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McEwen Copper commits to PFS for Los Azules

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The McEwen Copper division, 81% owned by McEwen Mining (TSX: MUX; NYSE: MUX), is advancing its Los Azules copper project in the San Juan province of Argentina to the pre-feasibility stage.

The first thing the company intends to do is construct a new, low-altitude northern access road to provide year-round access to the site. The current exploration road is only passable about five months a year.

Earlier this month, McEwen held a project development workshop for its senior management and representatives from Whittle Consulting (development scenarios), Bechtel Corp. (feasibility study for El Pachon project 75 km to the south of Los Azules), Samuel Engineering (project management, controls metallurgy and mill design), Stantec (geology, resources, mining engineering, tailings management, and water facilities), and McLennan Design (green building methods). Their work suggests there is considerable room to improve the economics of the Los Azules.

The preliminary economic assessment prepared in 2017 for Los Azules put the after-tax net present value at $2.2 billion (at an 8% discount) and the internal rate of return at 20.1%.

The study outlined an initial capex requirement of $2.4 billion with payback occurring after 3.6 years. The mine has a life of 36 years and will produce 415 million lb. of copper annually for the first 13 years at a cash cost of $1.14 per lb. A copper price of $3 per lb. was used in the study.

The goal, says McEwen, is to design a model copper mine for the 21st century. It will supply the raw material to enable a greener world, while incorporating the use of renewable energy sources to have a low-carbon footprint. Technological innovation will underpin an energy efficient operation.

There are currently about 280 people, 85% of whom are from San Juan, at the Los Azules camp to conduct exploration drilling. Two of the 10 rigs have been assembled and drilling will start Jan. 4. Medical services and emergency rescue teams have been on site since Dec. 1. An airstrip will be built to facilitate the movement of people during the PFS.

Earlier this year the company made a $40 million private placement and announced a 53,000-metre drill program to upgrade resources at the project. A second, $40 million private placement is due to close in January, leaving McEwen Mining with a 69% share of McEwen Copper.

(This article first appeared in the Canadian Mining Journal)

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