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McEwen says stage is set for better 2023, urgency of copper IPO reduced

The Los Azules copper project, in Argentina.

The Los Azules copper project, in Argentina.

15th March 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Canadian mining firm McEwen Mining has pushed out plans for going public with its copper venture to later in the year or early next year, chairperson and chief owner Rob McEwen said on Tuesday, noting that the recent investments by European automotive group Stellantis and diversified major Rio Tinto have reduced the urgency to do an initial public offering (IPO).

The transactions, announced late last month, have been transformative for the company, providing significant funding for the Los Azules project, in Argentina, eliminating the need to complete the proposed McEwen Copper IPO in the first half of 2023.

Stellantis invested AR$30-billion and Nuton, a Rio Tinto venture, agreed to increase its investment by $30-million to acquire shares of McEwen Copper. Subsequent to these transactions, each of Stellantis and Nuton own 14.2% of McEwen Copper, reducing McEwen Mining’s interest in the copper venture to 52%. As a result, the implied valuation of McEwen Copper is about $550-million.

CFO Perry Ing explained in a conference call that the Stellantis and Rio Tinto transactions deleveraged McEwen Mining’s balance sheet in a rising interest rate environment, allowed the company to advance its Fenix project, in Mexico, while continuing to explore in Ontario and Nevada without issuing additional equity.

With an enhanced treasury, McEwen Mining has the funds on hand to build Phase 1 of the Fenix project and to bring that operation into production within the next year, without raising additional capital, he added.

The capital required to build the Fenix project was reduced materially in September with the purchase of a second-hand gold processing plant and associated equipment for $2.8-million. The purchase includes substantially all the major components required to start the project. This equipment was estimated at $25.3-million in the Fenix feasibility study, published in February 2021.

Meanwhile, Rob McEwen stated that the “stage is set” for an improved 2023, following a transition year.

In 2022, production was 133 300 gold equivalent ounces (GEOs), which was slightly below the revised guidance range of 134 600 to 141 600 GEOs, owing to lower-than-planned production at the Fox Complex during the final days of the year.

McEwen Mining’s 100%-owned mines, Fox Complex and Gold Bar, generated a cash gross profit of $19.2-million in 2022 and a gross loss of $0.5-million.

The company incurred advanced project expenditures of $41.3-million at Los Azules net of foreign exchange gains, or, on a gross basis, a $61.1-million contribution to net loss.

The firm’s consolidated net loss in 2022 was $81.1-million, or $1.71 a share, and relates primarily to investment of $81.7-million in advanced projects and exploration.

“2022 was an important transition year for McEwen Mining. Our Fox operation in Timmins showed the largest improvement from 2021, with a 22% increase in gold production, 8% lower cash costs per ounce and steady all-in sustaining costs per ounce.

“Our operation in Nevada has now transitioned production to our Gold Bar South pit, a new mining contractor has been instated, and production is increasing,” said Rob McEwen.

For 2023, the miner’s production guidance is 150 000 to 170 000 GEOs.

Edited by Creamer Media Reporter

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