In a recent development, Nuton, a venture of Rio Tinto (NYSE:RIO), and Stellantis (NYSE:STLA) have amplified their stakes in the copper division of McEwen Mining (NYSE:MUX). This move has resulted in an increase in the business valuation to $800 million, up from a previous estimate of $550 million.
On Wednesday, Nuton announced an additional investment of $10 million that will boost its stake to 14.5%. This follows an earlier investment of $30 million. The transaction, which is expected to close on October 19, involves a private placement of 152,615 McEwen Copper shares and a secondary sale of 232,000 shares by McEwen Mining.
McEwen Mining, with a market cap of 329M USD as reported by InvestingPro, will retain just under 48% ownership and gain $4 million from the transaction. The remaining $6 million from the transaction will be channeled towards funding Argentina's Los Azules copper project. It's worth noting that despite the company's recent strides, InvestingPro data shows a declining trend in earnings per share and a quick burn through cash.
In a parallel development, Stellantis, the parent company of brands such as Alfa Romeo and Jeep, has also increased its stake in McEwen Copper. With the purchase of 1.9 million shares, Stellantis has raised its stake to over 19%. This move signifies the growing interest of major global entities in the copper mining sector.
According to InvestingPro, McEwen Mining has seen a high return over the last year with a 1 Year Price Total Return of 86.97%. However, the company also suffers from weak gross profit margins, as indicated by a Gross Profit Margin of -60.09%. Insights from InvestingPro Tips suggest that McEwen holds more cash than debt on its balance sheet, which could be a positive sign for potential investors.
Despite the challenges, analysts anticipate sales growth in the current year, a point worth considering for those following the company's progress. For more detailed insights and tips on McEwen Mining and other companies, consider subscribing to InvestingPro, which offers additional tips and real-time metrics to aid in investment decisions.
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