoor quality, acoustics, and stress reduction, with a focus on social justice, equity, and even beauty. This will be a place to live and thrive while earning a living. We're designing an ecological water treatment valley that not only completely protects downstream water quality, but allows for the creation of new habitat and the enhancement of vegas. Partnerships with local universities and scientists will see new advances in natural phytoremediation and water treatment. This is to ensure that water will always be safe and healthy. Our entire mine operations will be powered by onsite and offsite naturally generated energy. Where possible, conveyors and fleets will be electrified and plugged into this network of clean energy with batteries instead of diesel for backup generation. At Los Azules, we are not building a mill.
Instead, we're advancing heap leaching technologies to extract metals chemically in a completely closed-loop process with radical reductions in energy and water use. Finally, a state-of-the-art renewably powered electrowinning facility will produce pure copper so that from the pit to the product, our investors and customers know that sustainability forms every single step, and they can count on that for their own ESG objectives. Our planning process continues, and we look forward to sharing more innovations as we develop this amazing project forward. At McEwen Copper, we are striving to deliver the greenest copper producer in the world. Okay. Los Azules is a very big project. It is currently estimated to be the ninth largest measured by resource size. Taking out the projects that are owned by a major, it is the fourth biggest copper porphyry that can be developed. Here you see the ownership structure.
McEwen Mining owns 46.4% of McEwen Copper. McEwen Copper owns 100% of Andes Copper Ciervenera, which owns 100% of Los Azules. Stellantis, as Rob already mentioned before, owns 18%. Rio Tinto through their Nuton venture, which could significantly impact positively the future of our project, owns 17%. Rob owns slightly below 13%, with the others owning the rest. Now, how do we compare versus other projects in the province? We have chosen two comparisons. We have chosen José María and Filo del Sol, which recently joined together with BHP and Lundin into a joint venture to form the Vicuña District. Los Azules is at 3,100 m -3,600 m altitude. José María is at 4,000 m-4,900 m altitude. Filo del Sol is 4,900 m-5,400 m altitude. Why is that relevant? We are significantly lower.
We have less issues with machinery operating at altitude and with people that have less productivity at altitude. We are close to infrastructure. On the lower left-hand side, you see we are 70 km from a provincial highway and from a 500-kV energy line currently operated 132. José María is 244 km from infrastructure and Filo del Sol, 77 km from Chile. When you compare our copper resources and grades with the combined José María and Filo resource, you can see that while the resource size is about 2x , we are valued at about only half of the—sorry, let me start that again. I got confused. So while we have about half the size of José María and Filo combined in terms of resource size, we are only one quarter of the value when it comes to valuation.
José María and Filo came together at a deal valued at $4.5 billion. According to our PEA, and I have to say our feasibility study is pending, and you can expect slightly smaller resource and higher cost per pound and higher CapEx. We compare very favorably to José María and Filo. At the time of the PEA, we had $1.07 per pound of copper, while José María had $1.55 and Filo del Sol $1.54. Now, what happened since the PEA came out? We see an increase in copper price. The PEA was using $3.75, and we are currently seeing prices above $4.50 per pound of copper. We have increased knowledge of the mineral resources. We added 97,900 m of resource drilling. We added structural interpretations to limit the resource modeling. We have converted the majority of the PEA minable resource material into measured indicated mineral resources.
What we also see is that we see an increase in capital cost. Internationally, we see capital costs increasing by about 20%. In Argentina, while deregulation is working and inflation control is working, and the REGI is incentivizing capital attraction. However, since early 2024, US dollar costs have really reached inflation, outpacing devaluation. We have seen inflation in Argentina of 43% since January 2024 versus 45% of devaluation from January to April this year. Now, McEwen Copper, and you see here in dark gray the minable pit shell from the PEA, in light gray, the resource pit shell, has expansion potential to the north, to the south, and at depth. You see two holes to the north that go about 400 m to the north and stick outside of the minable pit shell, and they show 0.42% over 480 m, well below the resource pit shell.
We have seen 0.2% over 20 2m , 400 m further to the north. To the south, we have seen 600 m worth of expansion potential. We have seen 0.3% over 70 m in the hole closer to the pit. We have seen 0.21% over 276 m and 0.23% over 180 m , 600 m to the south. What did we do over the last two years? Over the last two years, our project was focusing on upgrading our resource and developing the project. Now, since about 18 months, we have started to do additional exploration, prospecting, and exploration. At the end of the last season, we have done a metallurgic, an MT helicopter geophysics survey, and we have identified seven exploration targets with key elements of a large porphyry system.
We have seen multiple intrusives, porphyry copper alteration at surface, porphyry copper veining, porphyry copper geochemical signatures, and I already mentioned geophysics. In the white, you can see the pit outline from Los Azules. You see all the other targets within our property. To give you an idea, our property spanned about 32,000 hectares, and we have explored about 3,000 hectares so far. That means we have significant exploration potential going forward. End of last year, we received the most important permit for a mine to go forward. We received our environmental permit from the local regulator, which allows us to construct and operate the future mine. 11th of February this year, we have presented ourselves to be included in the REGI. We are currently awaiting the approval of the REGI. The REGI is the large infrastructure investment regime created by the Milei administration in July of last year.
What does this mean? It means a copper tax reduction from 35%- 25%, halving of tax on dividends from 7%- 3.5%, freedom to export products with exemption of export duties after three years, currently on copper 4.5%, almost immediate recovery of VAT, and most importantly, export proceeds are freely available for big projects 100% three years after the startup of the project, the startup of the project being defined as the time of the approval of the project. All of that is packaged in 30-year stability with the possibility to litigate not only in Argentina but also in front of International Arbitration Courts, creating additional stability for projects investing in Argentina under this regime. Now, Argentina has fast become an attractive mining investment destination since Milei was elected in December, and we have seen that Milei has governability.
He was able to push through the large foreign investment incentive regime that was approved, which significantly increased Los Azules and PV versus the PEA. Everything else remained constant. We have seen transactions such as BHP, the world's largest miner, completing the $4.5 billion copper deal with Lundin Mining to form out of Filo del sol and José María the Vicuña District. We saw the signature of the United States signing a memorandum of understanding with regards to strengthening the cooperation on critical minerals. We saw Rio Tinto, the world's second largest miner, buying Rincón in Argentina for $6.7 billion for lithium mines mostly in Argentina, some in Australia and in Canada. We saw Rio Tinto coming in not only in our project but also buying an option on Aldebaran's Altar Copper Deposit, which is slightly south of us.
They can acquire 20% by making staged payments for a totaling of $250 million. On December 12th, Rio Tinto announced a $2.5 billion expansion of its Rincón lithium mine in Salta. On May 4th, we saw the massive BHP-Lundin release of the resource estimate for Vicuña. Okay. Rob, you would like to take over on the 2024 production and 2025 guidance?
Yes. Yes. Thank you, Mike. You haven't gone hoarse. Thank you. Here we are looking at first, if you're going down on the left-hand side, consolidated production from our various mines. GEO stands for gold equivalent ounces because we're producing, in some cases, silver as well as gold and putting it all on a gold equivalency basis. For this year, we're looking at total production between 120,000 and 140,000 ounces with an all-in sustaining cost of up to $2,000 an ounce.
It breaks down the operations: Gold Bar, Fox Complex, and San José Mine, which is the joint venture we have. In Gold Bar, the first two quarters, we'll be looking at higher cash costs and all-in sustaining as a result of some stripping we're doing to access an area of mineralization and expect the guidance here for the year to be achieved by year-end. Fox, similarly, it's in a transition. We're moving from mining at one mine called the Froome Mine and transitioning over to the Stock Mine. That's where I mentioned we will escape the gold stream that's sitting on our Froome Mine right now. It's 8% of our production. It's for effectively selling our gold. It's 8% of our production at $605 an ounce, which is ludicrous. That was a legacy when we bought the property that previous management put a stream on.
I do think those streams are very detrimental to the industry. Not a bad thing to buy as an investor, but when management uses streams or royalties, I think it really hurts profitability and resilience in the downturn of the metal price. Moving along. On the next slide, it is just listing our reserves and resources. Here you can see under gold and our operations that are five operations. We bought another company called Timberline earlier this year. There is a total resources taken proven, probable, measured, indicated, and inferred of 4 million ounces gold, about 37.4 million ounces silver, 46% interest in the copper. Our share with that would be from McEwen Copper would be 17.4 billion pounds.
On the next slide, we're expecting to increase production as a result of the development going on at the Stock Mine and could see us moving up to over 225,000 ounces in the next five years. You can see the growth there. McEwen Mining, I think there's considerable value there, at least by management's calculations. Attractively priced, liquid trader. You've got a lot of exposure to copper. In fact, if you bought McEwen Mining, you're getting the copper. You're basically paying for that and getting all the gold and the royalty portfolios for free at current prices. The resource base is growing, as is production. There's a lot of commitment by management in terms of ownership, alignment with shareholder interest. We're a big exploration advocate. We see growth at Los Azules through exploration, at Gold Bar, and at Fox. John, over to you.
Super. Everyone is welcome to submit questions via the question box, and we appreciate everyone's participation and interest. Rob, could you explain 100,000 ounce plus gold equivalent output gain by 2030? Is it principally at the Stock location?
Yes. It is Stock and Grey Fox. Conditional on some permitting, but we are looking to start developing that several years from now.
In order to build Los Azules, what do you expect would be the ultimate ownership and financial structure? For example, might there be a gold stream for the little bit of gold output? You do not need an Asian smelter because you are going to refine your own copper. Would you expect Rio Tinto to step up and be a larger owner and operator? Would McEwen Mining aspire to be the operator since you have some gold and silver expertise in that mines before? What do you think the end game is?
There is lower-grade gold and silver there. There is a lot of gold and silver, but the opportunity cost of not having a mill is not that large at the moment. We are looking at a heap leach process where you would not initially recover any gold or silver. That would be at a much later date. We are going with a heap leach process, one, because this part of Argentina has experienced a drought for several years. Water is a critical issue. With a heap leach process, we would be using less than a quarter of the water of a conventional copper mine that produces a copper cathode. Not only is it lower water consumption, it is lower capital, and probably you will get greater community acceptance because there would be no tailings dam.
When we model the tailings dam based on the production we're looking at, we'd be looking at something 300m tall in a seismically active area. We'd be at the headwaters of tributaries that feed into the main river that goes through the capital city. That is why we elected to go with a heap leach process, producing a copper cathode immediately at site. No stream on gold. I guess if someone wanted to buy a stream, it'd be probably about 30 years from now that they'd start seeing it.
It's possible that MUX, Rio, Stellantis, and potentially some others form a consortium to finance and build and run the mine?
Yes. That's the basis we're going forward on that we'd be building. We'd want to bring in a partner. Mike, do you want to add to that?
Sure. We think that in order to build Los Azules, I mean, we're looking for $3 billion+ financing, right? That means if we look at, let's say we can finance 40% equity, that would be about $1.2 billion. Out of the $1.2 billion, probably $600 million+ needs to come from a strategic investor. That could be either existing or could be a new strategic investor. The remainder would be through private equity and other sources, including potential multilaterals that do an equity contribution. On the debt side, how you typically finance this project is through export credit agency, development finance organizations, plus syndicated loan with commercial banks, plus subordinated mezzanine debt, plus off-take agreement. That is typically how this is done. That is what we're looking for at the moment.
Maybe to say one important thing for listeners is that our base case that we had in the PEA, the same as the base case that we're going to have in the feasibility, is conventional BioHeap leaching without Rio Tinto's new technology. We will include into the feasibility on PEA level of accuracy an upside scenario using Rio Tinto's new heap leaching technology, which could expand the life of the asset significantly. Why is that? Because we have upgraded to measured and indicated the majority of our supergene, which is the leachable material. We were not targeting the primary minerals. Now, we are going through about a little bit more than one-third of our resource in the feasibility, but then there's two-thirds of the resource left. These two-thirds of the resource could be processed using technologies such as Nuton.
This would be a bolt-on case, significantly expanding the life of the asset.
Let me just look in the question box to see what the topics of interest are from the audience. What's the plan for Canadian Gold and the Tartan Lake mine?
We have an investment there. We think it's an attractive asset. While I was running Goldcorp, we invested in a number of juniors, and I viewed it as a farm team and a listening post. Some of them ran beyond where I thought they would, and we sold them and used the proceeds to fund our development at Red Lake for Goldcorp.
It's an investment?
Yes. We have one in.
You expect to buy it and build the mine and operate it?
Not at this time. No. We have investments in a couple of other juniors, Inventus, which is a Paleoplacer in northern Ontario, in Goliath, which is a high-grade epithermal in British Columbia, the Golden Triangle. It seems to be a better place to put the money right now with the juniors undervalued than having it sit in the bank. Hopefully, one day, we get to a point where we can pay a dividend and do a buyback.
When will the copper spinoff and IPO happen?
There are a couple of factors we wanted to have included in McEwen Copper before we did an IPO. One was get the feasibility study done, which right now we're looking at in late July or a little later than that in the third quarter. Also getting the REGI. As Mike said, we applied for it on February 11th, and we're waiting for its approval because the contribution to the value of the property is significant. Lower tax rates, quicker refunds, tax stability. There are a number of big, significant benefits that we want to include in the calculation of the value of Los Azules.
Is it reasonable, Rob, that the IPO would occur before you raise the $3 billion to build the mine as part of the way to raise a little more equity on it?
Yes. That's correct, John. Once we have the feasibility done, then there's another year of engineering to be done before you make the investment decision. That's not to say we're not right now, we're going around talking to parties that have the capacity to lend and also invest in equity in a copper project.
There's a question about your board of directors, their competencies, how involved they are in contributing to the management. The guy asking the question might want to be a director and help you out.
Oh, all right. Mike, do you want to field that question?
It depends on what board of directors we're talking, whether it's McEwen Copper board or whether it's McEwen Mining.
Let's say both. Let's talk about both.
Yeah. I mean, we have a very experienced board in McEwen Copper. We have executive directors such as Rob, Bill Shaver, and myself. We have representatives from Stellantis, a Senior VP of supply chain. We have Adam Burley, the CEO of Nuton. We have Paul McGuinness, that is a very experienced director that has been helping us to get to the stage where we are. We are having an upcoming election on new board members, and we hope to bring somebody on board that has significant experience in building, in designing, engineering, and building copper mines in the Andes, with significant experience in companies such as Codelco and Antofagasta Minerals.
Also, David Beatty, who was second in command when Papua New Guinea gained its independence from Australia. He was the one that negotiated for Ok Tedi with the government and the investors. He served as chairman of Panama Copper, Panama and FNC. He has had a long exposure to the copper industry, and he also was instrumental in setting up all the director education programs that came out of U of T, the largest director education program in the country.
We have Serge Gloutnay, that's a former managing director of PwC in Canada that has seen during his tenure large accounts of Canadian mining companies with operations in South America, including Argentina.
As we proceed with the 100 km of additional drilling, more metallurgical tests, more engineering, what are the positive and negative surprises? You mentioned that the capital costs will be 20% more. Almost everything else you talked about was favorable. Tell us what you learned when you drill 100 km.
What you learn when you drill 100 km is that you have a better idea on the actual shape of your deposit, the way that you're going to mine it going forward. You get lots of additional information. I mean, what we have mentioned there is only the drilling that we did with regards to the direct resource drilling. We have also done lots of condemnation drilling. We have done water drilling. We have done geotechnical drilling. We learned that we need to consider certain factors of the environment differently that will have an impact on the mine design. We are benefiting from a project that is located in a very accessible area in the Andes at a very low altitude compared to others. We have mineralization that is amenable to the processing that we aim to use.
On the other hand, we have also lots of broken rock, meaning that we have to take into consideration geotechnical assumptions that because of the expanded drilling, we did not have during the PEA, which impacts how we are going to mine going forward. I would say the highlights are that we mentioned the additional exploration targets. We looked at prospecting. We did geological maps. We looked at outcroppings. We looked at surface. We did drill two targets. We have seen that those two targets are mineralized. One is Mercedes and Tango. We knew from the season before that Porphyria Norte, which is a northern extension of the pit, is mineralized and has significant mineralization. That was the hole I was showing, AZ22174, with 480 meters of about 0.42% copper. You learn a lot about potential and possibilities and refinement of the engineering going forward.
In terms of mundane things like net income and earnings per share, Rob, we have the wonders of $3,300 gold and $36 silver on the revenue side and the deconsolidation of McEwen Copper, where you're not charging all the expenses. You're going to have, I guess, 46% equity loss.
Yes.
Maybe that even gets slightly smaller if there is a capital raise at the copper level. Does the combination of more revenue and the deconsolidation of the copper put you on track for a profitable quarter in June or September or December? Or do we have to wait a couple of years until the output gets higher than 130,000 ounces of gold equivalent?
We're seeing positive cash flow being generated, John, looking at somewhere in the neighborhood of $30 million this year. Certainly, bringing in the expenses that have occurred at Los Azules onto our income statement has given us a number of years of losses. Once the feasibility study is published, then those expenses will be capitalized and no longer on the income statement as an expense. That'll have a very positive impact going forward. As the price of gold's going up, our cost containment's getting better. We are a higher-cost operation at the moment, but we can see a way to generating positive cash flow and earnings.
Rob, in terms of the formality of earnings, my impression is, do you always give the geologists more money to explore because you've made your fortune in living, drilling, and having successful results, and that you'd rather drill in the formality of what the earnings per share is, isn't your main driver? Is that a fair characterization that you're a long-term investor and not a quarterly earnings guy?
Very true. I'm a big believer that exploration can build value, having experienced it in the past. We're in some prolific areas for gold mineralization that have not been fully explored. We're seeing that at the Fox Complex, Grey Fox, and we're expecting to see more of it at the Stock Mine. We acquired a company called Timberline, a small explorer, so we could get property close to our Gold Bar property and be a source of additional ore. One of the other properties that came with us was called Seven Troughs. I'm quite intrigued by it because back 50 years ago, it was considered the highest-grade gold mine in Nevada, mining over an ounce. We're putting all that historic data together to begin a program there as well. You're right. I'll keep exploring because that's driving value for us.
We like long-term value and asset value. I do not think quarterly earnings mean anything for gold mines. If you can measure the ore grade to a tenth of a gram, it is probably beyond the measurement and sampling accuracy. The quarterly earnings fluctuations are about little things like that and the variations in stokes, which your drilling is what counts. Rob, the McEwen price maybe has not gone up as much as you think it should, but there are a lot of developers or pre-revenue companies whose stocks have not gone up yet. Do you think there are a couple more Timberline Resources that could enhance McEwen Mining?
Very definitely. It is still an overlooked sector of the market. I am a big believer the price of gold is going higher, and you are going to see more investors putting gold in their portfolio. There is a lot of people who have been out there exploring, getting good results and not getting much of a reward in the market for those results. They would be a good addition to McEwen Mining to increase our growth. Always on the lookout.
It's a remarkable time when the gold price is over $3,300, and the stock market seems to be expecting $1,000 or more or less. I tell investors that the large major gold miners calculate reserves at $1,400-$1,700. We averaged around $1,250 from 2013- 2018 and $1,850 from 2020- 2023. Some of the big guys, maybe they think like mining engineers. Maybe the shaft can only do 6,000 tones a day. The grinding mill is sized for 6,000 tones a day and the crushers and the permits and the waste dumps and the tailings. When the price changes, they can't change the engineering of all that. The permits can take three to five years when you want to change your amendment.
If they lowered their cutoff grade and put lower grade ore through a fixed 6,000-ton-a-day shaft mill infrastructure, it'd produce less gold. They sort of pretend like the price of gold is still $1,400-$1,700 and ignore the good times.
I couldn't agree more. I just don't understand.
A lot of the analysts do not want to do a price very different than the companies. I do not read street research. I treat it as pornography. It is more painful to read it than write it. My sense is that everybody is using over $1,000 below spot when they do their NPV models. We are in this weird time where the stocks are undervalued. I do not root for the gold price to go up when I own stocks. I just root for it to not go down. That is a pretty good payday.
Yes. Yes.
It's amazing how all these different stocks or the developers are just dead in the water, some of them. A few of them are getting discovered.
Now, there's been some movement, but not a lot. I think the opportunity, it's a very good opportunity to start establishing or adding to one's positions. There's a lot of torque when you're into a, as you know, when you're into a strong gold market, it's the companies that were ignored, that were high-cost or just forgotten about that can deliver triple-digit or quadruple-digit type returns. I've gone through it a couple of times before, and I think it's coming again, and it'll come back with a vengeance.
When I look at the price decks that some people are using or some companies are using, the U.S. dollar would have to strengthen over 25% for gold to fall $1,000. I don't think we're in very good shape or such good shape. I know lots of other countries are worse, but it's just a very good time, and people can't believe it. The base metals are just the same.
Yes. There has not been a lot of investment in increased production capacity. We are trailing behind. The demand for metals is going up, just geopolitical conflict and changing trade patterns in a big way.
Rob and Mike, I appreciate your time and your diligence. I know you put a lot of work into your slides and your presentation. You have been working arduously with Rob not getting paid as a salary or in the share price for a while. I want to thank you for your services to the company. Thank you.
Thank you, John. Much appreciated.
Thank you so much, sir.
Thank you, everyone on the call, for your attention. Have a good afternoon.
Thank you.