The Northern Miner Jul 19 2021 Issue 15

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EXPLORATION: BANYAN GOLD SEES DISTRICT-SCALE POTENTIAL / 2 Geotech_Earlug_2016_Alt2.pdf 1 2016-06-24 4:27:20 PM

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Centerra brings additional claims in Kyrgyz-Kumtor arbitration

A drill rig at McEwen Mining’s Los Azules copper project in Argentina’s San Juan province. MCEWEN MINING

LEGAL

| Gold mine was expropriated by government in May

C

McEwen Mining charts a course to capture the most value from Los Azules COPPER

| Rob McEwen says newly minted McEwen Copper will provide shareholders with exceptional copper price leverage

BY HENRY LAZENBY

W

ith the copper price trending in record territory after nearly doubling over the past 12 months, mining veteran and industry luminary Rob McEwen tells The Northern Miner the time had finally come to unlock the inherent value of its large-scale, advanced Los Azules copper project in Argentina. McEwen Mining (TSX: MUX; NYSE: MUX) announced last week it would spin out the Los Azules copper project in San Juan, Argentina, and the Elder Creek exploration property in Nevada into newly created McEwen Copper, subject to a 1.25% net smelter return royalty on both assets payable to McEwen Mining. McEwen Copper will, in turn, raise US$80 million through a private placement and become a public company within 12 months of its closing. McEwen says the asset has been in the McEwen Mining fold for longer than the namesake gold business has carried his name. The broad resource bear market of the past decade did not help spur investment in new copper development projects. Thus, management has been weighing several options ranging from an outright sale, a joint venture partnership with a deep-pocketed mid-tier or major or developing the asset itself. “With copper running up over US$4.00 per lb, Los Azules starts to take on a new life,” says McEwen. “It is very sensitive to the price of copper.” McEwen explains that in the cur-

rent copper price environment, the net present value of the project, as calculated in a 2017 preliminary economic assessment using US$3 per lb., goes from just about US$2.2

billion to over US$5 billion. And that’s using an 8% discount on the property. See MCEWEN MINING / 8

BY HENRY LAZENBY

anadian miner Centerra Gold (TSX: CG; NYSE: CCAU) has brought additional claims in its binding arbitration against the Kyrgyz Republic government as it fights the “wrongful expropriation” of the cornerstone Kumtor mine. Centerra has also named state monopoly gold refiner and Centerra’s largest shareholder, Kyrgyzaltyn, as a respondent. According to the amended notice of arbitration, Kyrgyzaltyn conspired with the Kyrgyz government to take control of the mine under the guise of temporary ‘external management’. It appears to continue acting at the government’s behest concerning the Kumtor operation and its shareholding in Centerra, the company alleges. The Kumtor external management has circulated monthly press releases exceptionally critical of Centerra, with the language use dripping of likely propaganda. For example, on June 25, the external management declared Kumtor was once more operating at full capacity and meeting all production expectations. It said: “Initial hurdles resulting from the manoeuvres of Centerra designed to impede smooth operations have been overcome. Managers drew upon their experience and the goodwill of employees, suppliers and contractors to restore key systems and resume production at the mine.” On a June 1 conference call, Centerra said it was conducting a “strategic review” of its ownership of Kumtor Gold Company and the Kumtor Operating Company. “The seizure of the mine is based on false information and groundless allegations that undermine everything we have built together,” Scott Perry, Centerra’s president and CEO, said in an open letter to the people of Kyrgyzstan. “We fear that the government’s unjustified action will put thousands of well-paying jobs and the businesses of hundreds of Kyrgyz suppliers at risk.” On July 6, the external management published an open response to Perry’s letter, demanding he return stolen Kyrgyz wealth. They accuse Perry and the company of running away from facing accountability under Kyrgyz law for environmental

BOOKS: TALES FROM THE PROSPECT CLUB / 5

issues previously settled. In the two months since the alleged Kumtor expropriation, the external management reports Kumtor has generated US$82 million worth of gold, causing “great joy and enthusiasm among our citizens.” “We would like to emphasize that in spite of you and because of our work, the country is now beginning to receive resources that help make the lives of our people easier,” says Kumtor external management. “There was no justice in the fact that our mine provided the lion share of the profits of Centerra.” Centerra seeks to hold the Kyrgyz government and Kyrgyzaltyn responsible for all losses and damages that result from their coordinated campaign to seize the gold mine in violation of longstanding investment agreements and without compensation to Centerra. The company also seeks to prevent the Kyrgyz government and Kyrgyzaltyn from taking any further actions to nationalize the mine or See CENTERRA / 2

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