RSD at Beaver Creek Interview Series: McEwen Mining (TSX: MUX) Chairman Rob McEwen

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is frankly somebody that doesn't need much of an introduction, Mr. Rob McEwen. Rob, how are you, sir?

Rob McEwen: Great, Gerardo. Thank you.

Gerardo Del Real: It's a pleasure. Thanks for taking the time.

Rob McEwen: Happy to.

Gerardo Del Real: So listen, I watched an interview of yours earlier talking about $5,000 gold in the mid to long-term. I read an interview earlier in the year where you talked about $1,700 gold by the end of the year. Do you still believe we hit that number?

Rob McEwen: We've got a good chance of hitting it this year.

Gerardo Del Real: Excellent.

Rob McEwen: And the bigger numbers later. I mean, from '71 to '80 it ran 20X, from $40 to $800. Then it dropped to $250, then it went to $1,900. That's 7X. And the low we've had recently was $1,050 in 2015. You apply that, you could get a $8,000 to $21,000 number.

Gerardo Del Real: Interesting. Let me ask you this. You've seen multiple cycles, obviously, right? The bottoming out process and the sideways pattern in gold seemed longer this time around.

Rob McEwen: We've built a very large base.

Gerardo Del Real: That was my question. So you think the upside will be proportionate?

Rob McEwen: Well, since gold was freed by President Nixon in 1971, all we've seen is higher lows. So I think it's just going to keep going. It's not going to go in a straight line to those numbers we talked about. It's going to correct, but each time it's higher.

You look at all the debt that's been created, and particularly you got $17 trillion of government debt that has a negative coupon on it. You've got the money expansion, you've got stock markets that seem to be reaching a crest and might be coming back at us a bit, and concerns about geopolitical issues.

Gerardo Del Real: Well, you answered my next question.

Rob McEwen: Yes? That was easy.

Gerardo Del Real: Which was, what do you think are the main drivers? So now my next question is, everybody asks you about gold. What do you think about silver by year end?

Rob McEwen: With gold running, silver's going to follow. And the exchange ratio, it's a little better than 80 to 1 right now, is going to start compressing. It's been down to 30 to 1, sure. So I would expect silver to keep running, and we saw that in the last few weeks, that it ran very quickly, added $3, basically 20% just almost overnight. And there are not a lot of pure silver producers out there.

Gerardo Del Real: There's not, there's not. It's a tough nut to crack for sure. Let's talk McEwen Mining. Very aggressive exploration. Assets in multiple jurisdictions, Argentina, Mexico, Nevada.

What is it like working specifically right now in Argentina and Mexico? Because they've been in the news recently.

Rob McEwen: Mexico I'll answer first. It's easier. They've increased the taxes. They are supportive of mining, but every once in a while they make newscasts that sound like they aren't. There's a lot of mining going on in Mexico, and it has a long history of mining, so I think it's to keep going. You might see a little bit more taxation, but I think they'll try to put more money in the local communities. Most of it was going to Mexico City, where it shouldn't have been going.

Gerardo Del Real: Correct. And in that scenario, which I agree with you 100%. That's what I'm hearing, it's actually a good thing that they're doing.

Rob McEwen: Yes, yes.

Gerardo Del Real: Fantastic. Argentina?

Rob McEwen: Well, Argentina, they had their election primaries, and it went in a different direction than most people are expecting. It looks like we're going to have Cristina Kirchner de Fernandez in. They are running out of foreign reserves. Inflation's running 40 to 50%. They need foreign capital. I would expect they're going to try to accommodate and make deals with foreign investors to come in, and so they're going to change some of the rules, I would expect.

Gerardo Del Real: Do you think what just happened in Argentina with its stock market is a peek into the future of a lot of other countries?

Rob McEwen: Could well be, particularly with the populist governments, where they're not paying attention to the impact of when they print too much money or they borrow too much money. Yes.

Gerardo Del Real: Okay. McEwen Mining, that brings me there. I know that you have very aggressive exploration goals for your multiple assets. Can you speak to those a bit?

Rob McEwen: Well, the budget over the last two years, just spending on our Black Fox property in Timmins, $36 million. We found a lot of high grade in Timmins, and it's looking like there's a reasonable probability that it could extend to depth. And the mines that we have there are shallow. They're 300 and 800 meters down, when the average is a kilometer and a half to two kilometers.

One of our deep holes recently returned 18 grams over 11 meters, and we went, "Yeah! This is good." And we're seeing more, a lot at the Black Fox Mine on the west side. We'll probably slow down the Black Fox. We'll have three satellites that we can get future production from. So one day I think that complex will be producing about three times what it's been producing in the past. And that'd be 150,000 ounces a year.

Gerardo Del Real: Okay, so bright future there. $17 million in exploration expenditures, is that still the plan?

Rob McEwen: This year.

Gerardo Del Real: This year, excellent. Fantastic. Lastly, I got to touch on all the philanthropic work that you do, which I think is outstanding. Let me ask you this. What inspires that?

Rob McEwen: Mother Nature. She's been very kind to us. And that there's a lot of needs in the world, and the areas that my wife and I particularly focused on was medical. We think that there's a crisis coming. And regenerative medicine, stem cell research, we started funding that in 2003 when most people couldn't say "stem cell" without getting upset. But that offers the promise of profoundly changing the delivery of healthcare, improving it, and we thought, “Well, it's far better to do that than sit on a pile of money if we can help many others.” And so we're into healthcare. We're into education leadership programs. There's a school of architecture with French, English, First Nation advisors in it.

Gerardo Del Real: Incredible work.

Rob McEwen: So it's fascinating. In the mining industry, there are all sorts of models that people in the mining industry have contributed in a very large way to the betterment of society. I'm just following some people that have been great examples for me.

Gerardo Del Real: Wonderful. You mentioned pile of money, so I have to ask, Great Bear Resources? It brings a smile.

Rob McEwen: It's been a great investment. I and McEwen Mining bought a position there. I think we became their largest shareholder back last August at $1.45. It was in Red Lake, where I built Goldcorp. It was pulling grades that look similar to what we were getting and had a geological formation that looked interesting.

Gerardo Del Real: That had to take you back to the Goldcorp days.

Rob McEwen: Yes. And I thought, well its market cap is low and the price wasn't bad. They made me pay more than what it had been trading at a week or two before, but...

Gerardo Del Real: It's worked out so far?

Rob McEwen: It's trading, traded up over $8, and I think it's got more room to go.

Gerardo Del Real: Excellent. Mr. McEwen, a pleasure.

Rob McEwen: Gerardo, thank you.

Gerardo Del Real: Thank you.