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Friday, 9 November 2012
Gold Junior M&A - Hochschild buy Andina
"Hochschild has agreed, subject to the terms of the Support Agreement, to make an offer to purchase all of the outstanding common shares of Andina by way of a friendly take-over bid at a price of C$0.80 per share in cash (the "Offer").
The Offer represents a 106% premium to the 20-day volume weighted average price as at November 7, 2012 of Andina's common shares on the TSX-V and a 100% premium to the closing price of the Company's common shares on the TSX-V, immediately prior to the announcement of the Offer. The transaction values Andina's equity at approximately C$103 million on a fully diluted in-the-money basis."
Here is another aquisition from the BMO new mines list I posted a while back.
Andina has been hated by the market for quite some time but have made some progress in development and permitting of a large low grade project.
An October sell note here....
Hochschild are a large £1.7bn family controlled London Listed, primarily silver miner, and were a problem partner for McEwen elsewhere.
Their "skillbase" I would have understood to be vein mining but this would be a large low grade pit in Chile, disliked for poor metallurgy, but the PFS did appear to work with decent gold prices as the capex was modest for a bulk tonnage mine although Otto at IKN suggests the real capex will be much higher....?
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."
Exeter is up 25% in sympathy but I would understand that to be a more remote resource with potential water issues and very high capex.
I expect more M&A to come for development projects and I think some of the profits investors take will flow around the juniors market, speculating first on the next takeover targets then on the juniors with "projects like" the take-over of company X where major paid £x00m.
If this is against a background of a strong gold and miners market it could get interesting.