McEwen Mining Inc

NYSE:MUX

Q4-2025 Earnings Call

[Operator]

Hello, ladies and gentlemen. Welcome to McEwen's Fourth Quarter and Year-End 2025 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner; Ian Ball, Executive Vice Chairman; William Shaver, Chief Operating Officer; Perry Ing, Chief Financial Officer; Jeff Chan, Vice President, Finance; Stefan Spears, Vice President, Corporate Development. Michael Medin, Managing Director of McEwen Copper; and Carmen Diaz, General Counsel and Secretary. [Operator Instructions] I will now turn the call over to Mr. Rob McEwen, Chief Owner. Please go ahead, sir.

[Robert McEwen, executive]

Thank you, operator. Good afternoon and welcome, fellow shareowners and interested investors. 2025 was a very momentous year for us for MX 1 that I believe will be the first of many to follow. The higher gold, silver and copper prices certainly contributed to giving us a big reason to smile, but there are many more reasons for us to continue to smile. Beyond the excitement of the higher prices, our vision of the future is accelerating towards becoming a reality. Our focus on exploration has been adding resources that will extend lives of our mines.

Our focus on expanding our existing operations plus several acquisitions has created the opportunity for us to significantly increase more than double our precious metal production by 2030 and our focus on driving the Keen Copper's large Losesules copper project towards production has been extremely successful. So far, our efforts have attracted global corporations as shareholders and completed extensive work to produce a feasibility study, which we published last October. That outlined an economically robust, large, long life, low production cost per pound, environmentally sensitive model for the future.

Compared to a conventional copper in comparable size, LasAzules is planned to have much lower water constrain, energy needs, carbon emissions and it will have no tailings and be utilizing 100% renewable energy. It is designed to not only be profitable, but to improve the general public's impression and acceptance of mining. We are planning to take the Q public later this year. should the copper price remain around current price levels.

At the time of going public, we expect this world-class deposit with strong economics that it will attract a much higher price than the last private placement at $30 a share, and that will be reflected in a higher value of McEwen Mining's shareholdings.

I'd now like to ask Ian Ball to speak about the big questions that come out about our growth.

[Ian Ball, executive]

When you look at the press release that we put out this morning, the thing that becomes apparent is as a shareholder, I guess what I would be asking is how are you going to finance this growth because there's no point of growing, if all you're going to be doing is diluting your shareholders in the process. And when I rejoined the company back in September and my ownership from Canadian Gold has moved into McEwen's mining, you want to see the share price grow. And that was the only reason for coming back to the company. So I want to walk you through our plans on how we're going to double production and do so in a way that maintains your ownership.

First, the one thing you have to look for is that today's Canadian Gold prices, we are generating significantly more cash flow. We received our first dividend from the San Jose mine in quite some time. That's 1 due to metal prices, but also them having covered off a number of closure obligations, which is now freeing up a lot of operating cash flow to be paid out as a dividend. Second is we're finishing up our development at stock we're going to be getting cash flow coming out of Mexico as well. So when you combine that with our current operations, our internal cash flow will be ever increasing, which will go a long way to developing our next 2 projects, which are Grey Fox, which we're looking at as an underground operation that would feed our existing stock mill.

And then looking at our Gold Bar operation, where we're essentially continuing on what we're doing there today, which is or prestripping and expanding the leach pad. We do believe that these projects are scaled in such a way that we can finance them. We're hoping mostly internally. But if gold and silver prices were not to maintain these levels, it would not represent excess dilution to our shareholders. So we're very mindful of the cost of capital? And how does this translate into a per share value over the next 5 years? -- question is how realistic are these goals. And one thing to point out is everything that we're looking at is either at an existing mine site or rehabbing a mine site here within a precious metal basis. So we do think these are projects which are quite achievable with the time frames that we have set out today in the press release.

[Robert McEwen, executive]

Thank you, Ian. I will now ask Perry to discuss our financial performance. .

[Perry Ing, executive]

Thanks, Rob. Good afternoon, everyone. Yes. as gassed earlier, the fourth quarter was very good. Our business delivered a strong finish to the year. Gross profit on an accounting basis more than doubled quarter-over-quarter. Rising to $17.4 million from $7.8 million just the quarter prior. For the full year, gross profit increased to $47.6 million, up from $30.9 million in 2024. The strength flows through to our bottom line in terms of reported net income. In the fourth quarter, we generated net income of $38.1 million or $0.70 a year compared to a net loss of $8.2 million or $0.16 a share in the fourth quarter of 2024.

For the full year, we delivered net income of $34.4 million, which is a sharp turnaround from a net loss of $43.7 million in 2024. What are the main drivers for that? I think both Rob and Ian touched on the higher gold price environment. So -- the higher gross margins come from both increased production that we saw in the fourth quarter relative to the rest of the year as well as higher realized gold prices at our 100% owned operations where we realized over $400, $400 an ounce gold in the fourth quarter. As Ian touched on, we also had solid operating performance from our San Jose mine, where we reported $33.5 million in the fourth quarter just for our 49% interest in the San Jose mine -- and as noted, subsequent to the fourth quarter, we received a dividend of $8.8 million in February.

Also tied to our accounting net income is a $27.5 million deferred tax recovery tied to the expected use of U.S. tax losses, which shows our expectations for continued profitability at our Gold Bar mine complex in the United States. I believe these results underscore the progress we're making in terms of our operations, cost discipline and positioning our assets for growth in 2026 and onwards. I'll also note that in terms of our balance sheet, we ended the year with a strong cash position of $51 million compared to $14 million at the year-end 2024.

[Robert McEwen, executive]

Thank you, Perry. Now I'll ask Bill to speak about our operations and looking forward.

[William Shaver, executive]

Yes. Thanks very much, Rob. So with regard to our operating entities at Gold Bar and Fox, I'm happy to tell you that it looks like the first quarter is going to be on target. And that will put us in a good position to have the whole year. If you remember last year, we kind of had a bit of a slow start to the year and kind of play us through most of the year. So this year, we're -- we put a concerted upward into getting off on the right foot, and I think we're -- we're doing well on that front.

And as you know, Mexico is also producing a small amount of coal, and that's not a significant amount of our production. However, it is carrying all of the operating costs out of Mexico. As we move forward in this year, -- we will complete the development of the stock ramp and the access over into what we call Stock East. And that portion of the mine should be in production in the second half of this year. We're also working hard on our Grey Fox pre-feasibility study, which will be out in the month of June. We're doing the detailed planning of bringing the Titan asset into production. And we have permitting work going on, on all of these projects including building the Phoenix project.

So as Rob mentioned earlier, our exploration over the last 4 years is now coming closer to production. And we can see all of these projects moving towards production this year. Of course, we will, in the third quarter of this year, we will complete mining at from mine, although we're still drilling some lower parts of the Room West and we're seeming to be pending or on some of these holes. So from may, in fact, find a way to go for another couple of quarters. So all in all, we're pretty happy with where we are on the projects and the project development. And I think it's nice when you're in the third month of the year that you're able to say that the first quarter is going to be on target. That's a rough summary of where we are.

[Robert McEwen, executive]

Thank you, Bill. Now I'd like to ask Mike to talk about our McEwan Copper's Las Azules project. .

[Michael Meding, executive]

Thank you, Rob, and good afternoon, everyone. It's a pleasure to be here today with an update on McEwen Copper and the Los Soles project. I want to be direct with you. 2025 was a transformational year for this project, and we entered 2026 with more momentum than at any point in our history. When we look back at what we accomplished over the last 12 months, 3 things stand out. First, we secured DT approval. Locking in 30 years of regulatory and fiscal stability in Argentina. Second, we completed a robust feasibility study that confirms Losesules as a globally significant low-cost copper project. And third, we did all of this while the macro environment for copper has only gotten stronger. .

Let me start with 3D because this was arguably the single most important derisking event in the project's history. In September 2025, Argentina approved our application under a large investment center regime. What does this mean in practical terms? It means losses now benefits from 30 years of legal, fiscal and custom stability. Our corporate income tax rate drops from 35% to 25%. We received a 50% reduction in dividend withholding tax. We exempt from export duties at the start of the exports. And critically, we have guaranteed access to foreign crudes and international arbitration. VG was designed to attract exactly the kind of large-scale investment that losses represents. It has fundamentally changed the investment framework for mining in Argentina, and we were among the first to secure these benefits.

In October 2025, we released the results of our feasibility study -- and I won't walk you through the headline numbers because they tell a compelling story. The base case at $4.35 pound of copper gives us an after-tax NPV at an 8% discount of $2.9 billion and 19.8% and a payback of 3.9 years. The project designed for 22 years life of project with an average copper cattle production of 205,000 tonnes per annum in the first 5 years and 148,000 tonnes per annum of the full life.

Our C1 cash cost comes in at $1.71 per pound, and all-in sustaining costs at $2.11 per pound. Placing a azoles firmly in the lower half of the global cost curve. But here is what really excites me. At today's copper price of around $580 per pound, the economics are dramatically stronger. The NPV more than doubled to 6.3 billion. The IRR jumps to 30%, and the payback shot to just 2.7 years. The NPV to CapEx ratio moves from just under 1% to 2%. Every dollar increase in the copper price at roughly 2.3 billion to the project NPV. -- for Max shareholders, that translates to approximately $18 per share of additional value for every dollar move in copper.

Importantly, the feasibility study also identified significant upside beyond the base case. There is potential for an additional 33 years life of mine, adding another 141,000 tons per annum of copper production to either hear Tinto's new technology or a commercial concentrator. When you consider that full potential you are looking at 1 of the largest and long-life copper assets globally. I want to emphasize something that makes Rosasulastandard part. This project has been designed from the ground up as low impact operations compared to a conventional mine of similar scale, is expected to use 1/4 of the water produced 1/10 of the carbon emissions and has the potential to operate on 100% in newale power.

There are no conventional tending -- we produce a finished copper cathode on site, which can be due directly to industry. This matters enormously in the current environment. offtakers, financiers and governments are all increasingly focused on the sustainability credentials of the copper supply. Los Azules is positioned to be a supplier of choice in a world that demands responsibly produce copper. We have also been building the institutional framework around the project.

The International Finance Corporation, a member of the World Bank has signed a collaboration agreement with McEwen's Copper to align Losesules with IC's environmental standards, social and government standards. This agreement also provides IFC with customer rights to act as a lender or Ranger for prospective project financing going forward. Having the IFC at the table is a strong signal of the caliber of project we are building.

Looking ahead, our team is continuing detailed engineering work, and we are targeting a final investment decision by the end of 2026, with construction targeted to begin in early 2027, obviously, subject to project financing. We are well on track. On the financing front, we are seeing strong interest from multiple categories of capital providers. Export credit agencies and development finance organizations in particular have shown meaningful appetite to support the project of this profile, large-scale, long-life, responsibly designed and located in our ag qualifying jurisdiction.

We are advancing conversations with the IFC and other institutions and we are actively preparing opportunity for full financing packages that gives us flexibility and how we fund construction. At the same time, we are currently evaluating the ETL time frame for an IPO of McEwen's Copper in connection with these ongoing financing discussions. The combination of a completed feasibility study, secured regulatory framework, strong copper fundamentals and interest from institutional capital providers give us the right conditions to consider a public listing that would unlock value for shareholders and provide additional avenue to fund the project developments.

Let me step back for a moment. and talk about why the timing for Azules could not be better. We are building this project into what I believe is the strongest structural backdrop for copper that we have seen in a generation. Copper is trading about $5.80 per pound today near record highs. LME prices surged past 14,500 per metric ton earlier this year. Major banks are focusing prices to remain elevated. JPMorgan expects an average of around 12,000 tonnes per tonne for 2026.

Goldman Sachs has raised its forecast to approximately $1,400 per ton. The structural deficit forecasted going forward on significant growth and overall world work declining rates. What is driving this? Three converging mega trends: first, the explosive build out of AI data centers. JPMorgan estimates that data centers copper demand alone will reach approximately 475,000 tonnes in 2026, going rapidly year-over-year. A single large AI data center can require up to 50,000 tonnes of copper.

Second, the electrification of transport, electric vehicles used nearly 3x the copper for a commercial car and EV adoption continues to accelerate. Third, the massive investment needed in good infrastructure and renewable energy to power all of that. Power Grids worldwide need to be expanded and modernized to support all this demand. On the supply side, we have real constraints. Mine disruptions have tightened. -- declining outrates permitting time lets averaging 15 to 17 years from discovery to production and the weakening discovery pipeline all point to sustained structural deficits.

S&P Global projects that copper supply could fall 10 million tons short of demand by 2040. This is precisely the environment in which large-scale shovel-ready copper projects like Los Azules become extraordinarily value. The world needs new copper supply, and there are very few projects of our scale and quality anywhere in the development pipeline. Investors entered to our copper equities has shifted meaningfully over the past year and rightly so. The market is recognizing that we are at the beginning of a multiyear super cycle driven by electrification AI infrastructure.

Copper is no longer just an industrial metal. It is a critical enabler of the energy transition and the AI revolution. Now consider this -- of the 20 largest undeveloped copper deposits in the world, nearly all are either controlled by major mining houses or effectively stranded by permitting and political road blocks, some for decades. Los Azulos to our knowledge, is the only that is independently held fully permitted, has a completed feasibility study with costs in the lower half of the global cost curve has a secular framework locked in and is advancing toward a final investment decision this year. For investors looking for direct exposure to a world-class copper asset before construction begins, there's simply nothing else like it in the public markets.

For those of you who evaluating McEwen's copper value with Max, I would point to you the most recent private financings October 2024, which valued McEwen's at $30 per share, implying an over market value of 987 million -- but since then, we have secured the environmental permit for construction and operation. We have secured the regime -- and we have secured the feasibility study with strong economics, significantly derisking and increasing the value for the project. Let me close by bringing this all together. Loss Asure is one of the world's largest undeveloped copper deposits.

In 2025, we derisked it to reach the approval and a strong feasibility. We have a clear path to the final investment decision. The project environmental design positions it as a next-generation mine. -- and we are building it into the strongest copper market in decades. Los Azules has the potential to become a generational copper asset, one that will deliver value for shareholders for decades to come. Thank you. I hand it over back to Rob.

[Robert McEwen, executive]

Thank you, Mike. Excellent. I'd just like to say, one, we have some questions, I'd like to answer -- and we, through the presentations, covered off some of the questions. One Terry. One, Terry was asking to provide more information on the IPO for McEwen Copper, which we're looking at later this year when we as Mike said, complete several other tasks. Steve was asking also about Los Azules and about the milestones, and I think that was well covered off by Mike. He also had a question about Goliath Resources, which we purchased an interest in, the rationale.

It's a rich gold deposit in British Columbia. It's had a high success level in its drilling. It looks like a resource that would grow. And buying into juniors was a strategy I used when building Goldcorp. I used that as a -- it served as a listening post and also one day could be a member of a farm team, but it also provided us with capital growth that allowed us to fund our expansion of production. We have John from Minnesota, and he's asking about our silver production, and I'll ask Ian to talk about that.

[Ian Ball, executive]

Yes. So regarding John's question, he was asking what is our current attributable silver production. Right now, we have silver just coming from our San Jose mine with Hoschchild. -- and our portion of that is approximately 3.6 million ounces of silver -- sorry, that's the total production. Ours is half. And we then convert that to gold equivalent when we report our production, and we're doing that right now based on a silver-to-gold ratio of 77:1. So that's a good question because it's not quite clear when you look at our news release. So if you take half of the 3.6, that's currently what we're producing in terms of silver. How does that evolve over the years where our next source of silver production comes from what we're calling El Gallo Phase 2. So that is obviously after El Gallo Phase 1. And we're looking at approximately 3 million to 4 million ounces of silver production there, which is 100% owned. In terms of how we look at rationalizing these, obviously, we do it based on gross profit margins, but also in terms of where things are practically in terms of CapEx and permitting. So the one things we are currently looking at is if the silver price environment was to remain as strong as what it was and the margins as robust, we are looking at ways that somehow you could accelerate the Phase 2 silver production closer to today and deferring some of the gold production coming from at El Gallo. So we are working on that to try to maximize the profitability of the operations, but a lot of that obviously is driven by the silver price. I just looking at the last question here. The last question that came from John was whether the company has considered a silver dividend. And right now, just based on the optics of that, no, it probably logistically would be very difficult for us to issue a dividend in silver. I think first and foremost, if we were to implement a dividend policy, it would start with cash and then proceed from there. I know when Rob was running Goldcorp, when I was running Abitibi, I'm not saying I copied his strategy, but we did copy his. That was to pay a monthly dividend. And I think that's something that here, we're looking to eventually strive towards while balancing our growth needs.

[Robert McEwen, executive]

Operator, do you have any other questions?

[Operator]

Your first question we have comes from the line of Jake Sekelsky from Alliance Global Partners.

[Jacob Sekelsky, analyst]

So just looking at the 2026 guide, you mentioned in the release that no contributions from stock were included there. I guess I'm just wondering, is that something that you expect to revisit in the second half of this year from a guidance standpoint? I'm just wondering how we should be thinking about the ramp-up there as it relates to consolidated production.

[William Shaver, executive]

Yes. Thanks very much for the question, Jake. Yes, basically, the project development at Stock is going very well. We're more or less on schedule. We broke through into the second level a couple of weeks ago, we break into the fourth level before the end of this month. The headings heading over towards where the mining is going to start are advancing at the right pace, about in the 2 headings, about 14 meters a day. So we will see production from there in the second half of this year. And what we're hoping is that -- or what we're planning, I guess, is that the Pru mine is going to kind of fade out at the same time as we're ramping up at stock. So we're in the midst of acquiring the equipment for the operation. And so that once we get out to the ore, we'll be ready to start the mining operation.

[Jacob Sekelsky, analyst]

Okay. That's helpful. And then just on the M&A front, I mean, Rob, you just mentioned you've been fairly active investing in juniors and picking up land packages surrounding some of your mines. Do you feel you have your plate full with the internal growth that you've laid out? Or are you seeing any attractive larger producing bolt-on type acquisition opportunities out there in this type of environment?

[Robert McEwen, executive]

It's a good question, Jake. When you look at the performance of juniors relative to the producers and relative to gold, they're still lagging far behind in terms of performance. We've been concentrating on companies that have properties either adjacent or in close proximity to our existing operations that would allow us to extend the life that we believe have potential to grow and aren't expensive to acquire. So we're open to other opportunities. you never want to issue a lot of stock and dilute your position, but we're building our production. And right now, we can see more than doubling by 2030 assuming all the projects go ahead as planned. But I don't think I want to stop there. The metal markets are -- I see the gold price, the silver price, the copper price those commodities are getting in short supply and demand is increasing. So I see higher prices as some want to position benefit from that. .

[Operator]

Our next question comes from the line of Joseph Reagor from ROTH Capital Partners.

[Joseph Reagor, analyst]

Rob, with Barts in a week or so. The -- I guess, just kind of following up on Jay's question about stock. Will you guys still report the production from there? It just won't be considered part of your ounces that are commercial. So therefore, it's not in the guide. Is that the rationale there?

[Jeffrey Chan, executive]

Yes. So this is Jeff, Vice President, Finance here. So yes, I think that would be the expectation that we would start to report pre-commercial production ounces from stock our way through the year when we start expecting to see that come through. But at this time because it is pre-commercial production, we're not giving production or cost guidance on those notes.

[Joseph Reagor, analyst]

And then over at Gold Bar, the new saw the new look out resource. But can you remind us like where Gold Bar is that as far as the remaining mine life at this point? .

[Jeffrey Chan, executive]

Yes. the mine life at Gold Bar, as we know, it goes into the 1930 or 2030s. And I would say we're doing an extensive amount of diamond drilling exploration drilling on ground all around the Gold Bar site. And -- at the same time, we're doing an extensive amount of drilling on the timber line assets. And that is in basically in progress right now on an agrasion basis. We're also doing some mine planning, and we're also doing some permitting work on those sites. And as soon as we get all of the permits. There are areas there that are amenable to open pit mining.

And what our intention is at this point is we would build a small or small to medium-sized leach pad on those sites and leach the material at the site. But meanwhile, the plant will be very, very small because what we'll do is circulate cyanide solution and then we'll take the carbon -- back out the gold bar. So we won't have to build a plant there. All we have is a leach pad in a circulation system. There will also be some sums and so on for storm events and that kind of thing. But basically, it will be an operating mine without much infrastructure.

[Joseph Reagor, analyst]

And then kind of one final thing, just Go ahead.

[William Shaver, executive]

I was just going to ask Ian to comment on the resources.

[Robert McEwen, executive]

Yes. The one thing I would take into account is what we refer to as Trinity rate is actually below the existing pits at Gold Bar. So when Bill talks about the current mine like into the 2030s, we then see it expanding much beyond that as Trinity rates taking into account mineralization that we know it exists, does not have a resource, but it's directly below where we're mining today.

[Ian Ball, executive]

And we'll have resources.

[Perry Ing, executive]

We're currently doing a drill program right now. There 10 drill holes approximately. We're about 1/3 of the way through. And once we finish that program and have the assays, we're going to be calculating the trinitrate resource while we're doing metallurgical test work on that as well. So we see that gold bar just dovetailing into a much larger pit.

[Joseph Reagor, analyst]

That makes sense. And then last thing, just on MSC. Now there's actually dividends coming out of it. Is there an opportunity to reopen discussions with Cascil for 1 of you to buy the other 1 out there and consolidate that asset?

[Robert McEwen, executive]

Well, there's been rumors they wanted to sell it from time to time, but I think has the price gone up, that desire to sell onto faded away. -- they were gathering lots of cash to cover off the closure costs and they've now exceeded what they thought they needed and -- they still have an active exploration program going -- it's a prolific area and right next to Cerro Negro.

[Jacob Sekelsky, analyst]

On your end drop, would you consider monetizing that and redeploying the capital elsewhere?

[Robert McEwen, executive]

At the right price, Joe?

[Operator]

Your next question comes from the line of Jeremy Hoy from Canaccord Genuity.

[Jeremy Hoy, analyst]

I guess I'll start with -- there's a lot of growth projects on the go. It's rapidly evolving, and it strikes me there's a lot of catalysts coming up this year. Could you walk us through the capital expenditures in '26 and how those are divided across the assets? And if you can comment on '27 or '28, that would be helpful as well for the -- on the modeling front.

[William Shaver, executive]

Certain last gen to address that. Sure. We expect the bulk of our capital expenditures this year to really be focused on the Fox Complex. So really looking at the stock mine, I think in terms of remaining CapEx through 2026 to complete, I think we're looking at sort of mid $50 million to $60 million to finish, possibly less -- we are also looking at a heap leach expansion at Gold Bar, which will take a $12 million this year. And we're also looking at Mexico and in terms of the plant refurbishment and bringing that back online about $25 million there. To about $100 million, and I think what you'll see is as we move forward with Tartan and Grey Fox the next few years will be around 100 -- that same $100 million a year.

[Jeremy Hoy, analyst]

Okay. And to be clear, that $100 million, I can -- we can calculate the what test is expected to be based on the ASIC numbers provided. But what's the approximate split between sustaining and nonsustaining.

[Perry Ing, executive]

In terms of those capital expenditures, I think the only amounts that are -- that we expect to report as sustaining are the gold bar figures given stock is a growth project, and we don't expect to bring that into commercial production until 2027, capital has not been included in our ASIC estimates at this time.

[Jeremy Hoy, analyst]

Okay. Great. That's really helpful. I guess just staying on the same vein of discussion here. Again, a lot going on, pretty exciting for the precious metals portfolio. Does -- does this require augmentations to the team? Are you guys building up on the technical side, the exploration side, just thinking about management's capacity to deliver on all these goals.

[William Shaver, executive]

Perhaps I can answer that. Yes, I mean we're building up our capabilities in terms of our technical capabilities and our bench strength as we speak, and that has been going on for now more than 6 months and you might even say it started a year ago. So yes, we have a study group that's centered in Sudbury, the reason we put that there was because we had some, I guess, some people that worked with us in the past. And so we set it up so that they'd be home, and we have really had no more room for them here in Toronto, and they didn't want to drive down here anyway. And we're also adding key people at all the projects.

So it's for sure a work in progress. But recently, we appointed a person in charge of a Permian environment and social responsibility. We're building a substantial HR team. We're working with a couple of consultants to help us put more rigor around our internal reporting requirements and so on. So I mean, we recognize the hurdles that we have if we're going to build these projects.

[Operator]

Your next question comes from the line of Don DeMarco from National Bank.

[Don DeMarco, analyst]

Thank you, operator, and Robin team. Maybe a question on the Tartan mine. You've got the resource update that's pending. With this update, -- maybe just in terms of managing expectations, do you plan to start by derisking the existing resource? Or could we also see maybe some resource cushion at this early stage?

[Perry Ing, executive]

Yes. So we're taking into account all the drilling that's been done post the 2017 resource. So we do expect it to be larger as the vertical extent of Tartan was expanded by about 9%. But it's not going to be an apples-to-apples comparisons for a few reasons. The 2017 resource did not use a stope optimization as it was really not a requirement or sens requirement back in 2017. So we are going to be putting some preliminary stopes around the resource. And then the second factor that makes it hard to compare is the resource cutoff grade. .

2017 used a 3-gram per tonne cutoff at today's gold price, we're using $3,000 for this resource. You could theoretically use a much lower cutoff rate, which will increase your ounces as well. So again, the comparison is hard, but we do expect an accretion number over the previous resource I'd say, by a reasonable amount.

[Don DeMarco, analyst]

We'll look forward to that. And maybe just some comments on your strategy for M&A. I mean, obviously, you've been somewhat active. I mean Tartan is an example that would be Paragon looking at these tactical high ROI opportunities. Is it -- should we maybe expect more of these to come? Or what is your kind of your vision on M&A over -- in the gold sector over the next year or 2 to come.

[Robert McEwen, executive]

Having greater exposure to precious metals, I think, is very positive development if you can find it on an accretive basis. We spend -- we have a large expenditure on exploration, and we've been meeting success there on our own properties, but we'd like to augment that growth. if we see Okay. And jurisdiction-wise, do you continue to focus on the Americas, I would presume then or Ontario? Or what -- is there any considerations on where you might be focused? We've largely focused -- while we have focused almost exclusively on areas in close proximity to our existing operations.

So we have the talent in place and don't have to spread ourselves too thinly. And so what comes up in a neighborhood, that's a natural fit where you have an opportunity to extend the life, increase your production. But there are other situations that might catch your eye and where you can see considerable growth. So it opportunity.

[Operator]

Your next question comes from the line of Jay Goldsmith of shareholder.

[Unknown Analyst]

Good afternoon. I joined a little late, so I hope this question wasn't asked. Congrats to you and the team on a solid quarter, and nice to see the profitability turnaround and stronger balance sheet and progress on zu -- can you update the Ken's stake in Paragon, I think, like 31% in Paragon laboratories and the photon assay technical I'd love to hear how the adoption is going.

[Robert McEwen, executive]

I'll ask Ing to speak on Paragon.

[Perry Ing, executive]

Yes. So just for your background, I did join the Board of Paragon when McEwen made its investment. The ownership is slightly below 30%. It's McEwen's was using Paragon for its assay needs before we made the investment. So we did see how it was working there. And as and it is gaining widespread acceptance -- right now, another supplier of the Photon machine is supplying Barrick. And I believe the number is about 18 machines that Barrick is now using worldwide. And so you are seeing turnaround times for assaying for gold and silver, down as low as 6 days, high as 10 days versus traditional fire assay you're seeing right now in the industry is running 3 to 4 weeks.

The cost between the 2 is approximately the same. A couple of the key advantages with the Photon technology is that the sample that you're able to analyze is much larger. So -- by that, it should be more representative of the actual assay. It's also very -- it's nondestructive -- so you're able to use that material for metallurgical test purposes later if you so choose versus having to drill a second call or another hall. And the turnaround time was much faster than obviously than fire assays. So there are many advantages, but you're still seeing through the industry -- it's still being adopted, but it's going to take Polly a couple of more years. The more people are turning towards it. And he said, Barrick is using it now for the majority of their needs, and we're using it for all of our current needs.

[Unknown Analyst]

Okay. Exciting to hear so financial impact for Mack and still a couple of years down the road, I suspect .

[Unknown Executive]

Well, there's no real financial impact for us. We do include Paragon at an equity investment into our financial statements. very similar to what we do with Macan copper. But there's no real -- we're not adding any more capital for treasury to it or receiving any current dividend. So the impact right now is purely as a capital gain or loss. And right now, we made the investment at CAD 1.75. They're trading approximately $3.50 a share -- and we've been trying to help them realize what a customer wants to see because I think you are in a commodities business when you're doing things such as assaying. So what we're trying to stress and work with Paragon is how do you make your very counter-oriented business so you go above and beyond to get the level of service that your competitors are not to win over that business.

[Operator]

And there are no further questions at this time. Mr. Rob McEwen, I turn the call back over to you. .

[Robert McEwen, executive]

Thank you, operator. and thank you for everyone on the line. We're looking to build a company that provides our shareowners with growing exposure to hard money, gold and silver and to a critical mineral, copper, a metal critical to modern society. And we're moving ahead on that front and I think once we take the cue and copper public, there will be a very positive impact on our balance sheet. So thank you for joining us today. .

[Operator]

This concludes today's call. You may now disconnect.