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MUX

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FOX COMPLEX

About the Fox Complex

Located in Timmins

The Fox Complex is located in the well-established Timmins Gold Mining Camp in Northern Ontario, Canada. Its main properties, Black Fox, Stock and Lexam, are positioned along the Provincial Highway 101. 11 kilometers east of the town of Matheson is the Black Fox Property. The Stock property is located 22 kilometers west of Matheson and 45 kilometers east of the city of Timmins and of the Lexam properties. Given the proximity to communities in a region with primary industries mining and forestry, local supplies and services are easily available and can be delivered in a timely manner at the complex.

About Diagram About Diagram

The Fox Complex comprises almost 7,000 hectares of land packages along 18 kilometers (11 miles) of the Destor-Porcupine Fault, known as the ‘Golden Highway’, which has a total strike length of approximately 200 kilometers (124 miles) and hosts many of the richest gold mines in the provinces of Ontario and Quebec.

Starting from the east, the Black Fox Property is an important component of the complex, including the Black Fox and Froome mines and the Tamarack and Grey Fox deposits. The Black Fox mine had an initial production from 1997 to 2001. Re-commissioned in 2009, it operated continuously, with open pit commercial production from May 2009 to September 2015 and underground mining commenced in October 2011 and continued to 2021. The open pit and underground operations at the Black Fox mine produced a total of 950 thousand ounces of gold to the end of 2021.

During 2021, production wound down at the Black Fox mine and ramped up at the Froome mine. Froome produced 24.3 thousand gold equivalent ounces in 2021 and is anticipated to produce 44 to 49 thousand gold equivalent ounces in 2022.

The Stock property is also located along the Destor-Porcupine Fault, between the Lexam property and the Black Fox property. Stock hosts the Black Fox-Stock mill and is the site of the former Stock Mine, which produced 137,000 ounces of gold from an underground operation between 1989 and 2005. Exploration initiated in 2018 at Stock and continued to date has defined deposits east and west of the Stock Mine, within a three kilometers mineralized trend along the Destor-Porcupine Fault.

Further to the west, the Fox Complex includes the Lexam properties, with the Buffalo Ankerite, Davidson-Tisdale, Fuller and Paymaster deposits, where the first three are fully owned and Paymaster is a joint venture with Newmont Corporation (61% McEwen Mining - 39% Newmont). As historic producers, the most prominent of the Lexam cluster are Buffalo Ankerite and Paymaster. Buffalo Ankerite produced 1.02 million ounces of gold at an average recovered grade of 6.5 grams per tonne from 1925 to 1953, and Paymaster produced 1.2 million ounces of gold at 7.2 grams per tonne from 1915 to 1966, bringing the combined production at the Fox Complex to 3.3 million ounces of gold.

McEwen Mining owns the Fox Complex through the acquisition of Lexam VG Gold in April 2017 and the acquisition of the Stock and Black Fox properties in October 2017.

In September 2021, commercial production was achieved at Froome, three months ahead of schedule. Located 900 meters west of the Black Fox open pit, the Froome mine is bridging the mine life towards our plans for future expansion program at the Fox Complex. We expect that exploration success at Froome will continue to expand production and add years to its mine life.

In January, 2022 McEwen Mining has announced an Expansion Preliminary Economic Assessment (PEA) to extend mine life and increase gold production at the Fox Complex. It translates our exploration success into a business case that increases mine life and production rates and lowers costs per ounce. The PEA is an encouraging first iteration and it provides a clearer picture of where future exploration should be focused to add value. Our commitment and investment in exploration has provided the foundation for this study, and ongoing exploration success is expected to continue to further enhance the expansion potential at Fox.

The land packages of the Fox Complex continue to hold exploration potential to depth and along trends, that can allow us to build a future for our Ontario operations. In 2018 we initiated a property-wide exploration program, that included 159,000 meters of exploration, definition and delineation drilling, to test for extensions of existing resources, to follow up on significant drill results, and to investigate new exploration targets. In 2019, 2020 and 2021 exploration drilling from surface and underground covered 266,000 meters and 78,000 meters respectively. The exploration programs continue to deliver strong results, with new targets identified and an expansion of gold resources across the properties.

1915 - 2021
Fox Complex Production

Black Fox Gold
3,338,000
Oz Au

MINING AND PROCESSING
AT THE FOX COMPLEX

The Froome underground mine started with initial ramp development in 2020, reaching initial stope production in early 2021 and commercial production in September 2021. Situated between 275 mL and 100 mL levels, its mining methods are longitudinal and transverse long hole mining with delayed backfill in a bottom-up sequence accessed from the footwall of the deposit. Mined material is trucked from each sublevel to surface, where it is hauled as run-of-mine 28 km by road trucks to the Fox-Stock mill site, and fed via a conveyor system to the mill’s crushing circuit.

The crushed product is transferred to a 1,500 tonne fine ore surge bin and then fed into a 2,000 tonnes per day grinding circuit, which includes two stages of closed circuit ball milling. Soluble gold is recovered by adsorption upon granular activated carbon in CIC, CIL, and CIP trains, with a process efficiency of up to 97%. Gold is removed from the carbon in a high temperature strip vessel in a closed circuit with electro-winning deposition. Gold plate is further refined by induction smelting and cast into molds.

Gold pile

RESOURCES
& RESERVES

MEASURED & INDICATED

3,041,000 OZ AU EQ

INFERRED

1,154,000 OZ AU EQ

PROVEN & PROBABLE

64,000 OZ AU EQ
For details see the company's Resources & Reserves.

FOX COMPLEX PEA

The Fox Complex Preliminary Economic Assessment (PEA) was announced on January 26, 2022 (see press release here) and is an expansion project based on the sequential underground development and mining of the Froome, Stock West, Grey Fox, and Fuller mineral resources. The PEA includes upgrading the Fox mill, located at the Stock property, to increase throughput capacity to 2,400 tonnes per day and to allow the simultaneous processing of material from multiple deposits.

With a base case of $1,650 for the price of the ounce gold, the life of mine for the Fox PEA is of over 12 years, with an average annual gold production of 72 thousand gold ounces, at average cash costs and all-in sustaining costs (AISC) per ounce under $800 and $1,225, respectively, and an After-Tax Net Present Value (5% discount) of $175 million.

The Fox project is partly funded by operating earnings from ongoing operations at Froome, some of which occur before the expansion project is started. With the current assessment estimating that 25% of the capital expenditure for the life of mine would require external funding, the Company is looking for opportunities to mitigate the funding requirement by enhancing near-term production opportunities at the Stock property and Froome with ongoing exploration drilling in 2022.

The PEA provides a sound basis for identifying where best to leverage exploration and delineation spending. Management remains confident that mineral resources can be expanded in the Stock area with targeted drilling within 400 meters from the surface at Stock West and Stock Main.

Recent exploration drilling has identified the host lithology (green carbonate unit) and similar mineralization to the Stock West deposit nearer to surface, between the historical Stock mine infrastructure and the Destor-Porcupine Fault Zone. Evaluation of the extent of this unit and its mineralization is currently underway. Successfully delineating potentially economic mineralization near surface, close to the proposed decline at Stock and adjacent to the Fox Mill could significantly improve near-term project economics and payback.

In addition, exploration continues at Stock Main and Stock West to develop additional resources that may provide opportunities for earlier revenue and quicker payback period. Drilling is also anticipated at Grey Fox to evaluate additional opportunities for resource extensions and definition.

Our other resources at Black Fox, Stock East, Davidson-Tisdale, Buffalo Ankerite, Paymaster, and Tamarack represent potential sources of additional production and require further exploration and study.

Highlights of
FOX PEA


  • Life of Mine (LoM) 12.3 years;

  • LoM Gold Production 885,400 oz Au;

  • Average Annual Gold Production - LoM 71,980 oz Au;

  • Average Cash Costs per oz over LoM $797;

  • Average AISC per oz over LoM $1,224;

  • Gold Price Sensitivity:
      Downside Case ($1,500/oz Au): After-Tax Net Present Value at 5% discount (NPV5%) $108 million;
      Base Case ($1,650/oz Au): After-Tax NPV5% $175 million;
      Upside Case ($1,800/oz Au): After-Tax NPV5% $240 million.

FOX COMPLEX
EXPLORATION

Located within the Abitibi greenstone belt, the Fox Complex has various gold mineralization occuring within the ankerite alteration zone: (1) free gold associated with shallow dipping quartz veins and stockworks in green carbonate and ankerite-altered ultramafic rocks; (2) gold-bearing pyrite; (3) gold associated with fine-grained pyrite and (4) free gold in steeply dipping sigmoidal quartz veins.

Although there is a history of exploration and production, Fox remains relatively under-explored. Its land packages have all the criteria characteristic of great exploration projects, including prime location within a prolific mining region, high gold endowment, presence of high-grade mineralization, multiple prospective structural trends, as well as various styles of mineralization and host rock types.

Exploration is a principal focus at the complex. A successful $21 million property-wide exploration program in 2018 has been followed up by a $25.5 million exploration program in 2019, which continued to deliver strong results, with new targets identified and an expansion of gold resources across the properties.

The main focus of Fox exploration is to extend mineralization around known deposits and to test new targets close to our mine and mill for potential contributions to near-term gold production.

The 2018 exploration program included airborne electromagnetic and magnetic surveys; geophysical data processing and interpretation work for the development of new drill targets; data processing and application of machine learning; and development of interactive 3D models. Drilling that covered 120,000 meters exploration and 39,000 meters of definition and delineation has been organized to test for extensions of existing resources, follow up on significant drill results and investigate new exploration targets.

In 2019 about 39,000 meters of underground exploration were targeted at adding new ounces for short-term mining, including in the upper part of the Black Fox mine. We also continued surface drilling, with 149,000 meters aimed at the highly prospective mine trend of over three kilometers in strike length, which includes the Stock East resource, the Stock Mine depth extension, the new Stock West deposit, as well as multiple targets on the Black Fox property, which include the Froome and Grey Fox deposits.

All areas explored so far have returned encouraging drill assay results, reinforcing our view about the strong exploration potential of the Fox Complex.

Overview     |

Stock West     |

Stock Mine Deep & Gap Zone     |

Stock East     |

Overview Property Stock Overview

The Stock property covers a 8 kilometers (5 miles) section of the prolific Destor Porcupine Fault. A significant NE-SW trending fault (the Nighthawk Fault) intersects the Destor Porcupine Fault near the Stock Mine, making the area a prime structural setting for gold mineralization.

The property is metal stream-free, site of our current Black Fox-Stock Mill and of the former Stock Mine, which produced 137,000 gold ounces at an average grade of 5.5 g/t, from an intermittent underground operation between the early 1980s and 2004 , having reached to a relatively shallow depth of 330 m (1,080 ft).

In addition to these major structures, the property also exhibits other characteristics of strongly mineralized systems in the prolific Abitibi Greenstone Belt: intense alteration, multi-style and multi-phase mineralization, and significant gold mineralization hosted in various rock types, including wide intersections of 10-30 meters grading 1-2 g/t Au, and also higher-grade intersections of over 10 g/t Au.

Gold mineralization at the Stock Property consists of disseminated sulfides (mostly pyrite) and quartz-carbonate stockwork and breccia, hosted in sericite-silica-albite and fuchsite altered mafic and ultramafic volcanic rocks, and in highly siliceous and albite-rich dykes.

Our drilling program started in February 2018 and followed-up on historical intersections and geophysical targets, with focus on the Stock East target.

Stock East is part of a 3 kilometers long trend that also hosts the former Stock Mine. Encouraging drill results from Stock East prompted us to extend drilling activities into 2019 over this mineralized trend, also including the Stock West, Stock Mine Deep and Gap Zone targets. For more details see links above for Stock West, Stock East, Stock Mine Deep and Gap Zone targets.

Stock West Stock West

Results from our first drill holes at Stock West suggest the potential to define a significant new zone of mineralization, with economic importance enhanced by this target being located only 1 kilometer (2/3 mile) from our Black Fox-Stock mill and 300 meters (1,000 feet) West from existing underground workings of the historic Stock Mine.

Drilling completed 1.1 kilometers (0.7 miles) along strike West of the Stock Mine intersected encouraging alteration and mineralization, such as in hole S19-90, which returned 4.2 g/t gold over 3.5 m (core length). This intersection is near two historical drill intersections, which returned 23.0 g/t gold over 1.5 m and 14.5 g/t gold over 3 m, suggesting that a potentially new mineralized shoot may occur in this area.

Hole S19-98, which was drilled to intersect mineralization beneath S19-90, has shown visible gold in multiple quartz veinlets within the silicified zones of a highly altered ultramafic volcanic and returned 5.6 g/t gold over 30 m, including 9.1 g/t gold over 13 m.

Significant intersections at Stock West were also returned in drill holes S19-101 (6.7 g/t gold over 39 m) and S19-105 (5.6 g/t gold over 29.1 m, including 15 g/t gold over 5.1 m).

Drill holes S19-98 and S19-101 to S19-107 completed at Stock West intersected the favorable host rock, a coarse-grained magnesite-fuchsite-dolomite carbonated altered ultramafic unit. Assay values from the well-mineralized intersections are consistent across the intervals, with gold present in both the veinlets and within the ultramafic itself. In addition, a pyrite-rich felsic dyke has been intersected in three holes. This dyke occurs next to the ultramafic intrusive unit and carries visible gold throughout. In hole S19-105, the felsic dyke returned assay results of 13.2 g/t gold over 5.4 m. These styles of mineralization have been intersected from 1,280 to 1,670 feet (390 to 510 meters) below surface and horizontally for 575 feet (175 meters). They differ from most other mineralization on the Stock and Black Fox properties and remain open at depth and along strike.

Similar coarse-grained ultramafic host rocks appear at part of Stock Mine Deep and the potential for a connection with Stock West over a gap of more than 2,000 feet (600 meters) will be tested. Four surface drill rigs are actively drilling at Stock West.

For 2019 drill results on Stock West see links to tables that have been included in the press release from Sep 4, 2019 and Oct 28, 2019.

Stock East Property Stock East

Stock East, a target that was unexplored for over 20 years, lies approximately 700 m East of our Stock Mill, at the intersection of the NW-SE Nighthawk Fault and the E-W Destor Porcupine Fault.

Positive 2018 drill results include narrow higher grade intersections, and also wider and lower grade intersections that indicate the potential for open pit mining. Drill intersections highlights from this program: 2.94 g/t gold over 18.03 m (hole S18-01), 5.24 g/t gold over 11.96 m (hole S18-10) and 5.76 g/t gold over 9.69 m (hole S18-47).

2018 drilling at Stock East outlined an initial resource estimate (effective Sep 5, 2018), followed by an infill program that upgraded the initial resource. The updated resource (effective Dec 31, 2018) is comprised of 60,000 ounces of gold in the Indicated category and 90,000 ounces of gold in the Inferred category under open pit and underground classifications:

  • Open Pit Gold Resource (using a mill cut-off grade of 0.25 g/t)
        43,000 Indicated ounces at a grade of 1.00 g/t and
        54,000 Inferred ounces at a grade of 1.01 g/t

  • Underground Gold Resource (using a cut-off grade of 2.40 g/t)
        17,000 Indicated ounces at a grade of 3.50 g/t and
        36,000 Inferred ounces at a grade of 3.26 g/t.

Stock East has a strike length of approximately 400 meters, it extends vertically from surface to a depth of approximately 450 meters and is open in all directions.

Drill intersections from 2018, such as 4.7 g/t gold over 2 m, including 14 g/t gold over 0.4 m; and 31.8 g/t gold over 0.4 m have been further correlated in 2019 with encounters of higher-grade mineralization, such as in hole SEZ19-15, which returned 10.9 g/t gold over 5 m. Further high-grade drill intersections were encountered at a vertical depth of approximately 290 meters: 34.7 g/t gold over 5.9 m, including 74.1 g/t gold over 2.7 m, and 83.5 g/t gold over 5.6 m, including 417 g/t gold over 1.1 m.

The 2018 resource estimate for Stock East included an open pit mining scenario. The new high-grade intersections encountered in 2019 suggest the presence of higher-grade shoots within the lower grade resource area. Together with past results, they strengthen our conviction that the Stock East deposit hosts higher-grade zones that could potentially be mined using existing nearby underground mine workings. An infill drill program is ongoing to better asses this higher-grade mineralization.

For drill results on Stock East see links to tables included in press releases from Apr 30, 2018, Jul 25, 2018, Sep 6, 2018, Sep 4, 2019 and Sep 30, 2019.
For the updated resource estimate on Stock East please see the press release from Feb 21, 2019.

Stock Mine and Gap Stock Mine and Gap

The Stock Mine Deep (the depth extension of the Stock Mine) and the Gap Zone had very little previous drilling. Holes drilled in 2018 targeted:

  • underneath the historical mine workings testing for the extension of the Stock Mine mineralization at depths from approximately 320 to 700 m below surface; and
  • along a 400 m trend east of the Stock Mine, testing continuity in sparsely drilled areas located along the main structure (Gap Zone).

Gold mineralization has been intersected in a variety of lithological settings including altered feldspar porphyry intrusions, altered mafic volcanic rocks and fuschite-altered ultramafic rocks. The zones include wide intervals of:

  • Lower-grade gold mineralization - grades from 0.8 to 1.3 g/t gold over true widths of 18 to 30 m, such as:
    0.9 g/t gold over 24.2 m (from 464 m to 497 m in hole S18-26 at Stock Mine Deep);
    0.8 g/t gold over 25.8 m (from 125 m to 160 m in hole S18-70 at Gap Zone); and
  • Narrow intervals of higher-grade gold mineralization - grades of 5 to 22 g/t gold over widths of 1 to 4 m, such as:
    22.2 g/t gold over 1.4 m (from 333 m to 335 m in hole S18-35 at Stock Mine Deep);
    7 g/t gold over 3 m (from 727 m to 731 m in hole S18-31 at Stock Mine Deep);
    6 g/t gold over 1.8 m (from 141 m to 143 m in hole S18-27 at Gap Zone).

The obtained drill results support the potential for extending the mineralization down plunge from the Stock Mine, and for shallow mineralization along the 2 km long trend between the hanging wall of the Stock Mine and the Stock East Zone.

Further exploration drilling by McEwen Mining in 2018 and 2019 below the workings of the Stock Mine is testing the potential for the mineralized system to extend deeper.

In 2018, hole S18-31 intersected multiple intervals of mineralization up to a depth of 750 m (2,460 ft) below surface under the mine workings. Hole S19-95, drilled in Q2 2019, intersected mineralization 250 m (820 ft) below the positive results of hole S18-31, and 950 m below surface. Multiple zones of alteration and mineralization were observed, including visible gold. The best interval received from this hole is 18 g/t gold over 9.1 m, including 120 g/t gold over 1.3 m, including 311 g/t gold over 0.5 m. These high-grade intersections and other mineralization intersected in holes S19-95 and S18-31 have reinforced our belief that the gold-hosting system remains open with high potential at depth.

Wedge hole S19-97W was drilled to follow-up on the positive assays from S19-95. Visually positive mineralized intervals were observed over 49 m, including local occurrences of visible gold, with assays returning 4.2 g/t gold over 7.5 m, including 25.9 g/t gold over 0.8 m, at a vertical depth of 1,020 m (3,345 ft). The gold mineralization is hosted in fuchsite-altered ultramafics, and could potentially represent the depth extension of the historical “N2 Zone” of the Stock Mine, which produced 80,000 ounces of gold at an average grade of 6.2 g/t Au. Significant depth potential well beyond 1,000 m (3,280 ft) is a characteristic of similar geological deposits in Canada.

For 2018 drill results at Stock Mine Deep and Gap Zone see link to table included in the company's press releases from Sep 6, 2018. For 2019 drill results at Stock Mine Deep see link to table included in the company's press releases from Sep 4, 2019 and Sep 30, 2019.