McEwen Mining Inc. on Tuesday lowered its production expectations and canceled plans to sell a mine based on the impact of lower metal prices.
The mining company said lower gold and silver prices have hurt its cash flow, lowered its potential return on investment on some development projects and increased its cost to borrow money for capital projects. As a result, the company has reassessed its development plans.
The Canadian company plans to dial back some of its efforts, lowering its production growth forecast to 225,000 gold equivalent ounces in 2016 from 290,000. As a result, the company said that its capital expenses will be low enough that the company can rely solely on cash reserves and cash flow to fund its production efforts.
McEwen also said that it no longer makes sense to sell its Los Azules mine in Argentina based on the market changes. The company put it up for sale in January but said that the copper-rich mine could command a better price in the future when metal prices are up.
However, the company said one benefit of all the market changes is that the potential return on investment from one of its mines in Mexico may be higher as it has forced the company to consider switching the type of mining done there to a less-costly method.
"Clearly, adversity is the mother of invention," Rob McEwen, chairman and chief owner of the company, said in a statement.
Shares of the company fell 9 cents, or 3.4 percent, to $2.41 in afternoon trading Tuesday. Its stock remains in the middle of its 52-week trading range of $1.67 to $4.94.
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