Milei Magic Is Very Bullish For Copper Mining In Argentina
McEwen Mining is my highest conviction copper development pick.
To be clear, it isn’t even close as to what is the best undeveloped copper project not held by a major mining company. Los Azules is the kind of future copper mining project that every major mining company would like to have on their books to build into a mine.
The changes President Milei has enacted to transform the economy of Argentina are remarkable, which include reforms to help foreign mining investors to focus on Argentina. He clearly understands the economic importance of mining to the economy as it injects substantial money into the economy and creates high paying jobs.
When it comes to grade, in worldwide undeveloped copper projects, Los Azules is at the top of the list. In size, it is the 8th largest worldwide and largest in Argentina. In their PEA it is estimated to be a multiple decade mine that has only contemplated mining around half the resource.
As far as costs go, it is in the lowest cost quartile for undeveloped copper projects worldwide. Collectively, it checks all the boxes of what major mining companies are looking to develop into future copper mines.
Recently, BHP and Lundin Mining made a takeover offer of C$4.5 million to acquire Filo’s Filo Del Sol copper discovery in the Vicuna district of Argentina. BHP and Lundin Mining will form a joint venture which will also include the Josemaria copper development project.
Comparing Los Azules to Filo Del Sol and Josemaria, it is incredible that Los Azules is bigger than both of them combined, with a higher grade and lower costs. A key reason for the lower costs is that Filo Del Sol and Josemaria are both at higher elevations right around the elevation at the Mount Everest base camp. Mining at such a high elevation is costly and needs special care to operate.
Another great aspect of Los Azules is that the copper won’t need to be shipped off to another country for smelting as it will produce a copper cathode. Which means that it can be used right in the country and be a value add to the Argentine economy.
Recently, McEwen Copper announced that they have struck a deal with YPF Luz, one of Argentina’s largest energy companies, to supply 100% renewable green energy to the project. Every mining company wants their mines to be carbon neutral and Los Azules will open as a new mine meeting this goal. YPF Luz will also cover the costs to bring the energy to Los Azules.
Rob McEwen has always been an innovator in the mining business and has exciting plans to build a world class copper mine. When Los Azules is built into a mine, it will be an example to other mining companies about what a modern mine should be.
They have hired an environmental architect, Jason McLennan, who is considered the Steve Jobs of the green building industry. He has been tasked with designing a mine in a way that is respectful of the land and has designed a mine that will be where every miner will love to work.
I would like to invite you to view the video McEwen Copper has produced to explain the vision for the Los Azules mine. It does a fantastic job of telling the story about how Los Azules will be built into a state-of-the-art copper mine.
Usually I am agnostic to politicians, it has been way too long since I saw a politician that is an example of how they should conduct themselves for the betterment of their country. President Milei is my favourite politician. What he is doing for the people of Argentina to transform the economy is almost unbelievable.
He came into office with a bold plan that many inside and outside his country thought would not be possible. They said he wouldn’t be able to push his reforms through, that the old way of doing things in the country was too ingrained. But, unlike almost every politician throughout my lifetime that had audacious plans during their campaigning, which then didn’t follow through with, he is doing exactly what he said he would do. What a novel idea.
I have not visited Argentina, but I can only imagine that he is loved by many in the country. As is often the case, when a politician in South America does exemplary things, others want to jump on the bandwagon. I can see other countries in South America are starting to follow his lead and don’t want to be left behind.
His presidency is getting international acclaim by powerful leaders. Like they are pointing a finger at President Milei and Argentina, often in awe of what he has done in such a short period of time.
Leaders in mining are definitely paying attention and taking action. First, BHP and Lundin Mining made a takeover for Filo Corp., and just recently First Quantum announced that they will spend $3.5 billion to develop their Taca Taca copper project in Argentina.
This is really only a start, as time goes on, we will see many more major mining companies commit huge investments into the country. Argentina has exceptional geological endowment and as it is developed, mining will be a massive contributor to the country’s economy. More countries should take notice and follow suit as the world needs mining to build everything and make things run in our modern world.
Not only do I think Argentina is heading to prosperity, much faster than many think, I also believe that Los Azules is going to be a cutting edge mine that will be the example that other mining companies will aspire to follow in its footsteps.
With all the demand coming from computing technologies and innovations like artificial intelligence, alternative energy, modernization of power grids in developed economies and building new ones in developing economies, plus electric vehicles, the mining sector is struggling to keep up with the copper supply needed to make these goals reality.
Projections are that in the near-term, there is a likelihood that due to the supply and demand fundamentals, that there will be supply shocks. Basically, every copper development project in the world needs to become a future mine, this won’t happen, at least not quickly enough to keep up with demand in the near-term and long-term. The price of copper is going to go much higher as it is needed to incentivise investment in new copper mines.
Argentina is about to make a major difference in copper supply that will have far reaching benefits in Argentina and in many countries throughout the world that need copper.
Los Azules is a mine that will last generations, creating jobs that families will be proud to say that they work at the Los Azules mine. As you can readily tell, I’m a big fan of Argentina, President Milei and the Los Azules copper development project.
In Closing
The world needs more copper mines and Los Azules is on the path to becoming an impressive copper mine in Argentina. It could be the jewel in the crown.
A key catalyst I’m looking for is early in 2025, McEwen Copper will announce the feasibility study for Los Azules. The PEA has impressive metrics and they have done a lot of drilling to firm up the confidence of the economics. The FS will help show how exceptional Los Azules is for an Argentinian project and how it stacks up on the world stage of copper development projects.
The company is also talking about a public listing for McEwen Copper in 2025. This will help flesh out the value of Los Azules, making it easier for investors to assess what that means for the valuation of McEwen Mining’s interest.
McEwen Mining owns 48.3% of McEwen Copper and a 1.25% NSR royalty. When McEwen Copper is trading, it will be easy math for investors to cut that valuation in half to get price discovery on McEwen Mining’s interest.
Astute investors don’t need to see McEwen Copper trade to get an understanding of the value proposition for McEwen Mining’s interest. Filo Corp. has received a C$4.5 billion takeover offer for their Filo Del Sol project. Los Azules is much bigger, with a higher grade and lower cost to produce copper. Currently, McEwen Mining has a C$610 million valuation.
One can easily make the case that McEwen Mining is under-appreciated for their interest in McEwen Copper and getting no value for their gold mines.
All the best,
Allan Barry Laboucan
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