McEwen still hopeful of attracting a buyer for Los Azules

- Wednesday, March 5, 2014

McEwen still hopeful of attracting a buyer for Los Azules

Toronto-based McEwen Mining (TSX, NYSE: MUX) is continuing to seek a buyer for its Los Azules copper project in Argentina despite withdrawing the asset from the sale process in June.

Los Azules is one of the largest and highest grade undeveloped red metal projects in the world, with an indicated and inferred resource of about 20Blb copper, according to company president Ian Ball.

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And its size and grade will see the asset "come back into favor again" with possible buyers when the market improves, he added, despite its location high in the Andes and investors' concerns over Argentina.

"We are still looking. We haven't had anyone write us a check yet but we are still hopeful," Ball told a lunch event at the PDAC 2014 conference in Toronto.

Selling Los Azules, which Ball said is worth US$125mn-150mn, would meet all McEwen's financing needs, including development of its El Gallo 2 silver-gold project in Mexico's Sinaloa state.

McEwen contracted BMO Capital Markets to market Los Azules early last year, but no buyer was found due to uncertainty over the economic and political situation in Argentina and unwillingness among major producers to take on such a large scale project, CEO Rob McEwen told the event.


The US$3mn expansion of the El Gallo 1 gold-silver mine will boost free cash flow from the mine from US$5mn to US$30mn next year, Ball said.

The expansion, which will take throughput from 3,000t/d to 4,500t/d, will see the mine's cash costs come down from US$750/oz to US$575/oz, among the industry's lowest, Ball added, while production will rise from 40,000oz/y to 75,000oz/y and grades will double to 2g/t gold. The expansion will be completed at the start of April, he said.

McEwen also has a 49% stake in the San José gold-silver mine in Argentina and the Gold Bar project in Nevada.