McEwen Mining Inc. (NYSE: MUX) has announced a non-brokered private placement of around 8 million common shares of its subsidiary McEwen Copper In. at $10 per common share for total proceeds of around $80 million. Currently, McEwen has 17.5 million outstanding common shares.
McEwen Mining owner to own 50% of McEwen Copper
Rob McEwen, Chairman and Chief Owner of McEwen Mining, has placed a lead order to purchase 50% of the Offering. In addition, Evanachan Limited, his investment company, will pay US$40 million for 4 million common McEwen Copper shares.
Qualified accredited investors can subscribe for the remaining 4,000,000 common shares, subject to a US$2 million minimum investment and other terms and limitations. Until they are listed on a public exchange, the securities offered in the Offering remain private and liable to transfer prohibitions.
McEwen Copper will own a 100% interest in both the Los Azules copper mine in San Juan, Argentina, and the Elder Creek exploration property in Nevada, subject to a 1.25 % net smelter return (NSR) royalty payable to McEwen Mining on both assets. Interestingly, McEwen Mining will be the controlling shareholder and own 68.6% of McEwen Copper if the Offering is completed in its entirety. Rob McEwen, one of the new investors, will own 31.4% of the company.
McEwen wants to drive more value for copper assets.
McEwen 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.” However, he added that having the copper assets as a separately listed vehicle will enable the company to attract investment.