 Good day fellow investors! Now some viewers asked me what I think about McEwen mining. As I like the CEO and like his charismatic approach telling the world that gold will be at 5,000, I decided to dig in and today I'll share with you my research about McEwen, what's the value, what's the potential and what's the risk. So hope you enjoy the video. What is very interesting about McEwen mining is that it is an asset very very difficult to value. To value something you need future cash flows and then you discount them to the present value and you get a value. However with McEwen you don't have any idea of what will the future cash flows be, therefore it's extremely difficult to value what McEwen owns. However we will give it a go and show the huge potential it has but also the large risks. Let's start with discussing the company, then we'll dig into the valuations, look at the resources and try to determine what can happen to McEwen on the good and on the bad and then you'll make the decision if you like that bet. McEwen is a production development exploration company with production in Argentina, Mexico and Ontario. Development the Gold Bar project in Nevada close to the largest Barrick Gold project, El Gallo Silver in Mexico, then we have exploration around all the mines that I have mentioned plus Los Azules exploration in Argentina which is a very very interesting copper project. In the middle of nowhere however with a huge net present value we'll discuss that too. Let's first discuss the producing assets the San Jose mine in Argentina estimated mine life is five-year underground mining which means expensive and they produce around 102 000 ounces per year and 6.7 million silver ounces however McEwen mining owns only 49% of the mine. The El Gallo mine has even a shorter life mine of just 2.5 years but has lower mining costs so there is some profit in the mine. The third producing mine is the recently acquired black fox complex that McEwen purchased for 45 million even if Primero purchased it for 300 million and invested 120 million since then. So this is really the example of what McEwen does he buys assets that nobody wants to buy so he bought here 10 cents on the dollar what was the value for Primero a few years ago when gold prices were much higher and this shows you also what kind of play is McEwen mining. If gold prices rise you can expect all those little borderline valuable assets that I mentioned producing or exploring to increase in value 10 times at least because that's the strategy buy things on the chip that nobody wants because nobody knows what would be the profitability of the black fox mine in the next two three four years and if you are an investor or a fund manager you are responsible for returns to your investors everybody likes linear returns and if you remember our video about extremistan and mediocristan 99% of people are in mediocristan. McEwen mining is in extremistan and therefore forget about linearity with McEwen. If gold prices go up McEwen will explode if gold prices go down McEwen will be in trouble. Summing it all up McEwen is now producing 180 000 expected to produce 180 000 ounces of gold in 2018 which is good the cash costs are around 1000 per ounce so I expect profits in the best case scenario of around 37 million or around 10 cents per share which is not much so the price earnings ratio in 2018 if everything goes as planned would be 20 at current prices plus McEwen is using all that money for financing the exploration and development of the other projects is has. Let's see the other development projects gold bar in Nevada as I said already located 25 miles from Barrick's largest gold mine the net present value of this project is just 40 million that's very very low so it really needs higher gold prices to become efficient nevertheless higher gold prices at a production rate of 65 000 ounces really amount to something in the future. El Gala Silver they are developing that expect to be a mine life of 6.5 years and to produce almost 100 000 gold equivalent ounces the pre feasibility study indicated 118 million net present value with silver at 25 per ounce and gold at 1400 per ounce as those prices are definitely lower now I expect a much lower net present value again a borderline valuable asset exploration there is plenty of exploration at at gala where they hope to find similar deposits in the timmings region the recently acquired deposits are close to many historical deposits and current operating and past operating mines so there is definitely potential and there is definitely a lot of value in the in the resources McEwen bought if gold prices go up now there is another very interesting project the Los Azules project in Argentina which is a huge project that has almost 20 billion pounds of copper 135 million ounces of silver and almost 4 million ounces of gold that is a huge deposit and if developed it will be a tier one copper produced the net present value of the project is 2.2 billion after tax so you would say now okay 2.2 billion divided by the 350 million shares that McEwen has is about seven dollars per share however that asset is somewhere in the middle of nowhere in the mountains in Argentina if you want to export the ore from there through an Argentinian port you have to transport it for a thousand miles or the best option would be to export it through Coquimbo in Chile and that's 200 miles however there are there is a road but you have to develop the roads and so on and so on the necessary investment is 2.3 billion and we know that McEwen doesn't have that money plus all the ore there are still resources there are not reserves so there's there has to be done plenty of drilling to confirm the ore body bring it to a pre feasibility study and then we can discuss a net present value of 50 percent on the value in addition McEwen has to bring in a partner who's going to invest the 2.3 billion to develop it so there is a lot of stages and a lot of money has to be spent to bring it to a level where we can say that the asset is valuable however the copper is probably there and somewhere in the future if copper prices explode it will be again very very valuable however the value for McEwen now is very questionable perhaps our friends from Argentina would like to comment if they have some local news about the project which would be very very interesting to see how it develops McEwen's current market capitalization is about 700 million with the two dollar per share stock price now all those assets are very borderline valuable i wouldn't give them a 700 million dollar valuation so you're really paying a premium here on the potential that McEwen has if gold prices explode so let's see what can happen if gold prices explode if i go back to the production that McEwen expects in 2020 in the best case scenario and then let's say gold prices go to 2500 don't think it's impossible gold prices were at 250 just 15 years ago so if gold prices double the 300 000 ounces of production suddenly have a net profit margin of around a thousand dollars per ounce that's 300 million thus you get a profit of around one dollar per share for McEwen times 12.5 you get a price of 10 10.8 dollars which is five times higher than the current price additionally there is something very interesting look at the gold resources 10 million ounces of gold that's in value more than 12 13 billion dollars silver resources 221 million ounces of silver and then we have 14.3 billion copper pounds that's about 50 billion dollars in copper value of course that has to be mine but just shows you the potential McEwen has so that's it that's the strategy that McEwen is using and the fact is that Rob McEwen was successful with the same strategy when he was the CEO of gold corp prior to 2005 so gold corp really had a nice performance when Rob McEwen was at the helm 31 percent per year and total performance plus 3000 percent the strategy was the same by assets that are not valuable at current gold prices gold prices were below 300 in 2001 and then wait for gold prices to shoot up they think gold prices will shoot up in the future if you think the same in the next five years then McEwen mining is really the play for you so that's the upside and the upside is huge let's take a look at the downside you can see that when gold prices went below 1100 McEwen went below one quickly spiked to above four in 2016 and now it's again below two as people expect lower gold prices and they haven't seen higher gold prices that they expected so they couldn't deliver on what they have promised however something very important here is that McEwen has no depth which means that it's difficult to go bankrupt if you have no depth so it takes a long time which is a bonus however if gold prices decline if McEwen doesn't operate profitably or doesn't find the money to develop all those projects we can quickly see a share price below one and then the listing issues come and so on and so on so expect huge volatility on the positive side Rob McEwen owns 24 percent of the company so he has skin in the game to conclude McEwen is really an extremist an investment there is nothing linear to expect there you cannot calculate the value of what it owns you can just look okay this is the value if gold prices go much much much higher and this is the value if gold prices go down we have a few years of surviving so very very tricky investment I would say it's a bet on gold prices not an investment so if you like it feel free to dig deeper into McEwen this is not a recommendation to buy or to sell just a description for those who are interested in such extreme investments thank you for watching and I'll see you in the next video