Mexico permit clears path for McEwen’s El Gallo mill

Canada’s McEwen (TSX: MUX; NYSE: MUX) has secured a federal extension of the environmental impact assessment for its El Gallo complex in Sinaloa, Mexico, clearing the way to start building a new mill in mid-2026.

The Toronto-based company is targeting first gold about a year after construction of the $24 million (C$33 million) mill begins. Stage one of the Fenix redevelopment is to reprocess material from historical leach pads using a new mill and leach circuit, yielding about 20,000 oz. gold-equivalent yearly for roughly a decade. A possible $24 million second stage would incorporate the site’s in-situ silver deposits and could extend the operation’s life.

The plan fits a broader industry push to squeeze more value from existing sites at lower upfront cost. A 2021 feasibility study showed that reusing on-site infrastructure and processing stockpiled material could aid a faster restart and lower capital intensity.

El Gallo sits along the foothills of the Sierra Madre Occidental and includes many deposits within a 13-km radius, part of a broader 1,700-sq.-km land package. McEwen acquired the district in 2007.

Redevelopment

El Gallo first poured gold in 2012 as an open pit and ran until mid-2018, when deeper sulphide mineralization made heap leaching uneconomic. Since then, output has come from residual leaching. Over its initial run, the mine produced 279,000 oz. gold and 134,000 oz. silver for 281,000 AuEq oz. at an average cash cost of $655 per ounce.

McEwen shares added 1.38% or C36¢ per share on Tuesday in Toronto to close at C$26.46. It has. A market capitalization of C$1.5 billion.

Next steps include detailed engineering, procurement and financing ahead of the construction start. The company is also evaluating the timing and scope of the silver-focused second stage, which would require additional approvals.

The restart hinges on executing the build on schedule and updating costs first scoped in 2021. Any change in capital estimates, permitting timelines or metal prices could shift returns and the sequence for bringing the silver deposits into the flowsheet.