McEwen Inc. (TSX: MUX) subsidiary McEwen Copper has closed a US$240 million senior secured term loan, giving the Los Azules copper project the money it needs to reach a construction decision.
Sprott Natural Resource Investment Partners provided $112 million. Rob McEwen, chairman and chief owner of McEwen Inc., put in $85 million, and a group of additional lenders supplied the remaining $43 million. The four-year loan carries interest of 12.0% per year, paid monthly, with principal due at maturity. McEwen Copper can repay early by covering a 5% fee on the outstanding balance.
Lenders also received 15,000 five-year warrants for every $1 million advanced, exercisable at $40 per share. Societe Generale acted as sole financial advisor.
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Proceeds will fund engineering and early works at Los Azules in Argentina’s San Juan province, along with general corporate purposes.
“This financing reflects our lenders’ confidence in Los Azules and in the progress Argentina has made over the past two and a half years,” said Michael Meding, managing director of McEwen Copper, who pointed to the country’s economic stabilization and its RIGI incentive regime for large investments. The project has already been approved under RIGI.
Work on the ground has moved quickly. The most recent field campaign completed more than 5,600 metres of drilling, with geotechnical results coming in better than expected, and engineering is running ahead of schedule. Metso has been awarded key process equipment packages, and an EPCM contractor is expected to be selected in the fourth quarter.
Peak season employment topped 500 people, roughly 90% of them from the surrounding province, and the company reports community acceptance above 90%. Weather was the main complication. The region saw one of its heaviest snow seasons in two decades, requiring meltwater management, though the runoff is expected to ease regional water scarcity.
A feasibility study completed last year, using a $4.35 per pound copper price, pegged the project at a $2.9 billion net present value, based on an operation that would average 148,200 tonnes per year of copper cathode production over a 21-year mine life. A final investment decision is expected in mid-2027, with commercial copper cathode production targeted for 2030.
McEwen Inc last traded at $30.02 on the TSX.
