McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) is pleased
to announce the closing of its previously announced bought deal
offering (the “Offering”), including the exercise in full of the
underwriters’ over-allotment option. Pursuant to the Offering, a
total of 20,700,000 shares of common stock (“Shares”) and warrants
(“Warrants”) to purchase up to 10,350,000 Shares were sold at a
price of US$2.25 per Share and associated one-half Warrant, for
aggregate gross proceeds of US$46,575,000. Each whole Warrant
entitles the holder to purchase one Share at an exercise price of
US$2.70 per Share until September 28, 2018.
Assuming all of the Warrants are exercised prior
to this date, the Offering will have resulted in the issuance of
31,050,000 Shares for aggregate gross proceeds of US$74,520,000 at
an average price of US$2.40 per Share. The maximum potential
issuance of Shares, including the exercise of Warrants, represents
9.9% of the total Shares outstanding prior to the Offering.
Cantor Fitzgerald Canada Corporation acted as
the sole book-running manager for the Offering, while H.C.
Wainwright & Co. LLC acted as the lead manager and Haywood
Securities Inc. and Maison Placements Canada Inc. acted as
co-managers.
The proceeds of the Offering will be used to
purchase the Black Fox Complex (“Black Fox”) and for general
corporate purposes. Black Fox is a producing underground gold mine
located in the world-famous mining region of Timmins, Canada.
Production in 2018 is expected to be 50,000 gold ounces, increasing
the company-wide gold equivalent production by 16% from
approximately 157,000 ounces in 2017 to 182,000 ounces in 2018.
Comments from Rob McEwen, Chairman &
Chief Owner -
Why we did this Financing:
The opportunity to buy Black Fox came together
quickly and the timeframe to close was short, which meant that our
financing options were limited to a bought deal or the issuance of
debt. Weighing the alternatives, we decided that this Offering
represented the best option for our share owners at this time.
The attraction of Black
Fox:
Black Fox reminds me a lot of the early days of
the Red Lake Mine when I was building Goldcorp Inc. The mine is
shallower than many of the larger mines in the Timmins area, and
some of its best high-grade zones extend near the bottom of the
known mineralization, suggesting there is good potential to grow
the deposit at depth.
Our plan is to continue to develop Black Fox to
achieve its maximum potential, invest aggressively in exploration,
and leverage the excess mill capacity to process feed from the
Timmins properties that we recently acquired with the purchase of
Lexam VG in April. In addition, we have also acquired a fantastic
operational team at Black Fox, which should allow us to
aggressively pursue our plans to advance the Lexam VG assets into
production as quickly as possible.
Impact on our Financial Strength:
This is the first financing we’ve done in five
years.
The Shares issued today resulted in dilution of
6.6%. This relatively small sacrifice will enable us to close on
the Black Fox purchase, which is anticipated on October 2nd.
Post-closing of the Black Fox purchase we expect to add US$16
million in cash to our balance sheet, increasing our total cash and
liquid assets to above US$60 million.
Assuming all the Warrants are exercised, we will
have diluted our pre-Offering Shares outstanding by 9.9% for gross
proceeds of US$74.5 million, at an effective issue price of US$2.40
per Share, which would represent a discount of just 1.2% to the
closing price of our Shares prior to the Offering.
Furthermore, based on our 2018 forecasts, if all
of the Warrants are exercised, we will be in an excellent position
to fund our project pipeline, including construction of the Gold
Bar Mine in Nevada, which we expect to be fully permitted later
this year.
Metrics of the Offering announced Sept. 18,
2017:
1. All amounts are in US$
2. $2.43 closing Share price (NYSE) on Sept.
18, 2017
3. 312,276,861 Shares outstanding on Sept. 18,
2017 (pre-Offering)
4. $2.25 base price of the Offering
5. $2.25 purchases 1 Share plus ½ Warrant
Warrant term: 53 weeks from closing
Warrant exercise price: $2.70
6. Effective Offering price assuming all Warrants are
exercised:
Shares |
|
Gross Proceeds |
18,000,000 |
Shares @ $2.25 |
= |
$ |
40,500,000 |
|
plus 15% underwriters’ over-allotment |
|
|
2,700,000 |
Shares @ $2.25 |
= |
$ |
6,075,000 |
20,700,000 |
Subtotal Shares |
= |
$ |
46,575,000 |
Warrants (assuming all Warrants are
exercised) |
|
|
9,000,000 |
Shares @ $2.70 |
= |
$ |
24,300,000 |
|
plus 15% underwriters’ over-allotment |
|
|
1,350,000 |
Shares @ $2.70 |
= |
$ |
3,645,000 |
10,350,000 |
Subtotal Shares |
= |
$ |
27,945,000 |
31,050,000 |
Total Shares |
= |
$ |
74,520,000 |
Effective Offering price $74,520,000 /
31,050,000 shares = $2.40
7. Dilution calculation:
|
Shares |
% of Pre-Offering Shares
Outstanding |
Shares Issued |
20,700,000 |
6.6 |
% |
Exercise of All Warrants |
10,350,000 |
3.3 |
% |
Total |
31,050,000 |
9.9 |
% |
8. Discount relative to the $2.43 closing price of
Sept.18, 2017:
At the $2.25 Offering price =
7.4% At the $2.40 Offering
price = 1.2%
About McEwen Mining
(www.mcewenmining.com)
McEwen Mining has the goal to qualify for
inclusion in the S&P 500 Index by creating a high growth gold
and silver producer focused in the Americas. McEwen Mining's
principal assets consist of the San José mine in Santa Cruz,
Argentina (49% interest), the El Gallo Gold mine and El Gallo
Silver project in Mexico, the Gold Bar project in Nevada, the
Timmins projects in Canada and the Los Azules copper project in
Argentina.
McEwen Mining has a total of 333 million shares
outstanding. Rob McEwen, Chairman and Chief Owner, owns 24% of the
Company.
QUALIFIED PERSON
Technical information pertaining to production
guidance for the Black Fox Complex contained in this news release
has been prepared under the supervision of Mr. Nathan Stubina.
Technical information pertaining to geology and exploration
contained in this news release has been prepared under the
supervision of Mr. Sylvain Guerard. Both Mr. Stubina and Mr.
Guerard, are officers of the Company who are a "qualified person"
within the meaning of NI 43-101.
CAUTION CONCERNING FORWARD-LOOKING
STATEMENTS
This news release contains certain
forward-looking statements and information, including
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements and information expressed, as at the date of this news
release, McEwen Mining Inc.'s (the "Company") estimates, forecasts,
projections, expectations or beliefs as to future events and
results. Forward-looking statements and information are necessarily
based upon a number of estimates and assumptions that, while
considered reasonable by management, are inherently subject to
significant business, economic and competitive uncertainties, risks
and contingencies, and there can be no assurance that such
statements and information will prove to be accurate. Therefore,
actual results and future events could differ materially from those
anticipated in such statements and information. Risks and
uncertainties that could cause results or future events to differ
materially from current expectations expressed or implied by the
forward-looking statements and information include, but are not
limited to, factors associated with fluctuations in the market
price of precious metals, mining industry risks, political,
economic, social and security risks associated with foreign
operations, the ability of the corporation to receive or receive in
a timely manner permits or other approvals required in connection
with operations, risks related to the completion of corporate
transactions, risks related to fluctuations in mine production
rates, risks associated with the construction of mining operations
and commencement of production and the projected costs thereof,
risks related to litigation, the state of the capital markets,
environmental risks and hazards, uncertainty as to calculation of
mineral resources and reserves, and other risks. The Company’s
dividend policy will be reviewed periodically by the Board of
Directors and is subject to change based on certain factors such as
the capital needs of the Company and its future operating results.
Readers should not place undue reliance on forward-looking
statements or information included herein, which speak only as of
the date hereof. The Company undertakes no obligation to reissue or
update forward-looking statements or information as a result of new
information or events after the date hereof except as may be
required by law. See McEwen Mining's Annual Report on Form 10-K for
the fiscal year ended December 31, 2016 and other filings with the
Securities and Exchange Commission, under the caption "Risk
Factors", for additional information on risks, uncertainties and
other factors relating to the forward-looking statements and
information regarding the Company. All forward-looking statements
and information made in this news release are qualified by this
cautionary statement.
The NYSE and TSX have not reviewed and do not
accept responsibility for the adequacy or accuracy of the contents
of this news release, which has been prepared by management of
McEwen Mining Inc.
CONTACT INFORMATION: |
|
|
|
Mihaela IancuInvestor Relations(647) 258-0395 ext
320info@mcewenmining.com |
Websitewww.mcewenmining.com
Facebookfacebook.com/mcewenrob
Twittertwitter.com/mcewenmining |
150 King
Street WestSuite 2800,P.O. Box 24Toronto, Ontario, CanadaM5H
1J9(866) 441-0690 |
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