SPOKANE, WA, Aug. 17 /PRNewswire-FirstCall/ -- Minera Andes Inc. (TSX-V: MAI and US OTC: MNEAF) is pleased to announce that Minera Santa Cruz S.A. ("MSC"), a company owned 49% by Minera Andes and 51% by Mauricio Hochschild & Cia. Ltda. ("MHC"), is finalizing the terms and conditions of an offer letter accepted earlier this year from Macquarie Bank Limited ("Macquarie Bank") (Australian Stock Exchange, ASX: MBL). This facility will provide a limited recourse project finance loan of up to US$55 million for completion of mine construction at the San Jose silver/gold project in Argentina scheduled for production at the end of the first quarter of 2007.
The debt facility of up to US$55 million to be provided by Macquarie Bank is subject, among other things, to documentation, finalization of hedging terms and fulfillment of conditions precedent. It is anticipated that the facility will be available for drawdown in the 4th quarter of 2006. The facility is substantially non-recourse to Minera Andes and MHC. As part of the overall project facility amount, there is a subordinated portion of up to US$5million available for unanticipated cost over-runs prior to completion and commercial production. The commercial terms of the loan are customary for a loan of this nature and include facility fees of 2.00% on the project loan and 3.00% on the subordinated portion with interest rates of LIBOR + 2.85% pa for the project loan and LIBOR + 4.85% pa for the subordinated portion. A success fee of up to US$269,500 (one percent of 49 percent of the principal amount of the facility) is payable by Minera Andes to Xystus Limited for assisting with the structuring and negotiation of the loan facility.
While the final documentation is being completed we have accepted an offer letter for an early drawdown agreement on the project loan facility for US$20 million. This early drawdown will act as bridge financing to fund costs of construction and development work with respect to establishing a mine at the San Jose project. The early drawdown has a maximum term of three months and is part of the larger project finance facility described above.
The interest rate for the bridge facility will be LIBOR + 3.00%. In addition, there is a fee of 3.0%, of which half is refundable against the fees payable under the larger project loan.
Early drawdown of the US$20 million from the project finance facility is subject to completion of documentation and fulfillment of certain conditions precedent with Macquarie Bank. These conditions include completing certain parameters on hedging, excluding pricing. It is anticipated that the early drawdown funds will be available before the end of this month.
Allen Ambrose, president of Minera Andes, said: "The early drawdown of the project loan facility allows construction of the mine to proceed on schedule while the larger project loan documentation is completed. In addition, the early drawdown minimizes the need for equity financing, limits dilution to shareholders, and allows time to set pricing on bank-required hedging."
The Macquarie group is a diversified international provider of specialist financial and investment banking services around the world with total assets under management of $111 billion (as of June 30, 2006). Headquartered in Sydney, Australia, the Macquarie group comprises Macquarie Bank, a leading Australian investment bank and its subsidiaries and affiliates worldwide. Macquarie Bank listed on the Australian Stock Exchange in 1996 and is rated A (S & P) / A2 (Moody's) employing over 8,600 people in 24 countries. Macquarie Bank has a long history of lending to the mining industry and has a strong international presence, having advised on and/or financed comparable projects in the Americas, Europe, Africa, Asia and Australia.
This project loan facility and early drawdown with Macquarie Bank replaces the previously announced loan facility on July 25, 2005 with Standard Bank Plc and Bayerische Hypo- und Vereinsbank AG.
Minera Andes is a gold, silver and copper exploration company working in Argentina. Minera Andes holds about 500,000 acres of mineral exploration land in Argentina, including the co-owned San Jose/Huevos Verdes silver/gold project now under construction and development. Minera Andes has also discovered an enriched copper zone at its Los Azules property and is acquiring other exploration targets in southern Argentina. The Corporation presently has 152,446,225 issued and outstanding shares.
This news is submitted by Allen V. Ambrose, President and Director of Minera Andes Inc.
FORWARD-LOOKING STATEMENT- Although Minera Andes believes many of its properties have promising potential, its properties are in the early stages of exploration. None have yet been shown to contain proven or probable mineral reserves. There can be no assurance that such reserves will be identified on any property, or that, if identified, mineralization may be economically extracted. There can be no assurance that the San Jose/Huevos Verdes gold/silver project will be found to be economically feasible or that a mine will successfully be constructed. In addition, Minera Andes' joint venture partner, Mauricio Hochschild & Cia. Ltda., does not accept responsibility for the use of project data or the adequacy or accuracy of this release.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
CONTACT: Art Johnson at the Spokane office, or Krister A. Kottmeier, investor relations - Canada, at the Vancouver office. Visit our Web site: http://www.minandes.com/.; Spokane Office, 111 East Magnesium Rd., Suite A, Spokane, WA, 99208, USA, Phone: (509) 921-7322, E-mail:
