Canada-based McEwen Mining plans to raise $80m in a Series B private placement, through a newly created subsidiary McEwen Copper, to fund the Los Azules copper project in Argentina.
McEwen Copper, the wholly owned subsidiary of McEwen Mining, will offer eight million common shares at a subscription price of $10 per share.
Of the total common share offering, McEwen Mining chairman and chief owner Rob McEwen has committed to acquire 50% through his investment corporation, Evanachan Limited.
McEwen said that the remaining four million common shares will be made available for subscription to qualified accredited investors.
However, this will be conditional on $2m of minimum investment, among certain other conditions.
McEwen Copper will operate the Los Azules copper project as well as the Elder Creek exploration property in Nevada.
This is conditional to a net smelter return (NSR) royalty of 1.25% on the two assets payable to McEwen Mining.
Proceeds from the private placement are planned to be used for advancing the Los Azules large-scale porphyry copper exploration project towards a pre-feasibility study.
It will also be used for the construction of a new year-round access road to the project, exploration drilling works at Los Azules and Elder Creek, environmental permitting, as well as other general corporate purposes.
Subject to completion of the private placement, McEwen Mining will have an ownership stake of 68.6% in McEwen Copper while Rob McEwen and other new investors will have a combined stake of 31.4%.
Rob 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.
“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.”