McEwen Mining's $110 Million Convertible Note Offering: A Strategic Move for Growth

McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) has successfully closed its upsized offering of $110 million in convertible senior unsecured notes due 2030. The offering, which included an upsized amount of $95 million and the exercise of a $15 million option, was priced at 100% of the principal amount, with an initial conversion price of approximately $11.25 per share, representing a 30% premium to the closing sale price of the Company’s common stock on February 6th, 2025. The notes have a 5.25% interest rate, payable semi-annually on June 15th and December 15th of each year, beginning on June 15th, 2025.

The Company will use the net proceeds from the offering for general corporate purposes, including exploration and resource expansion, production growth, debt repayment, and funding accretive growth initiatives. This strategic move aligns with McEwen Mining's current objectives, such as increasing gold production at the Fox Complex, by supporting exploration, resource expansion, production growth, debt repayment, and funding accretive growth initiatives.

The offering also includes a capped call feature, which has the potential to synthetically increase the effective conversion price for conversions at maturity to $17.30 per share, representing a 100% premium to the closing sale price on NYSE of the Company’s common stock on February 6th, 2025. This feature is designed to minimize potential equity dilution to existing shareholders if the stock price at maturity is at or below $17.30.

In comparison to other recent convertible bond offerings in the mining sector, such as Newmont Corporation's 2.75% convertible senior notes due 2026 and Barrick Gold Corporation's 3.5% convertible senior notes due 2026, McEwen Mining's convertible senior notes due 2030 have a higher interest rate and a lower initial conversion price. This may reflect the higher risk profile of McEwen Mining compared to these larger and more established mining companies, as well as the relatively undervalued common stock of McEwen Mining compared to the market prices of Newmont and Barrick's common stocks at the time of their respective offerings.

In conclusion, McEwen Mining's $110 million convertible note offering is a strategic move that supports the Company's growth objectives and aligns with its current initiatives. The offering's terms and features, such as the higher interest rate and the capped call, reflect the Company's risk profile and the market conditions at the time of the offering. The use of proceeds for general corporate purposes will help McEwen Mining fund various growth initiatives and support its strategic objectives, such as increasing gold production at the Fox Complex.