McEwen Mining's Offering of New Ordinary Shares Closes Today
- By Alberto Abaterusso
The closing of McEwen Mining Inc.'s (MUX) (MUX.TO) offering is scheduled for today, according to a news release published on the company's website Sept. 18.
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The intrinsic value of MUX
McEwen agreed on the basis of a bought deal underwritten arrangement to sell to a syndicate of underwriters - led by Cantor Fitzgerald & Co. - 18 million of its ordinary shares for total proceedings - gross of commissions and fees - of $40.5 million and warrants.
The warrants give the syndicate of underwriters the right to purchase extra McEwen Mining ordinary shares to a volume of 9 million units at a $2.70 exercise price.
The syndicate of underwriters has until the 53rd week from the closing to exercise the option.
The purchase price of one newly issued ordinary share of McEwen Mining has been set at $2.25.
In case the syndicate of underwriters purchases all the 18 million newly issued ordinary shares of McEwen and exercises all the warrants for an additional volume of 9 million ordinary shares, McEwen Mining will make total gross proceedings of $74.8 million for an effective selling price of $2.40 per share.
According to the agreement, the syndicate of underwriters has been granted by the Canadian mineral properties exploration and mining company a 30-day option either to purchase additional McEwen Mining's ordinary shares to a volume of 2.7 million units and to strike warrants to a volume of 1.35 million ordinary shares or alternatively to purchase the extra volume of ordinary shares or to strike the warrants to the fulfillment of the before mentioned limits.
McEwen said that it will "use the net proceeds of the offering to fund the acquisition of the Black Fox Complex and the Grey Fox Property, both located in the proximity of the Township of Black River-Matheson in the Canadian region of Ontario, and for working capital and general corporate purposes."
McEwen Mining is currently trading at $2.01 per share with a market capitalization of $627.68 million, a price-book (P/B) ratio of 1.32, a price-sales (P/S) ratio of 11.12 and an EV-EBITDA ratio of -50.30.
The forward price-earnings (P/E) ratio is 16.31.
One analyst forecasts a target price of $5 per McEwen Mining's share.
According to the Peter Lynch Chart, McEwen Mining is overvalued by the stock market.
The mining stock is downtrending and lost nearly 31% on the New York Stock Exchange year to date. McEwen Mining is trading only a few cents above its 52-week low of $1.98 per share. The 52-week high is $4.43 per share.
Disclosure: I have no position in McEwen Mining.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 4 Warning Signs with MUX. Click here to check it out.
The intrinsic value of MUX
