McEwen eyeing lower capex development at Los Azules

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Tuesday, December 29, 2015

McEwen Mining is investigating a lower cost development at its Los Azules copper deposit in Argentina, CEO Rob McEwen told BNamericas.

The company has been unable to secure a buyer for Los Azules in recent years, with little market appetite for such a large project, which requires US$3.92bn in capex according to a 2013 revised PEA.

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Difficulties doing business in Argentina have also reduced its appeal, McEwen said.

But the company is currently analyzing the possibility of utilizing different metallurgical processes to reduce capital and operating costs and make Los Azules a more attractive project.

"We think there is another way to approach this and come in with a much lower capex," the CEO said. Work to determine what the capex could be cut to is ongoing, he added.

NEW GOVERNMENT

The election of pro-business Mauricio Macri as Argentina's president is also positive for the chances of a Los Azules sale, McEwen said.

Macri, of the center-right PRO party, replaced Cristina Fernández de Kirchner earlier this month. Under the previous administration, mining companies struggled with restrictions on sending cash abroad and importing equipment, as well as foreign exchange and inflation issues.

"The Argentina election makes [the sale of Los Azules] a possibility, whereas with the previous government that wasn't going to happen," McEwen said.

Proceeds from a potential disposal of Los Azules would be used to help fund development of projects which include El Gallo 2 in Mexico and Gold Bar in the US.

McEwen also has the El Gallo gold-silver mine in Mexico and a 49% stake in the San José mine in Argentina.