Merger afoot for Minera Andes and La Mancha

Vancouver — Juniors Minera Andes (MAI-V) of Spokane, Wash., and La Mancha Resources (LMA-V) of Vancouver, B.C., are combining in an attempt to advance their projects in Argentina.

Under the proposed merger, 4.5 Minera Andes shares consolidate into one share of a new company called La Mancha Mining. After the merger, each existing La Mancha share will be exchanged for one share in La Mancha Mining.

The proposal has yet to be approved by La Mancha’s shareholders and is contingent on due diligence by both companies. A private placement, to raise funds for exploration, must also be completed before the deal can be completed.

Minera Andes’ management team of Allen Ambrose and Brian Gavin will be in charge of the day-to-day operations of the new company, and La Mancha’s Walter Berukoff will act as executive chairman. (Berukoff founded Miramar Mining [MAE-T] and Northern Orion [NNO-T].)

The combined company will have several exploration projects in Argentina, two of which are advanced.

One of these, La Mancha’s Hualilan project, in San Juan province, hosts a measured and indicated resource of 444,579 tonnes grading 14.59 grams gold-equivalent per tonne, plus an inferred resource of 976,539 tonnes grading 13.37 grams gold-equivalent. About 95% of the project’s value is in gold, the remainder being 5%.

Gold production on the property pre-dates Spanish colonization; it reached its peak in the 1870s. Currently, gold mineralization has been outlined at 19 sites along a north-trending ridge of limestone that sits on a westerly dipping thrust fault. Historically, ore has been mined from conformable manto-type structures, which extend for most of the 2-km length of the ridgeline.

Minera Andes’ main asset is the San Jose land package in Santa Cruz province. Included in this is the Huevos Verdes deposit, which hosts an indicated resource of 1.9 million tonnes grading 214.5 grams silver and 2.1 grams gold, plus an inferred resource of 2.7 million tonnes grading 253.5 grams silver and 2.5 grams gold.

Lima-based Mauricio Hochschild & Cia is in the third year of a joint-venture agreement to earn a 51% interest in Huevos Verdes. The company is sinking two 45 decline shafts and constructing tunnels on two levels of the main Huevos Verdes vein in order to define a minable reserve through bulk sampling and drilling.

Minera Andes is completing an audit of the work program, which is budgeted at US$3 million. It aims to exercise its rights to maintain its 49% interest through development and production.

Prior to the proposed merger announcement, Minera Andes had 37 million fully diluted shares outstanding and was trading at around 30, whereas La Mancha had 5 million fully diluted shares and was trading at $1.95.