McEwen resists predatory offers for Los Azules

"We are seeing a number of majors looking at Argentina, pressing their noses against the window and looking at Los Azules. We have been approached by some of them, some of whom have done extensive due diligence and some have made offers, but they were viewing us by looking at our financials of a year ago and seeing a company struggling with operations, with a treasury which was not strong and that they may be able to buy inexpensively," said McEwen.While McEwen Mining's share price is within a stone's throw of its five-year low, its operational performance has improved with two solid quarter of production now in the bag. The company reported production in the September quarter of 42,900 ounces gold equivalent, its best quarterly result since 2019, which followed 40,700oz in the June quarter. While it still has almost $100 million in debt, its working capital has improved throughout 2021 and its cash position has grown to more than $40 million.The June and September quarters saw the company produce slightly more precious metals than its guidance and it expects full year 2021 to come in towards the low end of its guidance range, but meeting guidance all the same."Costs are coming down and production is coming up. I believe we have the team that can deliver on [the execution plan] now which we didn't have before. We have a new executive team in headquarters and managing the mine sites which are focused on creating budgets they can meet and delivering on them," said McEwen, indicating that the operational difficulties of 2019 and 2020 are in the past.McEwen Mining's fortunes have improved to the extent that McEwen can once again contemplate growing the company into a larger gold producer, which was his original intent when he founded the company. "Growth is definitely coming back into my thoughts but we want a solid base first and want to see a higher share price before we start reaching. We have a lot of organic growth that would like to exhaust first," he said.Gold Bar in Nevada, USA is starting to perform as the company originally hoped it would, with the company expecting to get the Gold Bar South project permitted in order to start its development in mid-2022 to extend the mine life. Exploration and geological reinterpretation of where the Cortez Fault runs through is also providing positive opportunities.The company is also looking at an expansion at its operations in Timmins in Ontario, Canada with a preliminary economic assessment in the works for publication in December to both expand production and the mine life.Los AzulesRob McEwen invested $40 million of his own money at $10 per share to provide the initial funding for McEwen Copper to continue advancing its Los Azules copper project in San Juan, Argentina. This will more than finance a 53,000m drilling campaign expected to kick-off in the coming weeks with an initial six drill rigs, rising to 10 in January, focused on updating and upgrading the resource. Los Azules has a resource of some 29.5 billion pounds copper of which only a third is in the indicated category."Drilling aims to move the inferred to the indicated to facilitate getting a pre-feasibility study (PFS) done. About 9,000m of the 53,000m is geotechnical, metallurgical and environmental drilling. The rest is definition drilling and infill drilling to define the pit and have a better sense of what we have there," said McEwen.McEwen is working to close a second Los Azules financing tranche of $40 million and said he has been surprised at how some investors are uncomfortable investing in a private company, especially given the long-term investment horizon copper exploration often has. "Some people see an illiquidity issue with investing in a private company and don't want to tie their money up for 12 months," he said.McEwen sees the resource update and a PFS as clear value drivers for the fledgling company and that the $10/share financing price represents a significant value opportunity given the drilling to come and the development of a road to provide year-round site access."From 2010 to 2018 there were 12 major purchases of large copper deposits and two were at the PFS stage, which went for over 13 cents per pound of copper equivalent. Filo Mining is trading around 9c per pound and its Filo del Sol project in San Juan is at 1,000m higher elevation and has one quarter of the 29Blb resource we have, although at a 50% higher grade. With copper at $4.70/lb, based on a net present value discounted at 8%, Los Azules' value is well over $5 billion as modelled in the preliminary economic assessment and the issue is priced at 0.6 of a cent per pound so quite a bit of value accretion is going to occur," said McEwen.Shares in McEwen Mining are trading at C$1.43, valuing the company at C$667 million.

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