Last checked at 8 Nov 2012 07:00
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8 November 2012
Hochschild Boosts Project Pipeline With Recommended All-Cash Offer For Andina Minerals
Summary
§ Hochschild makes C$0.80 per share all-cash offer for all of the issued and outstanding common shares of Andina Minerals Inc.
§ Andina's Board has unanimously recommended that shareholders accept the Hochschild offer
§ Andina's Directors, senior management and a significant shareholder have entered into lock-up agreements with Hochschild agreeing to support the transaction, representing approximately 14% of Andina's common shares outstanding
§ Acquisition adds to Hochschild's extensive project pipeline, with assets located in Chile, one of the Company's key targeted mining jurisdictions
§ Acquisition is in line with Hochschild's stated strategy of pursuing highly value accretive, early stage opportunities with strong geological conditions and full control
Hochschild Mining plc ("Hochschild" or "the Company") is pleased to announce a recommended cash offer of C$0.80 per share for all of the issued and outstanding common shares of Andina Minerals Inc. ("Andina"). The equity value of the Hochschild offer is approximately C$103 million on a fully-diluted basis and represents a premium of approximately 106% to the 20-day VWAP for Andina common shares for the period ending 7 November 2012 on the TSX Venture Exchange ("TSXV").
Andina owns the Dorado Gold Deposit ("Dorado"), located at the Volcan Gold Project in the prolific Maricunga gold belt in Chile as well as a 49% interest in Hochschild's Encrucijada project close to Dorado and a 50% share in Pampa Buenos Aires, a gold and silver property in Northern Chile.
In February 2011, Andina published details of a Pre-Feasibility Study carried out on the Dorado deposit disclosing initial Proven and Probable mineral reserves of 6.6 million ounces of gold. Hochschild intends to carry out extensive technical and geological evaluation of the deposit over a significant period of time and consequently during this process will re-classify the reported reserves as resources. As reported in Andina's February 2011 Pre-Feasibility Study, the project has the following mineral resources:
Classification | Total In-Pit Resource | ||
Tonnes | Gold grade (g/t Au) | Contained Gold Ounces | |
Measured | 105,918,000 | 0.738 | 2,511,000 |
Indicated | 283,763,000 | 0.698 | 6,367,000 |
Measured & Indicated | 389,681,000 | 0.709 | 8,878,000 |
Inferred | 41,553,000 | 0.502 | 671,000 |
1. All quantities are rounded to the appropriate number of significant figures, consequently sums may not add due to rounding.
2. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues.
3. The quantity and grade of reported Inferred Resources in this estimation are conceptual in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource. It is uncertain if further exploration will result in the upgrading of the Inferred Resources into an Indicated or Measured Mineral Resource category.
4. The Dorado mineral resource estimate is effective as of 16 September 2010.
In addition, the Ojo de Agua area, close to the Dorado deposit, hosts an inferred resource of 18.6 million tonnes grading 0.85 g/t Au for total contained gold content of 510,000 ounces at a cut-off grade of 0.5 g/t (October 2008) at the Andrea and Florencia zones.
In July 2012, Andina announced that it had submitted an Environmental Impact Assessment ("EIA") for the Dorado Gold Project to the Chilean environmental authority, SEA ('Servicio de Evaluacion Ambiental'), who are currently evaluating the submission via SEIA ('Sistema de Evaluacion de Impacto Ambiental'). The next stage in the permitting process will be the receipt of an "ICSARA", being the formal document that contains the observations, comments, requests for clarification and/or modifications made by the regulatory authorities. Furthermore, the public consultation coordinated by SEA will, under Chilean Law, continue as part of the ongoing process.
Ignacio Bustamante, Chief Executive, commented:
"The acquisition of Andina Minerals provides Hochschild with further long-term optionality as well as geographical balance within our extensive project pipeline with its principal asset, Dorado, being located in one of our preferred mining-friendly jurisdictions in the Americas. Although we recognise the challenges associated with the project, we expect to conduct further substantial geological and technical evaluation work on the deposit and are confident that our experienced geological and operational teams will develop its strong potential. Despite this transaction representing approximately 4% of Hochschild's market capitalisation, it could ultimately deliver significant growth."
Terms of the Transaction
§ Andina shareholders to receive C$0.80 per common share in cash
§ Transaction equity value of approximately C$103 million
§ Represents a 106% premium based on the 20-day VWAP of Andina common shares on the TSXV for the period ending 7 November 2012
§ Completion of the transaction is subject to customary conditions including acceptances from 66.67% of Andina's shareholders and the absence of a material adverse change with respect to Andina
§ A Support Agreement provides for customary provisions, including a non-solicitation clause, right to match covenants in favour of Hochschild and provides for the payment of a C$4.1 million termination fee to Hochschild under certain circumstances
§ The transaction will be carried out as a take-over bid and, as such a take-over bid circular and related documents will be mailed to Andina shareholders on or before 21 November 2012
§ Andina's Directors, senior management and a significant shareholder have entered into lock-up agreements with Hochschild agreeing to support the transaction, representing approximately 14% of Andina's common shares outstanding
§ Hochschild has also agreed to provide Andina with a loan of C$1.75 million for general purposes until the transaction closes, which is to be repaid by Andina if the acquisition is not completed
Andina Board Recommendation
The Board of Directors of Andina has unanimously recommended that holders of Andina common shares vote in favour of the transaction.
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Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 7907 2934
Head of Investor Relations
RLM Finsbury
Charles Chichester +44 (0)20 7251 3801
Public Relations
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About Hochschild Mining plc
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has almost fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru and one in southern Argentina. Hochschild also has numerous long-term projects throughout the Americas.
About Andina Minerals Inc.
Andina Minerals' 100%-owned Dorado Gold Project is located in Chile's Atacama Region, approximately 120km east of Copiapo. The property is strategically located in the prolific Maricunga gold belt, which hosts a number of important gold deposits, including the Maricunga gold mine (Kinross), the La Coipa mine (Kinross), the Cerro Casale deposit (Kinross/Barrick), and the Lobo-Marte deposit (Kinross).
Forward looking Statements
This announcement contains certain forward looking statements which may relate to matters such as the business, strategy, investments, production, major projects and their contribution to expected production and other plans of Hochschild Mining plc and its current goals, assumptions and expectations relating to its future financial condition, performance and results.
Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "plans", "estimates" and words of similar import. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results, performance or achievements of Hochschild Mining plc may be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that could cause or contribute to differences between the actual results, performance or achievements of Hochschild Mining plc and current expectations include, but are not limited to, legislative, fiscal and regulatory developments, competitive conditions, technological developments, exchange rate fluctuations and general economic conditions. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
The forward looking statements reflect knowledge and information available at the date of preparation of this announcement. Except as required by the Listing Rules and applicable law, Hochschild Mining plc does not undertake any obligation to update or change any forward looking statements to reflect events occurring after the date of this announcement. Nothing in this announcement should be construed as a profit forecast.