Rob McEwen, chairman and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX), is best known for his work in the gold space, but this week his company announced a new copper venture.
McEwen Mining will be creating McEwen Copper, a new subsidiary that will house the company’s copper assets, notably the Los Azules project in Argentina.
The company is looking to raise US$80 million for McEwen Copper via a Series B private placement, and intends to take the new company public within 12 months of the offering’s closure.
McEwen, who will be contributing US$40 million to the placement, said that McEwen Mining has been considering this move for quite awhile, and now feels the time is right.
Copper’s supply/demand dynamics and positive price outlook are key reasons the company is acting now. “There are (copper) deficits being forecast by many of the brokerage firms — Goldman Sachs (NYSE:GS) is one of the ones leading that,” said McEwen.
“I feel that the demand for copper is going to increase with the growth of Asia, with the growth and the proliferation of electric vehicles and (copper’s) use in regenerative energy. I think we’re entering a strong period of demand for copper. So all that’s very good for Los Azules.”
Aside from McEwen Mining’s copper plans, McEwen shared his thoughts on the gold price, which is currently not as high as some market participants would like it to be.
“I suspect the key factors that are holding it back are a broad belief that inflation is under control, that gold is an old-school investment and no longer relevant in a digital world and the strength of the broad market,” he said. McEwen does see the situation changing, and he thinks the driver will be wider recognition of today’s inflationary environment.
“During the last 12 months, the prices of many essential commodities have experienced large price jumps, and it won’t take very long for these increases to be reflected in the prices of finished goods, services, foods — and followed by demand for higher compensation by labor,” he said. “And that’s when that inflation will become evident — clearly evident — and gold will start performing.”
Watch the interview above for more from McEwen on the copper and gold markets.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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