Monday, February 23, 2009

McEwen, Goldcorp Founder, Bets Crisis Will Drive Gold to $5,000 - MAI, TNR, GG, AUY, Kinross

If you're reading this blog - the picture to the left of fireworks should be what you're going through right now...

Gold is back at $1,000/ounce. The mental barrier has been broken.

The New Promise, President Obama (as great as he is, one man can only do so much against decades of capitalism inflationary forces!), and various bailout attempts - has so far sputtered.

What would you rather believe in, printed paper or physical currency?


Feb. 11 (Bloomberg) -- Goldcorp Inc. founder Rob McEwen, who has more than $100 million in gold investments, said he expects the metal to top $5,000 an ounce as governments increase the money supply to combat recession.

Bullion will more than double to $2,000 an ounce by the end of next year before rising to McEwen’s target by the end of the cycle, which could take an additional four years, the investor said.

“Politicians around the world are listening to cries from their electorates and they’re giving money to all callers,” McEwen said yesterday in a telephone interview from Toronto.

McEwen, who founded what is now the world’s second-largest gold producer by market value, owns stakes in three Canadian precious-metal explorers worth more than $100 million. He said he also has a “big, big” holding in bullion. Gold gained for the eighth straight year in 2008 amid investor concern the economy would collapse and government efforts to prevent that would increase inflation.

Gold futures for April delivery rose $29.10, or 3.2 percent, to $943.30 an ounce at 11:51 a.m. on the Comex division of the New York Mercantile Exchange, the highest for a most-active contract since July 23. The metal climbed to a record $1,033.90 on March 17.

McEwen said he started buying bullion in August 2007, at the beginning of the subprime mortgage crisis. Gold has jumped 40 percent since Aug. 1 of that year, touching a high of $948.20 today, while the Standard & Poor’s 500 Index has dropped 43 percent.

“I realized we had reached an inflection point regarding money,” McEwen said. “It was all about protecting money, and gold served that purpose.”

McEwen is the largest shareholder in Lakewood, Colorado- based U.S. Gold Corp., Vancouver-based Rubicon Minerals Corp. and Spokane, Washington-based Minera Andes Inc. Vancouver-based Goldcorp is the world largest gold producer by market value after Toronto-based Barrick Gold Corp.

TNR Gold Corp is associated with Minera Andes through Xstrata's optioned Los Azules property, which came through with a positive prelimenary assessment recently of:

-23.6 years mine life

-production cost of $0.85 copper

-43-101 resource of 11.2 billion lbs of copper


Remember CitiGroup? Of course you do... but guess what, CitiBank and its various associated companies are in danger of being Nationalized.

NATIONALIZED? Yes, as in shareholder equity wiped - government operated.

Think Washington Mutual (pictured left) and how it was "too big to be let go". I am really hoping this doesn't happen, but things like this tend to really change people's perception of wealth.

Bank of America is being rumored to be in the same position. I wouldn't doubt it - after acquiring Countrywide and Merrill Lynch - BAC has fallen back drastically from $32/share - when Warren Buffet recommended a huge buy.

NEW YORK (Reuters) – Shares of Citigroup and Bank of America fell in premarket trade on Friday on the fear that the banks would be nationalized, according to traders.

"There's that fear that we nationalize banks and this market gets killed," said Matt McCall, president of Penn Financial Group in Ridgewood, New Jersey

Citigroup slid 5.2 percent while Bank of America lost 5.9 percent.

The Frankfurt-listed shares of the banks also fell, with traders and analysts citing fears that big U.S. banks could be nationalized.


Really, its time to examine your perception of reality and what constitutes real savings at this point! Thanks for reading.

Tuesday, February 17, 2009

$40 million for 40 million shares!

Must be nice having this kind of backer!! From adjusted $0.33/share to $1/share.

Minera Andes (MAI) is up on the TSX today and closed at $0.75 from $0.35 the day before.

Minera Andes announces revised C$40.0 million private placement with Robert R. McEwen at a subscription price of C$1.00
Tuesday February 17, 8:19 am ET

    TSX: MAI

SPOKANE, WA, Feb. 17 /PRNewswire-FirstCall/ - Minera Andes Inc. (the "Corporation" or "Minera Andes", TSX:MAI and US OTC:MNEAF) announced today that it has agreed with Robert R. McEwen, a director and existing shareholder of the Corporation, to amend the terms of the private placement with Mr. McEwen, as first announced on February 9, 2009.

Mr. McEwen has agreed to complete the private placement in a two step transaction designed to alleviate the Corporation's immediate financial pressures. First, Mr. McEwen will purchase 18,299,970 common shares of the Corporation at a price of C$1.00 per share for proceeds to the Corporation of C$18,299,970 which will be used, as to $US11.3 million, to satisfy the cash call made in respect of the Corporation's 49% interest in the San Jose Project ("Step 1"). Second, Mr. McEwen will assume the bank loan owing by the Corporation to Macquarie Bank Limited ("Macquarie") in the aggregate principal amount of US$17.5 million ("Step 2"). The subscription price of C$1.00 per share represents a 108% premium to the closing price of Minera Andes' common shares on the TSX on February 13, 2009 of C$0.48 per share.

In order to initiate the transfer of funds to Argentina for the cash call by February 20, 2009, Step 1 is to be completed by the close of business in Toronto on February 18, 2009.

The Step 2 assignment of the Corporation's bank loan from Macquarie to Mr. McEwen, is subject to Mr. McEwen reaching agreement with Macquarie, and Macquarie has already indicated its agreement to this. The security for the bank loan also has to be transferred to Mr. McEwen, and Step 2 requires Hochschild Mining plc ("Hochschild") consenting to the transfer of the security in the San Jose Project from Macquarie to Mr. McEwen. If agreement is not reached with either or both of Macquarie and Hochschild by the close of business (Toronto time) on February 25, 2009, Mr. McEwen will purchase a total of 21,700,030 common shares of the Corporation at a price of C$1.00 per share and the Corporation will use the proceeds thereof to repay Macquarie directly.

The bank loan, once assumed by Mr. McEwen, will be convertible at the option of Mr. McEwen into common shares of the Corporation at a price of C$1.00 per share (for a total of 21,700,030 common shares), at any time, subject to approval by the shareholders of the Corporation. If such shareholder approval is not obtained by 60 days after closing, the bank loan (as assumed by Mr. McEwen) will be due and payable by the Corporation 15 business days after the date of the shareholders' meeting.

In addition, if prior to such shareholder approval being obtained there is a change of control of the Corporation, involving a person other than Mr. McEwen or one his affiliates, the bank loan (as assumed by Mr. McEwen) will be immediately converted into common shares of the Corporation at a price of C$1.00 per share (for a total of 21,700,030 common shares).

Step 1 and Step 2 of the transaction with Mr. McEwen are subject to the approval of the TSX.

Mr. McEwen will not demand repayment of any amounts under the bank loan (including the sum of US$7.5 million which is currently due on or about March 7, 2009) prior to the receipt of shareholders approval or, failing such approval, 15 business days after the date of the shareholders' meeting convened to obtain such approval. In addition, Mr. McEwen has agreed to waive all existing events of default under the Macquarie credit agreement.

Mr. McEwen has also confirmed that the Corporation may complete an offering of common shares on similar terms as the proposed transaction with Mr. McEwen for the purpose of funding its exploration activities.

Step 1 and Step 2 are intended to improve the Corporation's financial situation and provide shareholders the opportunity to approve the issuance of shares to Mr. McEwen, where time permits such approval to be sought, without a material adverse effect on the financial condition of the Corporation.

On February 9, 2009, the Company announced that it had entered into a letter agreement with Mr. McEwen pursuant to which Mr. McEwen or his affiliates would purchase 121,212,121 common shares of the Corporation at a price of C$0.33 per share (the closing price of the Company's common shares on the TSX on February 4, 2009), for proceeds of C$40.0 million.

Subsequent to that announcement, the Corporation received advice from Hochschild that it was prepared to make a formal bid to acquire all of the issued and outstanding shares of the Corporation at an exchange ratio of 0.24 ordinary shares of Hochschild (which is listed on the London Stock Exchange) for each common share of the Corporation. Based on the closing price of Hochschild's shares and the Corporation's shares on February 15, 2009 this bid, if made would have an implied price of C$0.8658 per common share of the Corporation. Hochschild is not currently listed on any Canadian stock market so any bid if made, could not be made until at least April 2009, at which time the requisite technical reports in respect of Hochschild's material properties are scheduled to be completed.

Hochschild indicated that it would (i) provide bridge financing to the San Jose project so that the payment of the outstanding cash call by MAI could be deferred until expiry of the formal bid by Hochschild; and (ii) make a loan available to the Corporation in the principal amount of US$17.5 million so that the Corporation could repay its indebtedness to Macquarie and that the maturity date of such loan would effectively be extended until December 1, 2009, provided in each case, among other things, that the Corporation would immediately express support for any such bid by Hochschild and negotiate the terms of a definitive support agreement for the making of any such bid (with a view to settling the terms of such agreement by February 26, 2009). The proposal from Hochschild also provides that any such financial assistance shall be immediately due and payable upon the Corporation supporting an alternative transaction.

    The Special Committee, together with its advisors, considered the
Hochschild proposal for a bid some time after April 2009 and financial
assistance and concluded that the proposed transaction with Mr. McEwen is in
the best interests of shareholders. In reaching this conclusion, the Special
Committee considered, without limitation, the following factors:

- the implied price of the proposed Hochschild bid, if made, is
inferior to the price offered by Mr. McEwen;
- the financial assistance offered by Hochschild is expressly
conditional upon the Corporation negotiating the terms of a support
agreement (the proposed material terms of which are unknown) and
failing which the proposed transaction with Mr. McEwen will have been
withdrawn and the Corporation will again be subject to untenable
financial pressure;
- the proposed Hochschild bid, if made, will be based on an exchange
ratio determined today, however any bid made by Hochschild cannot be
made until April 2009 at the earliest;
- the possibility that financial assistance provided by Hochschild
would become immediately due and payable upon a competing proposal
supported by the Corporation is coercive and
- the proposed transaction with Mr. McEwen does not prevent a
subsequent transaction with Hochschild or any other third party and
its effect on the Corporation's financial condition should enable the
Corporation to vigorously negotiate the terms of any such proposal
without the pressures of financial hardship.

Mr. McEwen presently owns, or exercises control or direction over, 46,057,143 common shares, or 24.3% of the issued and outstanding common shares. The issuance of 18,299,970 common shares to Mr. McEwen under Step 1 will result in Mr. McEwen owning or exercising control or direction over approximately 30.9% of the then issued and outstanding common shares of the Corporation. The issuance of 21,700,030 common shares under Step 2 will result in Mr. McEwen owning or exercising control or direction over approximately 37.4% of the then issued and outstanding common shares of the Corporation.

Under the TSX Company Manual, shareholder approval would be required as a result of the fact that together Step 1 and Step 2 will result in greater than 10% of the outstanding common shares of the Corporation being issued to an insider of the Corporation.

The Corporation applied to the Toronto Stock Exchange (the "TSX") under the provisions of Section 604(e) of the TSX Company Manual for an exemption from securityholder approval requirements in respect of the issue of 40,000,000 common shares to Mr. McEwen at a price of C$1.00 per share on the basis that the Corporation is in serious financial difficulty, in each in the circumstances described above The members of the Special Committee of the Corporation's Board of Directors, Allan Marter, Donald Quick and Victor Lazarovici (each of whom is free from any interest in the offering), authorized such application concluding, each time, that the Corporation is in serious financial difficulty as a result of the cash call for the San Jose Project and the outstanding bank indebtedness, and the transactions with Mr. McEwen are reasonable for the Corporation under the circumstances.

With its financial condition improved, the Special Committee believes the Corporation will be in a position to undertake a review of the options available to it for the medium and longer-term. At present, the Special Committee believes that the Corporation's ability to obtain maximum value for its shareholders is limited and constrained by financial distress caused by the cash call due imminently and the bank loan which may be called upon seven days notice.

As a result of its previous announcement concerning the private placement with Mr. McEwen, the TSX has advised that it has initiated a de-listing review of the Corporation as a consequence of relying on the financial hardship exemption under Section 604(e). The Corporation believes that, upon completion of the private placement, it will be in compliance with all of the TSX listing requirements.

The transactions described above with Mr. McEwen will also be a related party transaction for the purposes of Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions. It is the intention of the Corporation to avail itself of certain exemptions set out in such Instrument from provisions that would otherwise require the Corporation to obtain a formal valuation and the approval of its minority shareholders in connection with the private placement.

Minera Andes is a gold, silver and copper exploration company working in Argentina. The Corporation holds approximately 304,000 acres of mineral exploration land in Argentina. Minera Andes holds a 49% interest in the San Jose Project, an operating gold and silver mine. Minera Andes is also exploring the Los Azules copper project in San Juan province, where an exploration program has defined a resource and a preliminary assessment has been completed. Other exploration properties, primarily silver and gold, are being evaluated in southern Argentina. The Corporation presently has 190,158,851 shares issued and outstanding.

This news release is submitted by Allan J. Marter, a Director and the Chairman of the Special Committee of the Board of Directors of Minera Andes Inc.

Caution Concerning Forward-Looking Statements:

This press release contains certain forward-looking statement and information. The forward-looking statements and information express, as at the date of this press release, the Corporation's plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. In particular, there can be no assurance that financing will be secured within the time required. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral reserves and other risks.

Monday, February 16, 2009

Northern Miner / BNN feature MAI and its Los Azules - Hs

TSX to determine Minera Andes' fate as producer asks to issue 121 million shares

Vancouver - A few months ago, it seemed like Minera Andes (MAI-T) had it all: a 49% stake in a producing gold-silver mine, a massive copper deposit nearing development stage, and a pipeline of promising exploration properties.

It's amazing how quickly things can change. Now the company's ability to survive beyond mid-February is in the hands of the Toronto Stock Exchange, which has to decide if the company can, without shareholder approval, issue 121 million shares and bring a major shareholder's ownership to 53% in order to raise the funds Minera needs to meet pressing obligations.

That shareholder is none other than Rob McEwen, founder and former CEO of Goldcorp (G-T, GG-N). The highly successful McEwen, who is currently the president and CEO of US Gold (UXG-T), already owns 24% of Minera and sits on the board as a director. And at a time when money is hard to come by through the usual routes, a private investment of $40 million appears to be the white knight Minera desperately needs.

"We're sitting there, basically travelling at about 100 miles an hour about to slam into a wall," McEwen says, describing the events leading up to his offer. "This is Thursday and we need the money by yesterday. And because we've exhausted our routes the dealer comes in and says, ‘Here are some terms we should think about offering [to a third party]...but it'll have to be at a discount.' And I'm going, ‘Now wait a minute.'"

McEwen believes in Minera; he says its share price is far too low considering its producing mine, its massive Los Azules copper deposit, and its pipeline of exploration possibilities. And, as a major shareholder and director, he says he wasn't about to give the company away to a non-shareholder at a bottomed-out price.

So on Feb. 9th McEwen offered to buy 121.2 million shares at 33¢ a piece, for total proceeds to the company of $40 million. The price was set as Minera's closing price on Feb. 4th.

Minera has 190 million shares outstanding. That means the McEwen share issuance would dilute Minera shares by 65%. The financing would also result in McEwen, already an insider, owning a majority of Minera's shares. Both of those events trigger the need for shareholder approval, according to TSX regulations. But Minera doesn't have time for that. To understand why, we need to go back to the beginning.

The company's current financial predicament stems entirely from its producing mine. Minera owns 49% of the San Jose gold-silver mine in Santa Cruz province, Argentina. Hochschild Mining (HOC-L) owns the other 51% and operates the mine, which achieved production in mid-2007.

As part of its efforts to finance development at San Jose, Minera borrowed US$17.5 million from Macquarie Bank in 2007. The debt facility was predicated on the expectation that San Jose would achieve positive cash flow in 2008, allowing Minera to repay the debt. Minera used its assets to secure the loan; the agreement stipulated that the company could not dilute its interest in San Jose without defaulting.

Hochschild brought San Jose online in August 2007 and even before the high grade, underground gold-silver mine reached full commercial production the major decided to expand the operation. Initially the mine was built to process 265,000 tonnes of ore each year; Hochschild embarked on an expansion to bring annual capacity to 530,000 tonnes.

Minera has essentially no control over decisions at San Jose. The company that owns San Jose, of which Hochschild owns 51% and Minera 49%, is controlled by a five-member board of directors. Three of those members are from Hochschild; the other two are from Minera.

Both partners expected to fund the expansion using cash flow. Unfortunately development work cost more than expected and in December Hochschild told Minera it needed cash. Specifically, Hochschild said the partners needed to provide US$23 million to fund the expansion, which meant Minera Andes needed to hand over US$11.3 million within 60 days.

That's when things got interesting. The company had some $2.5 million in the bank - not nearly enough to fund the cash call - and because San Jose was not producing positive cash flow, Minera was already in breach of one of the covenants on its Macquarie loan.

In short, the company needed US$28.8 million almost immediately and rather unexpectedly.

"We asked in the summer if there would be any cash calls in the fall and Hochschild said no," says McEwen. "Then in December, all of a sudden, ops there's a cash call and it's due in 60 days.

Minera evaluated its options. McEwen says the board tried to raise interest in an equity financing but, not surprisingly, found the equity markets unresponsive. One institution offered to try a best-efforts financing, provided McEwen participated, but best-efforts financings in the current market offer no certainty. Minera also tried to re-negotiate its loan but instead of finding willingness to extend or increase the amount the bank said it wanted to accelerate the repayment schedule.

"So we're not getting much luck on the equity front, we're not getting much luck on debt refinancing, and so we're looking at a situation where, if we don't make this cash call, our interest in San Jose goes from 49% to 38%," says MwEwen.

And there's the rub. The other major covenant controlling the Macquarie loan is that a dilution in Minera's stake in San Jose defaults the loan, allowing the bank to demand full repayment in seven days. When Minera failed to repay the US$17.5 million, the bank could step in and seize the company's assets.

That's when McEwen made his $40-million offer and left the directors' meeting. The tricky part is that convening a shareholder meeting to approve the significant, insider share issuance would take months but Minera only has until Mar. 3rd to pay the cash call or essentially it's all over. So the company applied to the TSX for exemption from the requirement for shareholder approval according to Section 604(e), the financial hardship exemption.

The next day, Hochschild made two offers to Minera. The major first made a bid for the entire company, offering 0.22 Hochschild share for each Minera share. The takeover bid valued Minera at 62¢, a 100% premium to the company's closing price on Feb. 5th. Alternately, Hochschild offered to buy Minera's 49% interest in San Jose US$70 million in cash.

At the same time Hochschild also appealed to the TSX to "re-examine and reconsider" the availability of the hardship exemption. The TSX will render its decision on Monday, which is the closing date for the McEwen financing.

As for the Hochschild offers, a special committee of independent Minera directors and financial advisors decided the McEwen offer was a better decision for the company.

"If the TSX doesn't go along with this the company is going to lose its interest in the property or be consumed," says McEwen. "Hochschild's strategy is to tie this all up and prevent it from closing on Monday. Then no one else will be there to buy it and they'll get it at the price they want."

Major progress at Los Azules

In other major Minera Andes news, a completed preliminary assessment has started the clock ticking on Xstrata's right to back in on Minera's mega Los Azules copper project. And the first economic study of Los Azules has slapped the massive copper project with a US$2.7-billion price tag.

The preliminary assessment looked at an operation processing 36 million tonnes of ore annually to produce 170,000 tonnes of copper, 1.26 million oz. silver, and 38,000 oz. gold each year for 24 years. Over the life of mine, operating costs average out to US$7.59 per tonne of ore processed or 85¢ per lb. copper produced, net of gold and silver credits.

Minera based the open-pit study on an inferred resource of 843 million tonnes grading 0.51% copper. Pre-production stripping would remove 150 million tonnes of waste rock and once mining began the waste-to-ore strip ratio would be 1.5 to 1.

With the price of copper set at US$1.90 per lb. and a discount rate of 8% the project returned a net present value of US$496 million and an internal rate of return of 10.8%.

The biggest number in the study, though, is the estimate for initial capital expenditures. The study forecast development costs at US$2.7 billion. Capital payback is expected to take 6.4 years.

Los Azules is not an easy project to access. It sits at some 4,000 metres elevation in an isolated area of the Argentinean Andes, near the border with Chile. There is essentially no infrastructure on site and there are no nearby towns or settlements. The road into Los Azules is closed roughly seven months of the year because of snow or running water.

A mine at Los Azules would require a road and Minera considered three possible routes. Studies have since shown that a route in from the north is the most economically viable. Mine development would also necessitate building camp facilities, power lines, and concentrate and fresh water pipelines.

Although Minera Andes has a 100% option on the property from Xstrata (XSRAF-O, XTA-L), the prefeasibility study satisfies a condition for Xstrata's 51% back-in right. Xstrata has the right now that a technical report shows that Los Azules can produce more than 100,000 tonnes of copper for at least ten years.

Xstrata has 90 days to make its decision. To claim its 51% interest the major would have to pay Minera three times the amount it has spent at the site since late 2005, assume control of the project, and complete a feasibility study within five years.

There is also some confusion over another back-in right on the property. Xstrata originally optioned the property from Solitario Argentina, leaving Solitario a 25% back-in right on Xstrata's interest, exercisable within 36 months of Xstrata's decision to back-in. Xstrata and Solitario are now disputing the validity of the 36-month deadline.


Things are getting very interesting in Argentina over the span of a few days.

Let's face it, McEwan doesn't invest in companies to lose money.

Look at all his other holdings:

Rubicon Minerals (RMX:TSX) part of his McEwan group of companies - it's jumped from below $1 share to $1.80+... and it's just announced a $40 million financing round. RMX has high grade gold in Red Lake area of Canada - flow through financing will certainly help in this market climate.

where he is the CEO/Chair, it has jumped from $1 to nearly $3 in the last little while... no production - just a very wealthy group of backers who's funded the treasury with $15 millions+ and recently released high grade gold results in Nevada!

While I would love to go on his various other companies (there should be 7-8 within the McW group), the point and pattern I'm trying to outline here is... so far 2 out of 3 of McEwan's companies has made a significant rebound.

His network of investors, his high networth connections from his McEwan Foundation for Regenerative Medicine where he's invested 100's of millions, and more - should be a significant reason of why many of his associated stocks are up.

You can be sure that he's telling his friends about this little gem in Argentina called Los Azules lately...

Does the future bode well for Argentina? I'd like to think so.

Tuesday, February 10, 2009

Minera Andes receives BUYOUT Offer - 100% premium from PP

Note - not a bad way to wake up in the morning and realize your investment yesterday of $40 million is now worth... double?

$0.33 to $0.61. 

Not too shabby? I don't think McEwan will be happy with just a 100% gain, what about the rest of his 20% shares, those must be averaging $1.60+/share!

Personally, I think he's in it for the longer term. Either way, Argentina is definitely where the action is today... future is bright for our favorite small cap TNR Gold.


Hochschild offers to buy JV partner Minera Andes

LONDON (Reuters) - Latin American silver and gold producer Hochschild Mining Plc (HOCM.L) has made an all-share takeover offer for its joint venture partner Minera Andes Inc. (MAI.TO), Hochschild said on Tuesday.

Hochschild said it made a proposal on February 6 to the board of Minera to pay 0.22 of its shares for each Minera share, which valued Minera shares at 62 Canadian cents, a 100 percent premium to the closing share price on February 5.

Hochschild said at the same time, it made an alternate proposal to acquire Minera's 49 percent stake in their joint venture San Jose for $70 million.

Hochschild said it was making known the proposals following Minera's announcement on Monday that it had agreed a C$40 million ($32.73 million) private placement with Robert McEwen at a price of 33 Canadian cents per share.

Hochschild said its proposals expire on Wednesday.

(Reporting by Eric Onstad; Editing by Erica Billingham)

Monday, February 9, 2009

Minera Andes get $40 million investment

Who's that lucky guy sitting on a gold pile (literally), you ask? 

That's someone who grew GoldCorp from $1 to $50, created innovative open source competitions for geological drilling campaigns, and heads up several successful exploration companies - not to mention a non profit Cancer research foundation in Toronto. Read about it yourself some more below...

Why, Mining101, are we talking about him when the world's a disaster and Obama's going state to state today trying to sell the latest and greatest version of the Bailout Plan, version 2.0?

It's very simple, read the following news release.

Argentina is improving day by day. This is an unbelievable amount of confidence by the man who is a living legend amongst goldbugs. 

Don't forget Minera Andes only has 2 properties going for them:

1) San Jose - 49%. - 51% non-operational agreement with Horschild Mining PLC. Silver/Copper production

2) Los Azules - massive 43-101 compliant deposit of 11.2 billion lbs of copper. ~23 years mine life at $0.85 lb copper production costs.

TNR holds 25% back in right on best portions of Los Azules. Would you say its pretty good news for TNR?

Minera Andes investor McEwan invests $40-million

2009-02-09 08:55 ET - News Release

Mr. Allan Marter reports


Minera Andes Inc. has entered into a letter agreement with Robert R. McEwen, a director and existing shareholder of the corporation, pursuant to which Mr. McEwen or an affiliate of Mr. McEwen will purchase, on a private-placement basis, 121,212,121 common shares of the corporation (offered shares) at a price of 33 cents per share, for proceeds of $40-million. The subscription price is equal to the closing price of the corporation's common shares on the Toronto Stock Exchange on Feb. 4, 2009.

Closing of the offering is anticipated to occur on Feb. 13, 2009, following close of trading on the TSX. Of the proceeds, approximately $11.3-million (U.S.) will be applied to finance the corporation's share of the cash call in respect of its 49-per-cent interest in the San Jose project and $17.5-million (U.S.) will be applied to repay the corporation's outstanding indebtedness to Macquarie Bank Ltd. The balance of the proceeds will be used for general corporate purposes and exploration.

The completion of the offering is subject to a number of conditions including obtaining approval of the TSX. Mr. McEwen presently owns, or exercises control or direction over, 46,057,143 common shares, or 24.3 per cent of the issued and outstanding common shares. The issuance of the 121,212,121 common shares to Mr. McEwen pursuant to the proposed private placement (which represents 63.7 per cent of the currently issued and outstanding 190,158,851 common shares) will result in Mr. McEwen exercising control or direction over 167,269,264 common shares, or approximately 53.7 per cent of the then-issued and outstanding 311,370,972 common shares.

Under the TSX Company Manual, shareholder approval would be required as a result of the fact that:

  1. The number of common shares issued pursuant to the private placement will be in excess of 25 per cent of the currently issued and outstanding common shares of the company at an issue price below the volume-weighted average price of the common shares on the TSX during the five trading days up to and including Feb. 4, 2009, the day preceding the date of the letter agreement made between the corporation and Mr. McEwen;
  2. The private placement will result in greater than 10 per cent of the outstanding common shares of the corporation being issued to an insider of the corporation.

The corporation has applied to the TSX under the provisions of Section 604(e) of the TSX company manual for an exemption from securityholder approval requirements. The members of the special committee of the corporation's board of directors, Allan Marter, Donald Quick and Victor Lazarovici (each of whom is free from any interest in the offering), have authorized such application and have concluded that the corporation is in serious financial difficulty as a result of the cash call for the San Jose project and the outstanding bank indebtedness, the private placement is intended to improve the corporation's financial situation, and the private placement is reasonable for the corporation under the circumstances.

The TSX has advised that the corporation will automatically be subject, in the ordinary course, to a delisting review as a result of relying on the financial hardship exemption under Section 604(e). The corporation believes that, upon completion of the private placement, it will be in compliance with all of the TSX listing requirements.

The private placement will also be a related-party transaction for the purposes of Multilateral Instrument 61-101 protection of minority shareholders in special transactions. It is the intention of the corporation to avail itself of certain exemptions set out in such instrument from provisions that would otherwise require the corporation to obtain a formal valuation and the approval of its minority shareholders in connection with the private placement.

The company's joint venture partner in the San Jose project, Hochschild Mining PLC, has offered the corporation an extension to March 3, 2009, of the Feb. 17, 2009, deadline for payment of the cash call, to allow for the complexities of transferring funds to Argentina. The corporation has accepted this offer, with gratitude to Hochschild Mining.

Friday, February 6, 2009

Scoping Study Announced for Los Azules -, TNR.v, CZX,v

I like how TNR Gold Corp's 100% fully owned subsidiary, Solitario Argentina (SA) is mentioned in MAi's news release. 25% back in right... wonder how that'll work out if Xstrata doesn't end up backing in? After all, the giant's having some problems of their own lately...(Issuing $5.9 billion shares to pay debt)

Minera Andes receives positive PA study for Los Azules

Los Azules worth $496 Million - NPV estimate

Mr. Art Johnson reports


Minera Andes Inc. has released results of a preliminary assessment (PA) on the Los Azules copper project located in the San Juan province of western-central Argentina. The deposit as currently defined is open in several directions and further drilling will be required to fully define the limits of the mineralization, especially along the strike to the north and at depth. All financial amounts are stated in United States dollars unless otherwise indicated.

The project is an exploration area comprising adjoining properties that straddle a large copper porphyry system and is subject to an option agreement. The properties are owned by Minera Andes through its subsidiary company, Minera Andes S.A., and by Xstrata Copper, one of the commodity business units within Xstrata PLC, through Xstrata Queensland Ltd. and its subsidiary company, MIM Argentina Exploraciones S.A.


Highlights of the study are as follows:

  • The base case for the project on a pretax basis indicates a net present value (NPV) of $496-million and an internal rate of return (IRR) of 10.8 per cent (using $1.90 per pound copper, 8-per-cent discount rate, $70-per-tonne treatment charge and 7.5-cent-per-pound refining charge);
  • Capital payback in 6.4 years;
  • Average copper-in-concentrate production estimated at 170,000 tonnes per year for 23.6 years. Annual byproduct production estimated to average 38,000 ounces of gold and 1.26 million ounces of silver;
  • C-1 life-of-mine (LOM) cash costs (net of byproduct credits) are estimated to average 85 cents per pound of copper mined;
  • The project would generate approximately 550 permanent jobs;

The salient details PA are summarized below:

NPV ($1.90 per pound Cu, 8% discount rate): $496-million;

IRR: 10.8%

Initial capital expenditure: $2,747-million;

LOM average operating costs: $7.59 per tonne ore;

LOM C-1 cash costs (net byproduct credits): 85 cents per pound Cu mined;

Nominal mill capacity: 100,000 tpd;

Annual throughput: 36 million tonnes;

Mine life: 23.6 years;

Life-of-mine strip ratio: 1.50;

LOM average annual copper-in-concentrate production: 170,000 tonnes;

First five years average annual copper-in-concentrate production: 213,000 tonnes.

The PA is preliminary in nature and includes the use of inferred resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Thus, there is no certainty that the results of the PA will be realized. Actual results may vary, perhaps materially.

The PA was finalized by Samuel Engineering, Inc. and Randolph P. Schneider, MAusIMM. The PA was managed by MTB project management professionals (project management, infrastructure, capital and operating costs), and Robert Sim (SIM Geological Inc.) and Bruce Davis (BD Resource Consulting Inc.) developed the resource estimate, Ken Rippere completed pit slope studies, while Bill Rose (WLR Consulting Inc.) developed the mine plan and production schedule:

  • C.H. Plenge & Cia (metallurgy);
  • Samuel Engineering (process engineering, infrastructure, capital and operating costs, cash flow modelling, and valuation);
  • Vector Engineering (tailings, waste rock, environmental management, capital and operating costs, and baseline environmental and socioeconomic studies).

Project economics

The PA contains a cash flow valuation model based upon the geological and engineering work completed to date, and technical and cost inputs developed by Samuel Engineering and MTB. The base case was developed using long-term forecast metal prices of $1.90 per pound for copper, $750 per ounce for gold and $12 per ounce for silver.


Discount rate
(real) NPV

0% $4,691-million
5% $1,399-million
8% $496-million
10% $113-million
15% ($428-million)


The resource block model used in the PA were reported in the technical report titled, Los Azules Copper Project, San Juan Province, Argentina, dated Sept. 26, 2008, and filed under the company's profile on SEDAR in October, 2008. That resource estimate determined inferred mineral resources of 922 million tonnes grading 0.55 per cent copper at a 0.35-per-cent total copper cut-off. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The resource block model was used to evaluate potential economic pit limits using the floating cone algorithm, and develop a mine plan and production schedule for the PA. The resulting designed ultimate pit was estimated to contain 843 million tonnes of inferred mineral resources grading 0.51 per cent copper above an internal cut-off of 0.22 per cent copper. A total of 1,273 million tonnes of waste rock were also estimated within this pit. A mine production schedule from these estimates indicates 150 million tonnes of preproduction stripping and a mine life of 23.6 years. The average stripping ratio over the life of the mine is projected at about 1.5:1 (tonnes of waste per tonne of ore).

The PA is preliminary in nature and includes the use of inferred resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Thus, there is no certainty that the results of the PA will be realized. Actual results may vary, perhaps materially.

Mining and milling

The project will use conventional mining and milling processes, and will benefit from having a higher-grade copper core.

Production is scheduled to deliver 100,000 tonnes per day (36 million tonnes per year) of sulphide ore to the primary crusher for 23.6 years. The milling and concentrator plant are forecast to produce, on average, 170,000 tonnes per year of copper in concentrate, 38,000 ounces per year of gold and 1.26 million ounces per year of silver. Average LOM metallurgical recoveries have been estimated to be 92.5 per cent for copper, 61 per cent for gold and 66 per cent for silver, producing a copper concentrate grading on average 31.9 per cent copper, 2.2 g/t gold and 74 g/t silver.

Capital costs

The Los Azules capital costs table summarizes the capital cost estimates for the project.

                     LOS AZULES CAPITAL COSTS

Direct capital costs $1,118-million
Indirect capital costs $486-million
Owner direct and indirect capital costs $602-million
Additional costs $541-million
Total (base case) $2,747-million
Upfront working capital $39-million
LOM sustaining capital costs $704-million

Note: The capital cost estimates have been compiled with an accuracy level
of minus 35 per cent to plus 35 per cent.

Operating costs

The average LOM operating cost is estimated to be $7.59 per tonne of ore and the C-1 cash costs (net of byproducts) over the LOM will average 85 cents per pound of copper mined. C-1 cash costs include at-mine cash operating costs, concentrate transportation and freight costs, and all treatment and refining charges.


The project is in a remote location near the border of Chile in an isolated section of the Argentinean Andes at an elevation ranging from 3,500 metres to 4,500 metres above sea level (masl). Consequently, no infrastructure is present. In addition, there are no nearby towns and/or settlements. The key access issue for the project throughout the year is road closures due to snow and high stream flows in the spring. The snowline is at an approximate elevation of 3,000 masl. Presently, the project is accessible approximately five months out of the year with snow removal along the existing central road and after the snowfall season.

San Juan is a major regional centre serviced by an airport and highways. An existing highway extends from San Juan to a wide valley in which the community of Calingasta is located. Three potential mine access roads have been considered:

  • A northern route;
  • A central (existing) route;
  • A southern route.

Both the central and southern routes were discarded due to their capital and operating costs as the length, terrain and high-altitude crossings would likely make the routes prone to significant snowfalls and require snow removal operations. Therefore, the northern route was selected for the economic valuation of the project.

Given the remote location of the project a man camp facility will be provided on site. It is assumed to contain facilities for 500 to 600 individuals at any given time. The man camp will also contain dining and recreation facilities.

The Calingasta substation is the nearest source of power to the project; however, it is isolated from the provincial network. Power supply to the region is currently satisfied by means of local hydro or thermal generation.

The infrastructure facilities addressed by the capital cost estimate include on-site ancillary facilities and infrastructure (man camp, offices and other buildings), off-site infrastructure (access roads, power lines, concentrate and fresh water pipelines) and tailings impoundment.


Preliminary baseline studies completed to date have included initial hydrologic studies of surface water quality, climate and biological studies of the local flora and fauna.

Property agreements

The project is subject to an option agreement dated Nov. 2, 2007. Under the option agreement, MASA has the right to earn a 100-per-cent interest in the MIM properties by spending at least $1.0-million (U.S.) on the MIM properties by November, 2010, maintaining the property in good standing and delivering to Xstrata Copper an independent scoping study that contains an economic evaluation of inferred mineral resources and a technical report prepared in accordance with National Instrument (NI) 43-101 -- Standards of Disclosure for Mineral Properties in respect of the combined MIM properties and MASA properties, and delivering a notice of exercise. If in the opinion of Xstrata Copper, the independent scoping study and technical report show the potential to economically produce 100,000 tonnes (224 million pounds) of contained copper per year for 10 years or more on the combined properties, then MIM will have a right to earn a 51-per-cent interest in the combined property (the back-in right). To satisfy the conditions of the back-in right, Xstrata Copper must assume control and responsibility for the combined property, make a cash payment to Minera Andes of three times MASA's and its affiliates' direct expenditures incurred and paid on the combined properties after Nov. 25, 2005, and complete a bankable feasibility study within five years of its election to exercise the back-in right. In the event that the independent scoping study and technical report do not, in Xstrata Copper's opinion, meet the criterion contemplated above, Xstrata Copper's interest would be limited to a right of first refusal on a sale of the combined property, or any part thereof or interest therein.

Certain of the MIM properties are subject to an underlying option agreement, which is the subject of a dispute between Xstrata Copper, as optionholder, and Solitario Argentina S.A., as the grantor of that option and the holder of a back-in right of up to 25 per cent, exercisable upon the satisfaction of certain conditions, within 36 months after the exercise of the option by Xstrata Copper. The dispute surrounds the validity of the 36-month restriction described above. If Solitario is successful, MIM's interest in substantially all of the MIM properties may be reduced by up to 25 per cent and, upon exercise of the MASA option, MASA's interest in that part of the combined property may be similarly reduced.

A technical report in support of the PA, prepared in accordance with NI 43-101, will be filed on SEDAR within 45 days.

This news release was prepared by, or under the supervision of, Allen Ambrose, president of Minera Andes, a qualified person within the meaning of NI 43-101. For (i) the effective date of the resource estimate contained herein; a description of the key assumptions, parametres and methods used to estimate the mineral resources referred to in this news release; a general discussion of the extent to which the estimate of mineral resources may be materially affected by any unknown environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues, please refer to the October technical report.

We seek Safe Harbor.