Rob McEwen on the outlook for 2014 (Northern Miner – December 23, 2013)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. 

Rob McEwen, chairman and chief owner of McEwen Mining (TSX: MUX; NYSE: MUX), shared his thoughts recently with The Northern Miner about the outlook for the mining industry in 2014. McEwen Mining’s principal assets consist of the San José mine in Santa Cruz, Argentina (49% interest), the El Gallo 1 mine and El Gallo 2 project in Sinaloa, Mexico, the Gold Bar project in Nevada, U.S.A., and the Los Azules copper project in San Juan, Argentina. McEwen owns 25% of the company’s shares.

The Northern Miner: Some would say you are an eternal optimist. Are you optimistic about 2014?

McEwen: Anything can be better than 2013. On a relative value basis, gold is looking very attractive, compared to the broad market. So I think there might be some rotation into gold and gold shares … The producers are going through a lot of rationalization and cost cutting and they’ll be putting out some better numbers in the next few quarters.

And there are a few exploration companies that have put out fantastic drill results lately that have started to move their share prices up, like Reservoir Minerals and Balmoral Resources, and I think you’ll see a little bit more of that with the juniors. For a good part of this year, it didn’t matter if you had a good drill hole or not, your stock usually went down, so from the standpoint of someone entering the market today, there’s good upside. This is good as there is significant upside with little downside.

The Northern Miner: Do you think the price of gold is going to move higher in 2014?

McEwen: I do. A large part of the players, the investors in the market, appear to be very complacent, thinking the central bankers of the world, particularly the Fed and the ECB, have figured out how to control the stock markets and their manipulation will ensure that we don’t suffer another down market … you’re seeing this unwavering belief that the Central Bank can control it all. Maybe in the short-term it can, but in the medium- to longer term I think there will be cracks appearing in the economy that they won’t be able to fix and that will cause people to look to the precious metals for some protection.

The Northern Miner: So do you have a gold price in mind for next year?

McEwen: It will be higher than this year. I think you’ll have a shot at the old high of US$1900 per oz. before the year is out.

The Northern Miner: Have we reached rock bottom in terms of valuations?

McEwen: It’s close to it. We’ve gone through cycles like this before, in fact I was just reading an article before you called that appeared in The Northern Miner in the June 1-7 1989 issue, entitled: “Now the Bad News” by Kerry Knolls. It was talking about watching how one goes “from the triumph of discovery to the misfortune of production gone bad.” It said: “Too many explorationists were in too big a hurry. The money was too easy. Promotional zeal, not technical competence, motivated some would-be mine finders. Some engineers seem to have been too optimistic when estimating costs. There weren’t enough good technical people around.”

We’ve gone through this before and we’ll go through it again and cycles like these present very definite and significant opportunities for upside. It’s not going to happen tomorrow but for someone with a time horizon of six months, they could see some very attractive gains in the market by entering precious metal stocks now, today.

For the rest of this interview, click here:

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