MUX Stock Tumbles on Undervalued Public Offering Proposal

MUX Stock

MUX stock is sinking on Wednesday after McEwen Mining Inc (NYSE:MUX) (TSX:MUX) announced plans for a public offering of up to 15% of its stock.

The mining firm announced the plans in a press release earlier today, which will see a public offering of 37.75 million units, which consist of one share of stock and one warrant to buy a share of common stock in the future. One unit will cost $1.325, raising $50 million USD in total, with each warrant exercisable to buy MUX stock at $1.7225 per share over the next five years. Roth Capital Partners and Cantor Fitzgerald Canada Corporation are acting as joint book-running managers for the offering.

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MUX shares are sinking today because the offering is valued well below what the stock has been trading at recently. However, the company is in need of the cash in order to continue its current mining and exploration projects. McEwen Mining is planning on launching development at its Gold Bar South mine in Eureka County, Central Nevada. Historical production at Gold Bar includes 134,000 gold ounces obtained between 1991 and 1994 from Gold Pick and Gold Ridge, at an average mining grade of 2.5 grams per tonne.

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MUX shares have dropped as much as 16% since the announcement of the offering, currently trading at $1.27 in New York and slightly above a May low of $1.23.

To further compound the declining value of MUX stock today, gold prices have stalled as of late after surging throughout most of 2019. US yields continued to move lower, which shows that the market is concerned about future growth, especially if a trade deal is not reached in Trump’s ongoing trade war with China. While a resolution had looked to be very near in recent weeks, the optimistic sentiment has soured as the US president believes that the Chinese delegation may be asking for too much.

Featured Image: DepositPhotos © Kacpura

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