McEwen’s strong shallow Grey Fox assays prep expansion bid in Timmins gold zone

McEwen Mining (TSX: MUX; NYSE: MUX) says drill results at its Grey Fox gold deposit bode well for developing the wider Fox complex of historical mines and exploration sites in northeast Ontario.

Highlights released on Wednesday include 7 metres grading 4.9 grams gold per tonne from 90 metres depth in drill hole 24GF-1471; 2.4 metres at 13.8 grams from 119 metres down hole 4GF-1474; and 2.8 metres grading 9.8 grams from 208.5 metres depth in 24GF-1452.

“These results demonstrate that the Gibson area of Grey Fox has good grading mineralization over mineable widths in close proximity to existing underground infrastructure,” the company said in a release. “Grey Fox is currently a more than 1-million-oz. gold deposit and is the next project in our growth pipeline after the current development of our Stock project. 

McEwen plans to develop Grey Fox and Stock in the 70-sq.-km Fox complex 70 km from Timmins along 18 km of the Destor-Porcupine fault. The complex includes the past-producing Black Fox and the active Froome mine. Black Fox produced 950,000 oz. during 1997 to 2001 and from 2009 to 2021. Froome, less than 1 km west of Black Fox, started in 2021 and produced 44,400 oz. last year.

Shares in McEwen Mining gained 3% to $11.75 apiece on Wednesday afternoon in Toronto, valuing the company at $609 million. They’ve traded in a 52-week range of $8.05 to $17.08.

Ramp system

This year’s best drilling at Grey Fox, 5 km southeast of Black Fox, identified mineralization less than 300 metres deep and 50 to 100 metres around a ramp system, which could offer early access to near-term production, the company said.

Grey Fox is part of the Fox complex’s proposed expansion centered on the sequential underground development and mining of the Froome, Stock West and Fuller deposits. The gold mineralization at Gibson is characterized by multiple stacked and sub-parallel vein sets beginning less than 10 metres deep and extending below 600 metres, McEwen said.

“These vein sets are generally planar and have good strike and vertical depth components,” the company said. “Due to their strong continuity and good grades with mineable widths, these vein sets are attractive areas for either underground development or open-pit mining methods.”

Next year, McEwen intends to drill the Grey Fox exploration horizon northwest of its resource, plus several other targets, including one that became the Froome mine. The resource contains the Gibson, Whiskey Jack, 147 and Grey Fox South zones.

Black Fox horizon

“Geological interpretations have created an exciting new exploration target, one that suggests that high-grade Black Fox horizon-style mineralization may exist below and adjacent to the Grey Fox deposit and could extend 3 km along trend towards the Black Fox mine,” the company said.

The Fox complex’s expansion could produce 72,000 oz. annually for 12 years at all-in sustaining costs of US$1,225 per oz., according to a 2022 preliminary economic assessment. It has an after-tax net present value of US$175 million at a 5% discount rate and assumes a gold price of US$1,650 per ounce.

The project envisions upgrading the mill at Stock to increase its capacity to 2,400 tonnes per day and process material from the several deposits.

Stock mine

The former Stock mine produced 137,000 oz. of gold from an underground operation between 1989 and 2005. Exploration since 2018 at Stock has defined deposits east and west of the mine within a 3-km mineralized trend along the Destor-Porcupine fault, McEwen says.

McEwen purchased Black Fox, the Stock mine, mill and tailings facility, Grey Fox and Froome in 2017 from Primero Mining for US$35 million. The acquisition included US$150 million in tax pools the company could use to shelter future income.

Primero bought the property from Brigus Gold in 2014 for more than $300 million and assumed liabilities of $140 million, according to McEwen. Primero then spent another $120 million on capital spending and exploration.