McEwen planning new road link to Los Azules

Improving road access is McEwen Mining's top priority at its US$2.36bn Los Azules copper project in Argentina.

"One of [Los Azules'] big issues is its location," CEO Rob McEwen told the John Tumazos Very Independent Research Metals and Natural Resources Conference in New Jersey.

The copper-gold-silver asset, located high in the Andes in San Juan province and close to the Chilean border, is currently accessed by two mountain passes at around 4,000m altitude, which get filled in with snow in the winter, McEwen said.

Plans to establish a road link from Chile ran into political stumbling blocks, as Argentine authorities were unhappy about the company sourcing materials from Chile to advance the project, he added.

Instead, the Toronto-based company is working on establishing a route from the north running below the snow line and allowing year-round access to the asset, compared to just five months per year currently, the CEO said.

"It would be much cheaper. We would be able to bring a power line in. We would be going through no communities, and that is probably the best area for us to spend money on, not on exploration or anything else, just seeing if we can bring that road through."

McEwen will be focusing on establishing a year-round road link for the remainder of 2018 and next year, he added.

Los Azules hosts 10.2Blb (4.6Mt) of copper in indicated resources, along with 1.7Moz gold and 55.7Moz silver. Inferred resources contain an additional 19.3Blb copper, 3.8Moz gold and 135Moz silver.

A 2017 PEA indicated a 20.1% post-tax IRR and 3.6-year payback at US$3/lb copper, with a 36-year mine life and average production of 415Mlb/y copper over the first 10 years at US$1.11/lb cash costs.

McEwen tried to sell Los Azules in 2013 to raise funds to develop its El Gallo Silver project (formerly El Gallo 2) in Mexico but failed to secure a buyer.

The company also has a 49% interest in the San José gold-silver mine in Argentina, operated by Hochschild Mining, and the El Gallo gold mine in Mexico, along with assets in the US and Canada.

McEwen announced plans last month to combine remaining El Gallo resources with the El Gallo Silver asset and nearby deposits in its Fenix project.