The Canadian miner will bundle the Los Azules project and the Elder Creek copper-gold asset into a new copper-focussed company
McEwen Mining plans to raise $80m in a Series B private placement through a newly created 100% subsidiary for advancing the Los Azules copper project in San Juan, Argentina.
Under the non-brokered private placement, the company is offering 8,000,000 common shares in the newly formed McEwen Copper at a subscription price of $10 per common share.
McEwen Mining said that its chairman and chief owner Rob McEwen has committed to acquire 50% of the offering via his investment corporation, Evanachan.
The Canadian miner will make the remaining 4,000,000 common shares available for subscription to qualified accredited investors. This will be conditional on a minimum investment of $2m among certain other conditions.
In accordance with the deal, McEwen Copper will be the holding company of the Los Azules copper project. It will also have full ownership of the Elder Creek exploration property in Nevada, which is subject to a 1.25% net smelter return (NSR) royalty on the two assets payable to McEwen Mining.
Upon completion of the private placement, McEwen Mining will have a controlling stake of 68.6% in McEwen Copper. Rob McEwen and other new investors will have a combined stake of 31.4%.
McEwen Copper plans to pursue an initial public listing for the new subsidiary within 12 months from the closing of the offering.
The company said that the proceeds from the private placement will be exclusively used by McEwen Copper to advance the Los Azules copper project towards a pre-feasibility study.
The proceeds will also be used for the construction of a new year-round access road to the copper project, exploration drilling works at Los Azules and Elder Creek, environmental permitting and community relations, as well as general corporate purposes.
McEwen Mining said: “Currently, the market appears to be giving us little value for our Los Azules copper deposit, despite its impressive size and robust economics at present copper prices.
“Unfortunately, the scale of the required project development expenditures would require McEwen Mining to issue a massive number of additional shares.
“This share dilution would not be acceptable. However, we believe that by putting our copper assets, Los Azules and Elder Creek, into a separately listed company exclusively focused on copper, we can create an attractive copper investment vehicle.”
Located in the Andean Cordillera copper belt, Los Azules is an advanced large-scale porphyry copper exploration asset.
On the other hand, Elder Creek is an early-stage copper-gold porphyry exploration asset in Northern Nevada, 9km from SSR Mining’s Marigold Mine Complex.