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  • TNR Gold: Los Azules Litigation: U.S. Gold, Minera Andes CEO urges holders to approve merger mai, uxg, ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura 5 comments
    Dec 21, 2011 6:12 PM | about stocks: UXG, MNEAF, BHP, ABX, NG, FCX, RIO, AUY, BVN, VALE

    Updated on 1.01.2012 with comments and Copper Projects Valuations.

     
      This headline  U.S. Gold, Minera CEO urges holders to approve merger  is from Stockwatch and you should read the full NR from Rob McEwen below. Why is the worry about the approval outcome? Both stocks - US Gold and Minera Andes have collapsed since last spring. US Gold has made the top at 9.2CAD with MC over 1.2 billion dollars and now is trading at 3.26CAD with MC at 456 mln CAD. Minera Andes has made a top at 3.3CAD before the new claim for Los Azules was advanced by TNR Gold in May and now is trading at 1.42CAD with MC at 407 mln CAD. Combined companies will be valued at current market prices in the range of 863 mln CAD - a far cry from last spring almost 2 billion valuation at the top. 
      We can only speculate why the market does not like Gold juniors now or this particular deal or what else is affecting the valuations now. Some shareholders are raising very interesting questions about the valuations in proposed merger between Minera Andes and US Gold.


      Circular leaves more questions than answers now: why the sudden collapse in value of Los Azules? Could the litigation discount in case with TNR Gold be so large according to investment banks? Is the risk of litigation outcome properly disclosed to US Gold and Minera Andes side? Why the San Jose and Los Azules valuation range is so wide and out of touch with previous numbers published by Minera Andes? What Minera Andes did to address the litigation risk and preserve the value for its shareholders? Have they even tried to settle the case before this down beat valuations or it will be settled after Minera Andes existing shareholders will be diluted?
      Interesting to mention the large short position in US Gold and that it was driving Minera Andes down which is locked with the exchange ratio. Can we still expect the surprise counter bid for the Minera Andes?  A lot of disgruntled retail shareholders of Minera Andes are still waiting for it. But who reads all these boards anyway? That is why we are surprised with this letter - we have thought that the deal is done already from the beginning.
      Los Azules deal with TNR Gold - when company was paying 5 mln dollars for the 12.5% of the Los Azules with its attempt to back in and was refused by Minera Andes in 2010 - looks like a sweet distant memory now. TNR Gold has advanced the new claim in May 2011 and is seeking now the return of all the Northern Half of the Los Azules deposit. We can not assess the risk involved in this litigation for the all parties, but still think that more proactive approach on the part of Minera Andes in order to resolve the dispute with TNR Gold could lead to the benefit of all shareholders. The litigation disclosure from the company is still very modest to put it mildly and we will provide the links in order that it will not be a total surprise later for all shareholders involved.

    Update 1.01.2012 Charts below can provide further ideas about potential valuations for Los Azules:

    Chris from "On The Hunt for Value" has made a terrific forensic accounting job following the proposed valuations for Minera Andes and US Gold including the communication with US Gold. We highly recommend to read his Blog in its entirety, even if he takes in some part a different view on TNR Gold side of litigation:


    Minera Andes (OTC:MNEAF) merger with US Gold (NYSE:UXG)
     
    "A recent data point not included below is the purchase of Peregrine Metals' 12b lbs Cu, 0.42% grade Altar deposit, for an implied price of $0.03-$0.04 per lbs Cu.   
     
     
     
     
    Assuming at buyout-price of 54% of NPV, as based on recent M&A activity (see above slide), than Los Azules could have a potential value around $790m.


    UPDATE:

    My Question to US Gold:  In the NAV approach on Los Azules, using the assumptions that Raymond James stated, why is it that their sensitivity table says that LA is valued between $248.6m and $379.5m yet in the NAV summary, Raymond James has LA valued at between $87.0m and $132.8m?


    ANSWER FROM US GOLD:  The sensitivity table refers to the NPV of the Los Azules Project – based on 100% ownership and unadjusted for trading value. The NPV is then adjusted according to what is stated in the Formal Valuation “Raymond James applied a risk adjusted developer multiple to Los Azules, in line with industry comparables, to reflect the current stage of development of the project, and also made additional adjustments to reflect the risks associated with the current litigation.”

        As a result, we adjusted the NPV by a multiple of 0.35x and the range becomes US$87-US$132.8M from US$248-US$375. There are essentially no copper development stage companies that trade at 1.0x NPV, and given the political, technical and litigation risk associated with this project the 0.35x multiple was merited."

    End of quote.
     
     
    Los Azules Litigation TNR Gold vs Minera Andes - Trial Date is Set for November 2012
     

    Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.



    TNR Gold: Los Azules Litigation: Minera Andes: Los Azules Project Exploration Progress Update
      "Some Minera Andes shareholders are not very happy these days with the valuation proposed in the merger with US Gold.  The "Big Copper in Argentina" has been promoted by Minera Andes as one of the largest Copper deposits in the world -before TNR Gold was allowed its new claims last May - now it has shrunk dramatically on paper in valuation of the "independent financial advisers" in order to support the proposed acquisition price by US Gold. This shrinkage has affected even the 49% in the Silver producing mine in Argentina as well.
      Business is tough in Canada and who said that relationships with junior partners should be any different than with the small shareholders? Some of them are talking now about lawsuits to follow, misrepresentation of facts and other heavy litigation staff - people are getting emotional and frustrated. We would think as well that by now COO of the company should know better and made the clarification that TNR Gold is now seeking return of the Northern Half of the Los Azules deposit and not only 25% back in right, but we are sure Minera Andes shareholders are already better informed.
      In the other news about the project the very important information is that the Copper is still there in the ground, there are NO glaciers in the area and NO other shrinkages was reported in the area. We can expect the size of the deposit to grow further:
    "During the last season, nine wells were drilled in order to confirm the previously defined resources, in addition to two deep exploration wells. In one of the latter a new mineralized areas was found, located southwest of the already defined resources area. With regards to diamantine, 5,655 meters were drilled and 4,793 meters were drilled with reverse air. Due to this new mineralized area, it is possible that the amount of resources may increase."
     

     
     
      Stakes are getting bigger and companies involved in this case as well - we continue to monitor the situation. 

     


     


     
     June 23, 2011
     
    Vancouver B.C.: TNR Gold Corp. (the "Company"). TNR advises that it has taken note of the proposed merger of Minera Andes Inc. with US Gold to form McEwen Mining Inc. or some other similar entity. For further information please see the news release from Mineral Andes dated June 14, 2011.
     
    As TNR is currently engaged in litigation against Minera Andes Inc. and three of its subsidiaries, TNR advises that it will be monitoring the developments with Minera Andes Inc. and intends to ensure that TNR's rights in the litigation are not prejudiced by any changes to the ownership of Los Azules or the identity of the Minera Andes parties.
     
    Additional information can be obtained on the TNR corporate Los Azules webpage - 


    Public Court Documents on Los Azules litigation:

     

    We have found emails between Minera Andes and Xstrata presented in TNR Gold's application particularly entertaining:

     


     

      

    TNR Gold (Solitario) properties are called Xstrata on the map below and above that line.




     
    Mineweb: Minera Andes drops plans to spin-out Los Azules because of a court case with TNR Gold questioning its full ownership of the project. 




    Rob McEwen Letter to Shareholders of US Gold and Minera Andes12/21/2011
    Download this Press Release (PDF 283 KB)
    TORONTO, ONTARIO--(Marketwire - Dec. 21, 2011) -
    Dear Fellow Share Owners,
    You will shortly receive in the mail a massive document: information circular/proxy statement along with a request for your vote to approve the combination of US Gold and Minera Andes. My name is Rob McEwen and I am the largest shareholder, Chairman and CEO of both companies. I own approximately 20% of the outstanding shares of US Gold and 30% of the outstanding shares of Minera Andes. In June 2011, I proposed this combination to the Boards of both companies based upon my belief that the combined company would be significantly stronger and better positioned to grow and prosper.
    I do not take a salary from either company. I bought all of my shares. The cost of my investment is over $110 million and it is split approximately 45% US Gold and 55% Minera Andes. How will I make money? The same way as you, which is through a higher share price!
    I am very sorry to say that since June the price performance of our shares and much of the junior gold market has been simply awful and financially painful for all of us! However, once you have approved the combination on January 19th I believe we will see the value of our shares begin to improve for the following reasons:
    -Significant Near-Term Growth: The goal of the combined company is to significantly increase production as the El Gallo Complex comes online in Mexico and still remain at the bottom of the cost curve.
      
    -Exciting Exploration: Significant land packages adjoining US Gold's El Gallo Complex, Barrick's Cortez Mine, Minera Andes' San José Mine and Goldcorp's Cerro Negro project.
      
    -Resources (see table below):
     Silver - Measured and Indicated 70 MMoz, Inferred 86.4 MMoz
     Gold - Measured and Indicated 5.3 MMoz, Inferred 1.2 MMoz
     Copper - Indicated 2.2 Billion pounds, Inferred 10.3 Billion pounds
      
    -Market Capitalization: Combined market capitalization of approximately US$865 million (as at December 20, 2011) will create a combined company that possesses size and diversity of assets that should attract greater research coverage.
      
    -Listings: The combined company's shares would trade on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
    By combining US Gold's growth profile with Minera Andes' cash flow, we have the potential to create a high-growth silver-gold producer that is focused in the Americas. In addition, we retain exposure to great grass-roots exploration prospects. Under the proposal, each Minera Andes shareholder would receive 0.45 of a share exchangeable into a share of the combined company (McEwen Mining) for every one (1) Minera Andes share held. Each US Gold shareholder will continue to hold their existing shares as US Gold is renamed McEwen Mining. This exchange ratio was arrived at by the independent committees of each Board based on advice from their financial advisors. I agreed to support this exchange ratio.
    I previously built and ran Goldcorp over 18 years. Its solid foundation was built through several well considered and strategic reorganizations and mergers that enabled us to realize excellent share price performance. My goal is to see if we can duplicate that success and it starts with this merger. With US Gold and Minera Andes together we do have the potential to achieve something great.
    I urge you to vote YES to this proposal and I look forward to your support as we set out to build a great company that I expect will qualify for inclusion in the S&P 500 Index by 2015.
    If you require assistance in voting your proxy or further information about the Plan of Arrangement, please contact Kingsdale Shareholder Services Inc. toll free at 1-866-581-1513 or by e-mail at contactus@kingsdaleshareholder.com
    Best wishes for much success in your investments and life!
    Rob McEwen, Chief Owner
    US Gold & Minera Andes
    ABOUT US GOLD (www.usgold.com) AND MINERA ANDES (www.minandes.com)
    US Gold Corporation ("US Gold") and Minera Andes Inc. ("Minera Andes") entered into a definitive arrangement agreement on September 22, 2011, wherein each Minera Andes shareholder would receive 0.45 of a share exchangeable into a US Gold share for every one (1) Minera Andes share held. US Gold's objective is to qualify for inclusion in the S&P 500 by 2015. US Gold explores for gold and silver in the Americas and is advancing its El Gallo Project in Mexico and its Gold Bar Project in Nevada towards production. US Gold's shares are listed on the NYSE and the TSX under the symbol UXG, trading 2.6 million shares daily during the past twelve months. US Gold's shares are included in S&P/TSX and Russell indices and Van Eck's Junior Gold Miners ETF. Rob McEwen, Chairman and CEO, owns 20% of the shares of US Gold.
    Minera Andes is an exploration company exploring for gold, silver and copper in Argentina with three significant assets: One, a 49% interest in Minera Santa Cruz SA, owner of the San José Mine that is located near Goldcorp's Cerro Negro project; Two, 100% ownership of the Los Azules copper deposit; Three, 100% ownership of a large portfolio of exploration properties in Santa Cruz province, Argentina, including properties bordering the Cerro Negro project. The Company had $45 million USD in cash as at September 30, 2011 with no bank debt. Rob McEwen, Chairman and CEO, owns 30% of the shares of Minera Andes.
    Forward Looking and Cautionary Statements
    This press release contains certain forward-looking statements and information by each of US Gold and Minera Andes, including "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information express, as at the date of this press release, US Gold and Minera Andes' estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, the completion of the proposed business combination between Minera Andes and US Gold (including the numerous approvals required in connection with such a business combination), risks related to business integration as a result of a successful business combination, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, risks related to litigation including specifically but not limited to Minera Andes' Los Azules property which if resolved adversely to Minera Andes (or the combined company, as the case may be) would materially affect Minera Andes' ability to develop the Los Azules project, property title, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of mineral resources and reserves and other risks. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. Neither US Gold nor Minera Andes undertakes any obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. See (i) US Gold's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and other filings with the Securities and Exchange Commission, under the caption "Risk Factors"; and, (ii) Minera Andes' Annual Information Form as filed on SEDAR (www.sedar.com) and form 40F/A filed with the SEC, for the period ended December 31, 2010, for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information. All forward-looking statements and information made in this news release are qualified by this cautionary statement.
    Additional Information About the Arrangement
    In connection with the proposed arrangement, US Gold has filed a definitive proxy statement with the SEC.SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE ARRANGEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ARRANGEMENT AND THE PARTIES THERETO. The definitive proxy statement was mailed to the Company's shareholders on or about December 19, 2011 seeking, among other things, their approval of the issuance of US Gold shares as consideration in the arrangement. US Gold's shareholders may also obtain a copy of the definitive proxy statement by directing a request to: US Gold Corporation at (647) 258-0395 (Toll Free: (866) 441-0690) or Investor Relations, at Suite 4750, Bay Wellington Tower, 181 Bay Street, P.O. Box 792, Toronto, Ontario, Canada, M5J 2T3. In addition, the preliminary proxy statement, the definitive proxy statement and other relevant materials that have been or will be filed with the SEC will be available free of charge at the SEC's website at www.sec.gov or shareholders may access copies of such documentation filed with the SEC by visiting the "Investor Relations" section of US Gold's website at http://www.usgold.com.
    US Gold and its respective officers and other members of management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies in connection with the arrangement. Information regarding the names, affiliations and interests of certain of US Gold's executive officers and directors in the solicitation are available in the definitive proxy statement relating to the arrangement filed with the SEC. Information about US Gold's executive officers and directors is also available in US Gold's definitive proxy statement relating to its 2011 Annual Meeting of Shareholders filed with the SEC on April 29, 2011.
    Resources
    Cautionary Statement to US Investors: All resource estimates reported by US Gold and Minera Andes are calculated in accordance with Canadian National Instrument 43-101 and the Canadian Institute of Mining and Metallurgy Classification system. These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
    The cumulative resource and reserve figures set forth above is comprised of the following:
    San José Mine (49%)
    (MAI) (1)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Proven 0.7 511 7.26 10.6 0.14
    Probable 0.75 394 5.45 8.6 0.12
    Measured (inclusive of P+P) 1 570 8.1 16.6 0.23
    Indicated (inclusive of P+P) 2 426 6.14 24.8 0.35
    Inferred 2.9 373 5.96 31.5 0.5
    El Gallo
    (UXG) (2)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 7 87 0.08 19.5 0.015
    Indicated 5.6 64 0.06 11.7 0.009
    Inferred 10 52 0.04 16.7 0.01
               
    Palmarito
    (UXG) (2)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 2.6 72 0.14 6.12 0.011
    Indicated 1.1 68 0.13 2.4 0.004
    Inferred 1.6 58 0.1 2.9 0.005
    Magistral
    (UXG) (2)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 7   1.7   0.35
    Indicated 3.4   1.3   0.15
    Inferred 0.2   1   0.01
    Gold Bar
    (UXG) (3)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 0.7   1.19   0.03
    Indicated 18.8   0.94   0.57
    Inferred 7   0.94   0.21
    Tonkin
    (UXG) (4)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 17.5   1.44   0.82
    Indicated 14.7   1.34   0.63
    Inferred 8.4   1.13   0.31
    Limo
    (UXG) (5)
     Tonnes (MM*)
    (100%)
     Ag
    Grade (g/t)
     Au
    Grade (g/t)
     Ag (MMoz*)
    (100%)
     Au (MMoz*)
    (100%)
    Measured 5.9   0.89   0.17
    Indicated 3.7   0.61   0.07
    Inferred 2.2   0.7   0.05
    *MM= millions
               
    Los Azules
    (MAI) (6)
     Tonnes (NYSE:MM) Cu Grade (%) Au Grade (g/t) Ag Grade (g/t) Cu
    (B lbs)
    Indicated 137 0.73 0.07 1.7 2.2
    Inferred 900 0.52 0.07 1.7 10.3
       
    Gold Bar
    (UXG) (3)
     Probable
      Tonnes (millions) Grams per tonne Ounces
    Probable Reserves 15.1 1.0 484,379
    (1) San José Mine resources information was derived from the report "Minera Andes Inc. Annual Information Form" for the fiscal year ended December 31, 2010 released by Minera Andes Inc. on March 28, 2011 with an effective date of December 31, 2010, prepared by James L. Pearson P.Eng., Alfred Hayden and Fred Brown and Eugene Puritch. Each of the foregoing are considered to be independent of Minera Andes and Qualified Persons as defined by NI 43-101. For further information about the San José mine see the "Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina" prepared by Eugene J. Puritch, Alfred S. Hayden, James L. Pearson, Fred H. Brown, Tracy Armstrong, David Burga and, Kirstine R. Malloch, dated December 16, 2010. (2) El Gallo Complex resources (El Gallo, Magistral and Palmarito) information was derived from the report "Preliminary Economic Assessment for the El Gallo District, Sinaloa State, Mexico" with an effective date of February 11, 2011 prepared by Richard Addison, Paul A. Gates, Aaron M. McMahon (the "El Gallo Report"). Each of the El Gallo Report authors is independent of US Gold Corporation and a Qualified Person as defined by NI 43-101. (3) Gold Bar resources information was derived from the news release titled "US Gold Announces Positive Preliminary Feasibility Study for Gold Bar Project, Nevada" reviewed and approved by J. B. Pennington. Mr. Pennington is independent of US Gold Corporation and a Qualified Person as defined by NI 43-101. The report titled "NI 43-101 Preliminary Feasibility Study of US Gold Corporation's Gold Bar Project" with an effective date of November 28, 2011. This report will be available on SEDAR (www.sedar.com) within 180 days. (4) Tonkin resources information was derived from the report "Technical Report on the Tonkin Project" with an effective date of May 16, 2008 prepared by Alan C. Noble, P.E., Ore Reserves Engineering, Richard Gowans, Micon International and Steven Brown, US Gold Corporation. Mr. Noble and Mr. Gowans are independent of US Gold Corporation and a Qualified Person as defined by NI 43-101. (5) Limo resources information was derived from the report "NI 43-101 Technical Report for the Limousine Butte Project, White Pine County, Nevada" with an effective date of July 1, 2009 prepared by John Welsh, P. Eng., Kim Drossulis, Senior Engineer, Jonathan Brown, M.B.A., C.P.G., Doug Willis, Geologist, Christine Ballard, Project Geotechnical Engineer, Eric Haddox, P. Eng. (the "Limo Report"). Each of the Limo report authors is independent of US Gold Corporation and a Qualified Person as defined by NI 43-101. (6) Los Azules resources information was derived from the report "Canadian National Instrument 43-101 Technical Report Updated Preliminary Assessment, Los Azules Project, San Juan Province, Argentina" with an effective date of December 1, 2010 prepared by Kathleen Altman, Robert Sim, Bruce Davis, Richard Jemielita, William Rose, and Scott Elfen (the "Los Azules Report"). Each of the Los Azules Report authors is independent of Minera Andes Inc. and a Qualified Person as defined by NI 43-101.
    The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of the contents of this news release, which has been prepared by management of US Gold and Minera Andes.

     
    Contact Information
    Investor Relations
    Jenya Meshcheryakova
    (647) 258-0395 or Toll Free: (866) 441-0690
    (647) 258-0408 (NYSEMKT:FAX)
    info@usgold.com"

    Related articles
     
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Comments (5)
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  • Sufiy
    , contributor
    Comments (422) | Send Message
     
    Author’s reply » Interesting take on valuations in Minera Andes US Gold merger from Stockhouse:

     

    "I have been following this whole fiascal for over a year and the only thing I see is that we have a guy who valued and OVER promoted the company as a $2.8 billion dollar copper project, That made me excited and want to get involved. I understand the reson behind the valuation because the report was done by Samuel Engineering . That is fine and dandy but what about recent reports from Raymond James that valued the Los Azules some where around $109 million. Is the litigation brought on by TNR really that huge of a discount? If so then why are MAI shareholders only getting .45 against the new shares? I want to know where did our $2.7 billion go, and why would there be such a huge discrepency from SE's report to RJ's report. As a shareholder I would have to vote NO but thanks for the letter RM you seemed to have left that out of the circular.
    Happy New year"

     

    http://bit.ly/rAjSjj#
    23 Dec 2011, 08:28 AM Reply Like
  • dmallik
    , contributor
    Comments (28) | Send Message
     
    TNR market cap is less than $9 million. If it's such an issue in the value of Minera Andes and the merger, why doesn't McEwen just buy them....or it that the plan after the merger?
    31 Dec 2011, 08:01 AM Reply Like
  • Sufiy
    , contributor
    Comments (422) | Send Message
     
    Author’s reply » This is what we are thinking here as well. TNR Gold is primed for M&A activity in the new year.

     

    Rob McEwen with his dream for McEwen Mining to become the part of S&P 500 after the merger of US Gold and Minera Andes is cutting quite a few corners now. Retail Minera Andes shareholders are not happy at all with suggested valuations and counting NO votes now on the message boards.

     

    http://bit.ly/sbh0bq

     

    Minera Andes shareholders have never enjoyed the proper valuation of Los Azules. Now Rob McEwen's refusal to accept TNR Gold back in right attempt in 2010 for 25% of the Northern Half of the deposit (max 15% of the total deposit at that time) has grown out of his control in litigation with the advance by TNR Gold of the new claims, when TNR Gold is claiming for return the ALL Northern Half of the deposit. In situ metal valuation terms it could be up to 2/3 of the deposit - according to the maps of Minera Andes presenting Los Azules deposit - the high grade core is on former TNR Gold properties, which the company is now claiming back.

     

    McEwen Mining can try to buy out TNR Gold or make a settlement before November 2012. Straight forward buyout will be very difficult - TNR Gold is very tightly held now - but depends on the price he is willing to pay. If you have noticed, with all games around TNR Gold's share price, insiders were only buying and increasing their position.

     

    http://bit.ly/tIUcBP#

     

    Settlement right after the merger will be another slap in the face of Minera Andes shareholders - they will be diluted already, but maybe it is the plan - McEwen Mining will be able to settle for a smaller part of its valuation compare to Minera Andes total market cap now.

     

    Timing is not on Minera Andes side now - with further drilling Los Azules size will grow - if Rob McEwen will decide not to drill this season he confirms seriousness of TNR Gold claims to the market - which were totally dismissed before.

     

    We think that there could be another couple of very interesting scenarios:

     

    1. Counter bid for Minera Andes, when Hochschild or Gold Corp - two widely discussed among Minera Andes shareholders as the natural buyers - will go and strike a deal with TNR Gold and after that will bid for Minera Andes, knowing that they have acceptable settlement with TNR Gold for Los Azules. Minera Andes is at the 52 weeks low and its market cap now is less than a half from last spring and then only San Jose mine was valued at least at this valuation. We will not be surprised that something is already happening: TNR Gold has received bridge loan and insiders were buying everything in the market last fall.

     

    2. Rob McEwen was talking about Chinese and other potential interest in Los Azules before and he tried to spin this Copper project from Minera Andes before TNR gold changed his plan with new claims last May. Looking at TNR Gold and its surrounding group: Tonglin Nonferrous in Canada Zinc, which has a stake in TNR Gold; Ganfeng Lithium in International Lithium spun out of TNR Gold last spring and Nova Gold with Barrick Gold holding stakes in TNR Gold - we can imaging that these buyers are talking to TNR Gold as well. Potential buyer can strike a deal with TNR Gold and buy Los Azules from Minera Andes if the merger will fall apart or after it.

     

    3. Wild card could be when TNR Gold just sells its Argentinean operations with all related litigation for Los Azules and new group will throw a wrench into Minera Andes and US Gold merger plans. Minera Andes shareholders just ripped for any kind of confirmation that all presented valuations are not holding water and litigation risk disclosure for US Gold side is very modest to put it mildly. Any kind of activists shareholders from US will make this merger an open checkbook for the hungry litigators.

     

    In any case, TNR Gold was able to communicate its litigation position now - just read the boards on US Gold side justifying Minera Andes low ball valuation by the litigation discount on Los Azules.

     

    http://bit.ly/t9LLcT#

     

    TNR Gold and Los Azules litigation profile will grow with US Gold and Minera Andes merger and McEwen Mining coming out of the gate with TNR Gold reminding every litigation step about its claims. Drilling on Los Azules will increase resources and size of the deposit, refusal to drill this season will finally confirm seriousness of TNR Gold claims. We think that quite a few investors in Minera Andes and US Gold will start to buy TNR Gold this year as a hedge for litigation risk.

     

    Any scenario out of the discussed above will change the situation overnight. This year will be very exciting for all parties involved.
    1 Jan 2012, 02:20 PM Reply Like
  • dmallik
    , contributor
    Comments (28) | Send Message
     
    Yikes! I just bought a ton of UXG in anticipation of the merger (and visions of another GG success story). Maybe need to hedge with TNR.
    2 Jan 2012, 08:24 AM Reply Like
  • Sufiy
    , contributor
    Comments (422) | Send Message
     
    Author’s reply » Do your DD - litigation is always a risk for all sides - TNR Gold has nothing to lose here, but in case of litigation victory or settlement with Minera Andes or McEwen Mining will have a blue sky upside.

     

    It will always be wise to check all publicly available court documents and call both companies.

     

    http://bit.ly/t6j0TM#
    2 Jan 2012, 12:19 PM Reply Like
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