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

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

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.

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