SPOKANE, WA, Feb. 25 /PRNewswire-FirstCall/ -- Minera Andes Inc. (the "Corporation" or "Minera Andes", TSX:MAI and US OTC:MNEAF) announced today that on February 26, 2009 it will complete the second tranche of its previously announced private placement to Robert R. McEwen, the Executive Chairman and an existing shareholder of the Corporation.
On February 18, Minera Andes announced that it had completed the first tranche of the private placement with Mr. McEwen and had issued 18,299,970 common shares of the Corporation to him at a price of C$1.00 per share for gross proceeds to the Corporation of C$18,299,970 (the "First Tranche"). The Corporation also agreed with Mr. McEwen that if he acquires the bank loan owing by the Corporation to Macquarie Bank Limited ("Macquarie") in the aggregate principal amount of US$17.5 million, together with related security, the conversion of that loan to common shares of the Corporation would be put to the Corporation's shareholders for approval. If Mr. McEwen was unable to acquire the loan from Macquarie by the close of business on February 25, 2009, together with related security, then the Corporation and Mr. McEwen would complete the second tranche of the private placement, consisting of 21,700,030 common shares of the Corporation to be issued at a price of C$1.00 each for gross proceeds to the Corporation of C$21,700,030 (the "Second Tranche").
The Corporation has been advised by Mr. McEwen that he has not been able to acquire the bank loan and related security from Macquarie. Therefore, the Corporation and Mr. McEwen will now complete the Second Tranche. The proceeds from the Second Tranche will be used to repay Macquarie in full.
The Corporation applied to the Toronto Stock Exchange (the "TSX") under the provisions of Section 604(e) of the TSX Company Manual for an exemption from securityholder approval requirements in respect of the issue of an aggregate of 40,000,000 common shares to Mr. McEwen in the First Tranche and the Second Tranche on the basis that the Corporation is in serious financial difficulty. The details of those financial difficulties have been the subject of previous news releases by Minera Andes.
With its financial condition improved, the Corporation will be in a position to undertake a review of the options available to it for the medium and longer-term.
The transactions with Mr. McEwen described above are also related party transactions for the purposes of Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions. The Corporation is relying on certain exemptions set out in such Instrument from provisions that would otherwise require the Corporation to obtain a formal valuation and the approval of its minority shareholders in connection with the private placement.
The common shares of the Corporation purchased by Mr. McEwen in the First Tranche represented approximately 9.6% of the number of outstanding common shares prior to giving effect to the First Tranche and increased Mr. McEwen's beneficial ownership of common shares (which for this purpose includes 100,000 common shares issuable upon exercise of stock options held by Mr. McEwen) from 46,157,143 common shares (approximately 24.3% of the outstanding common shares) to 64,457,113 common shares (approximately 30.9% of the outstanding common shares). The common shares that will be acquired in the Second Tranche represent approximately 11.4% of the number of outstanding common shares prior to giving effect to the First or Second Tranche, and will increase Mr. McEwen's beneficial ownership to 86,157,143 common shares (approximately 37.4% of the outstanding common shares). To the best of the knowledge of Minera Andes, upon completion of the Second Tranche, the only person who will beneficially own, directly or indirectly, more than 10% of the Corporation's common shares is Mr. McEwen.
Pursuant to a subscription agreement between the Corporation and Mr. McEwen entered into in December 2005, until December 21, 2010 Mr. McEwen has the right to nominate one person to the Board of Directors of Minera Andes, so long as Mr. McEwen owns not less than 10% of the outstanding common shares of the Corporation and assuming the exercise of any warrants held by him. Mr. McEwen himself joined the Board of Directors of Minera Andes on August 8, 2008, upon the exercise of this right. Pursuant to the subscription agreement for the First Tranche and the Second Tranche, Mr. McEwen was given the right to nominate an additional two directors, with the result that he now has the right to nominate a total of three directors to Minera Andes' Board of Directors. Messrs. Richard Brissenden and Michael Stein were appointed as directors of Minera Andes on February 23, 2009 pursuant to the exercise of this right.
Minera Andes is a gold, silver and copper exploration company working in Argentina. The Corporation holds approximately 304,000 acres of mineral exploration land in Argentina. Minera Andes holds a 49% interest in the San Jose Project, an operating gold and silver mine. Minera Andes is also exploring the Los Azules copper project in San Juan province, where an exploration program has defined a resource and a preliminary assessment has been completed. Other exploration properties, primarily silver and gold, are being evaluated in southern Argentina. The Corporation presently has 208,458,821 common shares issued and outstanding.
This news release is submitted by Allen V. Ambrose, President and Chief Executive Officer of Minera Andes Inc.
Caution Concerning Forward-Looking Statements:
This press release contains certain forward-looking statement and information. The forward-looking statements and information express, as at the date of this press release, the Corporation's plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral reserves and other risks.
