Vedanta to invest $2 billion in Saudi copper projects
Investment agreement is one of nine metals and mining deals, totalling over $9 billion, signed by Saudi Arabia with global mining companies.
McEwen Mining (TSE:MUX, NYSE:MUX) dropped more than 7% in value the Canadian company announced its cutting back substantially on its gold production plans.
The company headed by mining veteran and Goldcorp founder, Rob McEwen is now worth $686 million in New York, down almost 40% year to date.
McEwen Mining lowered its production growth forecast more than 20% or 85,000 gold equivalent ounces to 225,000 gold equivalent ounces in 2016.
The company said as a result its capital requirements have been reduced to a point that its cash reserves and cash flow from operations could be sufficient to fund its production efforts.
McEwen Mining said its looking at turning phase 2 of its El Gallo Complex in Sinaloa, Mexico which started production in September into a heap leach operations rather than conventional milling operating saving $120m in development costs.
The company put its Los Azules Project in San Juan, Argentina up for sale in January but now said it no longer makes sense to sell the mine given depressed market conditions and its lower capital requirements.
McEwen mining also holds 49% of the producing San Jose Mine in Santa Cruz, Argentina.
“Lower gold and silver prices have reduced our cash flow and the projected IRRs on our development projects and increased the cost of capital. As a consequence, we had to re-assess our development plans and look at alternatives to avoid excessive dilution at current market prices. Fortunately, we have developed alternatives that our cash reserves and cash flow from operations would allow us to develop and fund largely from internal sources with limited use of very expensive outside capital. Another very positive aspect of this alternative course is the potential for a significant increase in the IRR of El Gallo 2. Clearly, adversity is the mother of invention,” McEwen, chairman and chief owner said in a statement.
McEwen Mining’s stated goal is to qualify for inclusion in the S&P 500 by 2015 by creating a high growth, low-cost, mid-tier gold producer focused in the Americas.
