false 0000314203 0000314203 2023-11-01 2023-11-01 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

(Amendment No. 1)

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 1, 2023

 

McEWEN MINING INC.

 

(Exact name of registrant as specified in its charter)

 

Colorado   001-33190   84-0796160
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

150 King Street West, Suite 2800

Toronto, Ontario, Canada  M5H 1J9

 

(Address of principal executive offices, including zip code)

 

(866) 441-0690

 

(Registrant’s Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class:   Trading Symbol(s):   Name of Each Exchange on Which Registered:
Common Stock   MUX   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

  

Explanatory Note

 

This Amendment No. 1 to the Current Report on Form 8-K of McEwen Mining Inc. (the “Company”), filed with the Securities and Exchange Commission on October 6, 2023 (the “Original Filing”), is being filed solely to file a revised Exhibit 96.1, Technical Report Summary for the Company's Los Azules Copper Project, as amended on November 1, 2023, and related consents. No other changes have been made to the Original Filing or any other exhibit.

 

Item 9.01Financial Statements and Exhibits

 

(d) Exhibits. The following exhibits are furnished or filed with this report, as applicable:

 

Exhibit No.   Description
23.1   Consent of Stantec Consulting International Ltd.
23.2   Consent of Samuel Engineering Inc.
23.3   Consent of Knight Piesold Ltd.
23.4   Consent of SRK Consulting UK Limited
23.5   Consent of W. David Tyler, SME-RM
96.1   Technical Report Summary for the Los Azules Copper Project, effective May 9, 2023, as amended on November 1, 2023
104   Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document

 

Cautionary Statement

 

With the exception of historical matters, the matters discussed in the Technical Report Summary for the Los Azules Copper Project, effective May 9, 2023, as amended on November 1, 2023 (the “2023 TRS”) attached as an exhibit hereto includes forward-looking statements within the meaning of applicable securities laws that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained therein. Such forward-looking statements include, among others, statements regarding future production and cost estimates, exploration, development, construction and production activities. Factors that could cause actual results to differ materially from projections or estimates include, among others, future drilling results, metal prices, economic and market conditions, operating costs, receipt of permits, and receipt of working capital, as well as other factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and other filings with the United States Securities and Exchange Commission. Most of these factors are beyond the Company’s ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made in the 2023 TRS attached as an exhibit hereto, whether as a result of new information, future events, or otherwise, except as required by applicable law. Readers are cautioned not to put undue reliance on forward-looking statements.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  McEWEN MINING INC.
     
Dated: November 3, 2023 By: /s/ Carmen Diges
    Carmen Diges, General Counsel

 

 

 

 

EXHIBIT 23.1

 

CONSENT OF STANTEC CONSULTING INTERNATIONAL LTD.

 

In connection with the McEwen Mining Inc. Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2023 and any amendments or supplements and/or exhibits thereto, including without limitation Amendment No. 1 thereto (collectively, the “Form 8-K”), the undersigned consents to the following:

 

(i)the filing and use of the technical report summary titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentina” (the “TRS”), with an effective date of May 9, 2023, an original date of August 25, 2023, and an amended date of November 1, 2023, as an exhibit to and referenced in the Form 8-K;

 

(ii)the incorporation by reference of the TRS in the Registration Statements of McEwen Mining Inc. on Form S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) and Form S-4 (File No. 333-226858) (the “Registration Statements”);

 

(iii)the use of and references to our name, including our status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission), in connection with the TRS, Form 8-K and the Registration Statements; and

 

(iv)any extracts from or summaries of the TRS included or incorporated by reference in the Form 8-K and the Registration Statements, and the use of any information derived, summarized, quoted or referenced from the TRS, or portions thereof, that were prepared by us, that we supervised the preparation of, and/or that were reviewed and approved by us, that is included or incorporated by reference in the Form 8-K and the Registration Statements.

 

Dated:  November 3, 2023

 

By: /s/ Stantec Consulting International Ltd.  
Name: Stantec Consulting International Ltd.  

 

 

 

 

EXHIBIT 23.2

 

CONSENT OF SAMUEL ENGINEERING INC.

 

In connection with the McEwen Mining Inc. Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2023 and any amendments or supplements and/or exhibits thereto, including without limitation Amendment No. 1 thereto (collectively, the “Form 8-K”), the undersigned consents to the following:

 

(i)the filing and use of the technical report summary titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentina” (the “TRS”), with an effective date of May 9, 2023, an original date of August 25, 2023, and an amended date of November 1, 2023, as an exhibit to and referenced in the Form 8-K;

 

(ii)the incorporation by reference of the TRS in the Registration Statements of McEwen Mining Inc. on Form S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) and Form S-4 (File No. 333-226858) (the “Registration Statements”);

 

(iii)the use of and references to our name, including our status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission), in connection with the TRS, Form 8-K and the Registration Statements; and

 

(iv)any extracts from or summaries of the TRS included or incorporated by reference in the Form 8-K and the Registration Statements, and the use of any information derived, summarized, quoted or referenced from the TRS, or portions thereof, that were prepared by us, that we supervised the preparation of, and/or that were reviewed and approved by us, that is included or incorporated by reference in the Form 8-K and the Registration Statements.

 

Dated:  November 3, 2023

 

By: /s/ Samuel Engineering Inc.  
Name: Samuel Engineering Inc.  

 

 

 

 

EXHIBIT 23.3

 

CONSENT OF KNIGHT PIESOLD LTD.

 

In connection with the McEwen Mining Inc. Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2023 and any amendments or supplements and/or exhibits thereto, including without limitation Amendment No. 1 thereto (collectively, the “Form 8-K”), the undersigned consents to the following:

 

(i)the filing and use of the technical report summary titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentina” (the “TRS”), with an effective date of May 9, 2023, an original date of August 25, 2023, and an amended date of November 1, 2023, as an exhibit to and referenced in the Form 8-K;

 

(ii)the incorporation by reference of the TRS in the Registration Statements of McEwen Mining Inc. on Form S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) and Form S-4 (File No. 333-226858) (the “Registration Statements”);

 

(iii)the use of and references to our name, including our status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission), in connection with the TRS, Form 8-K and the Registration Statements; and

 

(iv)any extracts from or summaries of the TRS included or incorporated by reference in the Form 8-K and the Registration Statements, and the use of any information derived, summarized, quoted or referenced from the TRS, or portions thereof, that were prepared by us, that we supervised the preparation of, and/or that were reviewed and approved by us, that is included or incorporated by reference in the Form 8-K and the Registration Statements.

 

Dated:  November 3, 2023

 

By: /s/ Knight Piesold Ltd.  
Name: Knight Piesold Ltd.  

 

 

 

 

EXHIBIT 23.4

 

CONSENT OF SRK CONSULTING UK LIMITED

 

In connection with the McEwen Mining Inc. Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2023 and any amendments or supplements and/or exhibits thereto, including without limitation Amendment No. 1 thereto (collectively, the “Form 8-K”), the undersigned consents to the following:

 

(i)the filing and use of the technical report summary titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentina” (the “TRS”), with an effective date of May 9, 2023, an original date of August 25, 2023, and an amended date of November 1, 2023, as an exhibit to and referenced in the Form 8-K;

 

(ii)the incorporation by reference of the TRS in the Registration Statements of McEwen Mining Inc. on Form S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) and Form S-4 (File No. 333-226858) (the “Registration Statements”);

 

(iii)the use of and references to our name, including our status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission), in connection with the TRS, Form 8-K and the Registration Statements; and

 

(iv)any extracts from or summaries of the TRS included or incorporated by reference in the Form 8-K and the Registration Statements, and the use of any information derived, summarized, quoted or referenced from the TRS, or portions thereof, that were prepared by us, that we supervised the preparation of, and/or that were reviewed and approved by us, that is included or incorporated by reference in the Form 8-K and the Registration Statements.

 

Dated:  November 3, 2023

 

By: /s/ SRK Consulting UK Limited  
Name: SRK Consulting UK Limited  

 

 

 

 

EXHIBIT 23.5

 

CONSENT OF W. DAVID TYLER, SME-RM

 

In connection with the McEwen Mining Inc. Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2023 and any amendments or supplements and/or exhibits thereto, including without limitation Amendment No. 1 thereto (collectively, the “Form 8-K”), the undersigned consents to the following:

 

(i)the filing and use of the technical report summary titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentina” (the “TRS”), with an effective date of May 9, 2023, an original date of August 25, 2023, and an amended date of November 1, 2023, as an exhibit to and referenced in the Form 8-K;

 

(ii)the incorporation by reference of the TRS in the Registration Statements of McEwen Mining Inc. on Form S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) and Form S-4 (File No. 333-226858) (the “Registration Statements”);

 

(iii)the use of and references to my name, including my status as an expert or “qualified person” (as defined in Subpart 1300 of Regulation S-K promulgated by the Securities and Exchange Commission), in connection with the TRS, Form 8-K and the Registration Statements; and

 

(iv)any extracts from or summaries of the TRS included or incorporated by reference in the Form 8-K and the Registration Statements, and the use of any information derived, summarized, quoted or referenced from the TRS, or portions thereof, that were prepared by me, that I supervised the preparation of, and/or that were reviewed and approved by me, that is included or incorporated by reference in the Form 8-K and the Registration Statements.

 

Dated:  November 3, 2023

 

By: /s/ W. David Tyler  
Name: W. David Tyler, SME-RM  

 

 

 

 

Exhibit 96.1

  

 

 

  

 

Signature Page

 

This report titled “SEC S-K 229.1304 Technical Report Summary Initial Assessment – Individual Disclosure Los Azules Copper Project – Argentine” with an effective date of May 9, 2023, was prepared and signed by:

 

 

 

This report was authored by the qualified persons (each a “QP” and collectively, the “QPs”) listed in Table 2.1. Each QP and their respective Company only assumes responsibility for those sections or areas of the report that are referenced opposite their name in Table 2.1. None of such QPs, however, accept any responsibility or liability for the sections or areas of this report that were prepared by other QPs.

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
i

 

  

  

 

Table of Contents

  

1.0 EXECUTIVE Summary 1-1
     
1.1 OWNERSHIP STRUCTURE 1-9
1.2 LOCATION 1-10
1.3 PROPERTY 1-13
1.4 EXPLORATION & DRILLING 1-15
1.5 mineral resource estimates 1-15
1.6 mining 1-16
1.7 Metallurgical Testwork and Recovery Methods 1-17
1.8 project economics 1-20
1.9 key project risks & opportunities 1-22
1.10 qualified persons recommendations and conclusions 1-24
     
2.0 introduction 2-27
     
2.1 2023 technical REPORT summary (TRS) Update Overview 2-27
2.2 Qualified Persons 2-28
2.3 Personal Inspection of Los Azules Property 2-29
     
3.0 property description 3-31
     
3.1 location 3-31
3.2 property and title in argentina 3-31
3.3 oWNERSHIP OF THE LOS AZULES PROJECT 3-32
3.4 ROYALTIES AND RETENTIONS 3-43
3.5 BACK-IN RIGHTS 3-43
3.6 ENVIRONMENTAL LIABILITIES 3-43
3.7 PERMITTING REQUIREMENTS 3-44
3.8 PERMITTING REGULATIONS 3-44
3.9 GLACIER PROTECTION LEGISLATION 3-45
3.10 ENVIRONMENTAL BASELINE STUDIES 3-46
     
4.0 Accessibility, Climate, Local Resources, Infrastructure and Physiography 4-48
     
4.1 accessibility 4-48
4.2 surface rights 4-48
4.3 climate and length of operating season 4-48
4.4 local resources and infrastructure 4-51
4.5 topography, elevation and vegetation 4-52
4.6 Availability of Area for Mine and Processing Facilities 4-53
     
5.0 History 5-54
     
5.1 property history 5-54

  

Engineering     u     Project Controls     u     Estimating     u     Construction Management
ii

 

 

  

 

6.0 geological setting, mineralization, and deposit 6-57
     
6.1 regional geology 6-57
6.2 property geology 6-60
6.3 other mineralization 6-64
6.4 deposit types 6-65
     
7.0 exploration 7-69
     
7.1 exploration history 7-69
7.2 Geological Mapping and Studies 7-69
7.3 GEOPHYSICS 7-69
7.4 SURVEYS AND INVESTIGATIONS 7-74
7.5 FUTURE EXPLORATION 7-75
7.6 drilling 7-76
7.7 True Thickness of Mineralization 7-85
7.8 Hydrogeology 7-85
7.9 ADEQUACY STATEMENT ON SECTION 7 7-85
     
8.0 sample preparation, analyses, and security 8-86
     
8.1 Introduction 8-86
8.2 Sampling Methods 8-86
8.3 Sample Preparation and Analyses 8-90
8.4 CONTROL SAMPLES 8-93
8.5 CONCLUSIONS 8-100
     
9.0 data verification 9-101
     
9.1 Drill Site Inspection, Los Azules Project Site 9-101
9.2 Core Logging compound, los azules project site 9-102
9.3 Core Warehouse, Calingasta 9-102
9.4 Alex Stewart Assay Lab, Mendoza 9-103
9.5 Global Database Manager, Database Curator & Exploration Manager, San Juan 9-103
9.6 CRM (Resource Estimation), San Francisco 9-104
9.7 Mine Technical Services (MTS) Database Audits 9-104
9.8 Geological Modelling 9-104
     
10.0 mineral processing and metallurgical testing 10-105
     
10.1 introduction 10-105
10.2 current metallurgical testwork programs 10-107
10.3 Nuton™ TECHNOLOGY Testing 10-130
10.4 Adequacy of data and use 10-133
     
11.0 mineral resource estimates 11-134
     
11.1 Introduction 11-134

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
iii

 

 

  

 

11.2 Available Data 11-137
11.3 Geologic Model 11-137
11.4 Compositing 11-142
11.5 Exploratory Data Analysis 11-142
11.6 Bulk Density 11-156
11.7 Evaluation of Outlier Grades 11-157
11.8 Variography 11-159
11.9 Model Setup and Limits 11-162
11.10 Interpolation Parameters 11-162
11.11 Validation 11-163
11.12 Resource Classification 11-169
11.13 Mineral Resources 11-172
11.14 adequacy STATEMENT on section 11 11-180
     
12.0 mineral reserve estimates 12-182
13.0 mining methods 13-183
     
13.1 Introduction 13-183
13.2 Economic Pit Limit Evaluations 13-186
13.3 Mining Phases and Pit Design 13-195
13.4 LOS AZULES MINE PRODUCTION SCHEDULE 13-205
13.5 Mining Equipment 13-207
13.6 Mine Workforce 13-210
13.7 Hydrogeology and Pit Dewatering 13-210
     
14.0 processing and recovery methods 14-212
     
14.1 introduction 14-212
14.2 heap leach (sx/ew) process flowsheet 14-213
14.3 adequacy statement ON SECTION 14 14-223
     
15.0 infrastructure 15-224
     
15.1 introduction 15-224
15.2 access to los azules 15-225
15.3 power supply to los azules 15-231
15.4 camp facilities 15-232
15.5 transportation 15-234
15.6 Water Consumption 15-235
15.7 water supply 15-236
     
16.0 market studies and contracts 16-239
     
16.1 Copper Market Outlook – Supply vs Demand 16-239
16.2 copper market outlook - Prices 16-240
16.3 Mineral Resource Estimate 16-242
16.4 marketing 16-242

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
iv

 

 

  

 

16.5 cathode or concentrate transportation 16-243
16.6 Contracts 16-243
     
17.0 ENVIRONMENTAL STUDIES, PERMITTING AND PLANS, NEGOTIATIONS, OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS 17-244
     
17.1 ENVIRONMENTAL BASELINE STUDIES 17-244
17.2 geochemistry 17-248
17.3 ENVIRONMENTAL MANAGEMENT AND MONITORING PLANS 17-253
17.4 PROJECT PERMITTING 17-254
17.5 SOCIAL/COMMUNITY 17-254
17.6 CLOSURE PLANNING 17-254
     
18.0 capital and operating costs 18-261
     
18.1 capital cost estimation 18-261
18.2 Project Development Execution Plan And Schedule 18-264
18.3 Operating Cost Estimation 18-267
     
19.0 economic analysis 19-271
     
19.1 CAUTIONARY statement 19-271
19.2 Methodology Used 19-272
19.3 Financial Model Parameters 19-272
19.4 Economic Results 19-275
19.5 Sensitivity Analysis 19-276
19.6 Mine Life and Capital Payback 19-282
     
20.0 adjacent properties 20-283
21.0 other relevant data and information 21-284
22.0 interpretation and conclusions 22-285
     
22.1 Overall Risks and Opportunities Summary 22-285
22.2 PHASE 2 Upside Potentials 22-287
22.3 Metallurgy and Mineral Processing 22-292
22.4 sample preparation, analyses, and security 22-294
22.5 MINERAL RESOURCE ESTIMATES 22-295
22.6 Pit Geotechnical 22-296
22.7 MINE PLAN AND MINING METHODS 22-298
22.8 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT 22-299
22.9 PIT DEWATERING AND WATER AVAILABILITY 22-299
22.10 MINE ROCK STORAGE FACILITIES 22-300
     
23.0 recommendations 23-302
     
23.1 Overall recommendations 23-302
23.2 metallurgy and mineral processing 23-304
23.3 pit geotechnical 23-305

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
v

 

 

  

 

23.4 PIT DEWATERING AND WATER AVAILABILITY 23-306
23.5 MINE ROCK STORAGE FACILITIES 23-307
     
24.0 REFERENCES 24-308
25.0 Reliance on information provided by the registrant 25-312
26.0 APPENDICES 26-313
     
26.1 Appendix A – units of measure and abbreviations and acronyms 26-313

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
vi

 

  

 

 

List of Tables

 

Table 1.1: Project Phase 1 Life of Mine Economic Summary (After Taxes) 1-2
Table 1.2: Exploration Drilling by Year and by Company 1-15
Table 1.3: Mineral Resource Summary 1-16
Table 1.4: Initial Capital Costs by Case 1-20
Table 1.5: Life of Mine Operating Cost Summary 1-20
Table 1.6: Project Economic Summary by Case 1-21
Table 1.7: Average First 8 Years and LOM Cash Costs* 1-22
Table 1.8: Expected Costs for Feasibility Study Development 1-26
Table 2.1: Summary of Qualified Persons 2-29
Table 3.1: Andes Corporación Minera S.A. - Mining Right Descriptions 3-37
Table 7.1: Exploration Drilling by Year and by Company 7-76
Table 7.2: Examples of Significant Drilling Results Prior to 2022 7-80
Table 7.3: Examples of Significant Copper, Gold and Silver Drilling Results From 2022 Campaign 7-83
Table 10.1: Event Timings and Associated Lithologies 10-110
Table 10.2: Event Timings and Material Types in the Ultimate Pit 10-111
Table 10.3: Event Timings and Material Types in 5 Year Pit 10-111
Table 10.4: Oxide/LIX Head Assays 10-113
Table 10.5: Supergene Head Assays 10-113
Table 10.6: Primary Head Assays 10-115
Table 10.7: Supergene Bottle Roll Results 10-116
Table 10.8: Primary Bottle Roll Results 10-117
Table 10.9: Column Head Assays 10-119
Table 10.10: Material Shipped to Hazen to undergo Nuton Testing 10-130
Table 10.11: Bundoora Column Test Matrix 10-132
Table 10.12: Hazen Column Test Matrix 10-132
Table 11.1: Indicated Resources for the Los Azules Project 11-136
Table 11.2: Inferred Resources for the Los Azules Project 11-136
Table 11.3: Chronological Geological Events used in Model Construction 11-138

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
vii

 

 

  

 

Table 11.4: Sequence of Alteration Effecting the Los Azules Deposit 11-140
Table 11.5: Mineral Zonation Criteria 11-141
Table 11.6: Geologic Events Altering and Effecting the Los Azules Deposit 11-141
Table 11.7: Total Copper Statistics by Location and Mineral Zone 11-147
Table 11.8: Total Copper Statistics by Lithology and Sector 11-148
Table 11.9: Basic Statistics – CuCN by Mineral Zone 11-153
Table 11.10: Basic Statistics for Gold Grades by Mineral Zone 11-155
Table 11.11: Basic Statistics for Silver Grades by Mineral Zone 11-156
Table 11.12: Basic statistics of Density by Mineral Zone 11-156
Table 11.13: Potential Effect of Capping on Copper, Gold, and Silver Content 11-158
Table 11.14: Variogram Model Parameters for Copper, Gold, and Silver 11-161
Table 11.15: Block Model Origin and Dimensions 11-162
Table 11.16: Search Strategy for Copper Estimation, Pass 1 to 3 11-162
Table 11.17: Search Strategy for Copper Estimation, Pass 4 to 6 11-163
Table 11.18: Comparison of Resource and NN Estimates in The Block Model 11-165
Table 11.19: 2017 Estimate of Los Azules Mineral Resources 11-172
Table 11.20: NSR Parameters for Leach Recovery 11-173
Table 11.21: NSR Parameters for Mill/Flotation Process 11-174
Table 11.22: Open Pit Design Parameters 11-176
Table 11.23: Indicated Resources for the Los Azules Project 11-177
Table 11.24: Inferred Resources for the Los Azules Project 11-177
Table 11.25: Inferred Material under the Cryogenic Geoforms 11-177
Table 13.1: Heap-Leach Net Smelter Return Inputs for the IA Mine Plan 13-187
Table 13.2: Overall Suggested IA Pit Slope Angles, by Overall Pit Depth 13-190
Table 13.3: Pit Optimization Input Parameters 13-192
Table 13.4: In-situ Pit Quantities by Resource Classification 13-196
Table 13.5: Pit Quantities by Phase 13-204
Table 13.6: MRSF Parameters 13-207
Table 13.7: Annual Mine Equipment Productive Hours 13-208
Table 13.8: MS Haulage Inputs 13-208

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
viii

 

 

  

 

Table 13.9: Mine Labor 13-210
Table 14.1: Potential Process Materials Distribution – Leach Only Pit Shell 14-213
Table 14.2: General Design Criteria 14-217
Table 14.3: Average Leach Cycle Times 14-217
Table 14.4: Base Case Leach Pad Plan and Estimated Copper Production – Year 1 through Year 18 14-221
Table 14.5: Projected Process Facilities Average Electric Power Usage 14-223
Table 15.1: Southern Access Road Upgrade Estimate (RyAC, 2023) 15-231
Table 15.2: Projected Camp Staffing Requirements 15-233
Table 15.3: Life of Mine Average Water Consumption by Case 15-236
Table 15.4: Estimated water supply by source 15-237
Table 17.1: Summary of future environmental and social work plan 17-247
Table 17.2: Water Quality Standards from Decree 1.426 Law 24.585 17-249
Table 17.3: Project Facilities 17-255
Table 18.1: Initial Capital Costs 18-261
Table 18.2: Base Case Sustaining Capital Plan 18-263
Table 18.3: Life of Mine Operating Cost Summary 18-267
Table 18.4: Mine Operating Costs 175ktpa Base Case 18-268
Table 18.5: Mine Operating Costs 125ktpa Alternative Case 18-268
Table 18.6: Life of Mine Operating Cost Summary 18-269
Table 18.7: Consolidated G&A (San Juan, Calingasta, Los Azules Site) 18-270
Table 19.1: Common Model Inputs 19-272
Table 19.2: Life of Mine Capital Cost Summary ($000s) 19-273
Table 19.3: Life of Mine Operating Cost Summary 19-274
Table 19.4: Project Economic Summary 19-275
Table 19.5: Copper Price Sensitivity 19-276
Table 19.6: CAPEX Sensitivity (Initial + Sustaining) 19-279
Table 19.7: OPEX Sensitivity 19-280
Table 22.1: Nuton Opportunity Capital Cost Summary for 35Mtpa Case 22-288
Table 22.2: Nuton Opportunity Operating Cost Summary for 35Mpta case 22-288

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
ix

 

 

  

 

Table 22.3: Nuton™ Opportunity Economic Summaries 22-289
Table 22.4: Copper Concentrator Opportunity Capital Cost Summary 22-290
Table 22.5: Life of Mine Leach/Mill OPEX ($/t processed) 22-291
Table 22.6: Copper Concentrator Opportunity Economic Summary 22-292
Table 23.1: Expected Costs for Feasibility Study Development 23-304
Table 26.1: Units of Measure 26-313
Table 26.2: Abbreviations and Acronyms 26-316

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
x

 

 

  

 

List of Figures

 

Figure 1.1: C1 Cash Costs by Current Producer and Selected Development Projects 1-3
Figure 1.2: Estimated Carbon Intensity vs Copper Equivalent Production Centiles 2022-2040 (Scope 1 & 2 Emissions) - Wood Mackenzie 2022 1-9
Figure 1.3: Location of Los Azules in the High Andes (Hatch, 2017) 1-10
Figure 1.4: Overall Site Plan (Samuel, 2023) 1-12
Figure 1.5: Los Azules Project Property Limits (V&G Report, 2023) 1-14
Figure 1.6: Simplified Process Flowsheet (Samuel, 2023) 1-19
Figure 3.1: Los Azules Ownership Structure (McEwen Mining, 2023) 3-35
Figure 3.2: Map of Mineral Claims (Minas), Easements (Servidumbres) and Surface (Superficie) Ownership (Vargas & Galindez/McEwen 2022) 3-39
Figure 3.3: ACMSA Owned Propiedad Minera (Mining Rights) and Campo Superficiario (Surface Rights) (McEwen, 2022) 3-41
Figure 3.4: Map of mineral concessions and surface rights (campos) within or adjacent to project area (Vargas & Galindez/McEwen, 2022) 3-42
Figure 4.1: Monthly Temperature Data Apr-17-Jun-18, Nov-19 (McEwen 2022) 4-49
Figure 4.2: Monthly Total Precipitation Data – no data recorded Apr-17-Jun-18, Nov-19 (McEwen 2022) 4-50
Figure 4.3: Monthly Wind Speed Data – no data recorded Apr-17-Jun-18, Nov-19 (McEwen 2022) 4-51
Figure 6.1: Physiographic features of San Juan Province, Argentina (Rojas 2010) 6-58
Figure 6.2: Regional geology of the Andean Cordillera of Argentina and Chile (Rojas 2010) 6-59
Figure 6.3: Model for Los Azules (pink: potassic alteration, green: chloritic alteration, blue: sericitic alteration, yellow: advanced argillic lithocap), (Sillitoe, 2014) 6-61
Figure 6.4: Early Mineralized Porphyry (magenta) with supergene enrichment zone (red) defined as the Soluble Cu ratio >50%. (McEwen Copper, 2022) 6-63
Figure 6.5: Kinematic structural interpretation of Los Azules porphyry copper deposit (Pratt 2010) 6-64
Figure 6.6: Part of the Central Chile Segment of the Miocene-early Pliocene Porphyry Copper Belt (Rojas 2008) 6-66
Figure 6.7: Diagram Showing Spatial Relationships between a Porphyry Copper System and the Surrounding Environment (Sillitoe 2010) 6-67

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
xi

 

 

  

 

Figure 6.8: Example Cross-Section (Section 40) of the Deposit showing the Main Lithological Units 6-68
Figure 6.9: Generalized Volcano-Stratigraphic Column of the Los Azules Copper Porphyry Deposit 6-68
Figure 7.1: Magnetic Map of Los Azules (Reduced to Pole) and IP lines. (Rojas, 2008 after Xstrata, 2003).  Note: Red box indicates the mag low across the Ballena Ridge 7-71
Figure 7.2: Section 58,400N Showing 2D IP Inversion Anomaly (Southwest Target) (McEwen 2012) 7-73
Figure 7.3: Total Magnetic Field Map of Los Azules. (Quantec, 2012).  Note: Dashed red box indicates the mag low across the Ballena Ridge seen above in Figure 7.1 – the solid red box indicates the discontinuous mag low to the southwest 7-74
Figure 7.4: Plan Showing Locations of drill holes at Los Azules (CRM 2022) 7-77
Figure 7.5: Logging and inspection of drill core 7-78
Figure 7.6: Geotechnical logging and data collection 7-79
Figure 8.1: Dedicated static photo booth for consistent photography of core 8-87
Figure 8.2: An example of the labelling of core boxes for photography 8-87
Figure 8.3: The securing and loading of the core boxes for shipment to Calingasta 8-88
Figure 8.4: The hyperspectral scanning unit and the hydraulic core splitter 8-88
Figure 8.5: Showing the sequence of bagging, tagging, sealing, and securing the samples for dispatch 8-89
Figure 8.6: Total Copper Assays vs Re-Assays 8-91
Figure 8.7: Cyanide Soluble Copper Assays vs Re-Assays 8-92
Figure 8.8: Diagnostic charts for standards used at Los Azules 2007-2022 8-96
Figure 8.9: Control charts for the blanks at Los Azules 2004-2022 8-98
Figure 8.10: QQ plots for core duplicates 2012-2022 8-99
Figure 8.11: QQ plot for the pulp duplicates in the 2022 campaign 8-100
Figure 9.1: Transferring Core to Core Box 9-101
Figure 9.2: Drill Pad Preparation 9-102
Figure 9.3: Core storage racks at Calingasta 9-103
Figure 10.1: Spatial Representation of Phase 1 Metallurgical Samples in the 5 Year Pit (SE, 2023) 10-108

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
xii

 

 

  

 

Figure 10.2: Spatial Representation of Phase 1 Metallurgical Samples in the Ultimate Pit (SE, 2023) 10-109
Figure 10.3: 19 mm Supergene Column Soluble Copper Recovery 10-121
Figure 10.4: 12.7 mm Supergene Column Soluble Copper Recovery 10-122
Figure 10.5: 19 mm Supergene Column Total Copper Recovery 10-123
Figure 10.6: 12.7 mm Supergene Column Total Copper Recovery 10-124
Figure 10.7: 19 mm Column Gross Acid Consumption 10-125
Figure 10.8: 12.7 mm Column Gross Acid Consumption 10-126
Figure 10.9: 19 mm pH 10-127
Figure 10.10: 12.7 mm pH 10-128
Figure 11.1: Drill Hole Location Map 11-137
Figure 11.2: Plan view of the lithology model under construction 11-139
Figure 11.3: Oblique section view of the completed lithological model looking North 11-140
Figure 11.4: Plan Map of Drilling Showing Location of Central Structure 11-143
Figure 11.5: Relationship Between Composite Copper Grades and Structure 11-144
Figure 11.6: Average Copper by Distance and Mineral Zone 11-145
Figure 11.7: Average Copper by Mineral Zone, Lithology and Distance 11-146
Figure 11.8: Cross Contact Composite Comparison 11-150
Figure 11.9: Detailed Cross Contact Composite Grade / Distance Analysis 11-151
Figure 11.10: Box Plots of CuCN by Mineral Zone 11-152
Figure 11.11: Average CuCN grades by Distance from Central Structure 11-152
Figure 11.12: Scatter plots of Total Copper VS Cyanide Soluble Copper 11-153
Figure 11.13: Graph Showing Relationship Between Copper Grades and Depth 11-154
Figure 11.14: Scatter plots of Precious Metals vs Total Copper 11-155
Figure 11.15: Experimental Data and Modeled Variogram 11-160
Figure 11.16: Scatter Plots of Large Block Comparison of Samples VS Model Grades 11-166
Figure 11.17: East-West Swath Plots of Total and Cyanide Soluble Copper Grades in the NN Model 11-167
Figure 11.18: North-South Swath Plots of Total and Cyanide Soluble Copper Grades in the NN Model 11-168

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
xiii

 

 

  

 

Figure 11.19: Total and Cyanide Soluble Copper Related to Depth from the Top of the Enriched Zone 11-169
Figure 11.20: Comparison of Indicated and Inferred limits before and after Smoothing 11-171
Figure 11.21: Plan View of the Resource Pit with Geoforms Outlines 11-172
Figure 11.22: Plan View of the Resource Pits with Slope Angles 11-176
Figure 11.23: Grade / Tonnage Curves for Leach NSR 11-179
Figure 11.24: Grade / Tonnage Curves for Mill NSR 11-180
Figure 13.1: Long Section through the Los Azules Mineralization Looking East – with Mining Phase Outlines 13-184
Figure 13.2: Cross Section through the Los Azules Mineralization Looking North West– with Mining Phase Outlines 13-185
Figure 13.3: Cryogenic Landform Locations on the Los Azules Property, with 50 m Topography Contours 13-188
Figure 13.4: Factor of Safety with Slope Angle and Pit Depth 13-189
Figure 13.5: Slope Zones for ultimate selected pit shell 13-191
Figure 13.6: Pit-by-Pit graph Economic Pit Optimization for the 175 ktpa production case 13-194
Figure 13.7: Pit Area Prior to Mining, with 50 m Topography Contours 13-197
Figure 13.8: Largest Selected Leach Only Pit, with 50 m Topography Contours 13-198
Figure 13.9: Cross Section Plan 13-200
Figure 13.10: Cross Section 1 with Pit Phasing and Leach NSR Values 13-201
Figure 13.11: Cross Section 2 with Pit Phasing and Leach NSR Values 13-202
Figure 13.12: Cross Section 3 with Pit Phasing and Leach NSR Values 13-203
Figure 13.13: Los Azules Mine Production Schedule 13-206
Figure 13.14: Fleet Size for the Primary Mining Fleet 13-209
Figure 14.1: Heap Leach Process Flowsheet 14-214
Figure 14.2: Heap Leach Pad General Layout 14-219
Figure 14.3: PLS Collection 14-220
Figure 15.1: Regional Infrastructure (Google Earth 2022) 15-225
Figure 15.2: Existing Access & Infrastructure (ACMSA, 2022) 15-226
Figure 15.3: Access Roads Photos (McEwen, 2023) 15-227
Figure 15.4: Site Access Road Profiles (McEwen) 15-229

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
xiv

 

 

  

 

Figure 15.5: Southern Access Road Route & Design Basis Sections (RyAC, 2023) 15-230
Figure 15.6: Mine Camp Concept - Isometric view showing Solar Arc 15-233
Figure 15.7: Mine Camp Concept - Oblique View 15-234
Figure 15.8: The Rio Salinas at the Proposed Campsite 15-238
Figure 16.1: Future Copper Market Demand Scenarios (from S&P Global) 16-240
Figure 16.2: Long-term Copper Pricing (CIBC, May 2023) 16-241
Figure 16.3: Copper Prices 1990 to Present (source: International Monetary Fund) 16-242
Figure 18.1: Conceptual Project Execution Schedule 18-266
Figure 18.2: Mine Operating Cost Breakdown 18-268
Figure 19.1: LOM Operating Costs per Tonne Mineralized Material (Samuel Engineering 2023) 19-274
Figure 19.2: Copper Price per Pound Sensitivity on NPV @ 8% (Pre-tax, 175k Cu Case) (Samuel Engineering 2023) 19-278
Figure 19.3: Copper Price per Pound Sensitivity on IRR (Pre-tax) (Samuel Engineering 2023) 19-279
Figure 19.4: Multiple % Sensitivity on NPV @ 8% (Pre-tax) (Samuel Engineering 2023) 19-280
Figure 19.5: Multiple % Sensitivity on NPV @ 8% (Post-tax) (Samuel Engineering 2023) 19-281
Figure 19.6: Multiple % Sensitivity on IRR (Pre-tax) (Samuel Engineering 2023) 19-282
Figure 20.1: Regional Adjacent Properties 20-283
Figure 23.1: Feasibility Study Development Timeline 23-303

 

Engineering     u     Project Controls     u     Estimating     u     Construction Management
xv

 

 

 

1.0EXECUTIVE Summary

 

The Los Azules Project is among the largest undeveloped copper deposits on the globe. Los Azules presents a multi-generational opportunity to design, build and operate a copper mine that is globally significant, technologically advanced, embraces regenerative design principles, and minimizes carbon footprint.

 

This report is a Technical Report Summary (TRS) which summarizes the findings of the Preliminary Study completed for the Los Azules Project in accordance with The United States Securities Exchange Commission (SEC) 17 CFR Part §229.1300 (S-K 1300) Standard Instructions for Regulation S-K subpart 1300 SEC S-K §229. 1304 and §229.601(b)(96). This TRS is intended to meet the requirements of S-K 1300 as considered for an Initial Assessment (IA) level of study and disclosure as defined in the regulations and supporting reference documents. The purpose of this TRS is to report the study results, updated mineral resources, additional technical work completed, and the subject project estimated costs and economic potential. The effective date of this report is May 9, 2023, concurrent with the updated final resource estimates published herein.

 

This TRS supersedes the current report on file titled: SEC S-K 229.1304 INITIAL ASSESSMENT INDIVIDUAL DISCLOSURE FOR THE LOS AZULES PROJECT, ARGENTINA, prepared by Mining Plus US Corporation with an effective date of April 01, 2021 (report revision date of February 25, 2022).

 

All currency shown in this report is expressed in May 2023 United States Dollars unless otherwise noted. Metric units of measure are used unless otherwise specified.

 

This Technical Report Summary is prepared for McEwen Mining Inc. (McEwen Mining) trading under the symbol NYSE/TSX: MUX for the purposes of disclosing current updates and information related to its 51.9% owned subsidiary McEwen Copper Inc. (McEwen Copper), which controls the Los Azules copper property located in Argentina. Los Azules is an exploration and development project presently consisting of a large porphyry copper deposit located in the Andes Cordilleran region of San Juan Province, Argentina near the border with Chile (the “Project”).

 

The Project is at the exploration stage of investigation; consequently, this study is preliminary in nature and includes Inferred mineral resources in one of the conceptual mine plans and mine production schedules presented. Inferred mineral resources are considered too speculative geologically and in other technical aspects to enable them to be categorized as mineral reserves under the standards set forth in S-K 1300. There is no certainty that the estimates in this IA will be realized.

 

McEwen Mining is obligated to report material information pursuant to its dual listings on the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX). A corresponding Technical Report was also completed in accordance with Canadian National Instrument 43-101 (NI 43-101) based on the same information and data. Information related to the project described under the NI 43-101 reporting rules is included in this report for clarity and to avoid confusion between reports. Two open pit-based mine plans were developed and are described in this TRS; one includes only material classified as Measured & Indicated Resources as required by S-K 1300 and a second mine plan including inferred resources within the pit comparable to what is reported in the corresponding NI 43-101 report.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-1

 

 

 

This 2023 IA incorporates an updated development strategy with the following two phases: Phase 1 considers mining and processing resources associated with the oxide and supergene copper mineralization in the near surface portion of the deposit using heap leaching methods. Phase 2 of the project considers the continued development of the deposit’s primary copper mineralization found beneath the supergene copper layer. The focus of this 2023 IA is the initial Phase 1 project with limited concepts presented for Phase 2. For clarity, the economic outcomes for the cases presented in this report include only Phase 1.

 

The Phase 1 implementation scheme for the Project is an open pit mine initially processing materials with crushing, bio-heap leaching and solvent extraction and electrowinning (SX/EW) facilities to produce LME Grade A copper cathodes for sale in Argentina or for export. Phase 1 preliminary mining plans excluding Inferred Mineral Resources extract a total of 8.2 billion pounds (3,732 ktonnes) of contained copper from the Measured & Indicated resources, of which 6.0 billion lbs. (2,721 ktonnes) is recoverable to copper cathodes. The total copper recovery expected is approximately 73% and considers scale-up efficiencies and production distribution over a two-year timeframe from placement of material on the leach pad.

 

Based on consensus estimates and independent analysis, long-term metal pricing used in this report (except for mineral resource estimation) and project economic analysis are Copper (Cu) - $3.75/pound; Gold (Au) - $1,700/ounce; and Silver (Ag) - $20.00/ounce. The 2023 updated financial outcomes for the Phase 1 initial project mine and facilities are shown in Table 1.1 below (expressed in Q1 2023 United States Dollars, after taxes).

 

Table 1.1: Project Phase 1 Life of Mine Economic Summary (After Taxes)
Project Metric Units

Base Case

175k tpa Cu

NI 43-101
Including Inferred

175k tpa Cu

Mine Life (including stockpile) Yr 17 27
Strip Ratio   1.29 1.16
Copper Production – cathode Cu ktonnes 2,721 3,938
Initial Capital Cost USD Millions $2,448 $2,462
Sustaining Capital Cost USD Millions $1,878 $2,243
C1 Costs (Life of Mine) USD/lb Cu $0.93 $1.07
All-in Sustaining Costs (AISC) USD/lb Cu $1.54 $1.64
Internal Rate of Return (IRR) % 21.5% 21.2%
Net Present Value (NPV) @ 8% USD Millions $2,234 $2,659
Pay Back Period Yr 3.4 3.2

 

C1 cash costs are defined as the cash cost incurred at each processing stage, from mining through to recoverable copper delivered to the market, net of any by-product credits. C1 cash costs per pound of copper produced and all-in sustaining costs per pound of copper produced are non-GAAP ratios. If it were in production today, the average C1 cash costs at Los Azules would be in the lowest cost quartile among copper producers. Figure 1.1 shows global cost data from S&P Capital IQ and SE showing how the Los Azules Base Case and Alternative Case average C1 cash costs compare to producing copper mines in 2022.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-2

 

 

 

(Source: S&P Capital IQ Mine Economics Market Intelligence 2022 Data, SE Analysis)

 

Figure 1.1: C1 Cash Costs by Current Producer and Selected Development Projects

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-3

 

 

 

The opportunity to process primary sulfides directly through a heap leach rather than building a traditional copper concentrator in the future is the envisioned approach to the Los Azules development plan. The primary sulfides are currently not considered economically suitable for commercial heap leaching operation.

 

Continuing the benefits of a hydrometallurgical approach is the preferred path of the project for Phase 2, along with ongoing development work efforts. Metallurgical work evaluating NutonTM bio-leaching technology is being developed to potentially replace the need for a future milling operation in favor of continued leaching and copper cathode production for the life of the mining operations. Potential scenarios for the future operations employing the NutonTM bio-leaching technology are presented and discussed in Section 22.2.1 of this report.

 

Although Nuton LLC, a Rio Tinto Venture, has completed larger scale testing at several global project sites and has developed proprietary modeling techniques to predict results, there are no commercial applications of the Nuton™ technology operating at the time of this report. Based on preliminary small-scale testing by Nuton and economic modeling inputs, these options provide the opportunity to extend the mine life to more than 50 years in some instances and increasing copper produced by more than 30% while adding significant additional value at lower LOM operating costs.

 

A significant testing program will be required to validate these preliminary estimates; therefore, these results are not considered suitable for inclusion at this time in the initial project phase cases presented and are only included as a demonstration of the potential future opportunity.

 

A conventional mill and flotation/concentrator option was considered to process primary copper mineralization to demonstrate economic viability employing conventional methods and support reserves estimation confidence. Details for this option can be found in Section 22.2.2.

 

The next steps for the Los Azules Project are continuing with infill resource drilling, variability and confirmatory metallurgical testing, environmental baseline studies, and commencing critical preliminary engineering such as hydrogeologic field investigations and geotechnical drilling at the heap leach pad site, tailings dam site and within the pit wall slopes to support a feasibility study.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-4

 

 

 

A NEW VISION AND APPROACH

 

Copper is a key ingredient in the solutions to global climate change, including initiatives in the automotive sector as the industry transitions to electric cars and the energy sector as it moves to more renewable forms. Los Azules aspires to be the world’s first Regenerative Copper Mine, providing valuable materials for a renewably powered world.

 

Guiding regenerative principles were developed to reframe the approach to sustainable innovation within the mining industry and set forth high-reaching goals that are being explored for all facets of the mining processes considered for Los Azules. The project development seeks to significantly reduce the environmental footprint of mining operations and their associated greenhouse gas emissions by integrating the latest renewable and environmentally responsible technologies and processes. The project aims to obtain 100% of its energy from renewable sources (wind, hydro, and solar) in a combination of offsite and onsite installations. Where possible, the project is also seeking to have long-term net positive impacts on the greater Andean ecosystem, the lives of miners, and the citizens of nearby communities, while contributing positively to the local and national economy of Argentina.

 

The project concepts allow for early adoption of emerging technologies under development and are anticipated to be commercially viable over the mine life. By being ‘future ready’ the project will be poised to adopt newly emerging technologies and infrastructure opportunities

 

Key project initiatives aimed at achieving these goals are described below.

 

Respecting the Lands We Use

 

The Los Azules Project is committed to responsible stewardship of the land and minimizing disturbance of local glacial morphologies and wetlands (“vegas” in the local terminology) wherever possible. Careful consideration of how activities are conducted and where they are located is a key aspect to meeting these commitments, both in the short and long term. Minimizing land use and disturbance by consolidating uses to the extent possible is considered in the site layouts, individual site areas, facilities/buildings, and access to the mine site.

 

Although the vegas in the pit and leach pad areas will be impacted, minimizing the footprint of the site facilities, re-routing, and diverting water courses to downstream connections are key design feature for the mine and leaching areas water management plans to minimize these impacts. The leach pad design includes an underdrainage for non-contact water coming from upstream sources to flow through the same valley and to the Rio Salinas. Longer term, the water courses will be restored during reclamation of the mine site at the completion of activities to bring the area as close to its original state as possible.

 

Transforming Water Use and Quality

 

Climate change, population growth and the industrial and agricultural use of water are some of the factors that affect water availability. In addition, the expansion of urban infrastructure exerts pressure on the quantity and quality of natural water courses. Long-term water solutions must be flexible, adaptable, and environmentally sustainable, working within the ‘carrying capacity’ of its place and climate. Increasing the efficiency of water use is equivalent to increasing productivity or, in other words, reducing the intensity of use by maximizing the value of uses and, in this way, improving allocation among different competing utilization.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-5

 

 

 

Selecting a hydrometallurgical process option for Los Azules could reduce effective water usage by 75% to 80% over a milling/concentrator alternative. Additionally, alternatives for improving precipitation/snow capture, site dust control, reuse/recycle and passive water treatment strategies are being developed at Los Azules.

 

Transforming the Energy/Carbon Nexus

 

An extensive review of power generation and supply options for the project was undertaken to consider the options for renewable energy. YPF Sociedad Anónima (“YPF S.A.” or “YPF”) owns and operates power generation facilities in Argentina based on wind, solar, geothermal, and hydroelectric sources through its subsidiary YPF-LUZ. YPF-LUZ has a rate structure based on 100% renewables sourced power generation that can be used as the project basis, eliminating hydrocarbon-based generation and associated emissions. The YPF-LUZ electric power supply option was selected for the Los Azules Project at a small premium over other hydrocarbon-based power options.

 

In addition to energy supply, the reduction of energy consumption is also a key aspect to regenerative mining.

 

Processing with the End Game in Mind

 

Given the context above, the most appropriate technology selection for Los Azules to minimize water usage is a hydrometallurgical approach, which is the basis for the Phase 1 project development. The hydrometallurgical option also provides lower overall project impacts from:

 

·Reduced energy usage by 35% over a concentration alternative to produce copper cathodes. The electric load reduction is about 25%.
·Lower transport requirements for product based on copper content of cathodes (99.99% Cu) versus concentrates (25%-35% Cu) and concentrate smelting options located outside of Argentina/South America.
·More efficient and minimized use of land for heap leach pad versus tailings storage facilities from concentration tailings discharge.
·On-site generation of sulfuric acid, using by-product sulfur supplied from local Argentinian sources, employing waste heat capture for on-site power generation and process heating – reduces grid based electric power requirements and eliminates hydrocarbon-based alternatives.
·Establishment of the infrastructure to be a rapid adopter of emerging heap leaching technologies for primary copper mineral resources when encountered – avoiding the future need for concentration methods as is the current industry practice.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-6

 

 

 

Moving Rock and Decarbonizing Mining Operations

 

Maximizing electrification, coupled with renewable power supply is aimed at significantly reducing environmental impacts.

 

The initial mining concepts will use trolley-assisted diesel-electric mine haulage and support equipment initially to significantly reduce diesel emissions. However, the project will select equipment and methods to rapidly transition to fossil fuel-free alternatives as rapidly as the technology and manufacturing capacities allow. The transition would also include in-pit conveying alternatives to minimize fleet requirements. The ultimate vision is a fully electric mine and the elimination of emissions associated with fossil-fuels.

 

A Mining Camp for Maximum Livability – the healthiest, greenest mine camp in the world.

 

The long-term permanent mine camp has been strategically located to optimize multiple variables. Worker safety, comfort, well-being, as well as the distance from the mine operations and access to the main road are major considerations. In addition, the specific layout and orientation have been selected to support passive heating and cooling strategies and solar energy generation, which are key considerations.

 

The Los Azules camp and mine will be forming a microgrid in a remote location, although Los Azules in closer to basic infrastructure than most other mines in the region. Even though the camp will be connected to offsite energy production, it is being sized for net-positive energy production, making it a candidate for International Living Future Institute’s (ILFI) Net Zero Energy certification (living-future.org), the world’s most rigorous green building standards. The camp will pursue ILFI certification based on the alignment with the Living Building Certification “Water Petal”.

 

The camp will also be designed to provide space for growing food in a self-sustaining environment. Finally, the camp will provide waste management systems to provide reuse of waste materials, either through direct reusing, recycling, composting, and eliminating single-use plastics and packaging.

 

Minimizing the Carbon Footprint from Mine to Market

 

Copper mining emits an average 2.3-2.5 tonnes of carbon dioxide equivalent per tonne of copper metal produced (t CO2-e/t Cu), while smelting adds another 1.65 tonnes (Source: “Metals recycling to be a key plank for cutting emissions” by Pratima Desai, Reuters, July 14, 2021). By employing modern, low emission technologies, the Los Azules Project intends to improve upon the standards set forth by “The Copper Mark” and set a new standard for CO2 emissions per unit of copper produced.

 

The Greenhouse Gas (“GHG”) Protocol Corporate Standard classifies a company’s GHG emissions into three ‘scopes’. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-7

 

 

 

Figure 1.2 Estimated Carbon Intensity versus Copper Equivalent Production Centiles 2022-2040 for mine site emission chart presents the relative estimated emissions for copper assets on an equivalent copper basis as obtained from the Emissions Benchmarking Tool – (Metals)™, a product of Wood Mackenzie Limited (“WoodMac”). The WoodMac database includes 394 individual global mining assets and covers Scope 1 and 2 emissions determined using the published methodology on their website. The highlighted assets represent comparable major Argentinian projects as included in the WoodMac modeled information. The Los Azules Project metrics in the WoodMac data (red line highlighted) reflects the estimated emissions for the prior project concept. The WoodMac average Scope 1 and Scope 2 emissions intensity for all 394 included assets the period between 2022 and 2040 is 1,980 kg CO2-e/t Cu Eq. (kilograms of Carbon Dioxide Equivalent per tonne of Copper Equivalent produced). Carbon Dioxide Equivalent means having the same global warming potential as any another greenhouse gas. For the 57 copper SX/EW assets included, the average Scope 1 and Scope 2 emissions intensity for the period between 2022 and 2040 is 1,723 kg CO2-e/t Cu Eq.

 

Based on the current project concepts considered for implementation at Los Azules, notably:

 

·Electrical energy sourced from 100% renewables (YPF Luz basis),
·Incorporation of site and mine electrification concepts (trolley assist for mine haulage, battery electric vehicles where possible),
·Regenerative design concepts for support infrastructure, and
·Hydrometallurgical extraction processes to produce copper cathodes.

 

The carbon intensity per unit of copper equivalent production (Cu Eq) was estimated by Whittle Consulting Pty Ltd (“WCPL”) using the GHG Protocol Corporate Accounting and Reporting Revised Standard principles (published by the World Resources Institute (WRI), a U.S.-based environmental NGO, and the World Business Council for Sustainable Development (WBCSD), a Geneva-based coalition of 170 international companies) which provides requirements and guidance for companies and other organizations preparing a corporate-level GHG emissions inventory).

 

WCPL’s estimations based on the preliminary information developed, the predicted carbon intensity for the Los Azules initial Base Case project is estimated to be to be 670 kg CO2e/tCu Eq for Scope 1 & 2 emissions. The estimated Scope 1-3 emissions for the Base Cases is approximately 902 kg CO2e/tCu Eq, assuming transport of copper cathodes to port facilities in either Chile or Argentina.

 

Figure 1.2 also shows the relative position of the Los Azules base case developed in 2023 and the prior Los Azules 2017 Project concept against the WoodMac average Scope 1 & 2 emissions intensity for all 394 included assets. Of significant importance is the improvement in the project compared to the prior concept and the project position in the lower 10% range of projects globally. Full electrification could drive emissions even more towards the lowest in the industry.

 

Continued implementation of newer and less impactful technologies, fully electric mine and equipment, EV use for materials and supplies transport to site, and broader employment of regeneration applications throughout the mine site to further off-set carbon emissions is expected to deliver on McEwen Copper’s commitment to achieve net-zero carbon emissions from the Los Azules Project by 2038, well ahead of its peers.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-8

 

 

 

 

Figure 1.2: Estimated Carbon Intensity vs Copper Equivalent Production Centiles 2022-2040 (Scope 1 & 2 Emissions) - Wood Mackenzie 2022

 

NOTE: “The data and information provided by Wood Mackenzie should not be interpreted as advice and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood Mackenzie in writing. To the fullest extent permitted by law, Wood Mackenzie accepts no responsibility for your use of this data and information except as specified in a written agreement you have entered with Wood Mackenzie for the provision of such data and information.”

 

1.1OWNERSHIP STRUCTURE

 

This subsection was prepared by J. Sorensen, FAusIMM, Samuel Engineering (Source Q1 2023 public filings).

 

McEwen Mining was organized under the laws of the State of Colorado on July 24, 1979, and is listed on the New York Stock Exchange (NYSE) and on the Toronto Stock Exchange (TSX) under the symbol MUX. The Company’s head office is in Toronto, Canada. As of May 2023, the Company owns a 51.9% interest in the Los Azules copper deposit in San Juan, Argentina through its subsidiary, McEwen Copper Inc. (“McEwen Copper”) which owns a 100% interest in the Los Azules Copper Project in San Juan, Argentina, and the Elder Creek Exploration Project in Nevada, USA.

 

McEwen Copper has 28,885,000 common shares outstanding, and its shareholders are: McEwen Mining Inc. 51.9%, FCA Argentina S.A. (Stellantis) 14.2%, Nuton LLC (Rio Tinto) 14.2%, Robert R. McEwen 13.8%, Victor Smorgon Group 3.5%, and other shareholders 2.4%.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-9

 

 

 

1.2LOCATION

 

The Los Azules Project is a porphyry copper development project located in the Andes Cordilleran region of San Juan Province, Argentina along the border with Chile. The Project falls within the Calingasta Department of the San Juan Province. The Project is approximately 80 km west-northwest of the town of Calingasta, in the San Juan Province of Argentina at approximately 31° 06’ 25” south latitude and 70° 13’ 25” west longitude. The mine development is located approximately 6 km east of the border with Chile (Figure 1.3). Calingasta is located 173 km by road west of the city of San Juan along Route 12.

 

 

Figure 1.3: Location of Los Azules in the High Andes (Hatch, 2017)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-10

 

 

 

The terrain elevation at the project site ranges between 3,200 meters above sea level (masl) at the proposed camp location and up to 4,500 masl on the high peaks in proximity to the Project. The proposed pit and facilities are located between 3,200 and 3,600 masl. The Project area is remote, and no infrastructure is present. There are no nearby towns, Indigenous residents, or settlements. Seasonal exploration work typically commences in October or November and terminates in April or May. Exploration operations are supported by means of two temporary camps within the Project site area.

 

The facilities and site arrangements contemplated for the Los Azules Project are shown in Figure 1.4. Facilities are located to stay within the surface and mining rights currently held by McEwen Copper.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-031-11

 

 

 

 

Figure 1.4: Overall Site Plan (Samuel, 2023)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-12

 

 

 

There are no covered or uncovered “white glaciers” (classic ice glaciers) in the Project, although there are several small rock glaciers (or cryogenic geoforms) near the Project area that are not impacted by exploration or the proposed future development activities.

 

A preliminary seismic risk assessment of the Los Azules site was completed in April 2019. The area where the Los Azules Project is located corresponds to Seismic Zone 4, considered very high. The highest seismic event recorded near the Project was magnitude 7.5 in 1977 affecting the entire province of San Juan.

 

Drill core storage and processing facilities are in the town of Calingasta. These facilities will be upgraded during the next phases of work to increase the storage capacity and provide accommodation and staging of workers traveling to/from the project site.

 

The nearest mining projects to the Los Azules Project site are the Altar copper-gold project site owned by Aldebaran Resources Inc. located approximately 40 km south and the El Pachon copper-gold project site owned by Glencore plc located approximately 90 km south of Los Azules. To the north, the distance to Filo del Sol owned by Filo Corp. and Josemaria owned by Lundin Mining is approximately 300 km.

 

1.3PROPERTY

 

The information in this section relies upon a legal review and opinion report Re: “Incorporation and good standing status of Andes Corporación Minera S.A. (ACMSA) and of its mining rights” dated January 11th, 2023, by Abogado (lawyer) Jose Vargas Gei of Vargas & Galindez (V&G), a Mendoza based legal firm.

 

The Los Azules Project is comprised of properties (the “Properties”) owned by Andes Corporación Minera S.A. (ACSMA), an Argentine subsidiary of McEwen Mining through its ownership in McEwen Copper. ACMSA is duly registered before the Dirección de Personas Jurídicas of the province of Mendoza, by Resolution #2025 dated November 2nd, 2005.

 

There are two types of tenure under Argentine mining regulations: Cateos (Exploration Permits) and Minas (Mining Permits). Exploration Permits are licenses which allow the property holder to explore the property for a period following a grant that is proportional to the size of the property. Mining Permits are licenses which allow the holder to exploit the property subject to regulatory environmental approval. To convert an exploration permit (Cateo) to a mining concession (Mina), some or all the area of a cateo must be declared as MD (Manfestación de Descubrimiento) and then converted to a Mina. Minas are mining concessions which permit mining on a commercial basis.

 

McEwen Copper controls approximately 31,746 ha of mining rights (Minas) around the Los Azules deposit. In addition, McEwen Copper owns sufficient surface rights for the Project pursuant to an agreement with CCM S.A., on March 3rd, 2010, whereby ACMSA acquired the surface rights set out in Figure 1.5 (18,000 hectares in green outline).

 

The international border with Chile forms the limits of the owned property on the west side (shown as a black dashed line Figure 1.5). The surface rights limits of the property are represented by the green line in Figure 1.5. Based on the V&G review and opinion, ACMSA has good and valid, legal, and beneficial title to the mining rights shown in Figure 1.5.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-13

 

 

 

 

Figure 1.5: Los Azules Project Property Limits (V&G Report, 2023)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-14

 

 

 

1.4EXPLORATION & DRILLING

 

Exploration at Los Azules commenced in the mid-1990’s and has included various studies of geology, geophysics, and geochemistry, as well as drilling with both reverse circulation and diamond core drills, sampling and analysis of surface and drill core samples, and road construction. Drilling programs have been undertaken at Los Azules between 1998 and 2023 by three different mineral exploration companies including BMG, MIM Argentina (now Glencore) and Minera Andes/McEwen Mining and McEwen Copper. Drilling included reverse circulation programs mostly for gold exploration and diamond drilling focusing on supergene and hypogene porphyry-style copper mineralization. Descriptions of these programs are detailed in the following sections. Table 1.2 provides a summary of the drilling information.

 

Table 1.2: Exploration Drilling by Year and by Company
Year Company No. of holes Meters
1998 –1999 Battle Mountain Gold 24 5,681
2004 Glencore Xstrata (MIM) 4 864
2003 – 2011 Minera Andes 127 34,270
2011 – 2023 McEwen Mining 284 75,849
Total   439(1) 116,664

 

1.This table includes all drilling that has occurred on the property. Some holes were redrilled due to drilling difficulties and are not included in the database. Holes that were started in one season and completed the following season are counted in the year they were started, but the meters drilled in each season are shown for the respective seasons. The drilling reflects all holes to the effective date of May 9th, 2023.

 

1.5mineral resource estimates

 

The mineral resources have been classified according to guidelines and logic summarized within disclosure requirements and policies for mining properties with current industry and global regulatory practices and standards, as embodied by the Committee for Reserves International Reporting Standards (“CRIRSCO”) referred to in S-K 1300. Resources were classified as Indicated or Inferred by considering geology, sampling, and grade estimation aspects of the model.

 

The extent of mineralization along the strike exceeds 4 km and the distance across strike is approximately 2.2 km. The deposit is open at depth. Over the approximately 2.5 km strike length where mineralization is strongest, the average drill spacing is approximately 150 meters to 200 meters but there are localized areas where drilling is on 100-meter spacing. The assay database considers 162 drillholes and 56,528 meters of assay interval data. Resource estimation work was performed using Datamine Studio modeling software.

 

As of the date of publication, 47 holes and approximately 18,318 meters of drilling (mostly infill) have been completed but were not included in the database for resource estimation, data for which was cut off on date December 31st, 2022.

 

The Indicated and Inferred resources for the enriched and primary zones are presented in Table 1.3. Mineral resources are determined using an NSR cut-off value to cover the processing cost for each recovery methodology. For supergene and primary material going to the leach pile, the cutoff was $2.74/t. For supergene going to the mill, the cutoff was $5.46/t and primary material going to the mill was $5.43/t. The resource is further constrained by a pit shell that demonstrates the reasonable prospects of eventual economic extraction (RPEEE) of this material.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-15

 

 

 

Generalized technical and economic parameters include a long-term copper price of $4.00/lb, and a variable resource pit slope between 20° and 42°, depending on depth. Other parameters used in the resource pit development are detailed in Section 11.13.

 

Resources are reported in two categories related to processing amenability: 1) materials that are suited for processing in a commercially proven conventional, ambient conditions, copper bio-leaching scheme (Leach); and 2) materials that are better suited to processing either in a more advanced bio-leaching scheme such as NutonTM technology or traditional milling/concentrator approach (Leach+ or Mill).

 

Table 1.3: Mineral Resource Summary
     

Million

tonnes (M tonnes)

Average Grade Contained Metal

Cu% -

tot.

Cu% -

sol.

Au

(g/t)

Ag

(g/t)

Cu

(Blbs.)

Au

(Moz.)

Ag

(Moz.)

Indicated Supergene Leach 944.2 0.46 0.30 - - 9.54 - -
Mill or Leach+ 73.0 0.13 - 0.09 1.10 0.21 0.20 2.58
Primary Mill or Leach+ 218.1 0.25 - 0.036 1.06 1.19 0.25 7.43
Total Mill or Leach+ 291.1 0.22 - 0.049 1.07 1.40 0.46 10.01
Total Indicated   Leach, Mill or Leach+  1,235.3 0.40       10.94 0.46 10.01
Inferred Supergene Leach 695.7 0.32 0.19 - - 4.91 - -
Mill or Leach+ 525.6 0.30 - 0.05 1.44 3.45 0.87 24.40
Primary Mill or Leach+ 3,288.0 0.25 - 0.03 1.18 18.35 3.37 124.67
Total Mill or Leach+ 3,813.6 0.26 - 0.035 1.22 21.79 4.24 149.07
Total Inferred   Leach, Mill or Leach+ 4,509.3 0.31       26.70 4.24 149.07

 

Note: Mineral Resources do have demonstrated economic viability. No values are presented where the process recovery method does not consider this aspect of the materials.

 

1.6mining

 

The Los Azules Deposit grades, geometry, and depth make it suitable for conventional, large-scale truck-shovel open pit mining methods. This includes the use of equipment such as blasthole drills, diesel hydraulic excavators, electric shovels, large off-highway haul trucks, and associated operations support equipment.

 

One copper cathode production rate case was assessed during the mine engineering and planning process. This 175k tpa Cu cathode production scenario is the ‘base case’.

 

The ultimate pit shell limit and intermediate pit shells (or phases) were developed with the use of Geovia Whittle™ pit optimization software. Using Net Smelter Return (NSR), surface restrictions / constraints, pit slope geotechnical parameters, mining parameters, and production rates resulted in a series of economic pit optimizations that were evaluated to define pushbacks and the ultimate pit. The Los Azules Deposit also contains mineralized material that may be economic for producing a milled copper concentrate product, but this material was not considered for base case pit optimization or mine schedule.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-16

 

 

 

Open pit mining would take place in phases from an initial starter pit, allowing for a shorter pre-strip and earlier access to mineralized material for leaching. For the 175k tpa Cu cathode production base case, the material mined over the two-year pre-production period is 115M tonnes of which 17.4M tonnes is mineralized material that is either stockpiled or crushed and placed on the heap leach pad. There is a ramp-up in annual production to year 5, when peak annual material movement is reached at 130M tonnes. Material movement tonnage stays at approximately 130M tonnes through to year 11 and declines to 50M tonnes in year 17.

 

Approximately 58.6M tonnes of lower grade mineralized material is stockpiled during these periods of which 41.8M tonnes are reclaimed and placed into the crusher feed in years 15-17. The remaining 16.8M tonnes are predominantly primary copper mineralization and will be processed in the Phase 2 project.

 

1.7Metallurgical Testwork and Recovery Methods

 

Copper mineralization is complex and varied at Los Azules, consisting primarily of chalcocite, chalcopyrite, bornite and covellite with little oxide mineralization, typically chalcocite dominant with some covellite in the supergene materials and chalcopyrite dominant with some bornite in the primary materials. Metallurgical characterization testing has been completed as part of this study in the form of sequential assay (sulfuric acid and cyanide steps) for the resources considered, column testing and bottle roll testing. The sequential assay method used at Los Azules for both the resource assay and metallurgical programs provides an indication of the copper mineralization present in the form of acid soluble copper (CuAS) and cyanide soluble copper (CuCN), both assays combined provide an approximation for leachable/soluble copper (CuSOL) component of the total copper assay (CuT).

 

Historical testing for McEwen Copper was conducted on samples from the resource in several phases. C. H. Plenge Laboratory (Plenge) in Lima, Peru, performed several scoping level investigations from 2008 to 2012. A mineral liberation analysis (MLA) was completed at Thompson Creek Metals Company in Challis, Idaho; in 2012 on rougher flotation samples from the Plenge lock-cycle testing. Additional samples from the resource were tested at the SGS Research Limited (SGS) to support a Preliminary Economic Assessment (PEA) by Hatch in 2017.

 

The current metallurgical program consists of three concurrent phases of work, aimed at supporting a feasibility study level of investigation in future. In the current Phase 1 program work, existing drill core was selected for testing by lithology and material type to reflect economically processable material in the resource for this study. Phases 2 and 3 will utilize new metallurgical core obtained from the ongoing drilling program to investigate the potential metallurgical variability of the deposit and focus on the initial 3-5 years of material to be mined.

 

As of the effective date of this report, the initial columns for the current Phase 1 program are still on-going pending final analyses. As such, results are considered preliminary until tail assays can be obtained to provide a calculated head assay and related recovery.

 

Heap leach copper extraction is derived by two (2) different methods, one for leachable/soluble copper (CuSOL) and residual copper (CuRES) as derived from sequential copper assay methodology. The projected extraction for CuSOL is 100% for leachable/soluble recovery and 15% for CuRES. Residual copper assay is the difference between total assayed copper (CuT) and CuSOL. For the 19mm column tests in the current program, the total copper extraction ranged from 86% to 72% in 180 days and averaged 80% overall.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-17

 

 

 

Copper recovered to cathodes considers a heap efficiency and inventory factor of 90% of the long-term extractable copper extended over a two-year leach cycle period based on general experience. Soluble copper recovery exceeding 100% implies partial leaching of material which was not categorized as “soluble” based on the sequential assaying method and data available. Based on the resource assay data and column results, the apparent soluble copper (CuSOL) recovery to cathodes is approximately 107%, with total copper (CuT) recovery at 73%.

 

Based on current bottle roll results and the current column consumption, an average gross acid consumption is 18 kg/t of material. Net acid consumption is a function of recoverable copper with acid produced as a result of the electrowinning process and calculated in the process cost model annually.

 

The Phase 1 project Base Case option considers a processing facility to nominally produce 175,000 tonnes per annum (tpa) of copper cathodes from higher grade, highly leachable (soluble) copper content materials. An expansion of the mining rates and materials handling facilities is required by Year 4 to and again in Year 7 to maintain copper production as the copper grade drops. An additional solvent extraction train will be required in Year 8. This initial processing facility will function through to the completion of mining for the initial project phase in Year 15 with lower grade stockpile reprocessing and residual leaching operations to Year 18.

 

All Primary copper mineralized material mined during the initial project phases will be stockpiled for future processing routes that may include a mill/concentrator or alternative bio-leaching technologies.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-18

 

 

 

 

Figure 1.6: Simplified Process Flowsheet (Samuel, 2023)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-19

 

 

 

1.8project economics

 

The project initial capital costs are based on budgetary cost quotations and regional contractor estimates for major equipment and facilities obtained in Q4 2022 and Q1 2023. The capital costs for the project are summarized below and should be viewed with an expected level of accuracy for a preliminary analysis at +40%/-20% consistent with AACE International Recommended Practice No. 47R-11 for an Estimate Class 5. Owner’s Costs include the initial mine fleet, preproduction stripping costs and preoperational costs for early crushing and material placement on the leach pad.

 

Table 1.4: Initial Capital Costs by Case

Capital Cost

Level 1 Summary

Base Case

175k tpa Cu

WBS Area Total (USD)
100 - Mining $65,600,000
200 - Ore Storage & Handling $234,500,000
400 - Heap Leaching $158,500,000
500 – SX/EW Facilities $250,400,000
600 - Acid Plant $94,900,000
800 - Ancillary Facilities $23,300,000
900 - Site Development & Yard Utilities $126,700,000
2000 – Off-Sites $167,400,000
   Total Direct Costs $1,121,300,000
Common Indirect Costs $379,300,000
Owners Costs $454,000,000
Subtotal $1,954,600,000
Contingency $493,700,000
Total Capital Cost $2,448,300,000

 

The project life of mine direct operating costs per tonne processed and per pound of copper produced are summarized below. Costs vary with open pit development, feed head grades, acid requirements in leaching, power consumption increases over time and actual copper production.

 

Table 1.5: Life of Mine Operating Cost Summary
OPEX SUMMARY  Life of Mine Units

Base Case

175k tpa Cu

Mining OPEX Per Lb Cu $/lb Cu $0.47
Per tonne processed $/t $4.13
Processing OPEX Per Lb Cu $/lb Cu $0.32
Per tonne processed $/t $2.84
G&A Per Lb Cu $/lb Cu $0.12
Per tonne processed $/t $1.02
Selling Costs Per Lb Cu $/lb Cu $0.02
Per tonne processed $/t $0.17
TOTAL OPEX (C1 Costs)* Per Lb Cu $/lb Cu $0.93
Per tonne processed $/t $8.16

 

*Note: Numbers may not add exactly due to rounding

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-20

 

 

 

Based on consensus estimates and independent analysis, long-term metal pricing used in this report (except for mineral resource estimation) and project economic analysis are Copper (Cu) - $3.75/pound; Gold (Au) - $1,700/ounce; and Silver (Ag) - $20.00/ounce. The 2023 updated financial outcomes for the Phase 1 initial project mine and facilities are shown in Table 1.6 below (expressed in Q1 2023 United States Dollars). C1 cash costs are defined as the cash cost incurred at each processing stage, from mining through to recoverable copper delivered to the market, net of any by-product credits. C1 cash costs per pound of copper produced and all-in sustaining costs per pound of copper produced are non-GAAP ratios.

 

Table 1.6: Project Economic Summary by Case
Project Metric Units

Base Case

175k tpa Cu

Mine Life (including stockpile rehandle) Years 17
Processing Life Years 18
Tonnes Processed Thousand tonnes 702.3
Tonnes Waste Mined Thousand tonnes 906.8
Strip Ratio   1.29
Total Copper Grade % Cu 0.518%
Soluble Copper Grade (CuSOL) % CuSOL 0.362%
Copper Recovery (Total Copper) % 72.8%
Soluble Copper Recovery1 % 107%
Copper Production (LOM avg.)2 tonnes/yr 159,800
Copper Production (Yr 1-5) tonnes/yr 185,500
Copper Production – cathode Cu Thousand tonnes 2,721
Initial Capital Cost USD Millions $2,448
Sustaining Capital Cost USD Millions $1,878
Closure Costs USD Millions $180
C1 Costs (Life of Mine) USD/lb Cu $0.93
All-in Sustaining Costs (AISC) USD/lb Cu $1.54
Initial Capex/tpa (LOM avg.) USD/tpa Cu $15,295
LOM Capex/LOM tonnes Cu USD/tonne Cu $1,590
Before Taxes    
Net Cumulative Cashflow USD Millions $10,702
Internal Rate of Return (IRR) % 27.0%
Net Present Value (NPV) @ 8% USD Millions $3,747
After Taxes    
Net Cumulative Cashflow USD Millions $6,940
Internal Rate of Return (IRR) % 21.5%
Net Present Value (NPV) @ 8% USD Millions $2,234
Pay Back Period Years 3.4

 

Notes:

1.Soluble copper recovery exceeding 100% implies partial leaching of material which was not categorized as “soluble” based on the sequential assaying method and data available.
2.Life of Mine production averages include low grade stockpile rehandling and leaching production at the end of mining material from the open pit for each case.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-21

 

 

 

A summary of the 8 Year and LOM Cash Cost can be seen in Table 1.7.

 

Table 1.7: Average First 8 Years and LOM Cash Costs*
Category UoM 175k tpa Cu Production Case
First 8 years LOM
Gross Revenue US$/lb Cu 3.75 3.75
Selling Expenses US$/lb Cu (0.02) (0.02)
Mining Cost US$/lb Cu (0.44) (0.47)
Processing Cost US$/lb Cu (0.24) (0.32)
Local G&A US$/lb Cu (0.10) (0.12)
C1 Costs US$/lb Cu (0.80) (0.93)
Unrecovered VAT US$/lb Cu (0.03) (0.01)
Royalty US$/lb Cu (0.27) (0.29)
C3 Costs US$/lb Cu (1.11) (1.23)
Sustaining Capex US$/lb Cu (0.49) (0.31)
All-in Sustaining Costs US$/lb Cu (1.60) (1.54)
AISC Margin % 57% 59%

 

*Note: Numbers may not add exactly in every case due to rounding

 

1.9key project risks & opportunities

 

This subsection was prepared by J. L. Sorensen, FAusIMM, QP, Samuel Engineering and reviewed by the respective QP for each area.

 

This report is a Technical Report Summary (TRS) that summarizes the findings of the Initial Assessment completed for the Los Azules Project in accordance with Securities Exchange Commission 17 CFR Part 229 Standard Instructions for Filing Forms Regulation S-K subpart 1300 (S-K 1300) and is intended to meet the requirements of S-K 1300 as considered for an Initial Assessment (IA) level of study and disclosure as defined in the regulations and supporting reference documents. The effective date of this report is May 9, 2023, concurrent with the updated final resource estimates published herein.

 

Based on the results of this preliminary assessment, contributing authors have identified important risks and opportunities related to the Los Azules Project development. Below are what is believed to be the most significant “key” risks and opportunities. A complete list and description of the interpretations, conclusions, and recommendations to advance the Project is provided in Sections 22 and 23.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-22

 

 

 

Risks

 

·The Project is at the exploration stage of investigation; consequently, this study is at the scoping level of accuracy, preliminary in nature, and includes only Indicated mineral resources in the conceptual mine plan and the mine production schedule. Inferred mineral resources are considered too speculative geologically and in other technical aspects to have the economic considerations applied to them that would enable them to be categorized as mineral reserves under the standards set forth in S-K 1300.
·Significant additional investigation and work is required to improve the confidence level of the analysis to support a project development decision. There is no certainty that the results, project development plans or estimates in this IA will be realized.
·Potential new national laws under consideration by the Federal Government concerning the disturbance of wetlands (“vegas” in the local terminology) in Argentina is a significant risk if enacted prior to permitting completion. The established permitting processes consider impacts and mitigations on a case-by-case basis within each Province, whereas a national law could restrict case by case and Provincial laws and processes.
·The requirement to avoid impacting localized rock glaciers poses a risk to longer term mining opportunities, including some of those in the Phase 2 options considered in this report. Site investigations to confirm the characterization of the known geomorphologic structures should be completed in continued field programs to appropriately evaluate them and determine if avoidance impact constraints should apply.
·Limited information is available on the geotechnical characteristics and hydrology/hydrogeologic conditions affecting the open pit design and pit slopes, leach pad foundation design, water resources and management, and other site facilities. These areas pose both a risk to the facilities considered in this document and areas for potential opportunity.
·The preliminary nature of the metallurgical and geo-metallurgical aspects of the deposit poses a risk to the metallurgical performance expectations considered. Significant additional work is required to improve the confidence level of the analysis to support a project development decision.
·Metal price assumptions were considered based on current market conditions at the time of the report and pose both a risk and opportunity to future economic expectations.
·While estimates in this report utilize U.S. dollars, certain expenses, such as labor, operating supplies, and property and equipment, may be denominated in Canadian dollars or Argentine pesos. As a result, currency exchange fluctuations and foreign exchange regulations may impact actual operating costs. The appreciation of non-U.S. dollar currencies against the U.S. dollar increases costs and the cost of purchasing property and equipment in U.S. dollar terms in Canada and Argentina can adversely impact operating results and cash flows from the Project.
·Future changes in legal requirements and laws at the federal, provincial or municipal levels may impact the ability to obtain all required permits in a timely manner, on reasonable terms or on terms that provide sufficient resources to develop the Project according to the timetable and benchmarks conceptualized in this report.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-23

 

 

 

Opportunities

 

·The resource is presently limited by the drilling and associated information developed to date. Resources with limited drilling information due to access in the areas under the vegas (localized vegetated areas) is an opportunity to increase the near surface Indicated resource base within the current deposit. Additionally, opportunities for expansion of the resource base peripherally and at depth are apparent from the work completed. These should be investigated during the feasibility study drilling program.
·The open pit is presently constrained by the requirement to avoid impacting localized cryogenic geoforms currently identified as rock glaciers. Site investigations to confirm the character of these geomorphologic structures should be completed during field programs. A longer-term opportunity may exist to reclassify areas where no evidence of glacial activity is found.
·Within the glacier constraints, limited information is available on the geotechnical characteristics and hydrogeologic conditions affecting the open pit design and pit slopes. Generalized technical parameters include a variable pit slope between 30° and 42° depending on depth. Additional work to better understand these key areas represents an opportunity to reconsider the mine design parameters, potentially reducing stripping requirements and allow access to more of the deposit resources by extending and deepening the open pit. An initial analysis indicates that 10% to 15% additional resource is possible with a significant decrease in stripping required as the mine extends past the current base case.
·Incorporation of developing leaching technologies has the potential to improve copper recovery, reduce leaching times and minimize acid consumption requirements. Nuton™ technology is currently being evaluated in this capacity. This would also have the potential to unlock the primary copper resources more economically versus a mill/concentrator alternative and negate the need for a tailing’s storage facility.

 

1.10qualified persons recommendations and conclusions

 

This subsection was prepared by J. L. Sorensen, FAusIMM, QP, Samuel Engineering and reviewed by the respective QP for each area.

 

Based on the results of this Initial Assessment, contributing authors recommend that McEwen Copper complete additional work to further de-risk the Project, including more advanced stages of drilling to complete the work necessary for a Feasibility Study based on the findings reported. Key issues and items are included below. A complete list of these tasks and, summary of the interpretations, conclusions, and recommendations to advance the Project are provided in Sections 22 and 23.

 

Adequate work has been completed through the prior studies to define the project options going forward to select an option for Feasibility Study delineation, however metallurgical, geotechnical, geological, hydrological, and other aspects are not developed beyond a preliminary level of study at this time.

 

Given the resources developed to date, project technical options considered and permitting basis to date, a Preliminary Feasibility Study (PFS) is considered an optional step and a Feasibility Study (FS) level of project definition is recommended to expedite the project development timeline and to also comply with the requirements of the property ownership agreements with the Provincial Mining Ministry.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-24

 

 

 

As of the effective date of this report, the initial Feasibility Study resource drilling, geotechnical, hydrogeologic and metallurgical test work programs were started and in progress. The recommended technical program to complete the work deemed necessary to support the completion of a Feasibility Study is as follows:

 

·Complete an in-fill resource definition drilling program targeting Measured resource classification for the initial five years of the project and areas within the initial project supergene resource to Indicated classification as considered in this IA. The program delineated for execution includes an additional 32,000 meters of diamond drilling with the objective of converting the resource classification for the initial 5 years of mining to predominantly Measured from the Indicated and Inferred resources defined in this report.
·Complete the site geotechnical, seismic, glacier, hydrology and hydrogeologic investigations to a feasibility study level of definition. The program delineated included 16,000 meters of geotechnical drilling, 9,250 meters of hydrogeologic drilling, 9,700 meters of condemnation and other miscellaneous drilling, reestablishment of local surface water monitoring and field surveys.
·Complete confirmatory metallurgical test work and geometallurgical definition for the initial project process. The program delineated includes 6,000 meters of additional metallurgical PQ core (and/or equivalent HQ core) drilling and sampling to obtain approximately 90 tonnes of material, additional column leaching metallurgical testing for both conventional and augmented bio-leaching technologies. The metallurgical work includes site testing of the leach concepts with materials from the bulk sampling campaign. Additional testing on primary mineralization materials for potential milling options is also considered.
·Update resource/geologic models and estimations, mine plans and schedules based on the additional data collected.
·Update leach pad, processing and site/off-site infrastructure facilities designs to feasibility level development and support ongoing permitting requirements. Finalize concepts for power supply, site access and logistics.
·Confirm critical consumables availability and pricing, including sulfur and sulfuric acid, fuels and water.
·Update execution plans, costs and financial estimates and assumptions based on the updated project definition.
·Expand the inclusion of regenerative design considerations to further improve the carbon footprint and social handprint features of the project.

 

A Feasibility Study level of definition is estimated to take 18-20 months to complete from the effective date of this report and assuming continuance of the work areas in progress.

 

Based on current information from work in progress, the estimated cost is approximately $232 million including estimates for McEwen Copper/ACMSA costs. The study cost areas are broken out in the below Table 1.8 for the recommended program to complete the Feasibility Study and other expenditures planned during the same timeframe except where noted. As of the date of publication, approximately $43.4 million has already been incurred in 2023, which should be deducted from the 2023 total shown for a forward-looking cost estimate.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-25

 

 

 

Table 1.8: Expected Costs for Feasibility Study Development
Cost Category (USD Millions) 2023 2024 TOTAL
Drilling* $48.3 $32.8 $81.1
McEwen Copper/ACMSA/McEwen Mining $21.7 $16.5 $38.2
Camps/Site Services/Roads* $34.6 $13.7 $48.4
Feasibility Study/Engineering $9.8 $13.5 $23.3
Calingasta Development $1.5 $0.1 $1.6
Contingency $2.0 $8.0 $10.0
Cost $117.9 $84.7 $202.6
Estimated VAT* $18.8 $10.9 $29.8
Total $136.8 $95.6 $232.4

Note: * Items account for costs only attributable to the Feasibility Study and do not extend through December 2024.

Numbers may not add exactly due to rounding.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-011-26

 

 

 

2.0introduction

 

2.12023 technical REPORT summary (TRS) Update Overview

 

This report is a Technical Report Summary (TRS) which summarizes the findings of the Preliminary Study completed for the Los Azules Project in accordance with United States Securities Exchange Commission (SEC) 17 CFR Part 229 Standard Instructions for Filing Forms Regulation S-K. The report complies with 17 CFR Part §229.1300 (S-K 1300) Standard Instructions for Regulation S-K subpart 1300 SEC S-K §229. 1304 and §229.601(b)(96) and is intended to meet the requirements of S-K 1300 as considered for an Initial Assessment (IA) level of study and disclosure as defined in the regulations and supporting reference documents. The purpose of this TRS is to report the study results, mineral resources, and the subject project estimated costs and economic potential. The effective date of this report is May 9, 2023, concurrent with the updated final resource estimates published herein.

 

This TRS supersedes the current report on file titled: SEC S-K 229.1304 INITIAL ASSESSMENT INDIVIDUAL DISCLOSURE FOR THE LOS AZULES PROJECT, ARGENTINA, prepared by Mining Plus US Corporation with an effective date of April 01, 2021.

 

All currency shown in this report is expressed in May 2023 United States Dollars unless otherwise noted.

 

The Los Azules deposit is a classic Andean-style porphyry copper deposit. The large hydrothermal alteration system is at least 5 km long and 4 km wide and is elongated in a north-northwest direction along a major structural corridor. The altered zone surrounds and includes the Los Azules deposit area, which is approximately 4 km long by 2.5 km wide. The limits of the mineralization along strike to the North and at depth have not been entirely constrained by drilling. Primary or hypogene copper mineralization extends to at least 1,000 m below the present surface. Near surface, leached primary sulfides (mainly pyrite and chalcopyrite) were redeposited below the water table in a sub-horizontal zone of supergene enrichment as secondary chalcocite and covellite. Hypogene bornite appears at deeper levels together with chalcopyrite. Gold, silver, and molybdenum are present in trace amounts, but copper is by far the most important economic constituent at Los Azules.

 

The Project is at the exploration stage of investigation; consequently, this study is at the scoping level of accuracy, preliminary in nature, and includes Inferred mineral resources in the conceptual mine plan and the mine production schedule. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves under the standards set forth in S-K 1300. There is no certainty that the estimates in this updated IA will be realized.

 

This Technical Report provides information related to an updated resource estimation, revised processing flowsheet concepts and updated project economics since the last previously disclosed S-K 1300 Technical Report Summary in 2021. This report has been prepared in collaboration with McEwen Copper and other qualified contributors to assess the current potential economic viability of the Los Azules property.

 

This 2023 IA update supersedes the prior reports and reflects a revised development philosophy, processing flowsheet, updated resource model and estimations, metallurgical information, mine plans and economic parameters such as current capital and operating costs and associated new financial inputs and model. The main differences between this 2023 updated study and the most recent previously disclosed Technical Report Summary are:

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-012-27

 

 

 

·Updated post-pandemic costs and financial metrics.
·A multi-phased implementation approach to the Los Azules development with a focus on sustainable and regenerative design approaches to the project execution and operation.
·100% renewable energy power sourced from an Argentinian provider.
·Broader consideration of heap leachable copper resources than previously studied.
·Revised site general arrangement for initial heap leach operations and future mill operations with filtered dry deposition of tailings for the life of operations.
·On-site generation of sulfuric acid supplied with sulfur supplied from local Argentinian sources and waste heat capture for on-site power generation of a portion of the site requirements and make-up water heating.
·Revision to production of copper cathodes initially and future copper concentrate production.
·Supplying the Argentinian refined copper consumption needs, off-take options with investor groups (Stellantis & Nuton) and exporting of copper cathodes and/or concentrates directly through ports in Argentina or Chile as the preferred logistics solution.

 

2.2Qualified Persons

 

This IA is triggered by McEwen Copper’s intention to publicly disclose the engineering and optimization studies completed by Samuel Engineering Inc. and Stantec Consulting International Ltd. in conjunction with McEwen Copper during 2021 - 2023. The results from the updated IA and the Los Azules property are material to McEwen Copper.

 

The quality of information, conclusions and estimates contained herein are consistent with the level of effort involved in the authors’ services based on: (i) information available at the time of preparation; (ii) data supplied by outside sources and (iii) the assumptions, conditions and qualifications set forth in this report. This report is intended to be read as a whole and sections should not be read or relied upon out of context.

 

This report was authored by the qualified persons (each a “QP” and collectively, the “QPs”) listed in Table 2.1. Each QP only assumes responsibility for those sections or areas of the report that are referenced opposite their name in Table 2.1. None of such QPs, however, accept any responsibility or liability for the sections or areas of this report that were prepared by other QPs.

 

The QPs believe the report complies with 17 CFR Part §229.1300 (S-K 1300) Standard Instructions for Regulation S-K subpart 1300 SEC S-K §229. 1304 and §229.601(b)(96) and meets the requirements of S-K 1300 as considered for an Initial Assessment (IA) level of study and reporting disclosure as defined in the regulations and supporting reference documents.

 

A summary of the QPs, as defined in S-K 1300, responsible for each section of the report and their respective company affiliation is provided in Table 2.1.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-012-28

 

 

 

Table 2.1: Summary of Qualified Persons
Qualified Person (QP) Company Areas of Responsibility Report Sections
Allan L. Schappert, CPG, SME-RM Stantec Consulting International Ltd. Mineral Resource Estimates, Geology, Sample Preparation, Exploration & Drilling 1, 6, 7, 8, 9, 11, 22.4-22.5, 23
Bruno Borntraeger, PE Knight Piesold Ltd. Heap Leaching Design, Environmental Studies & Permitting 3.6-3.10, 17.1, 17.3-17.6, 22.8
W. David Tyler, SME-RM McEwen Copper Inc. Property, Ownership, Surface Rights, Project Infrastructure, Market Studies & Contracts 1, 3.1-3.5, 4, 5, 15.1-15.6, 16, 20, 22, 23
James L. Sorensen, FAusIMM Samuel Engineering Inc. Process, Mineral Processing, Metallurgical Testing & Recovery, Project Infrastructure, Project & Study Execution, 1, 2, 3.1-3.3, 10, 14, 15.1-15.3, 15.5-15.6, 18, 22.1-22.3, 23.1-23.2, 24, 25 and 26
Richard F. Reinke, P. Geo. Stantec Consulting International Ltd. Water Supply & Pit Dewatering 13.7, 15.7
Robert J. Bowell PhD, C. Chem, C. Geo, P. Geo SRK Consulting UK Limited Geochemistry 17.2
Steven Guy Bundrock, P. Eng. Stantec Consulting International Ltd. Mine Rock Storage Facility 22.6, 22.10, 23.3, 23.5
Satjeet Pandher, P. Eng. Stantec Consulting International Ltd. Mining 1.6, 13, 18, 19, 22.7, 23.1
Steven Alan Pozder, PE, MBA Samuel Engineering Inc. Economic Analysis 1, 2, 19, 22, 23
All All Information relating to areas of responsibility for Sections: 1, 2, 22, 23

 

2.3Personal Inspection of Los Azules Property

 

The author considers the foregoing personal inspections to constitute a “current personal inspection” in accordance with S-K 1300 for the current level of study.

 

Mr. Allan Schappert (CPG, SME-RM) of Stantec Consulting International Ltd., QP, visited the Los Azules property during the period from 24 April – 15 May 2022. The purpose of the visit was to observe, review, and comment on all aspects of data collection, recording, and analysis in preparation of the Mineral Resource Estimate. Activities and discussions included the following: visit and inspection of operating drill sites; care, custody, and control procedures of core boxes; core logging facilities at Los Azules camp; core storage and sampling procedures at the Calingasta warehouse; a tour of the independent assay lab in Mendoza; review of historical and current QA/QC protocols with a review of recent results.

 

Mine Technical Services (MTS) conducted two phases of database audits (2021 and 2022) including a site visit by Todd Wakefield and Francisco Ramos between April 18 – 27, 2022. Discussions of their findings and a review of their recommendations were made. Stantec Consulting International Ltd. geological QP supported McEwen Copper’s decision to undertake an extensive re-assaying program of existing core to augment the database prior to the updated estimate.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-012-29

 

 

 

A site visit was performed 08 April 2022 to 13 April 2022 with a team physically on the site 09 April 2022 through 12 April 2022 and attended by the following Stantec Consulting International Ltd. individuals.

 

·Jason Reynolds – Geotechnical Leader
·Carrie Loar – Geology Senior Reviewer
·Julia Loffler – Lead Geologist
·Andrew Burgin – Geotechnical Designer

 

SRK Geochemists Rob Bowell and Brooke Clarkson visited the Los Azules core warehouse facility in Calingasta, November 7-9, 2022, and were accompanied by Hugo Bracamonte from McEwen Copper. The focus of the visit was to examine the drill core from the intervals selected for geochemical characterization. Field logging included a description of the lithology, alteration, mineralogy, and structure.

 

Bruno Borntraeger, PE of Knight Piesold (KP), QP for the leach pad design visited the site January 29-31, 2023. The visit focused on leach pad site locations and field-testing requirements for the geotechnical design of the leach pad.

 

David Tyler (SME-RM) is the McEwen Copper Project Director for the Los Azules Project and has the responsibility for the study work. Mr. Tyler has visited the Los Azules site several times in 2022 and 2023.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-012-30

 

 

 

 

3.0property description

 

3.1location

 

The Los Azules Project is a porphyry copper development project located in the Frontal Andes Cordilleran region of San Juan Province, Argentina along the border with Chile. The project falls within the Calingasta Department of the San Juan Province. The Project is approximately 80 km west-northwest of the small town of Calingasta, in the San Juan Province of Argentina at approximately 31° 06' 25" south latitude and 70° 13' 25" west longitude. Calingasta is located 173 km by road west of the Provincial Capital city of San Juan along Route 12.

 

The terrain elevation at the project site ranges between 3,200 meters above sea level (masl) at the proposed camp location and up to 4,500 masl on the high peaks in proximity to the Project. The Project area is remote, and no infrastructure is present. There are no nearby towns, Indigenous residents, or settlements. Seasonal exploration work typically commences in October or November and terminates in May or early-June. Exploration operations are supported by means of two temporary camps within the Project site area.

 

The mine development is located approximately 6 km east of the border with Chile (Figure 1.3).

 

McEwen Copper controls approximately 32,700 ha of mining rights and 18,000 ha of surface rights around the Los Azules Project. Aerial photography and global positioning were utilized to locate the property in the field; the coordinates of the corners of the property are established in the government documents granting the mining rights.

 

The Los Azules Project is currently accessed by 120 km of unimproved road with eight river crossings and two mountain passes (both above 4,100 m elevation). This access is subject to snow accumulation and is passable only from November through to May. This 2023 update describes in Section 15 “Infrastructure” a potential future northern access route within McEwen Copper owned lands that is less affected by snow. Also described is an airstrip currently permitted for construction.

 

3.2property and title in argentina

 

The laws, procedures, and terminology regarding mineral title in Argentina differ from those in the United States and in Canada. Mineral rights in Argentina are separate from surface ownership and are owned and administered by the provincial governments. The following summarizes some of the relevant provisions of the Argentine Mining Code and Argentinean mining law terminology to aid in understanding the McEwen Mining land holdings in Argentina.

 

The provinces are the owners of the natural resources located within their territories and each province retains the power to administer and regulate mineral rights according to the federal Mining Code and supplemental provincial laws and regulations.

 

Surface rights are separate from mineral rights, and they are treated separately under Argentine law. The Mining Code establishes that mining is in the public interest and therefore surface owners cannot prevent the granting of mining rights and properties or commencement and/or continuity of mining activities on their property, but surface owners have a right to collect an indemnity because of the use of the land by the miner and the damages derived from mining activities. Land over which a mining concession has been granted is legally subject to different types of easements (e.g., right of way, occupation of land, use of water, etc.), provided that an indemnity is paid to the owner of such land.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-31

 

 

 

Mineral rights are considered forms of real property and can be sold, leased, or assigned to third parties on a commercial basis. “Cateos” (exploration permit) and “Minas” (mining concession) can be forfeited if minimum work requirements are not performed or if annual payments are not made. Generally, notice and an opportunity to remedy defaults are provided to the owner of such rights.

 

Grants of mining rights, including water rights, are subject to the rights of prior users. Further, the mining code contains environmental and safety provisions administered by the provinces. Prior to conducting operations, applicants must submit an environmental impact report (“Informe de Impacto Ambiental” or IIA in Spanish) to the provincial mining authority describing the proposed operation and the methods to be used to prevent undue environmental damage. When the provincial mining authority approves the IIA it issues a permit in the form of an official declaration (“Declaratorio de Impacto Ambiental” or DIA in Spanish). The IIA must be updated every two years, with a report on the results of the protection measures taken. If protection measures are deemed inadequate, additional environmental protection may be required. Mine operators are liable for environmental damage. Violations of environmental standards may cause exploration or mining operations to be shut down but without prejudice to mining title.

 

3.3oWNERSHIP OF THE LOS AZULES PROJECT

 

McEwen Mining was organized under the laws of the State of Colorado on July 24, 1979, and is listed on the New York Stock Exchange (NYSE) and on the Toronto Stock Exchange (TSX) under the symbol MUX. The Company’s head office is in Toronto, Canada. As of May 2023, the Company owns a 51.9% interest in McEwen Copper which owns a 100% interest in the Los Azules Copper Project in San Juan, Argentina, and the Elder Creek exploration project in Nevada, USA. The relevant ownership structure is shown in Figure 3.1, as provided by McEwen Mining.

 

The Los Azules Project is comprised of properties (the “Properties”) owned by Andes Corporación Minera S.A. (ACSMA), an Argentine subsidiary of McEwen Mining through its ownership in McEwen Copper.

 

ACMSA controls approximately 31,746 ha of mining rights (Minas) around the Los Azules deposit. In addition, ACMSA owns sufficient surface rights for the Project pursuant to an agreement with CCM S.A., whereby ACMSA acquired 18,000 ha in surface rights. In 2018, ACMSA filed a request to group all the Mining Permits together, file #1124.553-A-2018, in such way that, once all surveys are approved, all the Mining Permits be considered as one larger Mining Permit. This will allow investments to be distributed across the larger permit group and eliminate the need to spend on each individual Mina. It is expected that this request by ACMSA could be favorably resolved during 2023. These Properties are the subject of this Technical Report. Specific property details are discussed in Section 3 of this report.

 

FCA Argentina S.A., a subsidiary of Stellantis N.V. (“Stellantis”), invested ARS $30 billion in Argentina to acquire shares of McEwen Copper in a transaction that closed on February 24th, 2023. In connection with the Transaction, McEwen Copper and certain of its affiliates entered into an Investor Rights Agreement with Stellantis (the "Stellantis IRA”) and a Copper Cathodes and Concentrates Purchase Rights Agreement (the “CCCPRA”), which are described below.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-32

 

 

 

The Stellantis IRA provides for the following principal terms:

 

·Stellantis will have the right to nominate one director to the Board of McEwen Copper,
·Stellantis will have the opportunity to provide local currency funding, in certain circumstances, for advancement of the Los Azules Project,
·Comprehensive scientific, technical and strategic planning information rights,
·Pre-emptive right to maintain their ownership percentage in any follow-on equity offering,
·Agreement of McEwen Mining and Robert R. McEwen to not trigger Drag Along Rights in the event of a bid for McEwen Copper prior to the planned initial public offering (IPO), and
·McEwen Copper commits to achieve net-zero carbon emissions from the Los Azules Project by 2038.

 

The CCCPRA provides an option to Stellantis and its affiliates that, if exercised to its maximum extent, would allow them to purchase a percentage of the copper cathodes or copper concentrates or both produced from the Los Azules Project, in each case equal to their equity ownership percentage in McEwen Copper at the time of exercise.

 

Nuton LLC, a Rio Tinto Venture (“Nuton”), has invested a further USD $25 million to acquire shares of McEwen Copper in a transaction that closed on August 31st, 2022. In connection with the transaction, McEwen Copper entered into a collaboration agreement with Nuton (the "Nuton Collaboration Agreement”), to advance our understanding of the potential application of heap leach technology at Los Azules, including the testing of Nuton™ Technologies for compatibility with Los Azules copper mineralization. Leaching has many potential economic and environmental benefits over a conventional milling scenario, including lower water and energy consumption, no large tailings storage facility or dam, and typically lower capital and operating costs.

 

The principal terms of the Nuton Collaboration Agreement include:

 

·McEwen Copper and Nuton will jointly undertake copper leach testing using Nuton™ technologies with samples from Los Azules. McEwen Copper has agreed to grant exclusivity to Nuton for one year in the area of novel, patented or trade secret leaching technology, while it will continue its independent test work and studies using conventional leach technologies.
·Nuton will have the right to select one nominee who will be appointed as a director or observer to the Board of McEwen Copper. This right will continue for as long as Nuton holds greater than 7.5% of the issued and outstanding shares of McEwen Copper.
·McEwen Copper has agreed to limit related party transactions in certain situations until the earlier of the planned IPO (or alternative liquidity event) or Nuton ceasing to hold 7.5%.
·Customary standstill and lock-up agreement between the Investor and its affiliates and McEwen Copper and its affiliates.

 

Nuton has invested a further USD $30 million to acquire additional shares of McEwen Copper in a transaction that closed on March 15th, 2023.

 

In connection with the second Nuton transaction, McEwen Copper and certain of its affiliates entered into an Amended Collaboration Agreement (the "New Nuton Collaboration Agreement”) and a Copper Cathodes and Concentrates Purchase Rights Agreement (the “CCCPRA”), which are described below.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-33

 

 

 

The New Nuton Collaboration Agreement provides for the following additional rights beyond those in the original Nuton™ Collaboration Agreement.

 

·Nuton will have the opportunity to provide local currency funding, in certain circumstances, for advancement of the Los Azules Project,
·Comprehensive scientific, technical, and strategic planning information rights,
·Extension of exclusivity over investigating other novel, trade secret or patented copper heap leach technologies until August 10, 2024,
·Pre-emptive rights to maintain their ownership percentage in any follow-on equity offering,
·Agreement of McEwen Mining and Robert R. McEwen to not trigger Drag Along Rights in the event of a bid for McEwen Copper prior to the planned initial public offering (IPO).

 

The CCCPRA provides an option to Nuton that is equivalent to that of Stellantis described above.

 

After closing the second Nuton Transaction, McEwen Copper has 28,885,000 common shares outstanding on a fully diluted basis, and its shareholders are: McEwen Mining Inc. 51.9%, Stellantis 14.2%, Nuton 14.2%, Robert R. McEwen 13.8%, Victor Smorgon Group 3.5%, and other shareholders 2.4%.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-34

 

 

 

 

 

Figure 3.1: Los Azules Ownership Structure (McEwen Mining, 2023)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-35

 

 

 

Los Azules Mineral Rights

 

In 1994, Minera Andes S.A. (MASA), an Argentine subsidiary of Minera Andes, was granted the Cateo to explore the Cordon de Los Azules (file # 545.957-D-94). This cateo was divided and converted into two MDs on October 17, 1998, known as Azul 1 and Azul 2. These MDs cover part of the southern portion of the Project. In 2009 MASA transferred these two MDs to Andes Corporación Minera S.A. (ACSMA). The central portion of the Project is covered by MD Mirta and the northern portion by Escorpio II, all owned by ACSMA.

 

The Los Azules Project is comprised of properties (the “Properties”) owned by ACSMA, an Argentine subsidiary of McEwen Mining through its ownership in McEwen Copper. The information in the section relies upon a legal review and opinion report Re: “Incorporation and good standing status of Andes Corporación Minera S.A. (ACMSA) and of its mining rights” dated January 11, 2023, by Abogado Jose Vargas Gei of Vargas & Galindez (V&G), a Mendoza-based legal firm.

 

Based on the V&G review and opinion, the following conclusions were included in their memorandum.

 

a.ACMSA has good and valid, legal, and beneficial title to the mining rights listed on Table 3.1. Mining rights coordinates are listed on APPENDIX X.
b.The mining rights listed on Exhibit A are all in good standing and comply with applicable regulations.
c.The annual canon for each mining right is paid up to the first semester of 2023 (see Table 3.1, for amount of canon paid for each mining right per year).
d.ACMSA has invested in Los Azules over 300 times the annual canon payment, reaching the minimum amount required by Article 217 of the MC, considering Los Azules Project as a whole unit.
e.Los Azules Project is subject to the payment mentioned in sections m) and n) below.
f.No inactivity has occurred on the mining rights listed on Exhibit A and Exhibit B for more than four (4) years.
g.“Labor Legal” [allowed exploration work] has been performed and the “Survey” has been performed on all mining rights. The Mining regulatory authority has observed these surveys and is discussing with the Company ways to improve them.
h.Pursuant to Resolution #3011, dated December 20, 2016, the Departamento de Hidráulica authorized ACMSA to use 316.8 m3 (cubic meters) of water for the benefit of Los Azules Project. This permit is renewable.
i.ACMSA has good and valid legal and beneficial title to the following easements (see Exhibit D):

 

oFile #520.0439-M-97 (exploration access road)
oFile #0680-F28-M-96 (southern access road)
oFile #1124.218-A-18 (northern access road)
oFile #1124.660-M-12 (Candadito camp)

 

j.ACMSA has requested the following easements, not yet granted (see Exhibit D):

 

oFile #1124.354-A-2018 (power line)
oFile #1124.544-A-2022 (surface occupation Illanes Mery property)
oFile #1124.231-A-2010 (surface occupation Estomonte property)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-36

 

 

 

k.The 5th Environmental Impact Report update for exploration filed by ACMSA for Los Azules Project has been approved by Resolution #317-MM-2021, dated June 3, 2021, and Resolution #352-MM-2021, dated June 17, 2021, both by the Ministerio de Minería of the province of San Juan.
l.Glacial and periglacial studies have been carried out by the consulting firm Mountain Pass Consulting and have been incorporated into the Environmental Impact Report referred to above.
m.Pursuant to the Los Azules Option Agreement, dated November 2, 2007, entered into between MIM Argentina Exploraciones S.A., Xstrata Queensland Limited, Minera Andes S.A. and Minera Andes Inc. (the latter later acquired by US Gold Corporation and the business combination later renamed McEwen Mining Inc.), once a Feasibility Assessment is completed on “Los Azules” project, including properties named Mercedes and Mirta, a payment of USD $500,000 is due to Ms. Dina Myriam Elizondo de Bosque and Mr. Hugo Arturo Bosque.
n.Pursuant to a Transfer Agreement, dated October 16, 2014, between TNR Gold Corp., Compañía Minera Solitario Argentina S.A., Los Azules Mining Inc., ACMSA and McEwen Mining Inc., ACMSA agreed to pay Compañía Minera Solitario Argentina S.A. a 0.4% net smelter return royalty in respect of Los Azules Project.
o.As of the date of this opinion, there are no material claims against ACM.

 

The challenge by ACMSA for the peripheral properties under threat of forfeiture, Gina, Sofia, Torora II, and Marcela, was resolved in the company’s favor and the forfeited rights were returned by the Mining Council on December 29, 2022.

 

As of January 17, 2023, the powerline easement was granted by the provincial government.

 

A list of those land holdings is detailed in Table 3.1 and are also shown on Figure 3.2. The size of the property covered by those tenements, once actually granted, however, may differ from those set out below.

 

Table 3.1: Andes Corporación Minera S.A. - Mining Right Descriptions
Exhibit A Properties

Mining
Right Name

File Number

Legal
Status

Annual Mining
Canon ($AR)

Legal Work Surface (ha) Comments Field Work
Agostina 1124.108-A-10 Registered $ 228,000.00 11/15/2010 1,184.00 In approval process
Azul 2 520.0280-M-98 Registered $ 247,000.00 9/8/1999 1,299.90 In approval process
Azul 3 1124.121-A-06 Registered $ 38,000.00 3/15/2013 166.76 In approval process
Azul 4 1124.473-M-08 Registered $ 19,000.00 1/22/2014 903.06 In approval process
Azul 5 1124.119-A-09 Registered $ 570,000.00 11/15/2010 3,001.32 In approval process
Azul Este 1124.186-A-07 Registered $ 456,000.00 5/27/2008 2,372.48 In approval process
Azul Norte 1124.668-M-07 Registered $ 38,000.00 11/15/2010 131.94 In approval process
Cecilia 1124.035-A-12 Registered $ 342,000.00 11/8/2013 1,702.26 In approval process
Escorpio I 0153-C-96 Registered $ 38,000.00 6/19/2008 168.81 In approval process
Escorpio III 0155-C-96 Registered $ 38,000.00 11/1/2013 199.45 In approval process
Mercedes 0644-M-96 Registered $ 171,000.00 6/4/1999 836.06 In approval process
Rosario 1124.169-A-10 Registered $ 342,000.00 11/15/2010 1,768.44 In approval process

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-37

 

 

 

Table 3.1: Andes Corporación Minera S.A. - Mining Right Descriptions
Exhibit A Properties

Mining
Right Name

File Number

Legal
Status

Annual Mining
Canon ($AR)

Legal Work Surface (ha) Comments Field Work
Totora 414.1324-C-05 Registered $ 114,000.00 9/14/2010 504.86 In approval process
Gina 1124.168-A-10 Registered $ 646,000.00 11/15/2010 1,762.99 In approval process
Sofia 1124.167-A-10 Registered $ 646,000.00 2/17/2011 3,324.97 In approval process
Totora  II 520.496-C-99 Registered $ 304,000.00 9/26/2005 1,561.12 In approval process
Marcela 1124.495-A-09 Registered $ 570,000.00 8/13/2010 2,952.77 In approval process
Exhibit B Properties
Azul 1 520.0279-M-98 Registered $ 399,000.00 11/1/1999 2,098.20 Process completed. Pending formal resolution
Escorpio II 0154-C-96 Registered $ 380,000.00 5/5/2008 1,991.00 Process completed. Pending formal resolution
Escorpio IV* 425.213-C-03 Registered $ 665,000.00 12/13/2005 4,411.71 In approval process
Mirta 1124.0141-M-09 Registered $ 76,000.00 10/20/2010 354.40 Process completed. Pending formal resolution
    Total Canon $ 6,327,000.00 Total Hectares 32,696.50  
*The reported hectares will be reduced to 3500 with the approval of the measurement, due to legal limitations.

 

*NOTE: Escorpio IV was originally requested, by the previous owner, as a 4,411.71 hectares mining permit. However, mining law sets a limit to the size of the mining permits held by companies of 3,500 hectares. Consequently, Escorpio IV, when acquired by ACMSA, was 911.71 hectares above the legal limit. This led ACMSA to release the central area of Escorpio IV, as suggested by its geologists, as it being an area that does not affect ACMSA plans for Los Azules Project. The mineral claim locations are shown Figure 3.2.
   
  By law, the released area is granted to Instituto de Exploraciones y Explotaciones Mineras (IPEEM, a provincial mining company), that, following certain procedures, can grant this area to private companies to be explored and exploited.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-38

 

 

 

 

 

Figure 3.2: Map of Mineral Claims (Minas), Easements (Servidumbres) and Surface (Superficie) Ownership (Vargas & Galindez/McEwen 2022)

 

As for the mining right at the project center, labeled Soberania (File # 259,299-C-84), ACMSA and three other persons have claimed the right to this mine simultaneously. To date, the award of the mining right has not been resolved, but it is expected that to be resolved in favor of ACMSA, since the request and technical arguments of ACMSA are more relevant than those of the third parties.

 

The 21 mining rights have been grouped into a Mining Group, which is in process under file No. 1124.553-A-2018. According to Argentine laws, it is necessary to have approved measurements of each mining right to constitute a Mining Group, so these measurements are in process and this approval is expected during the year 2023.

 

An exploitation plan was filed in January 2023 and subsequently an Environmental Impact Statement for the exploitation was filed in April 2023 with the government of San Juan. This plan and EIS were in support of the maintenance of the ACMSA mining rights. The exploitation plan committed ACMSA to begin the development of the mine within 5 years, or before January 2028.

 

It should be noted that no facilities are foreseen in either the Soberania or the released area of the Escorpio IV mining rights. Figure 1.4 shows the layout of site facilities relative to the surface and mining rights.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-39

 

 

 

Los Azules Surface Rights

 

In January 2010, Andes Corp. purchased 18,000 ha of surface rights in the Los Azules area. The purchase of this property, located near the Argentina/Chile border region, was subject to government approval. The approval was granted on August 31, 2010, by Resolution #907 of the Ministerio del Interior. Figure 3.3 shows the purchased surface rights. The surface rights currently held by ACMSA cover the area currently being explored by McEwen Copper. The area represented by the surface rights are also considered to be more than adequate for potential development of the mine, associated processing facilities and infrastructure considered in this technical report.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-40

 

 

 

 

 

Figure 3.3: ACMSA Owned Propiedad Minera (Mining Rights) and Campo Superficiario (Surface Rights) (McEwen, 2022)

 

The green area in Figure 3.3 indicates the limits of McEwen Mining surface rights (land holdings) relative to the mining rights. The western boundary of the property is the border with Chile. Below, Figure 3.4 shows the surface right owners within and adjacent to the Los Azules Project, with the land held by Illanes Mery colored in orange, Campo Cortez Monroy to the south in yellow, Cortez Angel to the north in green, and the Estomonte property to the east in peach color.

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-41

 

 

 

 

Figure 3.4: Map of mineral concessions and surface rights (campos) within or adjacent to project area (Vargas & Galindez/McEwen, 2022)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-42

 

 

 

None of the mineral concessions that are not owned by McEwen but that fall within the McEwen owned surface rights will have any impact upon the development of the Los Azules Project. All Los Azules facilities are located on lands where McEwen has both the surface and mining rights.

 

3.4ROYALTIES AND RETENTIONS

 

There are no outstanding royalties, payments, or other agreements or encumbrances to which the property is subject to other than a one-time USD $500,000 payment to be made to Hugo Bosque upon delivery of a feasibility study.

 

San Juan Province charges a 3% royalty based on the “mine head value”. The 3% is charged on the sale price less some costs (excluding depreciation of fixed assets and extraction costs). In other words, deductible expenses include: i) transport and freight costs; ii) crusher, milling and process (beneficiation) costs; iii) commercialization cost; iv) administrative cost (not related extraction cost) and v) smelting and refining costs. However, since July 2011, the Province of San Juan, through an agreement with the mining companies in operation, modified the calculation of the "mine head value" by a taxable base on gross sales, without any deductions. This change in the methodology has not been reflected in the legislation, and is implemented through agreements according to a series of conditions (e.g., metal prices, tax burden, etc.)

 

In addition, the Province of San Juan has an unlegislated practice of negotiating a voluntary contribution to a trust (“fideicomiso” in Spanish), usually 1.2% or 1.5% and on the same calculation basis as mining royalties (on gross sales, without deductions). These contributions are intended to finance infrastructure projects in the province, especially in the local area impacted by the mining operation.

 

TNR Gold Corp has a 0.4% NSR across the project, and McEwen has a 1.25% NSR.

 

3.5BACK-IN RIGHTS

 

There are no back-in rights.

 

3.6ENVIRONMENTAL LIABILITIES

 

At the present time, there are no known environmental liabilities at the Project site, since it is an exploration project. Reclamation activities are comprised of re-grading the drill pad sites, access roads at site and some portions of the main access road to the Project site.

 

There are two principal activities that have environmental impacts in the Project area. One is the overgrazing of pasture lands and the second is access roads and drill platforms on the property.

 

Seasonal grazing by “veranadas” from Chile takes place on sparse foraging resources and wetlands in the Project area. The “veranadas” with large animal herds (primarily goats) have affected:

 

·Vegetation coverage on the grazing land.
·Erosion of the borders of streams.
·The surface drainage capacity due to compaction.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-43

 

 

 

There are numerous previously existing excavation areas for exploration roads in the Project and surrounding areas, including drilling platforms.

 

3.7PERMITTING REQUIREMENTS

 

Argentine laws and regulations differentiate between prospecting, exploration, and exploitation activities. It is understood that exploration activities include mapping, sampling (including bulk samples), geophysics, trenching and drilling, whereas prospecting activities include only mapping and sampling.

 

There are different sectorial permits that are required to conduct mining activities, but the most relevant ones are the ones associated with environmental permits. The provisions related to environmental protection applicable to mining activity were established in 1995 by the General Environmental Law and have been incorporated in Title Thirteen of the Mining Code.

 

The federal government is empowered to issue Minimum Environmental Protection Standard Laws (MEPSL), applicable in the whole country by the respective local authorities. The provinces are allowed to supplement and regulate the MEPSL with more stringent local or provincial environmental regulations.

 

Exploration and Prospecting Requirements

 

The main permit for the exploration phase at Los Azules is the Environmental Impact Declaration (Declaracion de Impacto Ambiental or DIA in Spanish), which must be updated at least every two years with the provincial mining authority. An EIA must be presented for each phase of the project development: prospecting, exploration, and exploitation (including industrialization, storage, transportation, and marketing of minerals). The last DIA renewal was received on June 2, 2021, and the resolution was issued on June 17, 2021.

 

Ancillary permits for water usage (domestic, drilling and dust mitigation), archeological research and investigation, hazardous waste, sewage, and domestic waste facilities are renewed on an annual basis before the commencement of the exploration season. The permit renewals are expected to be approved on time as per prior exploration seasons. All necessary permits have been obtained for the work currently being carried out on the Project.

 

3.8PERMITTING REGULATIONS

 

There are five main legal requirements that impact the Project during the different stages of development: environmental regulation, mining regulation, hazardous waste regulation, health and safety regulation and the Mining Investment Law.

 

Environmental Regulation

 

Environmental regulations applicable to mining have four sources:

 

·Environmental specific regulations applicable to mining arising from the Mining Code,
·Environmental laws issued by Federal Congress as MEPSL applicable to all activities including mining,
·Local environmental regulations issued by the provinces the MEPSL and applicable to all activities including mining,

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-44

 

 

 

·Additional local/provincial environmental legislation if this does not contradict or is less stringent than a MEPSL.

 

Lack of compliance or other infringement of the environmental obligation may result in penalties ranging from fines to suspension of works or closure of the mine, but without effect upon title or ownership of the mining concession.

 

Mine Regulation

 

The acquisition, exploitation and use of minerals are regulated by the Mining Code (National Law 1919) and Provincial Law 688-M. In addition, the province of San Juan has adopted National Law 24585, environmental protection for mining activities.

 

Hazardous Waste Regulation

 

Other regulations affecting the Project are related to Hazardous Waste regulations set forth in National Law 24051, adopted by the province of San Juan. This law regulates the generation, handling, transportation, treatment, and disposal of hazardous waste materials.

 

Health and Safety Regulation

 

Health and safety regulations require that a mining company must hire an Occupational Hazard Insurer (ART, as per the acronym in Spanish) to identify and evaluate occupational hazards and to design preventive and emergency programs. For the mining sector, companies must give priority to riskier occupational activities and employee training.

 

Mining Investment Law

 

Mining Investment Law 240196 includes article 23, which relates to the preservation of the environment. To prevent and correct any impacts to the environment due to mining activities, companies may establish a special accounting provision for that purpose. The annual amount shall be left to the criterion of the company but shall be considered deductible for income tax purposes up to a sum equivalent to 5% of the operational costs of material extraction.

 

Archaeological Sites

 

Archeological sites are managed by the Ministry of Culture of the province of San Juan. Sites can be removed by applying to the Ministry for a permit that describes the tasks to be carried out, prepared by qualified professionals. A site plan of the proposed work area should also be submitted with the permit application. A permit is expected to take two months to obtain, and the work plan should be submitted one year in advance.

 

3.9GLACIER PROTECTION LEGISLATION

 

In 2010, Argentina passed Federal Legislation to protect its water resources contained in glaciers prohibiting activities that could affect these resources.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-45

 

 

 

·Federal legislation mandates cataloguing all glaciers in the territory and their status of conservation or impact.
·The legislation created a conflict regarding federal versus provincial (state) ownership of the natural resources, which sits now in front of the Supreme Court.

 

Following suit in July 2010, the province of San Juan enacted Provincial Law 8144, “Glacier Protection Law”, in a compromise with Federal Law, which, among other things, restricts disturbance of glaciers by mining activities. In addition, the Federal Congress issued a MESPL on the protection of glaciers and periglacial environment (Law 26639), which is separate from the provincial law.

 

Since 2011, several independent studies have been conducted by the Company.

 

·No uncovered, or “white glaciers” or ice glaciers, have been identified on Los Azules property; however, several small cryogenic geoforms identified as “rock glaciers” have been mapped onsite.
·The company believes it is in full compliance with the law, not having disturbed any glaciers that could be deemed a water resource.
·The provincial inventory has been completed with no rock glaciers having been found to be affected by exploration activities at Los Azules.
·None of these rock glaciers will be impacted by the company’s future exploration activities or the development of a mining project.
·The water storage and watershed contribution from any rock glaciers mapped will be evaluated as part of the Environmental Baseline Studies required for permitting.

 

The Los Azules exploration area was audited by a multi-agency environmental audit team in March 2013. There were no adverse findings and the audit results indicated that McEwen Mining is in full compliance in all areas protected by the provincial law.

 

In 2016, the Provincial Government began to catalogue the glaciers present in the provincial territory to determine if any impacts have taken place or if any glaciers could impede mineral development in the province.

 

3.10ENVIRONMENTAL BASELINE STUDIES

 

Between 2007 – 2012 Ausenco Vector has monitored and collected environmental baseline data on surface and groundwater volumes and quality, soils, flora and fauna, archeology, and weather. Several other consultants have been involved for all environmental aspects. Ausenco Vector has also studied the boggy wetlands, locally referred to as “vegas”.

 

Ausenco Vector implemented a plan to relocate or compensate the vegas where they may be impacted by the project. The plan did not produce satisfactory results. Andes Corporación Minera S.A. requested to the provincial environmental authority to propose an alternative compensation criterion, however, there has not been any response from the authority to date.

 

Dr. Andres Meglioli, of Mountain Pass LLC, has been monitoring cryogenic geoforms in the project area since 2011.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-46

 

 

 

The environmental baseline data on surface and groundwater volumes and quality as well as the flora and fauna data collection and additional studies on the vegas (including a compensation proposal) have been conducted since 2013 by the Instituto de Investigaciones Hidraulicas, a research center of the National University of San Juan, through their senior biologists Juan C. Acosta and Hector J. Villavicencio. These are ongoing studies contracted by McEwen Copper. After each drilling season, a report is prepared by the consultants and issued to McEwen Copper that summarizes the work completed through the season.

 

In late 2017 and throughout 2018, McEwen Copper, in conjunction with consultants and specialists, performed full-year baseline studies for fauna, flora, and hydrology that will require extended site access through all seasons and support using mules and helicopters. Geotechnical studies, such as water permeability tests, may also be performed to enhance the existing data set.

 

In 2022, additional environmental baseline work was undertaken with the objective of completing an IIA (Informe Impacto Ambiental) equivalent to the English EIA for exploitation of the mine. All of this and prior baseline data was included in the IIA documentation that McEwen Copper submitted to the authorities in April of 2023.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-013-47

 

 

 

4.0Accessibility, Climate, Local Resources, Infrastructure and Physiography

 

4.1accessibility

 

Access to the site is through provincial routes to mining access easements granted under Argentine law. The province of San Juan is bisected by RN 40, which extends the length of Argentina.

 

The main access to the Los Azules Project from Villa Calingasta (Calingasta Department – Province of San Juan), is through Provincial Route No. 437 from the intersection with Provincial Route No. 406 to La Alumbrera, an approximate distance of 25 km. From there, the mining road begins. This is the Exploration Road, which includes the Candadito support camp that is covered by an easement granted under file No. 1124.660-A-2012. The route has a length of 87 km and is covered by a road easement recorded in administrative file No. 520-0439-M-97 on behalf of ACMSA.

 

4.2surface rights

 

According to Argentine law, mineral rights supersede the overlying surface rights, and the holder of the latter is legally unable to impede access to the exploration or extraction of underlying mineralization. Fair compensation is provided to the surface rights holder for access and usage of the land in conjunction with exploration activities and mining operations. In January 2010, “Minera Andes”, a company 100% owned by McEwen Mining Inc., purchased 18,000 ha of surface rights covering the Los Azules Deposit and the associated surface facilities, as they are currently envisioned. The extent of surface rights and the proposed surface facilities are illustrated in the Los Azules General Arrangement in Figure 1.4.

 

4.3climate and length of operating season

 

Typically, the field season at Los Azules starts in December and runs through to the end of May due to limited access. However, last year, access to the site was maintained through mid-June, and depending upon the winter snowpack conditions, it is possible in some years to access the site as early as October as was the case in the last two drill seasons.

 

A weather station was installed near the camp site in mid-2010 to obtain local climatic information. The station is powered by a solar panel and collects meteorological parameters at 30-minute intervals. The station was manufactured by Coastal Environmental and is built around the ZENO® 3200 datalogger. Data communication is via an Iridium satellite modem. Data is downloaded using a companion base station located in the United States. The weather station uses a stand-alone tower with sensors to obtain the following parameters:

 

·Wind direction (degrees)
·Wind speed (m/s)
·Wind gust (m/s)
·Standard deviation of wind direction (degrees)
·Air temperature (°C)
·Relative humidity (%)
·Barometric pressure (mPa)
·SW solar radiation (W/m2)
·Rain intensity (mm/min)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-48

 

 

 

·Accumulative precipitation (mm) in precipitation bucket.
·Contents of precipitation bucket (mm3)
·Snow depth (mm) (installed Q2 2013)

 

Two new weather stations were purchased and installed this season to provide better coverage over the site.

 

Considering the types of recorded parameters, the Los Azules meteorological station meets the World Meteorological Organization (WMO) standards for a Principal Climatological Station.

 

Figure 4.1, Figure 4.2 and Figure 4.3, which were obtained from the site meteorological station, present monthly weather data for temperature, total precipitation, and wind speed. Snowfall accumulations are recorded by the station as snow-water equivalent. Snowfall in the Project area is light, although heavy winter accumulations are common on the two high passes on the access road.

 

 

 

Figure 4.1: Monthly Temperature Data Apr-17-Jun-18, Nov-19 (McEwen 2022)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-49

 

 

 

 

 

Figure 4.2: Monthly Total Precipitation Data – no data recorded Apr-17-Jun-18, Nov-19 (McEwen 2022)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-50

 

 

 

 

 

Figure 4.3: Monthly Wind Speed Data – no data recorded Apr-17-Jun-18, Nov-19 (McEwen 2022)

 

4.4local resources and infrastructure

 

The Project area is remote, and no infrastructure is present in the Project area. There are no nearby towns and/or settlements. Exploration operations are carried out by means of two-man camps within the Project development area.

 

Available Personnel

 

Historically, Villa Calingasta was a mining town whose economy was supported by the exploitation of alum deposits, which is used in water purification and gold mining at the Casposo mine. The United Nations Development Program (UNDP) and other national and international agencies have established programs to help remediate certain environmental liabilities associated with the alum mining activity.

 

The current principal economic activity of the area is agriculture with fruit trees (apple and walnut) as the principal activity, in addition to employment in the public sector. Lesser activities include the following:

 

·Timber and vegetables.
·Wood manufacturing activities.
·Cider manufacturing.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-51

 

 

 

·Tourism (hotels, restaurants).
·Commercial activities (shops).
·Public service (health, safety, education).

 

According to the Argentine National Census Bureau (INDEC) 2010 census, the population of the Calingasta Department (subdepartment) was 8,453 people. In 2015, the population was estimated to be 9,151 and was projected to be 9,641 by 2022. The 2022 census was not available at the time of writing this report.

 

Power

 

The 2022 PEA considers the cost of connection at the existing Calingasta substation and routing a 220 kV powerline parallel to the Exploration Road. A study by Energía Provincial Sociedad del Estado (Provincial Energy Society of the State, EPSE), a state-owned company, showed that the province was well suited to support the development of projects providing renewable energy to the province and projects.

 

For the initial phase of the project, an indicative price was received by YPF Luz that could provide 100% renewable power to the project for a cost of $67 per MWh for a 5-year contract.

 

Water

 

Surface water is available on the property in adequate amounts for McEwen Mining’s exploration activities. Preliminary hydrological evaluations conducted by Ausenco Vector have indicated that there are sufficient sources of water to operate the Los Azules mining and processing facilities and to provide the necessary fresh water needed to house employees at the mine site.

 

4.5topography, elevation and vegetation

 

The Project is in a broad valley, formed by faulting and glaciation, and is bounded by steep ridges to the east and west. The deposit is centered on La Ballena Ridge (English translation: the whale), a low NNW-SSE trending ridge. The Project area is rugged and ranges in elevation from 3,500 to nearly 4,500 masl. Vegetation is sparse and is absent at higher elevations.

 

Long, narrow vegetated areas (“vegas” in Spanish) occupy the valley floors on either side of La Ballena. The vegas areas are fed by ephemeral spring-water and snowmelt, but also reflect the groundwater regime as well, with standing water levels at approximately 3,600 m in elevation. Springs are noted at approximately 3,790 m in elevation upstream of the vegas along the west side of La Ballena Ridge. Groundwater-fed springs and marshes are also noted around the range to the west of La Ballena between 3,800 and 3,900 m in elevation and along the eastern flank of the Cordillera de la Totora. The vegas areas feed the westerly flowing Rio La Embarrada, which joins the Frío River to the west before turning south into the Rio de las Salinas, a main tributary to the San Juan River.

 

Deposits of glacial debris (morainal materials) and scree account for much of the surface area covering the Los Azules Deposit and adjacent mountainsides. In the area of the deposit, these materials locally exceed 60 m in thickness, but on La Ballena Ridge, the cover is less, starting at 10 m thickness.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-52

 

 

 

4.6Availability of Area for Mine and Processing Facilities

 

The area around Los Azules provides limited options for siting of the Heap Leach Facility (HLF), Filtered Tailings Storage Facility (FTSF), Mine Rock Storage Facility (MRSF), low-grade process stockpile, the processing facilities and other infrastructure needed. All facilities and permanent infrastructure considered in this PEA are located within areas where ACMSA has both mining and surface rights, or a current easement at this time.

 

The exact location of the project development surface facilities is yet to be finalized and requires hydrogeologic and geotechnical site investigations to support detailed design work to be performed.

 

The proposed Site General Arrangement of the various project facilities is presented in Figure 1.4. This is further described in Sections 13, 14, and 15.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-014-53

 

 

 

5.0History

 

There are no formal records of exploration in the Project area prior to 1980. The only important active project in the area prior to 1980 was the El Pachón Porphyry Copper Project, now owned by Glencore plc (Glencore), which is located approximately 90 km south of Los Azules. Evidence of prospecting (small trenches or pits) exists on some of the concessions.

 

5.1property history

 

In 1994, Minera Andes, through its subsidiary Minera Andes S.A. (MASA), acquired lands in the southern portion of the Los Azules area. Battle Mountain Gold Company (BMG) acquired lands immediately to the north through an option from Solitario Argentina S.A. (SASA). For the next couple of years, both companies independently explored for gold on their respective land holdings.

 

In 1998, a new access road was constructed by BMG while it conducted airborne geophysical surveys, mapping, trenching, and drilling several reverse circulation (RC) holes. A large hydrothermal alteration zone associated with dacite porphyry intrusions and stockwork structural zones was recognized in the Project area and Minera Andes signed a Letter of Intent with BMG to form a joint venture to explore the combined land package.

 

In 1999, Minera Andes and BMG signed a definitive joint venture agreement. BMG subsequently drilled additional RC holes and porphyry copper mineralization was intersected close to the property boundary; however, no drilling was done on the Minera Andes properties.

 

In 2000, BMG merged with Newmont Mining Corporation (NMC). No further work was done by BMG/NMC, and the joint venture was allowed to dissolve without BMG earning any interest in the Minera Andes or Solitario lands. At that time, capitalizing on a surveying error, Mr. Hugo Bosque, an attorney from San Juan, acquired a small strip of land between the Minera Andes and Solitario lands.

 

In 2003, MIM Argentina S.A. (MIM) optioned the Bosque and Solitario lands and began exploration work. Independently, Minera Andes began exploration on its own lands at Los Azules.

 

In 2005, a Letter of Intent was drafted between Minera Andes and Xstrata Copper (successor to MIM) for earn-in rights on the combined land package. More exploration occurred over the next couple of years.

 

International Copper Mining, Inc was incorporated in British Columbia, Canada on March 2, 2006, to hold ownership of exploration properties including the Los Azules property.

 

On November 2, 2007, Minera Andes Inc. entered into an Option Agreement with Xstrata whereby the exclusive right was granted to Minera Andes to explore and evaluate the area called “Los Azules” which included several properties owned by Xstrata as defined in the Option Agreement.

 

On May 15, 2009, the parties to the Option Agreement, together with Andes Corp. and Los Azules Mining, Inc. (LAMI), each wholly owned subsidiaries of Minera Andes, signed an Assignment and Amending Agreement whereby Minera Andes properties “Azul 1” and “Azul 2” were transferred to Andes Corp. together with the right to acquire from Xstrata 100% interest in and to the Los Azules properties (as defined in the Option Agreement). In addition, Minera Andes S.A. assigned and transferred to LAMI all of MASA’s right, title, benefit, and interest in, to and under the Option Agreement (as defined in the Assignment and Amending Agreement).

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-015-54

 

 

 

On May 29, 2009, Los Azules Mining Inc., exercised the option, by delivery of an Earn-in Notice (pursuant to the Option Agreement as amended by the Assignment and Amending Agreement) to acquire 100% interest in Los Azules properties (as defined in the Option Agreement). Therefore, Xstrata subsequently transferred to Andes Corp. all its properties located in the Los Azules area.

 

On September 30, 2009, Xstrata elected not to exercise its option to acquire a 51% interest in the Project and has no remaining interests in Los Azules.

 

In January 2012, Minera Andes Inc., was acquired by US Gold Corporation, which was subsequently renamed McEwen Mining.

 

Certain portions of the northern part of the Project that were formerly held by Xstrata and transferred to Minera Andes following the termination of the Option Agreement were subject to an underlying option agreement between Xstrata and a subsidiary of TNR Gold Corp. This agreement was the subject of litigation in the Supreme Court of British Columbia, Canada.

 

The final Transfer Agreement between TNR Gold Corp (along with Compañia Minera Solitario Argentina S.A.), and McEwen Mining (including Los Azules Mining Inc. and Andes Corporacion Minera S.A.) was executed on October 16, 2014, superseding the prior settlement agreement and transferred all rights on the Solitario Properties from TNR to McEwen Mining in exchange for an NSR royalty of 0.4% and TNR relinquishing the back-in right. The NSR terms are subject to a Net Smelter Returns Royalty Agreement executed on October 29, 2014, between Compañia Minera Solitario Argentina S.A. and Andes Corporacion Minera S.A.

 

International Copper was continued from the province of British Columbia to the province of Alberta on December 31, 2012, as International Copper ULC. The Corporation was converted to a limited liability corporation and changed its name to McEwen Copper Inc. by way of articles of amendment dated August 20, 2021. At the creation of McEwen Copper Inc., the company held a 100% interest in the Los Azules Copper Project. McEwen Mining Inc. also transferred a 100% interest in the Elder Creek Exploration Project to McEwen Copper to create a copper investment vehicle.

 

In 2018, ACMSA filed a request to group all the Mining Permits together, file #1124.553-A-2018, in such a way that, once all surveys are approved, all the Mining Permits be considered as one larger Mining Permit. If successful, this would allow investments to be distributed across the larger permit group and eliminate the need to spend on each individual Mina.

 

In July 2021, a private placement financing was initiated for McEwen Copper seeking to raise USD $80 million at a price of USD $10.00 per common share. This financing, subsequently closed in full, in three tranches on August 23rd, 2021, June 21st, 2022, and August 31st, 2022, respectively. On August 23rd, 2021, a company controlled by Robert R. McEwen (Chairman and Chief Executive Officer of McEwen Mining) purchased 4,000,000 shares for USD $40,000,000. On June 21st, 2022, the Victor Smorgon Group purchased 1,000,000 shares for $10,000,000 and other investors purchased 500,000 shares for an additional $5,000,000. On August 30th, 2022, Nuton LLC (a Rio Tinto Venture) purchased 2,500,000 shares for USD $25,000,000 and other investors purchased 185,000 shares for an additional USD $1,850,000. In total, 8,185,000 shares were sold in the private placement for gross proceeds to McEwen Copper of USD $81,850,000.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-015-55

 

 

 

During 2022, a 1.25% net smelter return (NSR) royalty was created encumbering the Los Azules Project, which is held by McEwen Mining Inc.

 

As of December 31, 2022, McEwen Copper had 25,685,000 common shares issued and outstanding on a fully diluted basis, of which 17,500,000 common shares were owned (68.1%) by its parent company McEwen Mining Inc., and 8,185,000 common shares were owned by third parties and some affiliates.

 

The challenge by ACMSA for the peripheral properties under threat of forfeiture, Gina, Sofia, Torora II, and Marcela, was resolved in the company’s favor and the forfeited rights were returned by the Mining Council on December 29, 2022.

 

FCA Argentina S.A., a subsidiary of Stellantis N.V. (“Stellantis”), invested ARS $30 billion in Argentina to acquire shares of McEwen Copper in a two-part transaction that closed on February 24th, 2023.

 

Nuton invested $55 million to acquire shares of McEwen Copper in two transactions which closed on August 31, 2022, and March 15th, 2023.

 

Both the Stellantis and Nuton investments included investor rights and product purchase rights, discussed in detail in Section 1.1.

 

As of 2023, ACSMA/McEwen Copper continues to hold 100% of the Los Azules development, associated land holdings and mineral concessions and easements, while continuing to perform seasonal infill drilling and studies with a view to eventual project development.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-015-56

 

 

 

6.0geological setting, mineralization, and deposit

 

This section relies heavily on geological studies conducted by Richard Sillitoe (2014) and Vázquez (2015) as well as other references cited in the section. A description of the techniques used in the geological modelling used as a base for the mineral resource estimate is provided later in Section 11.3.

 

6.1regional geology

 

Los Azules is a porphyry copper deposit located in western San Juan Province in west-central Argentina. This region is characterized by a series of north-south elongated mountain ranges that rise in altitude from east to west to form the rugged Andean Cordillera along the border between Argentina and Chile. Los Azules lies within the highest altitude Cordillera Principal at an elevation of about 3,700 masl (Figure 6.1).

 

The Cordillera Principal is composed of strongly folded, faulted, and elevated Paleozoic-Mesozoic sedimentary and volcanic lithologies (Gondwanide orogeny) overlain by extensive Upper Miocene ignimbrites (Andean orogeny) as shown in Figure 6.2. Eocene to early Miocene volcaniclastic strata in the region accumulated in an extensional basin followed by plutonic intrusion and contractional deformation from 19 Mya to 16 Mya. These units were overlain and intruded by 16 Mya to 7 Mya volcanic flows and pyroclastic units with comagmatic 12 Mya to 8 Mya plutons and porphyry systems. This was followed by a compressional event at 8 Mya to 5 Mya with important crustal shortening, thickening, and regional uplift (Sillitoe and Perello, 2005). Figure 6.2 also shows the relative locations of other major mining projects in the area.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-57

 

 

 

 

 

Figure 6.1: Physiographic features of San Juan Province, Argentina (Rojas 2010)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-58

 

 

 

 

 

Figure 6.2: Regional geology of the Andean Cordillera of Argentina and Chile (Rojas 2010)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-59

 

 

 

6.2property geology

 

Los Azules has been geologically mapped on at least four separate occasions (Rojas, 2007; Zurcher, 2009; Almandoz, 2010; Pratt, 2010). The entire area comprising the Los Azules Deposit is covered by thick scree or valley fill, so none of the rocks or structures are exposed in outcrop, although some near-surface exposures have been exposed in shallow trenching at the crest of the La Ballena Ridge. Consequently, the interpretation of the structures and intrusive bodies is based almost entirely upon drill hole data.

 

In many respects, the Los Azules Deposit is a classic Andean-style porphyry copper deposit. In the bedrock below the surface cover, a barren leached zone overlies a zone of secondary supergene enrichment of variable copper grades and thickness, and primary hypogene mineralization extends to at least 1,000 m below the present surface. The Los Azules hydrothermal alteration system is at least 5 km long and 4 km wide and is elongated in an NNW direction along a major structural corridor. The system disappears below volcanic cover to the north, so the overall extent is unknown. The altered zone surrounds the Los Azules Deposit, which is approximately 4 km long by 2.5 km wide. The limits of the mineralization along strike and at depth have not been entirely constrained by drilling. In fact, many of the holes in the core resource area have been terminated in mineralization that exceeds the resource cut-off grade.

 

Hypogene minerals include chalcopyrite, lesser bornite, chalcocite-digenite, idaite and trace molybdenite, magnetite and lesser hematite, usually deposited on igneous mafic minerals. Chalcopyrite is the most important hypogene copper mineral in the upper levels of the deposit, and hypogene bornite appears at deeper levels together with chalcopyrite. Copper sulfides rarely exceed 2% to 3% of rock volume. Intervals of 0.1% to 0.35% copper are common in hypogene mineralization. Silver (approximately 1 gram/tonne), anomalous gold (up to approximately 150 parts per billion) and molybdenum (up to approximately 600 parts per million) are reported in some intersections.

 

Circulation of meteoric ground water leached primary sulfides (mainly pyrite and chalcopyrite) from the host rocks over the past several million years, and the leached copper was redeposited below the water table in a sub-horizontal zone, or blanket, of supergene enrichment as secondary chalcocite and covellite. The intensity of secondary enrichment diminishes with depth, except along major structures where it may extend to great depth.

 

Starting at the boundary between the barren leached zone and the supergene mineralization, secondary enrichment mineralization gradually transitions to predominately hypogene mineralization at depth.

 

Sillitoe (2014) examined about 9,000 m (approximately 25% at the time) of the available drill core and proposed a revised geologic interpretation for Los Azules, which is shown in Figure 6.3.

 

Vázquez (2015) subsequently relogged 44,000 m from 98 drill holes representing essentially all the drill core available at that time. Vázquez confirmed Sillitoe’s interpretation, and he also refined the temporal sequence and spatial distribution of distinct phases of alteration and mineralization.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-60

 

 

 

 

 

Figure 6.3: Model for Los Azules (pink: potassic alteration, green: chloritic alteration, blue: sericitic alteration, yellow: advanced argillic lithocap), (Sillitoe, 2014)

 

Sillitoe recognized the presence and importance of an early mineralized porphyry dike phase of igneous intrusion. Much of the hypogene mineralization as well as the supergene mineralization is associated with this phase; later dikes are not as well mineralized. Sillitoe referred to the later dikes as “inter-mineral” stage dikes.

 

Vásquez established the following chronological sequence of igneous and hydrothermal events at Los Azules, and these will be described in the following sections.

 

1.Intrusion of dioritic stock or pre-mineral pluton (DIO / PMP).
2.Pervasive chlorite-magnetite alteration accompanied by chalcopyrite mineralization in the upper levels of the pluton grading into potassic alteration with chalcopyrite and bornite mineralization at depth.
3.Intrusion of the early mineralized porphyry dike phase (EMP).
4.Intrusion of the later “inter-mineral” phase porphyry dikes (IMP) and formation of magmatic- hydrothermal breccia bodies.
5.Late sericite alteration accompanied by pyrite and chalcopyrite.
6.Formation of erratic quartz veins containing base and precious metals.
7.Supergene enrichment.

 

The most relevant geologic features to the current project considered are briefly discussed in the following sub-sections.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-61

 

 

 

Supergene Enrichment

 

Supergene mineralization at Los Azules comprises a sub-horizontal chalcocite-covellite supergene blanket (“enriched” zone) that grades downwards through a partially enriched zone of incomplete replacement (mixed hypogene-supergene sulfides) into underlying hypogene sulfide mineralization. A sterile oxidized leached cap overlays the supergene blanket. Sillitoe considered that the enriched zone is immature because of the relative youthfulness of the supergene processes, which was probably active only since about 4 Mya –5 Mya.

 

The leached cap ranges from 0 m to 180 m thick and consists of oxidized and argillic-altered rock. Limonitic boxworks and disseminated spots of jarosite, goethite, and hematite are common. Hematite is more abundant in the southern structural block; jarosite is best developed over the central block, while goethite appears more widespread in the northern block (Zurcher, 2008a). Primary magnetite is altered to hematite, and ferrimolybdite also occurs (after molybdenite), but copper minerals and sulfides are mostly absent (Rojas, 2008). Copper oxides are reported from the margins of the leached zone and include brochantite, minor cuprite, copper pitch, and copper wad. Copper grades in the leached cap range between 0.01% and 0.10%.

 

Beneath the leached cap, a thin mixed sulfide-oxide zone gives way to a supergene sulfide zone where hypogene sulfides are replaced by chalcocite and minor covellite. The supergene copper blanket is best developed in the central and central-northern structural sectors and is characterized by a more jarositic oxide cap in the pyritic phyllic-altered zone located directly above the potassic alteration zone. Supergene (earthy) chalcocite and minor covellite partially (or rarely) completely replace hypogene sulfides, but pyrite usually survives. Traces of native copper and gypsum after anhydrite occur in the underlying potassic alteration zone.

 

The thickness of the supergene chalcocite blanket typically varies between 60 m and 250 m but can penetrate to more than 400 m down structures. The intensity of supergene mineralization gradually decreases with depth from the top of the zone, and there is typically no distinct lower limit or boundary to the zone of enriched mineralization (Sim and Davis, 2015). Also, see Section 14 for a geostatistical review and explanation.

 

Copper values in the supergene enriched zone vary between 0.4% Cu to greater than 1.0% in the north-central part of the system and decrease to 0.2% to 0.4% Cu in the south and peripheries. Supergene mineralization is the most important mineralization of economic interest at Los Azules.

 

Cyanide soluble copper data is used to interpret the distribution of supergene enrichment mineralization. Mineralization with a ratio of cyanide soluble copper content to total copper content >50% is “enriched”. See Section 11.3.6 for further details on the Copper Mineral Zonation Model. The limits may be modified slightly in places to match mineralization observed in the drill core. Figure 6.4 shows the enriched mineralization and the early mineralized dike. Lithology, alteration zones, and structures have been removed from the illustration for clarity, except the early mineralized porphyry dike. Supergene mineralization penetrates all lithologies and alteration types, and supergene mineralization appears to extend to greater depths along fault structures.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-62

 

 

 

 

Figure 6.4: Early Mineralized Porphyry (magenta) with supergene enrichment zone (red) defined as the Soluble Cu ratio >50%. (McEwen Copper, 2022)

 

Structural Geology

 

Triassic volcanic country rocks at Los Azules are deformed into an anticline or monocline with the steep limb in west and the flat limb in the east (Pratt, 2010). The anticlinal axis strikes north and may coincide with the NNW-striking structural corridor that controlled the locations of volcanic-intrusive centers in the region during the upper Miocene (Rojas, 2008). Near Los Azules, this structural corridor appears to control the locations of porphyry dikes, hydrothermal alteration, and mineralization zones along a seven-kilometer strike length including the Los Azules Porphyry System (Rojas, 2008).

 

The porphyritic dikes at Los Azules were emplaced along numerous, strong north-northwest and northwest striking faults (Zurcher, 2008a). Based on the few surface exposures, Zürcher proposed a steep easterly dip for most of the north-northwest striking faults. Sillitoe and Vásquez both noted that evidence from diamond drill core indicates that these structures were active as faults during as well as after the deposition of the mineralization because post-mineral movement is evidenced by slickensides in areas with supergene mineralization.

 

Pratt (2010) interpreted a kinematic structural model of the Los Azules Porphyry Copper Deposit. The Piuquenes Fault is part of the north-northwest striking “Vegas” fault system described by Rojas (2008). The northwest-striking faults were named Azules by Rojas (2008). Porphyry-related quartz veins (blue) and deeper level and older (than epithermal) alunite and vuggy quartz silicified ribs (red) are shown in Figure 6.5.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-63

 

 

 

 

Figure 6.5: Kinematic structural interpretation of Los Azules porphyry copper deposit (Pratt 2010)

 

6.3other mineralization

 

Battle Mountain Gold explored Los Azules during 1998-1999 for gold and drilled three at La Hoya in the extreme northwest of the area, without significant success. The company may have been attracted by hydrothermal breccias with associated kaolinite-illite-dickite-quartz-alunite alteration that are reported in volcanic lithologies intruded by small intrusions and dikes of feldspar porphyry in the Cerros Centrales (Cerro Oeste) area.

 

Indications of potential gold-silver mineralization around the Los Azules porphyry copper system include late-stage, intermediate-sulfidation epithermal quartz veins described by Pratt (2010).

 

The existence of a thick leached cap and supergene chalcocite blanket at Los Azules indicates that oxidation, dissolution, vertical transportation and redeposition of copper occurred in the system. Copper may also have been transported laterally away from the deposit and redeposited to form so-called “exotic” copper mineralization (Sillitoe, 2010). No exploration for this style of mineralization has yet been undertaken in the vicinity of Los Azules.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-64

 

 

 

6.4deposit types

 

Los Azules is located within the Central Chile segment (400 km-long) of the Miocene-early Pliocene porphyry copper belt (6,000 km-long) of the North and Central Andes as shown in Figure 6.6. The figure also shows locations of the major porphyry copper and related epithermal deposits, limits of the porphyry copper belt and permissive northwest-trending structural corridors that influence the location of mineralization along the porphyry belt. Porphyry copper deposits in this sub-belt include the world-class Los Pelambres (Cu-Mo), Rio Blanco-Los Bronces (Cu-Mo) and El Teniente (Cu-Mo) Porphyry Deposits, the Maracunga Belt Porphyries (Cu-Au) in Chile and El Pachón (Cu) and Bajo de la Alumbrera (Cu-Au) in Argentina, as well as numerous other porphyry and related deposits (Sillitoe and Perello, 2005).

 

Panteleyev (1995) describes the common features of porphyry deposits as large zones of hydrothermally altered rock containing quartz veins and stockworks, sulfide-bearing veinlets, fractures, and lesser disseminations in areas up to 10 km2 in size. These are commonly associated intrusion breccias and/or dike swarms.

 

Deposit boundaries are determined by economic factors that define mineralized zones located within larger areas of low-grade, often concentrically zoned mineralization. Important geological controls on porphyry mineralization include igneous contacts, cupolas and the uppermost, bifurcating, parts of stocks and dike swarms. Intrusive and hydrothermal breccias and zones of intensely developed fracturing, respectively due to intersecting or parallel multiple mineralized fracture sets, commonly coincide with the greatest metal concentrations.

 

Surface oxidation commonly modifies porphyry deposits in weathered environments. Low pH meteoric waters leach copper from the oxide zone, which is then transported and redeposited as secondary chalcocite and covellite, usually immediately below the water table to form sub- horizontal, tabular zones of supergene copper enrichment. This process forms a copper-poor leached cap above a relatively thin, but often high-grade, zone of supergene copper enrichment that itself caps a thicker zone of often moderate grade hypogene copper mineralization at depth.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-65

 

 

 

 

Figure 6.6: Part of the Central Chile Segment of the Miocene-early Pliocene Porphyry Copper Belt (Rojas 2008)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-66

 

 

 

Other deposit styles often spatially, temporally, and genetically associated with porphyry deposits include:

 

·Exotic copper deposits, formed by the lateral migration of copper-bearing fluids away from the main body of porphyry mineralization.
·Mineralized breccia pipes, skarns, sedimentary replacements (mantos) and precious metals-bearing mesothermal-epithermal vein deposits located peripheral to and progressively distant (laterally and vertically) from the porphyry copper center as shown in Figure 6.7.

 

The figure shows the spatial relationships between a porphyry copper system and its surrounding environment, including host rocks and peripheral styles of mineralization such as skarns, carbonate replacement (chimney-manto), sediment-hosted disseminated sulfides, mesothermal polymetallic veins, and higher-level high/intermediate/low sulfidation epithermal gold-silver veins and disseminated deposits.

 

 

Figure 6.7: Diagram Showing Spatial Relationships between a Porphyry Copper System and the Surrounding Environment (Sillitoe 2010)

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-67

 

 

 

 

 

Figure 6.8: Example Cross-Section (Section 40) of the Deposit showing the Main Lithological Units

 

 

 

Figure 6.9: Generalized Volcano-Stratigraphic Column of the Los Azules Copper Porphyry Deposit

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-016-68

 

 

 

7.0exploration

 

7.1exploration history

 

Exploration at Los Azules commenced in the mid-1990s and has included various studies of geology, geophysics, and geochemistry, as well as drilling with both reverse circulation and diamond core drills, sampling and analysis of surface and drill core samples, and road construction. Exploration was conducted successively, and sometimes in cooperation, by Battle Mountain Gold, MIM-Xstrata, and Minera Andes/McEwen Mining and McEwen Copper, principally by the latter company.

 

7.2Geological Mapping and Studies

 

The most comprehensive and up-to-date geological map of Los Azules was produced by Pratt and Bolsover in 2010, as described in Section 6.2. An earlier detailed geological map, with cross sections, was compiled by Rojas (2007); Almandoz (2010b) produced a geological map at a 1:5000 scale, and Zürcher (2008a) made a detailed map of the central portion of the north-northwest-trending La Ballena Ridge that focused on hydrothermal alteration and mineralization.

 

Petrographic studies of polished sections collected by Zurcher from drill cores, and surface samples were initially studied by DePangher (2008) in Oregon, and then by GEOMAQ in Santiago de Chile (Rojas, 2010). Zurcher (2008b) reported a series of U-Pb age dates for the igneous intrusions.

 

In 2014, Sillitoe examined about 9,000 m (approximately 25% at the time) of the diamond drill core and proposed a revised geologic interpretation for Los Azules, which is described in Section 6.2. Sillitoe recognized the presence and importance of an early mineralized porphyry dike phase of igneous intrusion. Much of the hypogene mineralization as well as the supergene mineralization is associated with this phase; later dikes are not as well mineralized. In 2015, Vázquez relogged 44,000 m from 98 drill holes representing essentially all the drill core at the time. Vázquez confirmed Sillitoe’s interpretation, and he also refined the temporal sequence and spatial distribution of distinct alteration phases and mineralization zones as described in Section 6.2.

 

7.3GEOPHYSICS

 

Various geophysical studies were conducted at Los Azules by Battle Mountain Gold and by MIM-Xstrata respectively in 1998-1999 and 2004 and by Minera Andes (Quantec) in early 2010 and McEwen Mining (Quantec) in 2012. Work done and results for these surveys are described in the following section.

 

7.3.1 Battle Mountain Gold (1998-99)

 

GEODATOS, a Chilean geophysical company, conducted an airborne geophysical survey in early 1998. The survey covered a 20 km by 10 km area elongated east-west including the Los Azules and Paso de la Coipa areas.

 

Results suggested the existence of a structural corridor striking northwest and structures striking east- northeast associated with strong to moderate magnetic low signatures in the Los Azules mineralized body. A total field magnetic plot identified a magnetic high anomaly surrounding a central magnetic low that extended 6 km north-northwest and 3 km northeast as shown in Figure 7.1. Battle Mountain Gold interpreted the magnetic low as altered rocks associated with the mineralized body.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-69

 

 

 

Four lines of induced polarization (IP) were oriented east-west averaging two kilometers long and spaced at 600 m to 900 m apart. The lines were positioned to cross the locations of mineralized drill holes LA04-98, LA-06-98, and LA-08-98. IP results indicated high chargeability and low resistivity corresponding with the location of the Los Azules porphyry copper deposit.

 

Two ground magnetic surveys totaling 103 km were conducted in the Los Azules mineralized porphyry and the nearby Sector Mantos, which is 1 km west of Cerro Oeste.

 

Lines were oriented east-west at 100 m spacing and 10 m stations. Results confirmed the existence of north-northwest- and north-northeast-striking structures as indicated by aeromagnetics. Results also confirmed the presence of a magnetic low anomaly in the vicinity of drill holes LA-98-04, LA-98-06 and LA-98-08 and suggested the presence of a magnetic low along the alteration system of La Ballena Ridge as shown on Figure 7.1.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-70

 

 

 

 

 

Figure 7.1: Magnetic Map of Los Azules (Reduced to Pole) and IP lines. (Rojas, 2008 after Xstrata, 2003).  Note: Red box indicates the mag low across the Ballena Ridge.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-71

 

 

 

7.3.2 MIM Xstrata (2003-2004)

 

During 2003-2004, MIM-Xstrata carried out a magnetic survey of approximately 70 km at Los Azules. Lines were oriented east-west across the area controlled by the company at that time. In addition, MIM-Xstrata ran six lines of MIMDas (MIM-Xstrata proprietary IP system) east-west totaling 11.8 km. At the request of Minera Andes, MIM-Xstrata extended their geophysical lines south into Minera Andes ground completing five additional lines for a total of 11.3 km in 2004. Total surveying by MIMDas was 23.1 km.

 

Magnetometry indicated a magnetic low beneath the Los Azules porphyry copper system and suggested that it extended north-northwest towards the La Hoya Zone (Cerros Oeste and Este). The total field plot identified a magnetic high anomaly surrounding the magnetic low. The magnetic low extends 7 km to 8 km north-northwest and up to 2 km east-northeast confirming the interpretations made by Battle Mountain Gold.

 

MIMDas IP surveying (2003-2004) indicated high resistivity in the north-northwest zones at Los Azules with much lower resistivity within the porphyry copper system. Chargeability is relatively low to the north but becomes much lower at the porphyry although it increases significantly at depth. These results reflect the occurrence of more superficial sulfides in the Lagunas area of the system (north of the porphyry deposit) and a thicker leached cap in the more altered part of the system.

 

7.3.3 Minera Andes TITAN 24 Survey (2010)

 

Titan-24 DCIP-MT data were acquired at Los Azules during April and May 2010 by Quantec Geoscience Ltd., on behalf of Minera Andes Inc. The survey consisted of twelve parallel lines and each line comprised one single spread of 3.6 km, except for L63450 N that was 3.3 km long. Full MT tensor data was acquired in all the lines and DCIP was collected in all but two of the lines. In total, ten spreads of DC and IP data were acquired covering 35.7 km and twelve spreads of MT covering 42.9 km.

 

Over 130 IP anomalies were identified. Of these, 20 were classed as priority 1, 20 as priority 2, and 12 as priority 3. The priority 1 anomalies are larger targets, at least 200 m across, and described by Quantec as being consistent with the porphyry and near- porphyry mineralization model.

 

Two large, deep resistivity anomalies, one high to the east, under the Los Azules mineralization, and one low to the west are well defined by the MT survey. The width of the anomalies is 800 m to 1 km for the resistivity low and 500 m to 800 m for the resistivity high. Quantec postulated that the deep anomalies are most likely related to conductive sulfides, perhaps in a disseminated pyrite/sulfide shell surrounding a concealed porphyry intrusion. These anomalies, which are referred to as the “Southwest Target”, are the targets that were tested in Hole T-01B in 2011 and Hole 1279 in 2012 (Figure 7.2).

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-72

 

 

 

 

 

Figure 7.2: Section 58,400N Showing 2D IP Inversion Anomaly (Southwest Target) (McEwen 2012).

 

7.3.4 McEwen Mining: Ground Magnetic Survey (2012)

 

During January 2012, Quantec Geoscience Argentina S.A. performed a ground magnetic survey on the southwest portion of the Project. The data was presented as maps of the Total Magnetic Field, Reduction to the Pole transform, Analytic Signal, Tilt Derivative and First Vertical Derivative.

 

Figure 7.3 is the Total Magnetic Field map for the 2012 survey overlain on the image shown in Figure 7.1. The 2012 magnetic data shows a discontinuous north-northwest trending magnetic low southwest of and roughly parallel to the prominent magnetic low that corresponds to the location of the main Los Azules Deposit.

 

Areas of high magnetic response indicate the presence of elevated levels of magnetic minerals, such as magnetite, pyrrhotite, and hematite, whereas areas of low magnetic response may be caused by alteration processes such as magnetite destruction or may simply indicate rock types with no magnetic minerals. This anomaly was tested with one drill hole during the 2012 season and intersected only traces of copper mineralization.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-73

 

 

 

 

 

Figure 7.3: Total Magnetic Field Map of Los Azules. (Quantec, 2012).  Note: Dashed red box indicates the mag low across the Ballena Ridge seen above in Figure 7.1 – the solid red box indicates the discontinuous mag low to the southwest.

 

7.4SURVEYS AND INVESTIGATIONS

 

Mineral exploration at Los Azules has been carried out successively by Battle Mountain Gold, MIM-Xstrata and Minera Andes-McEwen Mining, McEwen Copper and/or professional consultants or contractors employed by these companies.

 

In 2017, McEwen Mining engaged consultant Rodrigo Diaz to conduct an evaluation of remote spectral geology (RSG) over a 17 km by 20 km area at Los Azules and later extended to include an area 38 km by 42 km. Spectral data of Landsat 8 (30-15 m pixel and 16-bit radiometric resolution), spectral data of Aster (30-15 m pixel and 8-bit radiometric resolution) were selected and used; additionally, spectral data of the Sentinel 2 (20-10 m pixel and 16-bit radiometric resolution) and Sentinel 1-Radar (10 m pixel).

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-74

 

 

 

In 2022, McEwen Copper undertook a program of continuous hyperspectral scanning and high-resolution core photography on the entire available archive of drill core completed in 2022 and previous programs stored at Calingasta. By July 2022, this represented some 64,000 m of scanned material available to augment completion of an updated geological model and support the design of the ongoing metallurgical program. This work is expected to be a protocol for all future drill programs.

 

Also in 2022, McEwen Copper engaged the services of Murphy Geological Services to complete a structural interpretation of Sentinel-2 and high-resolution imagery of the Los Azules property and immediate surrounding area. Sentinel-2 is a new earth observation sensor with 13 spectral bands having resolutions up to 10 m which was launched by the European Space Agency in June 2015 and is a significant improvement on the 15 m resolution pan-sharpened Landsat-7 and ASTER data and allows more detailed structural analysis. An interpretation of a 45 km (E-W) by 35 km (N-S) Sentinel-2 extract centered on Los Azules was undertaken at up to 1:10,000 scale and a more detailed structural analysis of high-resolution satellite imagery for Los Azules Project area at up to 1:2,000 scale.

 

Completion of the Diaz work in 2017 and Murphy work in 2022 is foundational to designing and re-establishing more regional reconnaissance exploration at Los Azules.

 

7.5FUTURE EXPLORATION

 

The goals of future exploration at Los Azules include the establishment of upside potential on the property, ongoing geological model refinements, deposit growth, resource category upgrades, and identification/discovery of new porphyry mineralization as extensions of the Los Azules Deposit, as well as new porphyry systems.

 

Future exploration work programs should carry out reconnaissance study, field mapping, geophysical surveying, and core drilling to achieve these goals. More specifically, these activities should include:

 

·An updated regional scale Spectral study for alteration definition, characterization of known mineralization, and generation of new targets.
·Satellite-based litho-structural mapping to complement updated spectral study.
·Reconnaissance geological mapping and geochemistry to increase geological and structural understanding of the known mineralization, to ground truth interpretations of the satellite mapping study and identification or refinement of potential exploration target areas.
·Continue core relogging and validation versus hyperspectral scanning results to ensure a unified geological model of the deposit supported by all datasets from current and historic programs.
·Reprocessing of the raw 2010 Quantec Titan Survey data.
·Strategic core drilling of interpreted Los Azules Deposit extensions and over selective high-quality exploration targets to be generated on the property.
·Continued infill core drilling to upgrade the priority portion of the resource based on goals of the planned Feasibility Study.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-75

 

 

 

7.6drilling

 

Drilling programs have been undertaken at Los Azules between 1998 and 2023 by four different mineral exploration companies including BMG, MIM Argentina (now Glencore), Minera Andes/McEwen Mining and McEwen Copper. Drilling included reverse circulation programs mostly for gold exploration and diamond drilling focusing on supergene and hypogene porphyry-style copper mineralization. Descriptions of these programs are detailed in the following sections. Table 7.1 provides a summary of the drilling information.

 

Table 7.1: Exploration Drilling by Year and by Company
Year Company No. of holes Meters
1998 Battle Mountain Gold 16 3,614
1999 Battle Mountain Gold 8 2,067
2004 Glencore Xstrata (MIM) 4 864
2003 - 2004 Minera Andes 9 2,064
2005 - 2006 Minera Andes 11 2,602
2006 - 2007 Minera Andes 17 3,501
2007 - 2008 Minera Andes 18 5,469
2009 - 2010 Minera Andes 28 10,229
2010 - 2011 Minera Andes 44 10,405
2011 - 2012 McEwen Mining 8 2,830
2012 – 2013 McEwen Mining 22 15,873
2017 McEwen Mining 17 6,469
2018 McEwen Mining 79 4,274
2022 McEwen Copper 65 23,811
2023 McEwen Copper 93 22,592
Total   439(1) 116,664

 

1.This table includes all drilling that has occurred on the property. Some holes were redrilled due to drilling difficulties and are not included in the database. Holes that were started in one season and completed the following season are counted in the year they were started, but the meters drilled in each season are shown for the respective seasons. The drilling reflects all holes to the effective date of May 9th, 2023.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-76

 

 

 

 

The drill plan showing collar locations by the year drilled is shown in Figure 7.4.

 

 

Figure 7.4: Plan Showing Locations of drill holes at Los Azules (CRM 2022)

 

7.6.1 Drilling Procedures and Conditions

 

Drilling by McEwen Mining Inc. was contracted to various drilling companies including Connors Drilling, Patagonia Drill Mining Services, Adviser Drilling, Boland Minera, Major Drilling, Foraco Argentina, HG Perforaciónes, Conosur, and Boart Longyear. Drilling conditions have been particularly difficult, especially in faulted intersections or in areas of unconsolidated surface scree/talus.

 

7.6.2 McEwen Copper (2022-2023)

 

Over the period of two drilling seasons from January 2022 to May 2023, McEwen Copper completed 40,815 m of core drilling in 99 holes. The primary purpose of the drilling was for mineral resource upgrading from Inferred to Indicated (66 holes for 28,221 m) and metallurgical purposes (33 holes for 12,594 m). A further 59 holes for 5,588 m drilled by RC, core and sonic drilling methods were used for geotechnical, hydrological, and ground investigation work in the area. Figure 7.4 shows the location and distribution of Los Azules drill holes based on core and RC drilling methods.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-77

 

 

 

7.6.3 Logging

 

Samples taken from drill holes at Los Azules are logged at the Project camp by geologists employed or contracted by McEwen Copper. Sampling procedures are described in Section 8.2. Emphasis is given to recording rock-types, alteration associations, types and distribution of mineralization, and the presence of various types of veinlets and structures. These features are logged onsite (Figure 7.5) and then transferred to a digital database.

 

 

Figure 7.5: Logging and inspection of drill core

 

Geotechnical observations and parameters are recorded, including percentage of core recovery, RQD, Schmidt Hammer hardness determinations, point load testing, fracture density and angle relative to the length of the hole, as well as fracture fill material (Figure 7.6). This information is transferred to the digital database.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-78

 

 

 

 

 

Figure 7.6: Geotechnical logging and data collection

 

Log sheets are coded, and details recorded for interval depth, interval width, lithology, alteration types, alteration intensities, alteration minerals, structure, percentage vein quartz, percentage total disseminated sulfides, mineralization minerals, mineral zone (hypogene or supergene), including observations of jarosite, goethite, hematite, covellite, chalcocite, pyrite, chalcopyrite, bornite among others.

 

7.6.4 Surveys

 

According to McEwen Copper staff, downhole surveying is done on drill holes by the drilling contractors using REFLEX and/or Sperry-Sun tools. Density determinations were made for 915 drill core samples prior to the 2022 drill program. During the 2022 campaign, a program of hyperspectral scanning of the entire available core archive of some 64,000 m was completed.

 

7.6.5 Drill Hole Results

 

There are a total of 439 drill holes in the Los Azules database, with a cumulative length of 116,664 m. A summary of the significant drilling results is found in Table 7.2 for campaigns prior to 2018, while Table 7.3 displays results for the 2022 drilling campaign.

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-79

 

 

 

Drilling has confirmed the presence of a hypogene porphyry copper deposit in a continuous body, as well as the presence and continuity of an overlying supergene chalcocite enrichment blanket. The extent of the mineral resource measures approximately 4 km north-south by 1.5 km west-east. Many of the drill holes in the central and northern parts of the deposit have been terminated in mineralization that exceeds the 2017 IA base case cut-off grade of 0.20% Cu. Drilling during the 2012-2013 campaign extended the depth of the mineralized system in the southwestern part of the deposit to at least 1,000 m.

 

Table 7.2: Examples of Significant Drilling Results Prior to 2022
Drill Hole ID TD (m) Intersection Interval (m) Total Copper (%)
From (m) To (m)    
AZ0401 195.0 130.0 195.0 65.0 0.62
Including 150.0 192.0 42.0 0.82
AZ0402 330.5 164.0 304.0 140.0 0.38
Including 164.0 190.0 26.0 0.47
Including 230.0 304.0 74.0 0.42
AZ0404 300.8 162.0 282.0 120.0 0.54
Including 162.0 202.0 40.0 0.59
Including 236.0 282.0 46.0 0.64
AZ0407 168.8 96.0 152.0 56.0 0.44
Including 126.0 152.0 26.0 0.58
AZ0610 261.4 174.0 261.4 87.4 0.83
AZ0611 270.7 112.0 270.7 158.7 0.51
AZ0614 224.6 132.0 180.0 48.0 1.13
Including 136.0 158.0 22.0 1.40
AZ0617 183.5 66.0 183.5 117.5 0.63
Including 66.0 124.0 58.0 0.84
AZ0619 299.4 78.3 299.4 221.2 1.62
Including 78.3 116.0 37.8 2.22
Including 134.0 146.0 12.0 3.94
AZ0620 253.3 80.0 226.0 146.0 1.10
Including 80.0 106.0 26.0 1.54
AZ0722 271.2 119.0 155.0 36.0 0.99
AZ0724D 278.2 124.0 160.0 36.0 0.79
AZ0729B 226.9 130.0 214.0 84.0 0.73
Including 172.0 204.0 32.0 0.94
AZ0730 342.6 123.0 323.8 200.8 0.89
Including 140.0 253.0 113.0 1.04
AZ0832 420.0 80.0 140.0 60.0 0.78
AZ0833 387.8 73.0 313.0 240.0 0.94
AZ0837A 541.0 326.0 516.0 190.0 0.82
AZ0841 400.2 241.0 285.0 44.0 1.83
AZ0843 176.0 67.0 131.0 64.0 0.69

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-80

 

 

 

Table 7.2: Examples of Significant Drilling Results Prior to 2022
Drill Hole ID TD (m) Intersection Interval (m) Total Copper (%)
From (m) To (m)    
AZ0946 469.4 110.0 469.4 359.4 0.63
Including 115.0 260.0 145.0 1.08
AZ1047 493.1 74.0 493.1 419.1 0.50
Including 102.0 182.0 80.0 0.92
AZ1048 466.1 105.0 466.1 361.1 0.77
Including 123.0 339.0 216.0 1.01
AZ1049 491.2 62.0 491.2 429.2 0.75
Including 62.0 298.0 236.0 1.05
AZ1050 408.5 94.0 408.5 314.5 0.30
Including 94.0 132.0 38.0 0.68
AZ1051 620.2 69.0 620.2 551.2 0.35
Including 363.5 426.0 62.5 1.12
AZ1052 425.0 103.0 425.0 322.0 0.42
AZ1053A 650.0 48.9 650.0 601.1 0.54
Including 122.0 230.0 108.0 1.03
AZ1055 408.5 116.0 408.5 292.5 0.55
AZ1056 295.3 70.0 295.3 225.3 0.47
Including 192.0 223.0 31.0 0.88
AZ1057 503.6 173.0 503.6 330.6 0.43
Including 173.0 225.0 52.0 0.84
Including 255.0 293.0 38.0 0.83
AZ1058 451.8 70.0 451.8 381.8 0.52
Including 96.0 181.0 85.0 0.99
AZ1059 656.4 88.0 656.4 568.4 0.47
Including 330.0 404.0 74.0 0.90
AZ1060A 402.5 116.0 402.5 286.5 0.50
Including 130.0 170.0 40.0 0.69
AZ1061A 293.4 71.0 293.4 222.4 0.90
Including 71.0 250.0 179.0 1.04
AZ1062 280.0 130.0 280.0 150.0 0.64
Including 130.0 248.0 118.0 0.70
AZ1063 427.1 94.0 427.1 333.1 0.72
Including 94.0 232.0 138.0 0.81
AZ1064 170.1 136.0 170.1 34.1 0.47
AZ1064A 404.4 120.0 248.0 128.0 0.75
And   248.0 404.4 156.4 0.39

 

Project Los Azules – S-K 1300 Technical Report SummaryProject No.: 21139-017-81