McEwen profit triples as Gold Bar setback cuts 2026 production outlook

McEwen Inc. reported a more than threefold increase in second-quarter net income as higher gold prices offset lower sales volumes and increased investment across its North American development portfolio. The New York Stock Exchange and Toronto Stock Exchange-listed miner, which trades under $MUX, generated revenue of $59.2 million, gross profit of $20.1 million and net income of $9.6 million, or $0.16 per share. Adjusted EBITDA increased to $22.2 million as the company benefited from an average realized gold price of $4,454 per gold-equivalent ounce. McEwen also advanced the Stock, Grey Fox and Tartan projects and increased production guidance for its Fox Complex in Ontario. The central tension is that stronger metal prices and San José dividends are funding expansion, but operational problems at Gold Bar forced the company to cut Nevada production guidance and raise its consolidated cost outlook.

Revenue increased 27% even though McEwen sold 13,948 gold-equivalent ounces, compared with 14,549 ounces during the prior-year quarter. The average realized selling price increased 35% from $3,298 per ounce, demonstrating that commodity pricing rather than higher sales volumes produced most of the revenue growth. Gross profit rose from $12.3 million, while net income increased from $3 million, or $0.06 per share.

McEwen shares traded at approximately $18.26 during the afternoon of August 6, down about 7.3% from the previous close, giving the company a market capitalization of roughly $1.36 billion. The decline suggests that investors placed considerable weight on the Gold Bar guidance reduction and higher operating costs despite stronger quarterly profit and exploration results.

Why McEwen’s higher profit depended more on gold prices than production growth

McEwen’s wholly owned operations produced 13,852 gold-equivalent ounces during the second quarter, broadly unchanged from 13,835 ounces a year earlier. The production mix changed significantly, however, as stronger performance at the Fox Complex was offset by lower output from Gold Bar.

Fox produced 7,000 gold-equivalent ounces, up 29% from 5,429 ounces. Cash costs declined to $1,972 per ounce from $2,212, although all-in sustaining costs increased moderately to $2,701 from $2,563 because the measure includes additional capital and sustaining expenditure.

Gold Bar produced only 5,842 ounces, compared with 8,406 a year earlier. Cash costs increased to $2,705 per ounce from $1,679, while all-in sustaining costs rose to $3,197 from $1,792. Gold Bar’s cost per ounce therefore approached the value of gold assumed in many long-term mine plans, even though current realized prices remained substantially higher.

McEwen attributed the shortfall to an assay laboratory outage and more carbonaceous material in the ore than anticipated. The laboratory disruption caused the mine to concentrate temporarily on moving non-mineralized material to advance pit development. Carbonaceous ore can interfere with conventional cyanide recovery by absorbing dissolved gold, reducing the amount recovered through heap leaching.

Management reduced Gold Bar’s annual production forecast from 39,000 to 43,000 ounces to between 30,000 and 33,000 ounces. It also increased the mine’s all-in sustaining cost forecast to $2,900 to $3,200 per ounce. Consolidated 2026 production guidance now stands at 109,000 to 120,000 gold-equivalent ounces, with expected all-in sustaining costs of $2,500 to $2,750 per ounce.

The higher gold price protected consolidated profitability from the operating setback. That protection cannot be assumed indefinitely because McEwen does not control commodity prices, while labour, fuel, reagents and mine-development costs remain operational obligations.

The company’s stated production-growth plan assumes average prices of $4,000 per ounce of gold and $50 per ounce of silver will generate enough cash to fund expansion with limited or no further share dilution. This is a management scenario rather than a guaranteed funding outcome. Lower prices or additional operating setbacks could require slower project development, increased borrowing or new equity.

How San José cash flow is funding McEwen’s North American expansion

McEwen’s 49% share of the San José mine in Argentina produced 17,019 gold-equivalent ounces during the quarter, representing growth of 24% from the prior-year period. Higher processing capacity, increased mining rates and improved gold recoveries supported the production increase.

The attributable production is not included in McEwen’s reported revenue because San José is accounted for as an equity-method investment. McEwen therefore recognizes its share of the operation’s earnings rather than consolidating the mine’s revenue and expenses line by line.

San José paid McEwen a $49.4 million dividend during May, bringing total 2026 distributions to $58.2 million. The amount already exceeded management’s previous full-year expectation of $40 million to $50 million. The dividend appears in cash flow and on the balance sheet but not as quarterly revenue or net income because it represents a distribution from the equity-method investment.

The cash is particularly important because McEwen is developing several projects simultaneously. It invested $11.4 million in exploration during the second quarter, more than double the $5.4 million spent a year earlier, and increased its full-year exploration budget from $22 million to $25.7 million.

Cash and equivalents increased to $78.9 million from $51 million at the end of 2025. Debt principal remained at $130 million, consisting of $110 million of convertible notes due in 2030 and a $20 million term loan.

The share count increased from 55.5 million at year-end to 59.7 million at June 30 following the acquisitions of Canadian Gold Corp. and Golden Lake Exploration. The approximately 7.6% increase demonstrates that McEwen has already used equity to expand its asset base, even as management emphasizes a strategy of limiting future dilution.

San José’s dividends can reduce the need for additional equity, but its costs remain high. Attributable cash costs were $2,466 per gold-equivalent ounce and all-in sustaining costs were $2,913. Continued distributions therefore depend on metal prices, production performance and decisions made by the operation’s controlling partner.

Why Stock and Grey Fox are central to McEwen’s 100,000-ounce Timmins target

McEwen is developing the Stock underground mine within its Fox Complex near Timmins, Ontario. The company invested $12.8 million during the quarter and $52.2 million since development began last year. Mineralized material encountered during ramp construction has already been transported to the existing mill.

Initial mining is expected during the fourth quarter of 2026, with commercial production planned for 2027. McEwen has not included early Stock production in its current annual guidance, limiting the risk that commissioning delays produce another guidance reduction this year.

Additional engineering and mine planning increased Stock’s estimated operating life from six years to 8.5 years based on the current resource. The company expects lower costs than at the existing Froome operation because Stock has a lower royalty burden, shorter haulage distance to the mill and softer ore that should require less processing effort. These benefits remain projections until sustained commercial production demonstrates the expected costs and recoveries.

McEwen raised full-year Fox Complex guidance from 16,000 to 19,000 ounces to between 20,000 and 23,000 ounces. Its larger ambition is to reach approximately 100,000 ounces annually in 2029 by combining Stock with the Grey Fox project.

The Grey Fox pre-feasibility study outlines initial development capital of approximately $181 million and a 15-year project life extending Fox production through 2041. At an assumed gold price of $3,000 per ounce, the study estimates an after-tax net present value of $282 million, an internal rate of return of approximately 25% and a 4.6-year payback period.

The study forecasts average Fox Complex production of approximately 87,000 ounces annually between 2028 and 2041, with output reaching about 100,000 ounces in 2029. Life-of-mine all-in sustaining costs are estimated at $2,212 per ounce.

Those economics rely on estimated reserves, assumed metal prices, permitting, construction costs and the use of existing processing infrastructure. Reusing the Fox mill reduces initial capital compared with constructing a new plant, but the project still requires detailed engineering, water permits, closure-plan approval and long-lead equipment purchases before planned construction begins in 2027.

Exploration expands McEwen’s growth options but increases capital-allocation pressure

Grey Fox drilling returned several high-grade intersections, including 97.7 grams of gold per tonne over 4.4 metres, 64.8 grams over 3.3 metres and 32.5 grams over 5.2 metres. These results may expand resources or extend mine life, but drill intersections do not automatically convert into economically mineable reserves.

At the Tartan project in Manitoba, drilling identified a new Central Zone between the Main and South zones and extended known mineralization approximately 300 metres deeper. Reported intersections included 29.1 grams of gold per tonne over 10 metres and 17.8 grams over 15.9 metres.

McEwen is evaluating a processing rate of 1,000 to 1,500 tonnes per day rather than its earlier staged plan beginning at 500 tonnes. The larger option would require more upfront capital but could support annual production of between 40,000 and 65,000 ounces over an estimated seven to 10 years.

The company is also seeking to transform Gold Bar despite the current operational difficulties. Indicated resources across the Nevada complex now total 792,000 ounces, with an additional 281,000 inferred ounces and 168,000 ounces of probable reserves. Windfall, Lookout Mountain and Trinity Ridge could eventually support production of 90,000 to 110,000 ounces annually by 2030, according to management.

McEwen’s 46.3% interest in McEwen Copper adds a separate copper-development opportunity through Los Azules in Argentina. The feasibility study projects average production of approximately 205,000 tonnes of copper cathodes during the first five years, a C1 cash cost of $1.71 per pound and an initial operating life of about 22 years.

Approximately 27% of the work required before a final investment decision was complete at June 30. Construction is targeted to start in early 2027 and production in 2030, subject to financing, approvals and a final investment decision. McEwen Copper appointed Société Générale to advise on project debt and is considering a potential initial public offering.

Los Azules could become McEwen’s most valuable asset, but it also requires substantially more capital than the company’s gold projects. The strategic challenge is to preserve exposure to the copper project while funding Stock, Grey Fox, Tartan, El Gallo and Nevada exploration without repeatedly expanding the share count.

Key takeaways from McEwen’s second-quarter results and revised guidance

• McEwen Inc. increased second-quarter revenue by 27% to $59.2 million despite selling fewer gold-equivalent ounces than a year earlier.
• The average realized gold price increased 35% to $4,454 per ounce, making higher commodity prices the primary driver of revenue and gross-profit growth.
• Net income increased to $9.6 million, or $0.16 per share, while adjusted EBITDA rose to $22.2 million.
• Gold Bar produced 5,842 ounces and reported all-in sustaining costs of $3,197 per ounce following an assay-laboratory outage and problems with carbonaceous ore.
• Gold Bar’s annual production guidance was reduced to 30,000 to 33,000 ounces, while forecast all-in sustaining costs increased to $2,900 to $3,200.
• Fox Complex guidance increased to 20,000 to 23,000 ounces as quarterly production reached 7,000 ounces and Stock development progressed.
• Initial mining at Stock is expected during the fourth quarter of 2026, with commercial production planned for 2027 and estimated mine life extended to 8.5 years.
• San José paid McEwen $58.2 million of dividends during the first half, providing important funding for exploration and mine development.
• Grey Fox could lift the Fox Complex toward 100,000 ounces of annual production by 2029, although the project requires approximately $181 million of initial capital.
• The outlook for $MUX depends on maintaining strong precious-metal cash flow while correcting Gold Bar’s performance and funding a large portfolio of gold and copper developments.