Stellantis, Rio Tinto grab stakes in McEwen Copper

McEwen Copper, a subsidiary of McEwen Mining (TSX: MUX; NYSE: MUX) is attracting investments for its Los Azules copper project in the San Juan province of Argentina. Nuton, a Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) subsidiary that had already invested $25 million for 9.7% stake in McEwen Copper last August, has promised a further $40.7 million (US$30 million). Stellantis, a leading international automaker, has pledged $207 million (30 billion Argentine pesos).

Nuton will acquire 350,000 common shares of McEwen Copper first in a private placement, and then purchase 1.25 million shares owned by McEwen Mining in a secondary sale. Approximately $8.8 million of the proceeds will go accrue to McEwen Copper and $31.8 million to McEwen Mining. The transaction values McEwen Copper at about $745 million.

When the deal closes, Nuton will own 14.2% of McEwen Copper on a fully diluted basis and McEwen Mining will own 51.9%.

The agreement between Nuton and McEwen Copper provides an option for Nuton to purchase a percentage of copper cathodes and concentrates produced from Los Azules equal to Nuton’s equity ownership percentage in McEwen Copper at the time of exercise.

Through its subsidiary FCA Argentina, Stellantis has invested $207 million in McEwen Copper and McEwen Mining. First, Stellantis acquired 2.85 million common shares of McEwen Copper through a private placement. Secondly, it is acquiring 1.25 million shares indirectly owned by McEwen Mining.

Stellantis now owns 14.2% of McEwen Copper.

At the close of both arrangements, McEwen Copper will be owned 51.9% by McEwen Mining, 14.2% by Nuton, 14.2% by Stellantis, 13.8% by Rob McEwen, 3.5% by the Victor Smorgon Group, and 2.4% by other shareholders.

The Los Azules copper project is one of the world’s largest undeveloped copper projects. It is located about 80 km northwest of the town of Calingasta and 6 km east of Argentina’s border with Chile, in the Andes Mountains at an elevation of 3,500 metres. The project contains 10.2 billion lb. of copper, 55.7 million oz. of silver, and 1.7 million oz. of gold in indicated resources totalling 962 million tonnes at 0.48% copper, 1.8 grams silver per tonne, and 0.06 gram gold. The inferred resource is about 2.67 billion tonnes  containing 19.3 billion lb. of copper (0.33% copper), 135.4 million oz. of silver (1.6 grams silver), and 3.8 million oz. gold (0.04 gram gold per tonne).