McEwen sees Grey Fox adding 15 years to Ontario mine complex

McEwen (NYSE, TSX: MUX) has confirmed the potential for its Grey Fox project located near Timmins, Ontario, to add significant gold production and extend the life of its Fox Complex.

The Canadian miner released on Monday the results of a pre-feasibility study (PFS) on the project, forecasting annual gold production of 87,000 oz. from 2028 through 2041, effectively extending the life of its Fox Complex by another 15 years. In 2029, production could reach as high as 100,000 oz., it also showed.

The new report confirms the project's status as a long-term growth driver for McEwen and its Fox Complex. The Complex, one of Canada’s most prolific gold camps, currently relies on production from the Froome mine, supported by processing at the Stock mill.

Grey Fox's production profile, McEwen says, is expected to support the company's near-term objective of increasing its total annual production to 250,000–300,000 gold equivalent ounces (GEOs) by the end of this decade.

Shares of McEwen dipped slightly during early trading hours, with the company's market capitalization floating just above US$1 billion in New York.

$181M cost

The PFS report also outlined that the Grey Fox mine would have an initial capital cost of $181 million. This, based on current gold prices of over $4,000/oz., is expected to be funded primarily internally, McEwen said.

Under the base-case scenario of $3,000/oz. gold, the project would have a post-tax net present value (at 5% discount rate) of $282 million, an internal rate of return of 25% and a payback period of 4.6 years. All-in sustaining cost over the life of mine is estimated at $2,212/oz.

The PFS is based on a current indicated resource of nearly 2 million oz. (18.8 million tonnes grading 3.28 grams per tonne gold) for the Grey Fox deposit. Nearly half of those (980,000 oz.) were reserves included in the mine plan.

McEwen highlighted that the reserve accounts for only 40% of Grey Fox's total resource count. As such, there is upside to grow the reserve through resource conversion, it said, adding that it has planned further drilling with a total spend of $5 million.

Construction in 2027

The next steps in the project, the company noted, include detailed engineering and long-lead purchases and an amended water permit and closure plan. Construction is expected to begin in the spring of 2027, followed by underground development in the second half of the year.

If completed on schedule, commercial production would begin in 2029, as outlined in the PFS mine plan.

Mining at Grey Fox is expected to be a combination of two independent underground operations accessed from separate portals. The ore will be hauled to surface and driven to McEwen’s operating Stock mill, where it will be blended with Stock mine material. Gold recovery has been estimated at 87.5% based on laboratory testing, according to McEwen.