Why McEwen Mining (MUX) Is Up Today

NEW YORK (TheStreet) -- McEwen Mining (MUX) was gaining 3.1% to $3.62 Friday after the miner updated its reserve and resource estimates at its San Jose mine in Argentina.

The company reported that proven and probable gold and silver reserves both rose 12% from the year-ago period to 409,400 ounces of glad and 30.1 million ounces of silver contained in 1.8 million tons. McEwen said gold grades increased by 9% to 7.03 gpt while silver grade increased 10% to 515 gpt.

McEwen calculated its reserve and resource estimates using $1,2000 per ounce gold and $20 per ounce silver.

Production in the San Jose mine increased 10% in 2013 to 221,073 gold equivalent ounces, which consisted of 98,827 gold ounces and 6,356,801 silver ounces.

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TheStreet Ratings team rates MCEWEN MINING INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MCEWEN MINING INC (MUX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MUX's very impressive revenue growth greatly exceeded the industry average of 8.4%. Since the same quarter one year prior, revenues leaped by 2482.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MUX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.62, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 223.0% when compared to the same quarter one year prior, rising from -$2.65 million to $3.26 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, MCEWEN MINING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MUX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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