Proposed McEwen Mining Seeks to Be Next S&P 500 Gold Company

RENO, NV – Goldcorp founder Rob McEwen Tuesday announced plans to merge his two junior mining companies-U.S. Gold and Minera Andes–into the aptly named McEwen Mining.

During the AGM of U.S. Gold, McEwen told shareholders his long-term goal is to transform McEwen Mining into only the second gold mining company listed in the S&P 500.

To accomplish this, McEwen hopes to turn his 340 million combined shares and $1.4 billion McEwen Mining shares into a company with a $5 billion market cap, the minimum required for the S&P 500.

With a 31% stake in Minera Andes and a 20% stake in U.S. Gold, McEwen observed that his current shareholdings are already 20 times larger than those held by any other precious metals CEO in the world. Not only is he the largest shareholder in both companies, but he also serves as their chief executive.

McEwen would hold 25% or shares valued at $345 million in McEwen Mining. Minera Andes shareholders would receive 0.4 of a US Gold share for each 1.0 Minera Andes share.  The deal is valued at $635 million.

In a presentation to U.S. Gold shareholders Tuesday, McEwen said the combination will result in a “lower cost producer” with a strong balance sheet, a “significant growth pipeline” and a “well positioned exploration portfolio.”

McEwen said the strength of the combined company will give it increased credibility with financial markets which would help get financing and accelerate U.S. Gold’s projects toward production. McEwen Mining would have a projected production of 2.5 million silver ounces this year, expected to increase to 7.5 million by 4014.

Combined measured and indicated resource estimates include 81.2 million ounces of silver, 3.8 million ounces of gold, and 2.2 billion pounds of copper. 

It would also possess significant land packages adjoining Goldcorp’s Cerro Negro Project, Barrick’s Cortez Gold Mine in Nevada, and U.S. Gold’s Gallo project in Mexico. El Gallo is expected to produce 5 million ounces of silver and 50,000 ounces of gold annually when it commences production in 2014.

Minera Andes owns a 49% interest in Minera Santa Cruz, owner of the San Jose Mine near the Cerro Negro Project in Argentina. San Jose had a silver production of 5.3 million ounces and gold production of 84,000 ounces in 2010.

The Minera Andes/U.S. Gold merger is expected to be completed in October if approved by shareholders of both companies.


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