"Los Azules is the ninth largest undeveloped copper deposit in the world, and within McEwen Mining, it represents the largest value and greatest excitement in our portfolio of assets."

Rob McEwen & Michael Meding


October 28, 2022

Where does Los Azules rank in the list of undeveloped copper projects, and how does it compare to other copper projects in San Juan, Argentina?

RM: Los Azules is the ninth largest undeveloped copper deposit in the world, and within McEwen Mining, it represents the largest value and greatest excitement in our portfolio of assets. In contrast to two other projects in San Juan province, Filo del Sol and Josemaria, we are at a relatively low elevation of 3,100-3,600 m. In addition, our published estimated copper resources and copper grade are 2-3 times higher, and we are in closer distance to infrastructure, power grid and roads. The combination of these factors projects Los Azules in the lowest cost quartile of copper producers.

What prompted the decision to spin out McEwen Copper?

RM: The market has shown a preference for pure plays. Therefore, we made the decision to split out McEwen Copper. For 2023, we will complete an updated PEA in the first quarter, and in the first half, we plan to go public. This will help us establish a market value that we can show on our balance sheet accurately reflecting the quality of our Los Azules asset.

Can you tell us about the recently signed investment from Rio Tinto’s Nuton group?

RM: We were looking into how to best process Los Azules’ ore while consuming the least amount of water. We started thinking about heap leach rather than having a milling scenario, which is very heavy in water usage. Nuton claims to have a heap leach process that has a faster recovery, at a rate closer to that of a mill. As they were working with us, they took notice of Los Azules and expressed their interest in investing in it.

Why is San Juan province a reasonably good jurisdiction to develop a mine, and how do you assuage investor concerns over risk surrounding Argentina?

MM: In Argentina, it is essential to have the right team, with the right connections, level of resilience and persistence to conduct business. What has happened in Peru and Chile is that those governments have shifted in a direction that makes risk incalculable. I think San Juan province in Argentina is analogous to Nevada in the US, where there is a good environment to conduct mining business. Yes, a lot of things are regulated by the nation. You have to deal with central bank regulation, and a lot of the taxation comes from Buenos Aires, but with the right support from the government, which wants to do projects, things can be very positive going forward.

How would you characterize the opportunity for investors subscribing to McEwen Copper’s IPO?

MM: We want to build a mine that is conscious of the environment and financeable. Putting significant capital into countries is difficult, especially if there is uncertainty around political risks. Therefore, we want to limit investors’ capital exposure, even though the resource base will allow Los Azules to be a multi-generational mine. Consequently, we developed a strategy to build a mine that is relatively small but scalable. We are talking about a mine that can produce 100,000 to 200,000 t/y of copper cathodes. That means that at today's prices, you would have somewhere between US$700 million to US$1.4 billion of sales, depending on the copper price. That is a significant operation already, but from there we can decide if we have sufficient data and confidence in technologies such as Nuton, that allow for primary copper leaching, or if we need to put in a mill. When you go to a bank to get funding for an expansion it is a totally different story if you already have an operation. Therefore, the idea is to be quick through the permitting process and to be shovel ready. This will allow investors to better assess the risk level they are willing to accept. We are going to finish our economic assessment update by Q1 2023, and this will form the basis of us going public in the first half of 2023.


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