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Creating a High Growth, Low Cost Mid-tier Silver Producer
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June 2011
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Forward Looking and Cautionary Statements This documents contains certain forward-looking statements and information by each of US Gold and Minera Andes, including “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information express, as at the date of this press release, US Gold and Minera Andes’ estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward looking statements and information include, but are not limited to, the completion of a business combination between Minera Andes and US Gold (including the numerous approvals required in connection with such a business combination), risks related to business integration as a result of a successful business combination, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, risks related to litigation including specifically but not limited to Minera Andes’ Los Azules property, property title, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral resources and reserves and other risks. Readers should not place undue reliance on forward-looking statements or information. Neither US Gold nor Minera Andes undertake any obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. See (i) US Gold’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and other filings with the Securities and Exchange Commission, under the caption “Risk Factors”; and, (ii) Minera Andes’ Annual Information Form as filed on SEDAR (www.sedar.com) and form 40F/A filed with the SEC, for the period ended December 31, 2011, for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. All forward looking statements and information made in this news release are qualified by this cautionary statement.
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Transaction Details
Proposed Corporate Name:
Exchange/Ticker:
Share Exchange Ratio:
Pro-forma Market Cap:
Pro-forma Shares Outstanding:
Pro-forma Rob McEwen Ownership:
Pro-forma Balance Sheet:
Expected Closing:
McEwen Mining Inc.
NYSE / TSX : Ticker TBD
1:0.4 Minera to US Gold
US $1.4 Billion
252.7 Million
25% ($345 Million)
US $122 Million – No Bank Debt
Late October
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Share Performance When Paying Premiums
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18 Months
15 Months
12 Months
9 Months
6 Months
3 Months
2 Months
1 Months
2 weeks
1 weeks
June 13
Time Share Exchange Ratio
(US Gold : Minera)
0.33
0.32
0.32
0.35
0.36
0.35
0.35
0.36
0.36
0.37
0.39
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Goldcorp + Wheaton Combination
Premium Paid: 7% Goldcorp Performance Day of Announcement Goldcorp Performance 12 Months Upon Closing
$0.01
170%
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Highlights of Combination
• Current Production + Significant Growth
• Low Cost Producer
• Strong Balance Sheet
• Well Positioned Exploration Portfolio
• Increases Management’s Focus
• One Step Closer to S&P 500
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S&P 500: 2 Remaining Hurdles
1. Market Cap. > $3.5 B
2. 4 Qtrs Positive Earnings
Today Pro-forma
$765 MM
No
$1.4 B
Cash Flow Begins
* As of Jun 13, 2011
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Diversified in the Americas
* San Jose: includes just MAI 49% interest
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Significant Growth Pipeline
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Production &
Development
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2011E 2014E
7.5 MM oz
2.5 MM oz
Growing Production
2011E 2014E
-$1.50 -$0.40
Lowering Costs Cash Cost / Silver oz*
(Gold by-product)
*Cash cost reported on a by-product basis
High Growth + Low Cost Pro-forma Estimates
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McEwen Mining
First Majestic
Silvercorp Hecla Coeur D’Alene
Pan American
Silver Standard
$345 MM
$39 MM $31 MM $5 MM $3 MM $1 MM $0 MM
27x Avg.
Rob McEwen Big Ownership – No Salary! Increases Management’s Focus
* As of Jun 13, 2011
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Creating a Low Cost, High Margin Producer
Silvercorp -$7.60
McEwen Mining
Hecla $1.05
Pan American
$7.85
Silver Standard $10.95
First Majestic
$8.25
*Cash cost reported on a by-product basis ** As of March 31, 2011
Cash Cost (By-Product Basis): McEwen Mining vs Peers
2011 -$0.40 2014
-$1.50
Coeur $6.50
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Creating the Next Mid-tier Silver Producer
5.6 MM
2.5 MM
10.6 MM
24.3 MM
8.5 MM 7 MM
*Pro-forma production ** As of Dec 31, 2010
Production Profile: McEwen Mining vs Peers
16.8 MM
McEwen Mining 2011
Silvercorp First Majestic
McEwen Mining 2014
Silver Standard
Hecla Coeur Pan American
7.5 MM
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McEwen Mining Market Cap vs Peers
$1.5 B $1.4 B*
$2.0 B
$3.1 B
$2.0 B $1.7 B
*Pro-forma market cap ** As of June 13, 2011
$2.1 B
McEwen Mining
Silvercorp First Majestic
Silver Standard
Hecla Coeur Pan American
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Pro-forma Resource Estimates
3.8 MM oz
0.9 MM oz
81.2 MM oz
51.1 MM oz
Silver M&I Inferred
Gold M&I Inferred
Copper Indicated Inferred
2.2 B lbs
10.3 B lbs
* As of Dec 31, 2010
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Strong Treasury - No Bank Debt
$122 MM
$100 MM
$22 MM
Pro-forma US Gold Minera Andes
Cash + Silver / Gold Bullion
* As of May 31, 2011
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Exploration
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Sofia Vein
10.13 m @ 14.96 g/t Au, 1,096 g/t Ag
5.45 m @ 13.54 g/t Au, 206 g/t Ag
1.72 m @ 10.94 g/t Au, 1,255 g/t Ag
Micaela Vein
2.45 m @ 8.33 g/t Au, 1,484 g/t Ag
1.09 m @ 33.50 g/t Au, 2,752 g/t Ag
New Veins @ San Jose Mine
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Early Stage 100% Owned Beside Goldcorp’s $3.6B Purchase
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El Gallo: Potential to Expand Production
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Stepping out: 1.12% copper over 62.5 meters
4 Best Drill Holes:
• 1.08% copper over 145 meters
• 1.01% copper over 216 meters
• 1.05% copper over 236 meters
• 1.04% copper over 168 meters
Los Azules – Excellent Copper Results
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Appendix
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San Jose Mine – Argentina (49%)
• Started production in 2007
• 2010 silver + gold production - Silver 5.3 MM oz - Gold 84,000 oz - Silver cash costs -$1.00
• Started production in 2007
• Large 100,000 acre property remains underexplored
• October 2010, 9 new veins announced, significantly extending the mines life
San Jose Mine (49%)
Tonnes (MM)(100%)
Ag Grade (g/t)
Au Grade (g/t)
Ag (MM oz)(100%)
Au (MM oz) (100%)
P & P 1.5 451 6.33 21.3 0.30 M&I (incl. P&P) 3.1 475 6.80 46.6 0.67 Inferred 3.0 373 5.96 35.8 0.57
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El Gallo Project – Mexico (100%)
• Located in Sinaloa State, Mexico
• Discovered by US Gold in 2009
• Consists of the El Gallo, Palmarito, Magistral Deposits
• Forecasted production - 5 MM oz Silver - 50,250 oz Gold - Silver cash cost $2.50
• Bankable feasibility Q4 2011
• Commercial production 2014
El Gallo Tonnes (MM) Ag Grade (g/t)
Au Grade (g/t)
Ag (MM oz)
Au (MM oz)
M&I 12.6 77 0.06 31.2 0.02 Inferred 10.0 52 0.03 16.7 0.01
Palmarito Tonnes (MM) Ag Grade (g/t)
Au Grade (g/t)
Ag (MM oz)
Au (MM oz)
M&I 3.7 71 0.14 8.5 0.02 Inferred 1.6 58 0.10 3.0 0.01
Magistral Tonnes (MM) Ag Grade (g/t)
Au Grade (g/t)
Ag (MM oz)
Au (MM oz)
M&I 10.4 -‐ 1.50 -‐ 0.50 Inferred 0.2 -‐ 1.14 -‐ 0.01
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Gold Bar Project – Nevada (100%)
• Located in Nevada’s Cortez Trend
• Previous producer
• Forecasted production - 60,000 oz Gold / yr - Gold cash cost $600
• Pre-feasibility Q3 2011
• Commercial production late 2014
Gold Bar Tonnes (MM)
Ag Grade (g/t)
Au Grade (g/t)
Ag (MM oz)
Au (MM oz)
M&I 33.5 -‐ 0.91 -‐ 0.97 Inferred 1.3 -‐ 0.54 -‐ 0.02
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Los Azules Project – Argentina (100%)
• Advanced-stage porphyry copper exploration project
• One of the world's largest undeveloped copper deposits
• PEA Highlights - NPV $2.8 Billion - IRR 21% - 169,000 tonnes Cu / yr - Capex. $2.9 Billion
• Pre-feasibility underway
Los Azules Tonnes (MM)
Cu Grade (%)
Au Grade (g/t)
Ag Grade (g/t) Cu (B lbs)
Indicated 137 0.73 0.07 1.7 2.2 Inferred 900 0.52 0.07 1.7 10.3
