Roth reiterates McEwen Mining's Buy rating on optimism surrounding 2019 production guidance

Roth Capital Partners reiterated its Buy rating for McEwen Mining Inc (TSE:MUX) (NYSE:MUX) after the precious metals miner released its first quarter 2019 production figures showing the company achieved 93% of its budgeted production for the period.

After a rocky start to the year, which included adverse weather and contractor-related issues at two of its four operating mines, Roth analyst Jake Sekelsky wrote in a research report that the company remains on track to meet its 2019 guidance of 205,000 gold equivalent ounces.

READ: McEwen Mining shares rise as 1Q production gets back on track after difficult start to 2019

The research firm did lower its price target to US$3 from $3.25 per share, primarily as a reflection of the dilution incurred from a recent financing, Sekelsky wrote.

The Toronto-based company released production numbers for the first quarter of 2019 on Tuesday showing a decrease in ounces since the year-ago quarter. In Q1 2019 McEwen produced a total of nearly 27,000 ounces of gold and around 703,000 ounces of silver, or 36,000 gold equivalent ounces (GEOs) using a 75:1 gold-to-silver ratio.

The precious metals miner was hit with a couple of unforeseen disruptions at the beginning of the year at its Gold Bar and Black Fox mines. At Gold Bar in Nevada, production guidance has been reduced by 10% as a result of a slower-than-expected start up due to challenges with the crushing plant, while Black Fox also experienced six weeks of unanticipated downtime during the quarter.

Production guidance

“We note that the crusher is now fully repaired and the (Black Fox) mine remains on track to meet guidance of 50,000 ounces in 2019, in our view,” wrote Sekelsky. “Given this, we expect management to put 1Q19 in the rear-view mirror and focus on delivering on guidance for the remainder of 2019.”

Sekelsky wrote that factors that could impede McEwen’s ability to reach its price target, which include capital or political risk, volatile commodity prices and unfavourable M&A transactions going forward.

Shares of McEwen slipped in Toronto to C$1.98 while in New York, shares traded at US$1.49 on Wednesday.

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Story by ProactiveInvestors