McEwen Mining! May I suggest EGO.to as the ticker symbol?

So we now know why Minera Andes (MAI.to) tanked 10% yesterday Monday, as word must have leaked out to the inside trading scumballs in Canada about Rob McEwen's latest brainwave. Here's how today's NR kicks off, click through for more:

Press Release Source: US Gold Corporation and Minera Andes Inc. On Tuesday June 14, 2011, 8:00 am EDT

TORONTO, ONTARIO--(Marketwire - 06/14/11) - US Gold Corporation (NYSE:UXG - News)(TSX:UXG - News) and Minera Andes Inc. (TSX:MAI - News)(OTC.BB:MNEAF - News) announce that Rob McEwen, Chairman, CEO, and largest shareholder of both companies has proposed to combine these companies to create a high growth, low-cost, mid-tier silver producer focused in the Americas. Mr. McEwen's investment in the combined company (market close on June 13, 2011) would be approximately US$ 345 million. CONTINUES HERE

And the cherry on the cake? If (when) this deal goes through, the newly fused company gets to be called "McEwen Mining Inc", which caused me to wipe coffee off my nice new computer screen this morning.

If I were a long time supporter and holder of MAI.to I'd be hopping mad today. Because of McEwen's desire to "do something" and "take initiative" and "be innovative", MAI.to holders are faced with the future of seeing their valuable producing asset at San José, very good looking prospects around the area and the spin-out bonus of Los Azules be diluted to kingdom come by the pisspoor track record of gold exploration at US Gold (UXG), which to date has only found one decent silver prospect (the gold assets currently at UXG ain't never gonna happen) at El Gallo Mexico (i.e. for "US Gold" please read "Mexico Silver") that's already valued up to the hilt. Sadly for MAI.to longs, it's going to be very difficult to stop McEwen from applying the KY Jelly because as he owns 31% of shares and will be able to mesmerize enough of his faithful flock into believing this deal is good for them and not just his own ego the majority vote will be easy for him to reach.

0.4 shares of UXG is an insult! ForCryinOutLoud, HOC.L could offer a better deal than this. In fact, thinking about it, that might just happen....

Rob McEwen's genius

Rob McEwen is many things to many people, but only the dumb would take away from his genius for promotion. He smells the new money interest at exactly the right time, sets up the promo and WHACK WHACK WHACK the new investor sees just how cheap Minera Andes (MAI.to) is (according to the owner of 33% of the stock, that is) at just the right time and from several different angles....

Look, the copper!

Look we produce gold and silver!

Look at the exploration potential!

Look at what happened to AND.to recently, newbie!

....all the angles that us jaded longtooths have always seen for X or Y number of months or years while never respectfully moving the stock for him. So now, all us "yesbut" merchants that knocked Minera Andes (MAI.to) for so long and just used it for a quickflip 20% here/15% there trading vehicle get to look stupid, while those that believed McEwen and were equipped with the Zen-like patience are sitting on a heavy win from a very short space of time.

Rob McEwen, you are a true genius at this mining game. I salute and applaud your brilliance.

Handbags at dawn! Hochschild vs McEwen goes to court

Oh, now this one could run and run....and be fun along the way, too. Funnily enough I was looking at MAI and wondering if it were shortable at its $1+ prices registered, as a couple of e-mail pals will stand witness. I didn't short it in the end, so just a sideline spectator as this stuff unfolds. I can't wait for the Rob Mac E reply PR:

Hochschild files suit against Minera Andes seeking project financing repayment

    -   Despite a $65 million loan disbursement by Hochschild, Minera Andes,
       Inc. and Minera Andes SA have refused to execute formal loan
       agreement documents for three years
   -   Hochschild provided a project finance loan to the co-venture entity,
       Minera Santa Cruz, for the construction of the San José mine in
       Argentina
   -   Minera Andes has caused an undue delay in documentation and repayment
       of this loan by refusing to execute formal loan documents
   -   Legal action has no impact on the running of the San José mine, which
       is operated by Hochschild

LONDON, March 17 /CNW/ - Hochschild Mining plc ("Hochschild") today announces that it has filed suit in the New York State Supreme Court, asking that Minera Andes, Inc. ("MAI") of Alberta, Canada and its subsidiary, Minera Andes SA ("MASA"), be required to execute formal loan agreement documents for the $65 million project financing loan Hochschild provided to the San José gold and silver project in Argentina.

The mine, a co-venture between Hochschild and MAI, has been in operation since June 2007. Under the terms of letter agreements between the parties executed in October 2006, Hochschild alone provided the full amount of the project financing, totalling $65 million in instalments between October 2006 and July 2007.

The complaint alleges that MAI and MASA have unduly delayed the execution of formal loan documents and repayment of the loan by the co-venture entity, known as Minera Santa Cruz. Hochschild has made repeated attempts to finalize the formal loan agreement documents, but the suit alleges that MAI and MASA have made demands never contemplated by the original letter agreements.

The suit lists five separate causes of action. It seeks a decree by the court requiring MASA and its parent company to execute formal loan agreement documents with Hochschild, consistent with the previous agreements between the two companies. It asks that Minera Andes, Inc. and MASA be enjoined from further interference in the repayment of the project finance loan, asks the court to order payment to Hochschild of benefits derived by MAI and MASA as a result of the loan, and requests an order declaring that other shareholder loans are subordinate to the project finance loan.

The law suit has no impact on the running of the San José mine, which is operated by Hochschild. The mine initiated operations in 2007 with a plant capacity of 265ktpa, and following a successful expansion in 2008, it doubled plant capacity to 530ktpa. In 2009, the mine produced approximately 5 million ounces of silver and 77 thousand ounces of gold.

x

Shenanigans at Minera Andes (MAI.to)

MAI.to five day chart, 1 minute bars: Not easy to
read, but has all those 500 share trades showing

One of the nice things about running this blog is that over its lifetime it has attracted some pretty sharp market observers as readers that are often kind enough to share their opinions with your scribe. Yesterday I received a mail from reader 'AP', who has noticed the same thing as your humble correspondent these last couple of days about trading in Minera Andes (MAI.to). Here are extracts from his mail:

Hello Otto,

At the end of trading, for the last couple of days, there was always someone dumping a big number of shares on the market, this pattern looks somehow suspicious to me. .
................

Do you think there could be some importance to those trades at the end of the trading day or is it just some kind of coincidence in your eyes? Thanks in advance for your opinion.

Best regards,

Here's my reply to 'AP':

Yep I'd noticed too. I think you're right and someone wants a lid kept on MAI.to. the suppression is done by multiple 500 share blocks, too (the minimum number required for a price change to be registered.

Note volumes are high recently (1.5m in two days). I think it adds up to somebody wanting in for a nice, big chunk at these prices. Not a bad pattern and one not to worry about.

And sure enough, this morning we're seeing the same sort of action. The fact that the multiple trades are going through in blocks of 500 shares is also significant, as any number less than 500 is classed as a small lots trade by the TSX and doesn't register any price change in the stock. Also, all these 500 share lots are sold by our old friend "anon" and bought by house 7, TD Sec.

Funny coincidence that, innit?

The bottom line is that MAI.to is being sat on here, folks. That means things look good for a short term trade, because once the bigger player has decided the sitting-upon chapter is over, the stock will pop back up, just like the metaphorical cork held under water.

DYODD, dude.

That Rob-O-Meter in action

On Friday we wrote about Minera Andes:

".....my Rob-O-Meter predicts a PR or two early next week...."

And here we are Monday morning. Right on schedule, Mr McEwen.

SPOKANE, WA, Aug. 24 /CNW/ - Minera Andes Inc. (the "Corporation" or "Minera Andes") (TSX: MAI and US OTC: MNEAF) is pleased to announce exploration plans for two principal areas in Argentina. 1) Santa Cruz province where the Corporation's San José mine is located and 2) San Juan province, site of the Corporation's recent Los Azules copper discovery. The target in Santa Cruz province is high-grade epithermal gold-silver mineralization. In San Juan province porphyry-style copper mineralization is the primary target.

Exploration Program

Minera Andes plans to systematically evaluate its portfolio of properties in Santa Cruz and San Juan province. It is anticipated that in the next eighteen months all the properties currently held will be evaluated using satellite image analysis, soil and rock yada yada continues here

Minera Andes (MAI.to): Who da man? WHO DA MAN???

RMC DA MAN

SPOKANE, WA, June 18 - Minera Andes Inc. announces that following the Corporation's annual general and special meeting today, Mr. Robert R. McEwen has been appointed interim President and Chief Executive Officer of the Corporation effective immediately, replacing Mr. Allen Ambrose. Mr. Ambrose was re-elected to the Board of Directors of the Corporation.

Minera Andes would like to thank Mr. Ambrose, a founder of the Corporation, for his dedication and service to the Corporation. Under Mr. Ambrose's stewardship, Minera Andes grew from a junior exploration company to a company with exploration success in Argentina and a significant interest in a producing mine.

Meanwhile, if you want to know what Ambrose and previously ejected from Minera Drummond have decided to do with their spare time, watch out for a post coming up soon on a real prize of a junior company, brought to you by a smart and generous IKN reader. All will be revealed.....

Mister McEwen joins Mr. Dow, Mr. Jones, Mr. Standard and Mr. Poors

Here's an interesting and totally, utterly un-egoistic development. Rob McEwen (yeah, him) has put his name to a new index of exploration-stage junior gold miners. Humbly called "The McEwen Junior Gold Index", the idea is to track a basket of explorers on a weighted basis. Ther minimum market cap for inclusion is an accessible $50m and it's done in loonies.

Amazingly enough two McEwen companies make the list, Rimfire and US Gold (that perhaps should be re-named Mexico Silver, but that's just me). Anyway, here's the link where you get the full list of companies included and the read-more-about-it page, too. So go check it out. All in all not a bad initiative, name or no name.


UPDATE: Yes, I confused Rimfire and Rubicon....thanks for the mails, folks. Just goes to show the normal Otto ignorance ex-LatAm (also goes to show I should DD a bit). BTW, McEwen also holds chunks of GUY.to which is on the list.

Minera Andes (MAI.to)

For the record, Minera Andes (MAI.to) is one of the long-term stocks to follow in The IKN Weekly.

As for the short-term (i.e. today), my only commentary is "WHEEEEEEEEEEE!!!!"

Trading idea of the day

Minera Andes (MAI.to)

Because in about 90 minutes' time, Rob McEwen is going to stand up in front of a whole bunch of rich people and their analysts at the Yale Yacht Club in New York and tell them to buy MAI.to. All these people will have cellphones in their pockets and decent red wine in their bloodstream.

Buy at 64c now, sell at 70c (or maybe even that 74c target I set myself a couple of days ago) in a couple of days; what could possibly go wrong?

DYODD

Postcard from PDAC: Low lies and high fives

Superspy "Codename NRI" is back with a second missive, direct from the heaving bosom of PDAC. If you missed the first, here it is. So here we go with the second NRI view of things. Enjoy (because I did...in fact it's a hoot).

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NRI here, with a few tales to tell...

I thought I should act on the suggestions of Otto, the incisive analyst, and locate a few of his interesting miners. I spotted the Petaquilla Minerals booth; and got straight to the point:

NRI: Aren't you the guys that have an unpaid fine?

Pet. rep: No. We don't owe a fine.
NRI: What do you mean?

Pet.rep. (defensively): They don''t have the authority to impose a fine.

NRI: Who?
Pet.rep.: The environment group. Only the Ministry. Nothing is being enforced against us.

NRI: Are you saying that the Ministry hasn't imposed a fine?
Pet.rep. : Not that I'm aware of.

NRI: Who are you?
Pet.rep.: Bassam Moubarak, the CFO.

NRI: The CFO...so, if a fine were imposed, you would know.
Pet.rep. : I'm not aware of any fine. A misconception in the media.

NRI: Which media?

Pet rep. responded but I didn't catch the reference. It sounded like a Panamanian newspaper.

This ended our exchange and I hurried off to a bench to sit and make a transcript of the questions and answers, while the exact words (as I recalled them) were fresh in my mind.

Now, Otto, if you find out that my interview might be of any help to Panamanian authorities I am responsive to providing evidence and would be delighted to have an expense paid trip to Panama for that purpose.

Digressing, I paid a visit to the booth of Eastmain Resources - ER.to - explorationists with some great projects in the James Bay area of Quebec, Canada, one of which is a JV with Goldcorp, which is developing the Roberto Mine on an adjacent property. ER is one of my favourites (I have shares) and I like their people a lot. I talked to one of the geologists, Cathy B, and she told me this PDAC has been very busy for them. I asked Cathy whether she and husband Don (ER's CEO) exhibited at the show in Phoenix last week. Cathy told me they had and, though they expected that it might be quiet, it was very very busy. Cathy told me that a coin dealer was set up right behind them; and he sold out his entire inventory - $173,000 in coins - in the first three hours of the show.

Returning to Otto's crib sheet, I really wanted to find Rob McEwen. Well my buddy, JG, informed me that the

McEwen companies - Rubicon Minerals, U.S.Gold, Lexam, Mineras Andes - were hosting a reception Tues eve at 1King St - a tony location in the power vortex of Toronto. Off I went - to this, my fourth reception so far, with the first three having been in suites in the Fairmont Royal York and the Intercontinental Hotel. Digressing again, the other night at the Royal York, a staff person told me that the PDAC is their biggest and busiest engagement of the year - and the one during which the most booze is served. Many many receptions are hosted simultaneously in each of several hotels. The McEwen reception was not in a suite - but in a ballroom! - and it was packed. I was given 2 bar tickets upon entry. Waitstaff circulated with platters of hors d'ouvres; rep's from each of the McEwen companies had stations to receive and respond to questions; and a photographer had a station to take one's photo as one held a 400oz. gold bar.

My buddy JG arrived and we connected. He told me that McEwen must be economizing, because last year, the bar was open - no 2 drink limitation - and there was a lot more food. I hadn't sighted Rob McEwen in the packed ballroom but JG had and pointed him out. I approached Mr. McEwen and waited for the couple who were chatting with him to finish; and then, responded to his greeting by thanking him for hosting this reception. I told him I had been following the Minera Andes story and was really glad that he had jammed Hochschild. Mr. McEwen responded that they deserved to be jammed. I asked whether he had heard about Inca Kola News; He had not. I told him this guy Otto had this blog and encouraged anyone spotting McEwen to highfive. Gawd love him, Mr McEwen immediately responded with the highfive. Anybody reading this: he is such an accessible guy. I have had an opportunity to speak with him before and my buddy JG told me that he once called one of the McEwen companies; and Rob McEwen answered the phone and was absolutely responsive to the questions which JG posited.

Wearing down here, I wanted to report on my meeting the charismatic and very impressive Juan Vegarra, the CEO of Vena Resources, and the question I didn't get to ask him; but I must sign off.

more later...
NRI

Related Post
Postcard from PDAC: Where have all the people (and freebies) gone?

Mining PRs and the Ottotrans™: Part Three

I've had mails about part one and part two of this series and even people saying "oh do it more often", so as you're all suckers for punishment here goes. Today's mining PR is a longer one than before and comes from Minera Andes (MAI.to). But don't worry, I'll keep the Ottotrans™ version concise.

This is what it says:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SPOKANE, WA, Feb. 23 - Minera Andes Inc. (the "Corporation" or "Minera Andes") is pleased to announce that Robert R. McEwen has been appointed as Executive Chairman of Minera Andes. Minera Andes has also appointed two new directors, Messrs. Richard Brissenden and Michael Stein. Minera Andes also announced that Dr. Arthur D. (Darryl) Drummond has retired as a director of the Corporation after almost 13 years of service.

Mr. McEwen is the Chairman and CEO of U.S. Gold. He is a recipient of the Order of Canada, Canada's highest civilian honor. A leading Canadian mining industry entrepreneur, with active exploration underway in Nevada and Mexico, Mr. McEwen was the founder, former chairman and CEO of Goldcorp Inc., which he built from an investment company with a $50 million market capitalization to one of the largest gold-mining companies in the world with an $8 billion market capitalization by the time he retired from the company. His achievements in natural resources have been recognized with such honors as The Northern Miner's Man of the Year Award; Ernst & Young's Ontario Entrepreneur of the Year in the Energy Category; and the Developer of the Year Award from the Prospectors and Developers Association of Canada.

Mr. Richard Brissenden is a chartered accountant with more than 25 years experience in the mining and exploration sector. He serves as a director on several mining companies, including Canuc Resources Corporation, Excellon Resources Inc., Corona Gold Corporation, Lexam Explorations and Valdez Gold. He has previously served as a director of, amongst others, Metco Resources., which was purchased by Breakwater Resources Ltd. in 2008 and Hudbay Minerals Inc. from June 2003 to 2006.

Mr. Stein has been Chairman and Chief Executive Officer of MPI Group Inc., a company engaged in real estate investment and development, since 1994. Mr. Stein has also held the position of Chairman and Chief Executive Officer of MICC Properties Inc., a company engaged in real estate investment and development, since 1987. Mr. Stein is also currently the Chairman of Canadian Apartment Properties Real Estate Investment Trust (CAP REIT). Between 1978 and 1987, Mr. Stein held progressively senior positions, ultimately holding the position of Executive Vice President responsible for operations, with The Mortgage Insurance Co. of Canada. Mr. Stein was a director of Moneysworth & Best Shoe Care Inc. between 1997 and 2000. Mr. Stein was also a member of the Board of Directors of Goldcorp Inc., a public natural resource company the shares of which are listed on the TSX and New York Stock Exchange, between 2000 and 2006. Mr. Stein is a graduate engineer and holds a Master of Business Administration in Finance and International Business from Columbia University in New York.

Messrs. Brissenden and Stein were nominated for appointment by Mr. McEwen, pursuant to the rights he has in connection with the private placement he recently completed with Minera Andes.

Mr. Ambrose, President and Chief Executive Officer of Minera Andes said "I look forward to the contributions of these new, highly experienced board members as Minera Andes continues to grow and uses its ongoing income to create new asset value and market awareness. We are also very pleased that Rob McEwen has agreed to take on a more active executive role with the Corporation."

Dr. Drummond is a self-employed consulting geological engineer who lives in Vancouver, British Columbia. On behalf of the Corporation, Mr. Ambrose thanked Dr. Drummond for his many years of service to the Corporation. Mr. Ambrose said "I am very grateful to Darryl for his long-time service on the Board and his guidance, as Minera Andes has grown from an early-stage exploration company to an emerging gold/silver production company with excellent prospects for growth."

The Board of Directors of the Corporation now consists of Robert R. McEwen, Executive Chairman, Allen V. Ambrose, President and Chief Executive Officer, Richard W. Brissenden, Victor Lazarovici, Allan J. Marter, Dr. Donald Quick and Michael L. Stein.

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And this is what it means:

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SPOKANE, WA, Feb. 23 - Minera Andes Inc. (the "Corporation" or "Minera Andes") is pleased to announce that Robert R. McEwen is now da man. Minera Andes has also appointed two new directors, Messrs. Richard Brissenden and Michael Stein. Minera Andes also announced that Dr. Arthur D. (Darryl) Drummond is toast.

Mr. McEwen is the Chairman and CEO of U.S. Gold which should really be named Mexico Silver because the only thing they've found worth talking about is a lump of Ag at its Gallo project in the land of large sombreros. Mr McEwen is really, really very special indeed and lots of people have told him that already. You'll note he was at the head of Goldcorp when it had a market cap of much less than Minera Andes, so imagine what he can do for you here. His achievements in natural resources have been recognized by everyone because he is really, really very special indeed.

Mr. Richard Brissenden is a chartered accountant who has been twiddling his thumbs since Metco got bought out by Breakwater. He's filled in a few months by sitting on the boards of other pennycrappers but got a call from his old buddy McEwen last week and is now a director here.

Mr. Stein has been Chairman and Chief Executive Officer of MPI Group Inc., a company engaged in real estate investment and development, since 1994. He's a buddy of McEwen's from the Goldcorp days and probably couldn't name the capital of Argentina, let alone find San José on a map. His director's role at Best Shoe Care will be particularly useful to the BoD at Minera Andes.

Messrs. Brissenden and Stein will do exactly as McEwen tells them to do. Mr. McEwen was given the chance to put his own flunkeys on the BoD thanks to his recent company-saving financing and is wasting no time.

Mr. Ambrose, President and Chief Executive Officer of Minera Andes said "I look forward to being bossed around by two people who have no idea what MAI.to has been through in the last 15 years. We're also relieved that McEwen is finally taking over and can show us how to market the company because we've been crap at that so far."

Dr. Drummond is a self-employed consulting geological engineer who lives in Vancouver, British Columbia. On behalf of the Corporation, Mr. Ambrose thanked Dr. Drummond for his many years of service to the Corporation. Mr. Ambrose said "You're gone, sucker."

The Board of Directors of the Corporation now consists of Robert R. McEwen, Executive Chairman, Robert R. McEwen, Robert R. McEwen, Robert R. McEwen, Robert R. McEwen and a few other people.

Minera Andes (MAI.to): I doff my cap to Rob McEwen

POW!

You gotta applaud Rob McEwen today...man that was a class move. Here's the PR and here's the opening snippet....

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 José 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.

.......but you must read the whole thing to fully understand what he's done, including diffusing the HOC.L problem and getting them to bid higher. That's why he's a multimillionaire and I'm a dude with a blog.

Minera Andes (MAI.to): Suddenly it's a raging buy....

...isn't it? I mean, accuse me of being a bit slow on this if you like.......

It occurred to me, lying in bed last night and about to drop off that Minera Andes (MAI.to) is a raging, stonking total buy right now (yes it is sad that I obsess about these things so much....I pity myself, too). Here's the reasoning in simple bullet point form:

• Hochschild (HOC.L) has run a six month long dirty play on MAI.to to get its hands on 100% of the San José silver/gold mine. Basically it deferred sales in 3q08 while costs were high, thus causing a cash crunch at MAI.to. Then HOC.L as operator made an unexpected cash call of $11.3m on MAI.to that it knew it couldn't cover, then once the PPS had dropped made a cash offer for the company. That's so low it could limbo under a rattlesnake while wearing a top hat.
  

• However, Rocking Rob McEwen screwed up HOC's plan and gave them the bird royal style by funding MAI.to via the recently announced placement (details of which found here).
  

• So HOC.L now cries "not fair" and is trying to stop McEwen via the regulators. By the way, McEwen will win this one, be in no doubt. Even if the TSX stuffed suits say "can't do that" he'll just take it to a full shareholder vote and get approval that way.It'll take a while longer, but he's got it in the bag whatever.
  

• But wait, there's more. Now who in their right mind would want to JV with HOC.L at San José after the sneaky trick it tried to pull? Answer; nobody. Not MAI.to, because HOC.L (as operator, remember) can continue to play silly financial game with MAI.to and make sure it never makes a decent profit.

• But but but, McEwen has made it perfectly clear that MAI.to is up for sale at the right price. The Reuters note dated Feb 11th is entitled "Minera says will consider bids after conditions improve". That clear enough for you, readerperson?

• The bid that's on the table is the C$0.66 offer from Hochschild. It's unlikely anyone will come in to counterbid that, as who would want a crummy partner like HOC.L anyway?

• So what's going on here? Seems simple, really. McEwen is going for a quick and VERY profitable flip by taking control of the company, adding 121m shares at $0.33 to the 46m or so he already owns, then "considering offers" from HOC.L who'll have to come up with more cash. I mean, maybe HOC.L reduces that offer to, let's say $0.55 to take into account the extra dilution, but whatever happens here, if HOC.L wants control of San José it will have to pay more than it tried to pay with its bullshit lowball backdoor tactics.

• And with McEwen in 53% control of the company, he'll be able to vote the deal he wants. Anything above $0.33 means he's in the money, but i'll bet you anything you like that he doesn't take a penny under $0.60 on this.

So, there's the logic, as thunked through by your humble correspondent last night on his pillow. Anyone think of a reason why Minera Andes isn't a raging buy right now?

PS: I don't own, but if that nice Mr. Market lets me in at under 50c I will very soon.

Related Post
Minera Andes: In Play

Minera Andes: In Play

The news that Rob McEwen had put together a $40m financing deal for Minera Andes that would give him 53% control of the compayn has tipped Hochchild's (HOC.L) hand. It turns out HOC.L privately offered $70m for Minera's 49% of the San José mine in Argentina....aka the 49% HOC doesn't already own.

What the hell was HOC trying to achieve here? It's pretty clear that the company has tried to muscle in and grab full control by making a cash call they knew MAI.to couldn't easily cover and then lowballing for the whole asset. Are you surprised that McEwen, a Minera board member that would have known all about the deal, has done the corporate equivalent of giving HOC.L the finger?

Thus Hochschild once again proves it's a total klutz when it comes to doing deals. We can now add this one to recent Hochschild screwups such as selling Caylloma, a mine packed full of silver and profit, to Fortuna when HOC thought it was depleted. And let's not forget the Lake Shore Gold fiasco, too.

But what it does mean is that MAI.to is in play. Let's see if HOC.L comes back at them with a counterbid, as the original $70m mentioned is derisory for 49% of this asset; they put double that on the table and then people might take them seriously.

PS: Here's Mineweb with more details


RELATED POST
Minera Andes (MAI.to): Suddenly it's a raging buy... (February 16th 2009)
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Rob McEwen takes majority control of Minera Andes

McEwen tries to make a point with his furniture

It was a pretty logical move, all told.

Today in this PR, Minera Andes (MAI.to) announced that McEwen is buying 121m or so shares of the company. The immediate result is to put $40m in the coffers which easily covers the $11.3m cash call imposed on the company by Hochschild (HOC.L) as 51% owners and operators of the San José silver/gold mine in Argentina. It will also pay off the $17.5m debt it owes to Macquarie and leaves the company with $12m or so in working cap.

But the big ownership news is contained in this passage of the PR:

The issuance of the 121,212,121 common shares to Mr. McEwen pursuant to the proposed private placement (which represents 63.7% 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% of the then issued and outstanding 311,370,972 common shares.

Yup, McEwen just took control of the company. His stake in MAI.to dates back to when he was putting USGold (UXG) together to make a big move on the Nevada Cortez trend. As that hasn't worked out so well (the truth machine and all that), mo' MAI.to is a logical move.

The market likes the news so far; despite the massive dilution just announced, MAI.to is up 6.7% at $0.40. The good news (apart from the McEwen control) is that the company now has enough working capital to see it through. with silver spot now trading around $13/oz, Minera Andes may even begin to turn in profitable quarters in FY09; that'd be refreshing.

MAI.to was a favourite here for a long time, though it disappointed through 2008. Since the HOC.L cash call was announced your humble correspondent put it on the also-ran pile. Now it's surely worth revisiting and looking at the company. DYODD, dude.