McEwen Inc. 2026 Q2 Earnings Call

Good morning, everyone, and thank you for joining us. I'd like to do something a little different today. You've already seen our financial statements. You've had an opportunity to read our press release. You know our production numbers, our revenue, our costs. Rather than simply repeating those numbers, I'd like to step back and talk about what they really mean. I've learned something over my career, markets are very good at measuring what happened last quarter. They're much less effective at recognizing the value that's being created for the future. Today, I'd like to focus on one question. What really matters? Before I entered the mining business, I spent 18 years in the investment industry as an analyst, portfolio manager, a mutual fund manager, and later, controlling a member firm of the Toronto Stock Exchange.

Every day, my responsibility was to decide where capital should be invested and just as importantly, where it shouldn't. Eventually, I made a decision that surprised many people. I stopped looking for companies that created value and decided to build one instead. That perspective has never left me. I still think like an investor. I still ask the same question I asked 40 years ago. Is this company becoming more valuable? That question I want to answer today. Let's begin with the hard part. This was not a quarter we wanted. Operationally, we fell short of our own expectations. Production was lower than we had planned. Costs remained higher than we consider acceptable. Those results were disappointing to you and to me. Those explanations don't create shareholder value.

Execution does. Our execution wasn't consistently where it needs to be. The most significant operational issue during the quarter was at Gold Bar. We encountered more carbonaceous material than expected in portions of the ore body. Carbonaceous ore presents a metallurgical challenge because it can absorb dissolved gold during leaching, thus reducing recoveries. Simply put, we recovered fewer ounces than we should have. That's on management. The important question today isn't whether we encountered a problem. We did. The important question is whether we understand it and whether we know how to fix it. I believe we do. We've expanded metallurgical testing. We're improving our geological modeling to better identify carbonaceous zones before they're mined. We're modifying mine sequencing and blending strategies. We're evaluating additional processing improvements to reduce the impact of preg-robbing.

These are not overnight solutions. They're practical, measurable actions that should improve recoveries over time. I've learned something more after 40 years in the mining industry. Nature always has another lesson to teach. Great companies aren't defined by whether they encounter problems. They're defined by how honestly they acknowledge them and how effectively they solve them. That is what we're doing. Having said all of that, I don't want anyone to conclude that one difficult quarter defines this company. It doesn't. What really matters isn't whether every quarter is perfect. What really matters is whether every quarter leaves us stronger, smarter, and better positioned for the future. That's where my optimism comes from. Unlike many companies in our industry, our biggest challenge isn't finding metal.

It's unlocking more of the value we already own. Our exploration programs continue to demonstrate that our assets have significant room to grow. At the Fox Complex, I don't simply see a mine. I see the emergence of a mining district. Grey Fox, Stock, Whiskey Jack, and our other targets continue to strengthen our confidence that we can replace depletion and continue building long-term value through discovery. I've always believed that exploration is one of the highest return investments a mining company can make. Every important discovery begins with a drill hole that challenges yesterday's assumptions. Those discoveries don't simply add ounces. They extend mine life, improve economics, create optionality. Ultimately create shareholder value. That philosophy has guided me throughout my career. It's one of the reasons I remain so excited about our future. Then there's Los Azules. I've spent much of my professional life looking for assets capable of changing the future of a company.

Those opportunities are rare. I believe Los Azules is one of them. We're entering a world where artificial intelligence, data centers, electrification, modern power grid, energy security are driving unprecedented demand for copper. At the same time, very few world-class copper projects are advancing towards production. That creates an opportunity for projects with the right scale, the right economics, and the right environmental profile. Los Azules has the potential to be one of those projects. The progress we've made over the past year has reduced technical risk, strengthened engineering, advanced permitting, expanded financing discussions. There is still much work ahead, every milestone moves us closer to unlocking what I believe is one of the most valuable assets in our portfolio.

One thing that has remained constant throughout my career is my approach to capital allocation. Shareholders entrust us with their capital. Our responsibility is to treat every $ as if it were our own. Because in my case, it is. I've invested a substantial portion of my own wealth in this company because I believe our best years remain ahead of us. That doesn't mean we'll never have disappointing quarters. We will. Mining doesn't work that way. What it does mean is that we will continue confronting problems honestly, investing in opportunities that offer the greatest long-term returns, and making decisions based on intrinsic value rather than short-term market sentiment. As I look ahead, I see four priorities. First, improve operational execution and recoveries. Second, continue expanding our resource base through disciplined exploration. Third, advance Los Azules towards becoming one of the world's premier copper projects.

Finally, allocate capital with the same discipline that has guided me throughout my career. Those priorities won't necessarily produce the perfect quarter, but I believe they will produce a much stronger company. I'll leave you with one final thought. When I entered the investment business many years ago, I learned that markets eventually recognize value. When I entered the mining business, I learned something equally important. Value has to be created before it can be recognized. That is our job. We still have work to do. We still have challenges to overcome. I believe we're building a company whose future will be considerably stronger than its recent past. In the end, that's what really matters. Thank you. Now open it for questions.

Permitting is about two years away. We have to have some water well studies done, and during that period, we'll be coming forward with our production. As you looked at the exploration results coming out of our Eureka properties, we can see that making a large contribution to that production number you spoke of.