McEwen Mining (TSX: MUX; NYSE: MUX) has closed a public offering of US$50 million issuing 37.8 million units at $1.325 per unit.
Each unit consists of one common share and one half of a warrant to buy one common share. Each full warrant can be exercised for one common share at $1.7225 per share within five years from the date of issuance.
Underwriters have a 30-day option to buy an additional 5.7 million shares and 2.8 million warrants.
Bhakti Pavani, a senior research analyst at Alliance Global Partners, noted the equity offering was higher than the estimate of $15 million in her financial model, and said the financing had “negatively impacted” her net asset value per share estimate, which has decreased from $3.18 per share to $2.84 per share.
As a result, Pavani has lowered her price target on the stock from $3.20 to $2.85 per share.
She also commented in a research note to clients that McEwen Mining “has to begin making a debt payment of $2 million per month starting August 2020 against its $50 million senior secured loan facility with Royal Capital Management Corp.”.
At press time, McEwen shares were trading at $1.57 apiece within a 52-week trading range of $1.61 to $2.84. The company has 400 million common shares outstanding and a $628-million market capitalization.
McEwen Mining has operating mines in Nevada, Canada, Mexico and Argentina. It also owns a large copper deposit in Argentina.