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McEwen Mining closes Black Fox gold mine buy for US$27.5M

McEwen Mining Inc. closed the acquisition of the Black Fox gold mine in Ontario from Primero Mining Corp.

McEwen Mining said Oct. 6 that the deal was closed at US$27.5 million after making certain price adjustments, as compared to the initial purchase price of US$35 million reported when the deal was announced in August.

The company noted that its recent US$46.6 million bought-deal offering provided the funds for the purchase. The balance of the proceeds will go toward future capital projects and exploration at Black Fox and may also be used for general corporate purposes.

As part of the acquisition, McEwen Mining will also gain access to US$150 million of development and exploration pools that can be applied to reduce the company's taxable income generated from within Ontario.

The Black Fox mine consists of a fully operational underground gold mine that is forecast to produce 50,000 ounces of gold in 2018, a 2,400-tonne-per-day mill, a workforce and the nearby Grey Fox and Froome development projects.

McEwen Mining reported that production costs at Black Fox have declined over the past year thanks to higher underground grades along with cost and operational improvements. All-in sustaining costs were US$827/oz for the second quarter.

The Black Fox and Froome deposits are subject to a gold streaming agreement with Sandstorm Gold Ltd., entitling Sandstorm to 8% of the gold produced at US$531/oz.