McEwen completes $110 Million USD financing

McEwen Mining has closed its previously announced offering of 5.25% convertible senior notes due 2030, raising a total of $110 million. This includes an upsized offering of $95 million and the full exercise of the $15 million option granted to the initial purchasers.

Rob McEwen, Chairman and Chief Owner, said, "McEwen Mining chose this innovative financing to fund accretive growth initiatives at what we view as an attractive cost of capital designed to minimize potential dilution to our existing stockholders. I am excited about the prospects for our Company while protecting our stockholders from substantial dilution. Dilution from this financing has the potential to be zero if the stock price at maturity is at or below $17.30, a 100% premium to our NYSE closing sale price of $8.65 on February 6, 2025. In addition, the Notes are unsecured, while carrying a coupon of 5.25%, which is 4.50% lower than the 9.75% coupon paid on the outstanding senior secured debt of $40 million. This debt will be reduced to $20 million through partial repayment using a portion of the net proceeds from the Offering. The remaining net proceeds will be used for general corporate purposes. As a result of our exploration success expanding our gold resources, we are developing plans that target an increase in the Fox Complex’s gold production from 30,000 ounces in 2024 to 60,000 ounces in 2027 and to 150,000 ounces by 2030."

Key Terms of the Offering

• Total net proceeds: $90.8 million after adjusting for capped call costs and other expenses.

• Interest rate: 5.25% per year, payable semi-annually on February 15 and August 15.

• Initial conversion rate: 88.9284 shares per $1,000 principal amount, equivalent to a conversion price of approximately $11.25 per share (30% premium to closing price on February 6, 2025).

• Capped call adjustment: Effective conversion price for conversions at maturity could reach $17.30 per share (100% premium to closing price).

• Redemption option: Callable at the Company’s option on or after August 21, 2028, if the Company’s common stock reaches at least $14.62 (130% of the conversion price).

• Maturity date: August 15, 2030, unless earlier converted, redeemed, or repurchased.

Use of Proceeds

• $15.1 million: To fund the capped call transaction, limiting potential dilution to shareholders.

• $20 million: Partial repayment of the Company’s senior secured credit facility.

• Remaining net proceeds: Allocated for general corporate purposes.

The offering was conducted as a private placement under Rule 144A of the Securities Act of 1933, as amended. The Notes and any shares of common stock issuable upon conversion have not been registered under U.S. securities laws and cannot be offered or sold without proper exemptions.

About Capped Calls

A capped call is an options strategy used by companies issuing convertible debt to reduce potential equity dilution upon conversion. It involves purchasing call options at the convertible bonds’ strike price while simultaneously selling higher-strike call options, limiting the potential stock appreciation benefit for bondholders and effectively raising the conversion price.

By Kevin Vincent, Senior Contributing Editor to Mining Life Online and Mining Life & Exploration News.

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