No One Paying Attention to the Gold Price - Rob McEwen, Chairman, McEwen Mining
NEW YORK (Kitco News) -- Gold is getting little attention these days, and wrongfully so, says Rob McEwen, chairman and chief owner of McEwen Mining (TSX: MUX), a mid-tier gold and silver producer.
"If you are in Australia, Canada, the price is going up because of the foreign exchange -- at some point, it will move in U.S. dollar terms," McEwen said in an interview with Kitco News on Monday.
He added, "People should be putting a little money into gold, think of it as 80-90 percent off; you can turn gold into cash in two days, it is value."
McEwen, the founder and former CEO of Goldcorp (NYSE: GG), said one of the greatest challenges the mining industry now faces is operating within the lower cost environment. December Comex gold was last up $0.30 at $1,088.50 an ounce.
"The price environment and capital markets are dead for the industry right now -- so how do you put new projects on? [I]nvestors should look and say, 'there are not a lot of new mines being built, so maybe we will end up with a shortage of gold and silver,''' McEwen said.
McEwen also addressed the company's record production for the third quarter with the El Gallo Mine, which he said is the company's 'star performer.' Total output for the July-September period was 43,390 gold-equivalent ounces, a 54% increase over the same quarter in 2014.
The El Gallo mine in Mexico was robbed last April but McEwen said the company has received reimbursement for approximately 80% of the fair value of a loss. "You have to be a little more sensitive to the local community -- we built a new refinery and it is now according to Brinks, the state of art facility in Mexico," McEwen said.
The company has said that the next project it plans to put in production is its Gold Bar Project in Nevada. McEwen said it has a low initial capital of $60 million, attractive internal rate of return (IRR) of 20% at the current gold price, average annual gold production of 65,000 ounces, and an estimated average cash cost of $728 an ounce.
As for looking to acquire new projects, McEwen said they are looking at a number of properties but have yet to step in, "[I]initially they look attractive," McEwen said, adding that as they peeled back the layers, they were not as promising.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.