Minera Andes to receive $10-million from McEwen
2005-12-21 11:54 ET - News Release
Mr. Art Johnson reports
ROB MCEWEN AGREES TO INVEST A TOTAL OF C$10 MILLION IN MINERA ANDES
Rob McEwen has subscribed $5,395,159 for a total of 15,414,740 Minera Andes Inc. units issued by way of private placement. Excluding warrants, completion of this subscription makes Mr. McEwen the company's largest shareholder with a 14.2-per-cent interest.
Terms for a second private placement have also been agreed to with Mr. McEwen that would make his total investment $10-million. The second private placement of 13,156,689 units will only close 61 days after receipt of approval from the shareholders of the corporation for the placement and for the waiver or repeal of Minera Andes's shareholder rights plan as it applies to Mr. McEwen. Excluding warrants, completion of the second placement would give Mr. McEwen a 23.5-per-cent shareholding in Minera Andes.
Proceeds from these two private placements will be used for further development and exploration of the advanced stage, high-grade San Jose gold/silver project in southern Argentina. A positive bankable feasibility study for the project was released Oct. 24, 2005, and permitting, advanced engineering and other work is currently under way. At San Jose, a work force of 330 is developing the underground workings exploring the main gold/silver vein. Proceeds will also be used for general corporate purposes and for exploration at the Los Azules copper discovery in west-central Argentina, in accordance with Minera Andes's recently announced letter of intent with Xstrata Copper Americas.
Allen Ambrose, president of Minera Andes, said: "Minera Andes is an entrepreneurial mining company and we are pleased that a proven industry leader in the gold sector recognizes the value inherent in our company. The value in Minera Andes lies in the development of the advanced stage gold/silver project at San Jose, currently scheduled for production in the first quarter of 2007 and its significant exploration upside. In addition, we have a large portfolio of wholly owned exploration properties in Argentina, including the Los Azules copper property scheduled for drilling this field season."
Mr. McEwen is chairman and chief executive officer of U.S. Gold Corp. and was the founder, former chairman and CEO of Goldcorp Inc. Over the past 18 years Mr. McEwen turned Goldcorp Inc. from an investment company with a market capitalization of $50-million into a mining company with a market value over $7.0-billion today. He has been honoured with such awards as the Northern Miner's Man of the Year Award; Ernst & Young's Ontario Entrepreneur of the Year Award in the energy category; and the Prospectors and Developers Association of Canada's Developer of the Year award. Under his leadership Goldcorp was named one of Fast Company magazine's 50 Companies of Innovation, and Business Week magazine's selection as one of the 50 most innovative companies on the Web.
The first placement with Mr. McEwen consists of 15,414,740 units for gross proceeds of $5.39-million. Each unit, priced at 35 cents, consists of one common share and one-half of one common share purchase warrant of Minera Andes. One whole common share purchase warrant entitles the holder to purchase one additional common share at an exercise price of 55 cents per share at any time prior to the earlier of: a) the date which is the 15th trading day after receiving notice from Minera Andes that the weighted average price of the common shares on the TSX Venture Exchange has been equal to or greater than $1.00 for a period of 20 consecutive trading days commencing 120 days after the date of issuance of the warrants, and b) Dec. 20, 2007. Securities issued in this first private placement are subject to a four-month hold period, expiring April 21, 2006. The second private placement is for 13,156,689 units and has the same pricing and terms as the private placement just closed. The second private placement is subject to receiving all necessary regulatory and shareholder approvals and to the waiver or repeal of Minera Andes's shareholder rights plan as it applies to Mr. McEwen. Securities issued in the second private placement will also be subject to a four-month hold period from the date of issue.
Canaccord Capital Corp. will act as agent on both private placements. Canaccord will receive a 5-per-cent cash commission and up to 700,000 agent warrants equal to 2.45 per cent of the total number of units sold pursuant to both placements. Each agent warrant will entitle the agent to acquire one common share on the same terms as the private placement warrants. A total of 377,661 agent warrants have been issued in connection with the closed private placement. The closed private placement and the second private placement together total $10-million.
The closed private placement is for $5,395,159 totalling 15,414,740 shares and 7,707,370 warrants making Mr. McEwen a 19.9-per-cent shareholder in the corporation on a diluted basis (14.2 per cent on a non-diluted basis). The pending second private placement, for $4,604,841 totalling 13,156,689 shares and 6,578,344 warrants, would take Mr. McEwen to 31.5-per-cent ownership on a diluted basis (23.5 per cent on a non-diluted basis).
Under terms of the arrangement Mr. McEwen will have the right to nominate a director and a right to finance the corporation in future financings for two years. If a majority of the shareholders don't approve the second private placement and waive or repeal the shareholder rights plan as it applies to Mr. McEwen through written approval or by a vote at a special meeting of the shareholders of the corporation, then a break fee of $2.0-million will be paid to Mr. McEwen.
In addition, Minera Andes has also completed a non-brokered private placement financing for $701,639.75 through the issuance of 2,004,685 units at 35 cents per unit. Each unit consists of one common share and one-half common share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at an exercise price of 55 cents for a period of 24 months. Finders' fees of 6 per cent, payable by issuance of 120,281 common shares was paid to Haywood Securities in connection with this financing. The common shares and warrants comprising the units, the warrant shares issuable on exercise of warrants and common shares issued to Haywood Securities will have a four-month hold period expiring on April 7, 2006. Proceeds from the financing will be used to advance the company's projects in Argentina.
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