TNR Gold Corp welcomes McEwen Mining’s submission of Loz Azules copper project for Argentinian investment incentives

North American producer McEwen Mining (TSX: MUX) has put forward its US$2.7 billion Los Azules copper project for admission to Argentina’s large investment incentive regime (RIGI), through its subsidiary companies McEwen Copper and Andes Corporación Minera SA.

Approximately US$227 million has been committed under the RIGI to complete the project’s feasibility study, conduct additional exploration and perform preliminary work in preparation for the construction phase.

An additional investment of US$2.5 billion has been estimated to build the mine and production facilities as part of a future expansion strategy.

RIGI benefits

Once admission to the RIGI is approved, the project will benefit from a drop in the corporate income tax rate from 35% to 25%; relief from value-added tax payments during construction; exemption from export duties; and an exclusion from the obligation to bring export proceeds into the country.

It will also qualify for access to international arbitration in case of disputes.

Undeveloped deposit

Loz Azules is ranked among the 10 largest undeveloped copper deposits in the world.

The project has attracted strong backing from major industry players including miner Rio Tinto and international car maker Stellantis.

TNR Gold royalty

News of the Loz Azules RIGI application has been welcomed by TNR Gold Corp (TSX-V: TNR) which holds a 0.4% net smelter royalty on the project (of which 0.04% is held on behalf of a shareholder).

TNR chief executive officer Kirill Klip said he was pleased McEwen Mining had reached the major milestone.

“The admission to RIGI could move the Los Azules development closer to a construction decision which may be made as soon as this year after the release of a feasibility study,” he said.

“TNR does not have to contribute any capital to the project’s development… the essence of our business model is to have industry leaders like McEwen as operators on projects which will potentially generate royalty cashflows to contribute significant value for our shareholders.”

Mariana royalty

TNR also holds a 1.5% net smelter royalty (0.15% held for a shareholder) on the Mariana lithium lithium salt-lake project in Argentina’s Salta Province, owned by Ganfeng Lithium Group.

The project boasts a resource of approximately 8.1 million tonnes lithium carbonate equivalent.

Under the terms of the royalty agreement, Ganfeng subsidiary Litio Minera Argentina SA has the right to re-purchase 1% of the royalty from TNR (of which 0.9% is a royalty interest).

Litio would receive CAN$900,000 and its shareholder would receive CAN$100,000 from the re-purchase, reducing TNR’s royalty to 0.45% and its shareholder to 0.05%.

Phase 1 production

Last month, Ganfeng announced the start of Phase 1 production at Mariana which will have an annual production capacity of 20,000 tonnes from a lithium chloride production line.

After this, Ganfeng plans to accelerate the ramp-up of project capacity to optimise the resource’s supply and cost structure.

This is expected to enhance Mariana’s profitability and improve Ganfeng’s competitiveness in the global lithium market.