Hello, ladies and gentlemen, and welcome to McEwen Mining’s Q1 2020 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner; Peter Mah, Chief Operating Officer; Meri Verli, Chief Financial Officer; and Sylvain Guerard, Senior Vice President of Exploration. I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead.

Thank you, operator. Good morning fellow shareholders, ladies and gentlemen. It’s been over two months since the World Health Organization declared the COVID-19 virus a global pandemic. Starting in late March and into early April, our operations were temporarily shut down to protect all of our employees in compliance with government-imposed restrictions. I’m delighted to say that none of our employees or the employees of our contractors have contracted the virus. In part, we hope this result is due to our rapid action and the robust measures that we put in place. As of today, Black Fox is back up operating normally, Gold Bar is starting to increase activities with a focus on preparing for production. Government restrictions in our San José mine are operating at 50% capacity, and our El Gallo mine is limited to residual leaching. We think these government restrictions will be lifted in June. Let’s turn to Gold Bar. Last year was a disaster. I have, and I’m sure you hope, our problems would be far behind us, but this year we have experienced a significant hit. This quarter, we are reporting a very large non-cash write-down of our Gold Bar Mine. This is a result of a revised geological model that reduced the size and structural interpretation of the deposit. This mine was to be a star asset for us, but so far, it is clearly an enormous screw-up. Many professionals tend to work for us and others who were technical consultants made decisions that compounded to bring us to where we are today. We’re not ready to close the mine and write it off as a very bad and regrettable decision for several reasons. We believe there are opportunities to improve the operation, reduce costs, and also define additional resources through exploration. Both Peter and Sylvain will speak to these issues later in the presentation. Let’s talk about our financial results for the quarter. First, our liquidity at the end of Q1; our liquid assets were $31 million compared to $46.5 million at the end of the year. Working capital was $25.3 million. However, we are forecasting that our working capital will decrease below the required levels mandated by our debt covenants. Therefore, we are evaluating several alternatives to refinance in order to extend and amend the terms of our $50 million debt. Materially, we have an alternative financing in place, which addresses the risk created by a potential working capital shortfall. Our auditors have added a growing concern language to our financial statement, and that is reflected in our Q1 10-K report. Assuming the current oil price remains constant, and we’ve been able to refinance the debt and amend the terms, we believe we have adequate cash to fund the company through 2020. The big item on our balance sheet and income statement is the impairment of the Gold Bar Mine. We stated this is a consequence of changes to our resource estimate related to the mine. Our finance department, our auditors, and then external property evaluators analyzed this information. We performed a recoverability test using a discounted cash flow method, employing a 9% discount rate. It also uses a long-term gold price assumption of $1,430 per ounce. The conclusion was that the carrying value needed to be impaired, as we are recording a non-cash impairment, reducing plant and equipment and annual property interest by $83.8 million in the first quarter. When we combine the impairment with $6.3 million spent on exploration and some projects plus G&A, the consolidated net loss for Q1 was $89.2 million or $0.25 a share; excluding the impairment, a net loss of $15.4 million or $0.04 a share. I would now like to provide an introduction to our new Chief Operating Officer, Peter Mah, who joined the company on April 2. Peter is someone who has worked with me before at Gold Corp. He is a very accomplished engineering executive who is a believer in innovation and likes to challenge conventional wisdom. I have to say that he has been working flat out for the last six weeks to put in place strategies that we believe are going to turn McEwen Mining into a performer. I will now ask Peter to continue with the presentations.

Thank you, Rob. I’m very excited to be joining McEwen Mining and the opportunity to work alongside you again. McEwen Mining has a bright future. We have some near-term operational challenges to overcome and a stellar pipeline of resources and discoveries with which to grow. Before providing the operations and projects update, I’d like to share some of my background and how my experience can be applied to the challenges and opportunities at McEwen Mining. I’m an engineer with a background in mining and mineral processing and earned a master’s degree in open pit and underground rock mechanics. Over the past 30 years, I’ve worked as an engineer, supervisor, manager, and executive in open pit and underground operations. My experience spans feasibilities, new mine builds, expansions, and turnarounds. I also worked in the Red Lake Mine for nine years in varying capacities. My experience as Mine General Manager at the Victor Diamond Mine has taught me the importance of blending challenging clay-rich ores and material handling systems designed to optimize processing efficiencies and throughput. At Musselwhite Mine, efficiencies in transverse open stoping and conveying will support the transition to production at our new Froome project. Speaking of Froome, the ramp development advanced in Q1 2020, and first store is expected in Q4 2021. The Froome deposit has a resource grade of 5 grams per ton and is expected to provide two to three years of mill feed utilizing a low-cost transverse open stoping mining method. Continuing with the update on the growth of the Black Fox complex, the high-grade mineralization at Grey Fox project, Black Fox Mine, and the Stock mine represents high growth potential to utilize the excess capacity at the Stock mill. High-grade open pits are being evaluated at the Grey Fox project. Permitting is set to begin in Q2 2020 and is expected to take approximately two years. In addition to the open pits, underground scenarios are being evaluated. The Grey Fox project is expected to grow into a long-life core asset for the company. The company has received the permit to dewater the stock shaft and is evaluating the options and costs to reaccess the mine via the existing shaft. Resource definition drilling is required to further advance this exciting discovery. High-grade intercepts at Stock are also encouraging, and there is strong potential for underground and/or open pit mining. At the Black Fox Mine, lateral development was boosted in Q1, increasing our access to new stoping areas in the west side of the mine. Other cost and productivity improvement plans include reducing stope dilution through improved drill control, more focused exploration, and mining in the upper part of the mine to reduce haulage costs, ground control optimization, and improving development rates. Moving to Nevada, results at the Gold Bar Mine were disappointing. An estimated 25% to 35% reduction in contained ounces in the gold pick deposit is expected. Drilling, resource modeling updates, and determination of the best business case going forward is ongoing and expected to be completed in early Q3. Key drivers for rising costs and underperformance in 2019 are being analyzed for improved solutions. Some areas for improvement being examined are resource reserve definition drilling to improve mine planning delivery, improved stockpile management and blending, better unit mining costs, and productivities with a dispatch system, assessment of run-of-mine heap leaching, improved grade ore, and blast control practices. In April, the mine began a staged return to operations that included maintenance, site cleanup, and a limited stripping for the next drill-ready ore in the west pick and processing of stockpiled ore. Ore remaining is on hold as management adjusts plans for operations. Gold Bar South is in the permit stage and is expected to begin production in the second half of 2021. Ongoing metallurgical work indicates favorable recoveries in excess of 70% with a potential for run-of-mine heap leaching. The mineralization starts at surface and exploration is planned targeting the extensions. In Mexico, our El Gallo mine continues to produce gold from residual leaching. The Phoenix project study demonstrates robust economics, and we expect to finalize this study in the second half of 2020. At our San José joint venture mine in Argentina, operations remain at 50% capacity due to the government travel restrictions. I will now turn the call over to Sylvain to take you through the exploration update.

Thank you, Peter. Our exploration over the last two weeks has focused on three properties: Black Fox and Stock in Ontario, and Gold Bar in Nevada. During this time, through our strong commitment to exploration, we achieved results that clearly demonstrate the high quality of our projects. Our drill programs have quickly driven the establishment of a discovery process that is contributing to our resource growth and defining an outstanding project development pipeline. Here are some key highlights starting with Nevada. At the Gold Bar Mine, the startup of mining at Gold Pick West indicated lower grades and tonnage than expected and has led to our revision of the resource model with more emphasis on the geological and structural controls of the organization, which is now better exposed in the open pit. To assist with the model review and to derisk short-term mining, we have designed an in-pit drill program consisting of reverse circulation and core drilling. This drilling started in late March and about 15,000 meters have been completed so far in Q2. The results, as shown on the slide, are confirming significant gold mineralization over the respective area and will assess reinforcing our model. Significant drill results have been defining in-pit mineralization derisking mining with results such as 5 grams over 64 feet, including 11 grams per ton over 70 feet, and 3.4 over 90 feet. Also strong intersections beneath the revised pits show 2.9 grams per ton over 82 feet, 1.2 over 144 feet, and 1.7 grams per ton gold over 225 feet, with potential to extend mineralization to the southwest of Gold Pick, where we had an intersection of 0.9 gram per tonne gold over 120 feet outside the pit boundary. An updated resource estimate using recent pit mapping and the revised mine plan is expected to be completed by the end of Q2. In 2019, significant drilling occurred at the Gold Bar South deposit, where we made reinforcement that increases our understanding and increases confidence in the resource of this quality satellite deposit to the main Gold Bar operation. The upside potential to grow the resource of Gold Bar South, which stands at 63,000 ounces measured and indicated, remains strong, and the drilling program is expected to start later in Q2, focusing on three main targets: first, the south extension as the deposit is open for exploration, with recent drilling in this area returning significant results. Second, the northern portion of the deposit, which was only partially tested; and finally, the northeast-southwest structures that control higher-grade mineralization. Moving now to Timmins, at the Black Fox Mine, our focus for resource and reverse expansion is on the west side of the mine from 300 to about 700 meters depth. We have generated multiple positive intersections, including high-grade pits typical of the Black Fox style of mineralization, suggesting a potential increase over these target areas. The most significant recent intersection includes 79 grams per tonne gold over 2.9 meters, and other high-grade pits are shown on the figure where the yellow highlights indicate the 2020 drill results. At Grey Fox, we are pleased to announce that the mineral resource estimate for the Grey Fox deposit has been updated with exploration drilling completed in late 2019. The updated resource estimate contained 888,000 gold ounces at 7.1 grams per tonne gold in the indicated category, and 173,000 gold ounces at 6.6 grams per tonne in the inferred category, representing increases of 43% and 30% respectively compared to the previous estimate. The Grey Fox gold mineralization system is large, covering an area of 1.5 kilometers by 1.5 kilometers, and is composed of five distinct deposits located on our Black Fox property, 2.25 kilometers southeast of the mine. We believe the potential to grow the Grey Fox resource is excellent. Open pit and underground mining scenarios are being evaluated for the potential to develop the Grey Fox deposit. More information about these evaluations will be provided later in 2020. On the Stock property, our exploration is focused on the 3-kilometer trend reflecting a strong gold system that encompasses the Stock mine and newly defined zones of mineralization. The main highlight of our 2019-year program is the discovery of the significant new zones in the organization at Stock West. We have completed a total of 31 drill holes in this area. The gold mineralization is associated with quartz veining and pyrrhotite hosted in coarse-grained clastic rock. During the intersections, the average is around 5 grams per tonne gold over widths ranging from 15 to 20 meters, occurring in an area measuring 265 meters along strike and 200 meters vertically. The Stock West remains open in all directions, and our exploration program is designed to produce an initial mineral resource estimate and also to test the extension of the mineralization in order to assess the potential size of the discovery. Our exploration effort at Stock produced results quickly, with the first inferred resource of Stock East in late 2018, and then we upgraded it to the indicated resource category at the end of 2019. Stock East is a shallow zone of mineralization containing 121,000 gold ounces located within one kilometer east of our processing mill. Our 2019 program generated some of the best intersections so far at East zone, including 63.6 grams per tonne over 6.2 meters and 34.7 grams per tonne over 6.5 meters, suggesting potential for shoots. At the historical Stock mine, we have demonstrated that the mineralized gold system is open to depth, with a deep intersection of 27 grams per tonne gold over 7 meters, which includes 0.8 meters drilling at 300 grams per tonne gold. In conclusion, I would say that we are well positioned to keep adding value going forward based on the solid exploration foundation we have established. In just two years, we have developed a strong exploration pipeline that goes from target delineation and drilling to resource estimations. Our rate of discovery success is increasing. We have strong positive momentum and remain focused on a few high-quality targets, including new discoveries that show excellent upside and development potential. That concludes our presentation. We will now open the call to questions. Thank you.

Thank you, Sylvain. Operators, please open the session for questions.

Thank you very much. Our first question comes from the line of Jake Sekelsky of ROTH Capital Partners. Your line is open.

Thanks for taking my questions, and I hope everybody's well. It looks like work at Grey Fox is progressing pretty well. I mean, it's good to see resources expand there. Are you able to just provide any color on the environmental studies and permitting work that might need to be done as you work towards bringing it into the mine plan?

Sure. I'll just ask Peter to jump in on that question.

Yes. We actually have all our Approval for Expenditure in draft form ready to approve various works on baseline, water management, and water studies regarding the movement of the creeks that our North and South pits will mine through, so that sort of early baseline information and development of the project description.

Okay. And have you seen that process slow at all just given the operating environment we're in right now with the pandemic?

No, actually, we haven't seen any impacts on that. We've been all working virtually and engaging with our consultants through the RFP process and the various departments. So we've not seen any real impact there.

Okay. That's helpful. And then just at Gold Bar, it looks like activities right now are focused on input drilling at Gold Pick and some stripping activities. Just trying to get a handle on the budgeted costs for these during Q2 and going forward. So are you able to provide any insight on that?

No. Not at this time. As mentioned, we're evaluating the plans forward, and we'll come forward with that at the end of Q2, early Q3 as mentioned.

Okay, fair enough. That's all I had on my end. Thanks again.

And our next question comes from the line of Bhakti Pavani with Alliance. Your line is open.

Good morning, guys. Thank you for taking my question. I would like to start with Gold Bar, if I correctly understood. You had about 15,000 meters of drilling completed at Gold Pick. Just wanted to understand, do you think that drilling is sufficient enough to put out an updated resource or do you plan to further drill and de-risk the deposit?

Sylvain, would you like to answer these questions?

Yes, sure. Good morning, Bhakti. Yes, our drilling so far has been focused on the West Pick part of the Gold Bar deposit because this is where we see short-term mining. So we want to de-risk that and also hopefully regain the additional ounces that are currently lost following the revised pit scenarios and we are also testing extensions around the pit at the same time. This drilling is critical for those reasons, and other things that lead us to move to Gold Bar South, where we see good upside to increase the resource there and to come back to Gold Bar for follow-up drilling, including on the East side of the deposit. We will have a resource update at the end of Q2 based on the revised interpretation of the structural setting, also based on all of the available historical and new drilling information. So to answer your question, this is key information that will contribute to new resource that would be completed by the end of Q2.

Okay, thank you. One more question regarding Gold Bar. You did mention in your prepared remarks that you have slowly started stripping and currently processing stockpiles. At this stage, what level of stockpiles do you have at site?

Peter, could you address that question?

Yes, we had some stockpile material left just before shutting down for COVID—we had below 60,000 tonnes that will be used up in the next four or five days. And then we have another stockpile of broken ore in West Pick about 60,000 tonnes that we're contemplating milling. But we haven't made that decision yet.

Could you maybe provide some kind of color on the grade?

I don't have that off the top of my head. But yes, I'm sorry. I don't have that answer for you.

No worries. Moving to Black Fox, you have pretty good results at Grey Fox, and the drilling results shown in the slides look pretty good. So at this point, you guys are still developing the access plan for Froome. Is that on target, and with the drill results presented to date, what does it imply for Black Fox? I mean, do you see that – do you see the mine life expanding within the Black Fox mine or do you think Froome will replace the Black Fox mine over the next two years?

Yes. So the decline is about – straight line about 160 meters in; we've got about 800 meters to get to the ore. The schedule that I quoted earlier is taking into account where we are currently in the decline and targeting first for Q4 2021. The idea is that we'll extend hopefully on this West Flank the new discoveries that Sylvain’s team and exploration have found in the Western area of Black Fox that will actually extend the Black Fox mining itself as well. But initially it was planned. Black Fox would finish mining and Froome would start the additional development I mentioned earlier, targeting some of that West Flank area that we're drilling now and having success on hits. So, my expectation is we’ll see some improvement on the Black Fox mine side as well.

That’s great. Thank you. With regards to advanced projects, there was about a $1 million charge in Q2 with regards to Canada; I’m assuming that’s related to the actual development for Froome. Question is, how much more development cost is remaining for the development of Froome at this point? And the second question is with regards to the $1 million cost in Mexico, which is related to Project Phoenix. So, how much of that cost still remains to be incurred in Mexico at this point?

Meri, if I could ask you to provide those numbers, please.

Sure. So in terms of Froome, we have forecasted around $10 million, $10.5 million for the rest of the year. And then for Phoenix, there could be, just to note for Phoenix, it includes also property holding costs. So we might have something similar for the rest of the year.

So is it going to be a $1 million a quarter?

No, not the quarter. Not the quarter. Like, something similar; I think it comes in the second half of the year. So, around another $1 million, and there may be some really small amounts.

Got it, perfect. Thank you very much. That’s it from my side, guys.

Thank you, Bhakti. Next question.

Your next question comes from the line of Adam Graf of B. Riley FBR. Your line is open.

Hello, guys. Thanks for taking my call. Just a question, Rob, on the overall graphical development plan that you guys presented to us last time. Has there been any updates there on schedule? I think you guys mentioned a bit about this potential for Western Black Fox development. Has there been any update there on the overall coordinated plan?

Not in terms of schedule. No, it’s still a couple of years out, with possible production.

And then just as far as the development over to Stock West, are you guys holding off until you're breaking through on Froome, or what’s the development plan just to drift over to Stock West?

Peter, do you want to comment on that?

Yes. We have about 250,000 ounces of mineral inventory there that we’re targeting, which is enough to trigger development, but we’d like to get better resource definition drilling done first. Additionally, the permit I mentioned that we received to dewater the shaft—the main shaft at Stock—is another option we’re looking at that could connect into that decline, and to any potential remnant mining that would be in Stock mine. So, we’re evaluating the costs and the trade-offs of what’s the best way to go about that while further drilling is required.

Could you guys get into the Stock mine to do some remnant mining there prior to achieving permits for Grey Fox?

Yes. The Stock mine is permitted, and as I mentioned, we have the permits to dewater now. That’s exactly the opportunity we’re examining; it’s in early stages. We’re getting some quotes on what it would take to dewater the shaft and restore it to be either a production shaft or an exploration shaft. So, we’re just going through some of those evaluations over the next quarter.

And would that be – you’d be looking at that prior to development of—or prior to at least drifting over to Stock West to do underground test mining and structural confirmation and all that?

That’s a possibility, as you probably are aware from previous communications. It’s a fairly lengthy development program for Stock West, about 2.5 kilometers. So, we’re looking for opportunities. Is there any way to bring more to the mill quicker and get access for drilling, especially for the deeper targets that Sylvain mentioned? It would be helpful if we could get down on some of the lower levels of the existing mine, providing some drill platforms there. So, those are some of the things we’re looking at, and hopefully, we can come forward with some exciting options on how to develop that mine.

Would you need additional permits if you were to open pit Stock East? And if you didn’t, at what kind of – I know it’s lower grade, but at what kind of gold price does that ore become interesting, because you have so much extra mill capacity?

Yes. We would need extra permits. We haven’t actually advanced that, even though there’s a fairly nice resource there. It’s near proximal to some water and a river, in some low-lying areas, and it’s also open further to the east and at depth. So, we’re not sure of the size of it yet in order to go for a permit; and, as well, we’ve hit some really high-grade intersections and shoots. There’s an underground trade-off versus a pit, and more drilling is needed to make that decision.

All right, great. Thank you very much.

Thank you, Adam.

And our next question comes from the line of Mike Kozak of Cantor Fitzgerald. Please go ahead. Your line is open.

Hi guys. Thanks for taking—hi there. So, just looking at the balance sheet here with the Gold Bar challenges going to impact on near-term cash flows for the company. I mean to what degree can you cut back on some discretionary spending? And then are you, in fact, looking at cutting back on things like exploration G&A, sustaining CapEx? And if so, by how much?

I’m assuming the current gold price stays or goes higher, and we can refinance the terms under our debt. We should have adequate capital to go through the year. We’ve been looking at about $5 million for exploration at both Black Fox and Gold Bar and about $1 million in Mexico. If prices change, then we can adjust our plans accordingly.

Got it. And I think the first principal repayments on that debt started, I think Q3. So, I mean presumably, you want to refi that debt, I guess in the coming months?

Yes. That’s correct.

Okay. All right, thanks. That’s it from me.

Okay, good. Next question.

And our next question comes from line of Heiko Ihle of H.C. Wainright. Your line is open.

Hello, Heiko.

Hey, my name got ready to ask and then got skipped over. Thanks for taking my questions, guys. I hope everyone on this call and their families are staying safe. I’m somewhat grateful to you guys spending over $6 million on exploration, given the longer-term potential of the assets there. Just to follow up on one of Jake’s questions earlier a little bit. I mean, in regards to Sylvain on your remarks, you spent a decent amount on the pre-stripping at the Gold Pick West pit. Should we expect to see expenditures in that regard in Q2 and Q3; and building on that, I mean, how much potential is there totally in mining in that area and essentially just move it elsewhere?

Peter, do you want to talk about that?

We know West pit is a positive business. So, we’re looking for the best way to go about and carry the mine forward, and then make improvements to the overall cost and productivities before we restart. Once we get the updated resource model that Sylvain mentioned, we’ll rerun our pit optimization to get a better view on strip. But currently, there’s nothing major in terms of stripping that’s the change from the past, and, what was the second part of your question?

How much do you seem expenditures and how much is there in order to could you possibly delay to mining there?

Oh, and go after like Pick East or something. Yes. I mean, we’re right on top of the Pick West ore. Our current thinking is to mine out Pick West and then move to Pick East. But there may be an opportunity to come down the mountain there and do it differently than previously. So, once we see the resource update, we’ll be looking at those scenarios.

Got it. In regards to the listing, I mean close to 90% of your volume is on the NYSE. I look this morning; it was 4.2 million versus 480,000 on average per day in Toronto. But clearly, the listing is extremely important. Can you walk us through some of the timelines that you’re willing to disclose about when you’d have to consider like a reverse split or other options in order to stay listed given that there are various processes that would be needed if you were to do some of the tougher choices?

Sure. Well, one, it’s not our intention to do a reverse split. The New York Stock Exchange and neither that COVID virus issues has pushed the deadline for compliance yet that requirement of being over $1 out to early December. We’ve got a good runway in terms of timing, and there’s a notice to shareholders to be given, so you’d probably have to be looking two months before that, so into early October.

Okay. So, that’s actually much more compressed than I thought it would be. I mean, because at this point, six and a half months, but it sounds like you’ve got four months left to come back, and presumably, that’s actually going to happen.

Yes.

On that same topic, can you venture a guess on your G&A savings during Q2, and thereafter, given the essential stoppage of travel and conference attendance? Are you looking to maybe downsize your office a little bit? How meaningful of a number do you think you can get with everybody working from home, and how sustainable do you think it is?

Well, we had a lease. I’m not sure when our office lease – our head office lease expires. From what I gather, people don’t mind working from home some of the time, but they don’t want to do it all the time. So, we still need an office presence. We have not investigated downsizing the office, although that thought has been moved around, because of the familiarity people are getting with using technology to work remotely. I can’t give you a number on Q2 or Q3 as to where we might achieve savings at this time.

Fair enough. Excellent. I have someone else who scooped up at the house – let’s we can all go back to an office at some point in time. Stay safe, guys. Thank you.

Thank you, Heiko. Bye. Next question.

Yes. Our next question comes from the line of John Tumazos of Very Independent Research. Your line is open.

Hello, John.

Good morning, Rob. Thank you for taking my call. Did the Gold Bar charge wipe out all of the PP&E, but none of the working capital?

Yes, of course. We haven’t really finally allocated the charge between basically PP&E and mineral interest. But we’ve determined that the fair value of mineral corporate or net assets, let’s say, is $47 million. We’ll be splitting it and allocating it at a certain point in Q2.

Thank you. Rob, the issue with the bank covenants reminds me of a training class I was in, as a graduate student for commercial bank lending officers at Morgan Guaranty Trust Company. A fellow named Charleston Chatfield III gave our presentation on relationship banking and winning back the Firestone account. I’m a little confused that the lenders like your company enough to loan you money. Now at sort of an awkward time, they’re enforcing the covenants and have triggered a going concern. It would seem a lot simpler if they charged you a fee to waive the covenant or sat down with you privately to seek a remedy before it triggered all these different events. Are the lenders just fundamentally uncomfortable with your strategy of assembling assets and drilling for exploration? Or do they like the managers that departed more than the managers in place? Or are they just trying to make you write a personal check for $50 million to settle the loan? It’s just a weird situation. And to the extent you can make comments, if you understand the situation yourself, I’d appreciate your insight.

Sure. We haven’t violated any covenants on the loan for the first quarter. It’s the second quarter that we’re concerned about and going forward. The gap was structured with a three-year term but a partial repayment of principal starting on the second anniversary. So that’s where we start getting into working capital issues. That would amount to about $2 million a month or about $10 million for the year, principally in impairment. The lenders are concerned, and they just had this covenant that you had to maintain a minimum of $10 million working capital at the end of each quarter. But we’re just looking ahead and that’s where it’s the partial payment and the working capital clause triggered the auditors to say there’s a growing concern over the next 12 months. And we haven’t gotten to saying, I should write a check. We have talked to a party or two. And their creditors—I have half of that yet. Creditors put up 25, and I was another creditor for 25. So I looked at it and said, “We believe we’re looking to refinance. And if we can refinance, we seem to have some agreement at the moment that we could extend the term and lighten or extend the partial repayments.” That’s where we got. As for that creditor half of the debt there, they like it but didn’t expect, nor did we, the problems we’d encountered with Gold Bar.

Thank you for the explanation. The Grey Fox seven-gram per ton material seems really good. Given the need to do some development to ramp into it and other logistics, dewatering, ventilation, all the infrastructure to get into it. How many quarters or years out or is that seven-gram material from going through the mill?

Peter, would you like to speak to that question of John?

Yes. So, the resource just came out last week. So, we haven’t actually updated the open pit and underground scenarios for the announcement you just heard from Sylvain. So, I really can’t speak to that yet. I think what I can say is the new discovery at Gibson is an exciting discovery with the potential for another open pit or third one, we have the 147, the contact and Gibson, and then looking at how undergrounds fit around those. We’ll need to do trade-offs to look at what has the best margin and returns and what combinations of open pits and underground mining. So quite a bit of work is ahead of us there.

Do you think it’s a year to figure it out and then a couple of years to get into it or longer?

No, I think it’s probably six months of work with mine planning, it won’t take that long, but other technical evaluations are proceeding with the Grey Fox pit permits on the 147 and the contact, and we’re probably going to roll in initially expedite the work on the Gibson pit and include that in the project description. So our first priority would be the open pit, and then making sure how our footprint fits together and how the underground fits with those pits so that we’re not sterilizing good ore. Still a number of trade-offs need to happen there, but we are proceeding with the permitting for the open pits.

It’s a little bit like a basketball game where you got your three-point shooter on the bench with the NYSE listing requirements in the bank loan and all these different pressures on the company, that seven-gram material going through the mills, you’re three-point shooter, and you need the same basket?

Yes. We’re very excited about it. It is harder ore, but we have to be a bit measured in how we bring it in, in what quantities relative to the mill capacity. So that’s another part of the trade-off and how it all blends together. But yes, we’re very excited about it. I mean, very high-grade pits and very attractive underground ore, and we’re certainly going to go after it as hard as we can.

Thank you.

Thanks, John. Next question?

And your next question comes from the line of Bill Power, Private Investor. Please go ahead.

Yes. Thanks for taking my call.

Hi, Bill.

Hi, Rob. And thanks for taking my call this morning. I had a couple of different questions. But I guess the first one would be that you said that in Gold Bar that the auditors were using a price of $1,430 or something along those lines? I would assume that it doesn’t sound like they were using the future strip prices going forward or anything along those lines. I guess, have you worked out internally if you use the forward strip if it’s substantially higher, as you’re sure you’re aware, what the write-down would have been by any – or is it materially different?

It would probably be different. I know, to answer your question, I don’t believe I looked at prices higher than $1,430. They employed endless projections, and apparently, we have a— I mean, you have Bank of America, $3 million, but they look beyond that and considered that analysts were still down around $1,400 going into the future.

Okay, okay. And so as far as they didn’t – basically, they were using analysts. They weren’t using what actual pricing is in the futures market. That didn’t seem to impact at all.

No, no.

And is that a traditional way of doing write-downs? Or do they go to – because this is kind of the – the reason I’m asking is this is the second time in less than a year that they wanted to change the accounting for the end of mine life in Mexico as well as they wanted to – like we had talked about made up a new category to put that into. And it appears that by using analysts, this seems as though it’s a little random to not what you could— what the futures market is telling you to price it?

Yes. I probably would have— I would have picked a higher price; this is my view on the different market, but I mean.

And that’s fine. I— it just seems as though it’s a little bit when you— I guess for the—in other industries, there is a pricing that is very clear and well established, whether it’s Comex or whatever. But anyway, to move on from that, getting to the Black Fox mine, in the last quarter, you had an average grade of 4.58 with a processing rate of 3.53, and that’s down materially from the first quarter of last year. But yet you were still able to come in very well on cash costs. And the all-in sustaining was actually lower. How did that seem to— how did you kind of come to those numbers? If you could shed some light on that.

So, they’re improving their operations a bit. There were a lot of problems in the first half of 2019 that didn’t occur. We had a crusher buyout. Then it was followed by a flood. Those weren’t reoccurring events. That’s why the costs are coming down.

Okay. And do you expect to return to a higher grade later this year? And I guess, are there further improvements that you can see for the costs, at least the cash costs coming down further?

So, we hope to have better recoveries. Solution has been a problem at the mine or dilution due to mining and the ground control, and we hope we have some remedies to that. Peter, do you want to jump in there?

Yes. On the dilution aspect, we are related to the falls here in the hanging walls. I’ve been discussing a lot with the team about implementing capable trials and different techniques to try and minimize this start and onset of at least once it starts traveling up that way. That has been a historical challenge, especially in the lower areas of the mine, the upper areas of the marketing in the West Flank, 300. These are new areas of the mine, which aren’t around old remnant mining. And so another reason we’re targeting in our development to get access to new areas should help the overall solution. But I’m not expecting yet.

Okay. So that sounds like you have it under control and are expecting improvements on the—at least the grade wise going forward. Is that fair to say?

Yes, we’re targeting that. I think it’s going to take time to prove it out and hone it. There is a good opportunity there to improve things.

Okay. And last question today. I appreciate all your patience. As I’m reading through the announcement down at Grey Fox, were the Whiskey Jack discovery – or I don’t know whether that was included in the discovery, but there seems to be some – it didn’t – it wasn’t mentioned specifically that it was included in the updated resource. Was the drilling done at Whiskey Jack included or is that something to be put in for future?

Well, I can answer that. Yes, Sylvain speaking. Good questions. And yes, Whiskey Jack is included in this revised updated resource. We have for the first time included Gibson, Gibson is part of Grey Fox. It’s to the west, hosted in a different host rock. It’s in a syenite. But we’ve now established that the structure is in the vein that controls mineralization across all units from mafic volcanic to sediment to syenite, all of the rocks that can be potential hosts. We merged that into this updated resource contact zone and we added Whiskey Jack to it; so it’s part of what is shown as the contact zone in this revised resource. And as you know, we have spectacular results there: 53 grams over 7.4 meters at Whiskey Jack. It’s a new discovery with just a starting point but can have to be included in this resource.

Okay. Well, thank you very much for all your answers this morning.

Thank you, Bill.

And your next question comes from the line of Mike Hawkins. Please go ahead, your line is open.

Hi guys. Thanks for taking my call. I just have a few questions on Gold Bar. Given the comments about the mineralization being more structurally controlled at Gold Pick, can you provide some high level guidance on what you expect the impact to be on mine grade and dilution and strip ratio, at least for this year? I think there was some comment about stripping being similar, but any comments on that would be helpful.

Peter, do you want to talk about that?

Yes, as I mentioned, we're waiting on the resource update in order to provide those numbers. Those will come out towards the end of the next quarter.

Okay. But can you at least comment on sort of at least geometrically, it’s more structurally controlled and less bedding controlled. So does that mean that they’re narrower zones that have to be mined in a more narrow fashion, or any commentary around that?

Yes, I think the slide that Sylvain showed of all the drill intercepts gives you a good idea. It hasn’t significantly changed the actual waste development required to access West pit. So we have—we’ll have full access, and some of the drilling results that Sylvain mentioned are outside of our current optimized pit shells, so with the old model. We’re anticipating some of those waste blocks transitioning into West pit. I really can’t comment until we see such resource model in both the cones and then do all that good stuff.

Okay. And maybe just to follow-up on that, it just gives you the impression given the reduction in— or the, I guess, the anticipated reduction in ounces and the commentary around it being structurally controlled that the zones are going to be different geometry? And I’m thinking narrower. But the drilling that you showed has some pretty wide intercepts. So just wondering if you could help me reconcile what’s— what you think is going on there?

Right. Yes, well the actual—the three zones you have, the West, the Central, and the East haven’t changed all that much. The drilling that Sylvain mentioned is confirming the mineralization in West pit, and that’s been most of the focus on near-term mining. The majority of the ounces lost in the write down were in the hump area and it’s from the stripping program we moved from West pit towards East pit. I think that can give probably a better color on that. Sylvain, could you speak to that issue?

Yes, sure. Sorry, I was on mute. Yes, the control of the mineralization all the way has been both stratigraphically and structurally controlled. So it’s structured across the stratigraphical bedding horizon and mineralizes the rock there. The big difference is the weight that has been allocated to the bedding or stratigraphic control versus the structural control. And this has impacted, of course, the way the model—the resource model has been designed in the past. As we get better exposure to the bits and, of course, a lot of detail coming from the last hole and mining, we get better definition of what’s going on. We started with Cabin; overall, the reconciliation was okay when we moved to the West pit upper bench we saw less and less answers, and we decided to go back with drilling—not just drilling, but also oriented core—to look in more detail of the rock and better understand the control of the mineralization. The drilling so far and together are showing that gold is there, the grade is there; of course, we have to wait as Peter said for our revise resource update and what would be our revised mine plan based on this global revision we’re doing right now. Based on those new submissions, we’ll see where we stand with that Gold Bar.

Okay. And could you comment on sort of the widths of those structures that you see carrying grade versus what you saw in the bedding controlled mineralization?

Yes, there are actually a lot more structures than what was previously interpreted or understood. More we get from formation more we realize the structural setting is complex, which is not necessarily a bad thing, but it’s different from how it was understood and interpreted. So we still have significant width associated to structures to multiple structures, intersection of structures generating a wider zone of mineralization. The biggest impact we're seeing is that the model itself will be less spread away from the structure than it used to be, as parts of the last estimation.

Okay. Right.

Yes, Mike. It was a blindside. I mean, their structural interpretation was the foundation for the feasibility study in the mine plan and then it was built on that basis. And then the same party came along and did that based on the mining and said, 'Oh, well, it’s not laterally dispersed or spread. It’s more vertically controlled.' Thank you very much.

Yes. Okay. And maybe just one more question on Gold Bar. If I look at just the cumulative ounces placed on the pad, and the—does it have been produced, I get a cumulative recovery rate of about 52% after a little over a year of leaching. Is that correct? And can you comment on how it compares to the feasibility and how you think about recoveries going forward on the project?

Peter, would you like to answer that?

Yes. I’ll do my best. If I recall, I think we ran the numbers in April; it was about 55% recovered. So you’re pretty close there. The actual recovery rates are slower than what the feasibility study forecasted. So you're seeing a bit more of a lag and it takes longer to get up to feasibility study levels. But largely the expectation is to get towards the feasibility study level by the end of the mine life and cumulative. There are some impacts with a shorter mine life, obviously less time. So as we update this resource model and the life of mine, we’ll be able to understand that better. We have done some leaching tests with Forte and are in the middle of updating the recovery model to reflect the combined run-of-mine placement and agglomerated, and so far, our production is following those curves very well. So Forte’s work will culminate and complete in August, and through that study, we’re also going to take the new updated model, which will include a clay model and a preg-robbing for the carbonaceous material. We’re going to feed all of that into an economic assessment to find the best net present value approach for agglomerated versus a hybrid of agglomerated.

Okay. And do you understand what’s causing the difference in recovery versus the initial test work at this point? Is it that— is it clay that’s being placed on the pad or carbonaceous? Or is it something else?

It was a combination. And hence, why I think we’ve taken the model over internally and planned to create those models and refine them with our in-pit mapping. So we can—that's what I was getting at about blending and in terms of the preg-robbing segregation, but right, we segregate all the carbonaceous material out. But early on in the build, there were some tonnes placed on there. I can’t recall the amount, but a small portion of the area that has been taken into account in the model.

Okay. Great. Yes, that’s it for me. Thanks very much, guys.

Thank you, Mike. Next question.

Actually, this concludes today’s Q&A session. If you have any further questions, please direct them back to our management in a rock open forum. I turn the call back over to Mr. Rob McEwen. Thank you very much.

Thank you, operator. Thank you everyone for joining us. Stay strong and healthy. Thank you. Bye.

And this concludes today’s conference call. You may now disconnect.