By Robb M. Stewart

 

McEwen Mining Inc.'s shares jumped Monday after a Rio Tinto PLC venture and existing McEwen Copper Inc. shareholder agreed to invest a further $30 million in McEwen Copper to value the subsidiary that is set to be spun off at about $550 million.

In afternoon trading, the shares were 5.9% higher at C$7.87 on the Toronto Stock Exchange and up 5.6% at $5.77 on the New York Stock Exchange.

Under the binding agreement between the companies, Nuton will buy shares in McEwen Copper in a two-part transaction that will consist of a private placement of 350,000 shares in the copper subsidiary and a purchase of almost 1.3 million shares owned by parent McEwen Mining in a secondary sale. When the deal is completed, Nuton and McEwen Mining are expected to own about 14% and 52%, respectively, of McEwen Copper.

McEwen Copper expects to see proceeds of about $6.5 million from the private placement subscription, and McEwen Mining expects to see proceeds of about $23.5 million from the secondary sale. McEwen Copper said it plans to use the proceeds to help fund development of Los Azules, a copper project in San Juan, Argentina in which it holds 100% interest.

The agreement also offers Nuton an option allowing it to buy a percentage of the copper products produced at Los Azules equal to its equity ownership in McEwen Copper.

Also on Monday, McEwen said it closed an investment in Argentina by Stellantis N.V. that will leave the Chrysler and Fiat parent company with a stake of about 14% in McEwen copper and the right to buy a percentage of the copper produced from the Los Azules project.

 

Write to Robb M. Stewart at robb.stewart@wsj.com

 

(END) Dow Jones Newswires

February 27, 2023 12:52 ET (17:52 GMT)

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