The automotive giant Stellantis (NYSE: STLA) has invested an additional $160 million in an Argentinian copper mining operation run by a McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) subsidiary and now holds a 19.4 per cent stake in the company.
On Wednesday, McEwen announced that Stellantis had acquired 1.9 million shares of McEwen Copper through a private placement. The funds will be primarily utilized for development of the Los Azules project in the country’s San Juan province.
McEwen says that it has amended the “copper cathodes and concentrates purchase rights agreement,” previously established with Stellantis in February, so that the automotive manufacturer will be required to purchase a minimum of 10,000 tonnes of copper cathode annually. The agreement previously only provided Stellantis with the right to purchase a percentage of the commodity based on equity ownership in McEwen Copper.
McEwen says the transaction values its copper subsidiary at US$800 million. Los Azules is one of the world’s largest undeveloped copper projects and is estimated to contain 10.9 billion indicated pounds of the metal at a 0.4 per cent grade.
The news follows Stellantis making a $120 million investment in the mine earlier this year.
Read more: Calibre Mining reports strong Q3 cash flow with 26% increase to US$97M
Read more: Calibre Mining publishes open pit gold estimate for Cerro Volcan Gold, Nicaragua
Rio Tinto’s copper tech venture also raises stake in the mine
McEwen is also receiving an additional US$10 million investment from Rio Tinto Ltd.’s (ASX: RIO) (LON: RIO) copper leaching technology venture Nuton LLC, building on a US$25 million investment from the subsidiary in August last year and US$30 million in financing from it in February.
Upon closing, Nuton will have raised its equity stake in McEwen Copper by 0.3 per cent to 4.5 per cent.
Last month, McEwen Copper was selected to be an executive commission member for Argentina’s National Chamber of Mining Companies.
Stellantis shares rose by 3 per cent Wednesday to US$20.18 on the New York Stock Exchange.
McEwen Mining stock shot up by 7.5 per cent to $9.63 on the Toronto Stock Exchange.
Rio Tinto shares are currently worth C$99.13 on the Australian Securities Exchange.
rowan@mugglehead.com
