- McEwen Mining is an asset-rich diversified gold and silver producer in the Americas with significant exposure to copper through its 51.9%-owned McEwen Copper
- McEwen Copper holds 100% interest in the Los Azules Project in Argentina, which has been shown to have many attributes comparable to world-class copper-gold deposits in South America
- The subsidiary is advancing the Los Azules Project and has been undertaking infill and step-out exploration drilling
- McEwen Copper’s focus comes at a time when the world is staring at copper deficits driven by constrained supply amid political instability in top copper-producing countries and increased demand
Copper, a base metal with no obvious substitute, is found in countless products in homes, offices, manufacturing plants, and vehicles. For context, a typical home contains over 400 pounds (about 180 kilograms) of the metal, with most of these copper-containing products being electronics that need to be powered by electricity tapped from an electricity grid that majorly comprises components that are made using copper (https://ibn.fm/Ng9Yv). Copper is also used to manufacture military vehicles like ships, naval vessels, and aircraft because it is resistant to corrosion.
As the world targets a green transition, more sectors are looking to decarbonize, opting to electrify to reduce use of fossil fuels. As a result, millions of feet of copper wiring will be needed to build complex grids that can handle the growing electricity needs. Sights are also set on electric vehicles, which use about two to four times more copper than the average internal combustion engine (“ICE”)-powered vehicle. Against this backdrop of increased demand, an article in Investing News notes the prospects for the base metal are bright both in the short and long term (https://ibn.fm/uK2v5).
How well the supply will keep up with the demand is an open question, with a recent CNBC article warning about the possibility of a copper deficit continuing throughout 2023 and even beyond (https://ibn.fm/H5SjU). Most mines are located in the political hot zones of South America – Chile, the top copper producer, for example, has been experiencing political instability since 2019, while Peru, the second top copper-producing country, is drowning in ongoing unrest. Additionally, besides being primarily located in these volatile regions, the top 10 mines in the world are getting deeper every year, translating to increased mining expenses, yet the copper being extracted is of a lower grade. Combined, these factors represent a supply bottleneck that McEwen Copper, a base metal developer 51.9% owned by McEwen Mining (NYSE: MUX) (TSX: MUX), is looking to solve by advancing its 100%-owned Los Azules Project in the San Juan Province of Argentina.
The Los Azules Project is situated near the Argentina-Chile border between two prolific mineral belts, a gold belt to the north that is host to multi-million ounces of gold and a porphyry copper belt, according to a 2008 technical report (https://ibn.fm/iQJfG). The Los Azules project thus has the characteristics of both belts, making it host to a copper-gold-silver deposit whose ultimate depth and lateral extent are yet to be fully determined. A more recent Preliminary Economic Assessment (“PEA”) completed in 2017 nonetheless highlights the project’s robust economics. The project’s average annual production throughout the first 13 years of operation is expected to be about 415 million pounds of copper at a cash cost of $1.14 per pound, placing it within the lowest cost quartile (https://ibn.fm/J98cj).
Tellingly, the cost is much lower than the prevailing market price of copper – about $4.04 per pound as of March 31, 2023, according to Commodity.com (https://ibn.fm/s3FoU) – further boosting the project’s economic prospects. And with the supply bottlenecks and increased demand expected to influence a continuous uptrend, the outlook appears positive. In fact, according to the article in Investing News, as the need for copper continues to grow, observers believe the red metal will become “the new precious/industrial metal – and it’s going to have an importance that’s equivalent to some of the more attractive metals, such as gold and silver.”
In its current undeveloped state, the Los Azules project is the world’s 9th largest undeveloped copper project, according to a 2022 ranking by Mining Intelligence (https://ibn.fm/qw3hq). The list also included the El Pachón property in San Juan, further pointing to the prolific nature of the porphyry copper belt that underlies both projects. In the meantime, McEwen Copper is undertaking infill and step-out exploration drilling, with the data generated so far showing that the project has many attributes comparable to world-class copper-gold deposits in South America (https://ibn.fm/ug1SE). The company regularly releases comprehensive updates of the results from the ongoing drilling campaign as they become available, with those released thus far showing the project’s great promise.
For more information, visit the company’s website at www.McEwenMining.com.
NOTE TO INVESTORS: The latest news and updates relating to MUX are available in the company’s newsroom at http://ibn.fm/MUX
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