NEW YORK McEwen Mining Inc. is looking to sell its Los
Azules copper deposit in Argentinas San Juan province,
but the country is not proving to be attractive to investors,
according to chairman, president and chief executive officer
The Toronto-based company has
been considering selling Los Azules since last year and engaged
BMO Capital Markets Corp. to market the asset in January, but
interest has been limited. "The lineup at the door isnt
very long," McEwen told AMM in an interview.
There have been a number of site
visits by prospective buyers, however, and McEwen hopes to see
indicative offers by mid-June.
While investor appetite is weak
in general right now, McEwen believes there would have been
much more interest in the deposit if it were in another
country, such as Chile.
Argentinas government has
been unpredictable in its dealings with foreign investors,
McEwen said, citing as an example the Latin American
countrys move to order mining and oil exporters to
repatriate funds in 2011. "Foreign investors dont get a
vote," he said.
The governments decision
to repatriate the future revenue of miners and oil producers
came as it hoped to curb capital flight from the country.
But the move has made it
difficult to take money out of Argentina and made the process
of importing capital equipment cumbersome, according to
The companys decision to
sell Los Azules, which McEwen said has a current market value
of $200 million, is based on funding and a lack of expertise in
the development of a project of this size. "The capital
requirements for Los Azules are way beyond our balance sheet.
... Its best suited for someone who knows how to develop
a project of this size," he said.
Los Azules is a very large
copper project with good copper grades that "has good
potential," according to McEwen.
The company will weigh the
offers it receives before committing to a sale, however.
"Lets see what comes in," McEwen said, adding that a sale
might not be necessary if the company were to alter its capital
requirements at its other projects.
Funds from a possible sale could
go towards building a mill at the companys El Gallo
silver and gold complex in Mexico.
McEwen Mining is currently
assessing the potential to process ore from El Gallo 2 at the
current heap leach facilities at El Gallo 1, which is about
three miles away. While this would reduce recoverable silver,
it would eliminate about $170 million in capital expenditures,
according to the companys website.
Should this become a viable
option, the company might not have to sell Los Azules, said
McEwen, a 25-percent shareholder in the company.
Current financing conditions
also could be a hidden opportunity, according to McEwen, who
said "adversity is the mother of invention."
In times like these, he said,
companies must ask themselves, "How can we do it and get a
better capital return?" This often leads to more innovative
thinking than when money is more readily available, he