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Titan Minerals to obtain Andina Resources

Published by , Assistant Editor
Global Mining Review,

Titan Minerals Ltd (Titan) has entered into a bid implementation agreement (BIA) with Peru-focused gold treatment company, Andina Resources Ltd (Andina). Under the terms of the agreement, Titan will acquire all of the issued share capital in Andina via an off-market takeover bid. Andina is a Peru-focussed unlisted public company incorporated in Australia.

Under the Bid, Andina shareholders will receive 1 fully paid ordinary share in the capital of Titan for every 1.18 Andina shares held. According to Titan, completion of the Bid will create a company of enhanced scale that is positioned for further growth as a significant gold and base metals exploration and production company in Peru.

The independent directors of Andina, (Messrs Tim Neesham and Arturo Cavero) unanimously recommend that Andina shareholders accept the Bid, in the absence of a superior proposal, and subject to the independent expert's report concluding that the offer is fair and reasonable to Andina shareholders.

Andina conducts gold refining and production at the Tulin Gold Plant and the Vista Gold Plant in Peru.

During the financial year:

  • ending 30 June 2014, Andina processed 15 700 t of ore averaging 15.7 g/t and achieved a profit before tax of AUS$1 938 225;
  • ending 31 December 2015, Andina processed 12115 t of ore averaging 20.5 g/t and achieved a profit before income tax of AUS$612 002; and
  • ending 31 December 2016, Andina processed 13 500 t of ore to produce 7629 oz of gold averaging 17.4 g/ t and achieved a profit before income tax of AUS$358 613. Andina's audited accounts for the financial year ending 31 December 2017 are in the process of being prepared. During that financial year, Andina processed 8592 t of ore averaging 17.7 g/t. Andina does not anticipate deriving a profit for that financial year on the basis that its working capital was directed to the construction of the Vista Gold Plant and the existence of tailings dam capacity restrictions at the Tulin Gold Plant, amongst other things.

Tulin Gold Plant

Andina currently leases and operates the Tulin Gold Plant, located south of Nasca in Southern Peru. High grade gold ore (averaging approximately 17-20 g/t) is acquired from licensed artisanal miners, and then processed at the plant.

Andina has operated the Tulin Gold Plant on a commercial basis since 2013, generating revenue of circa AUS$11million/yr, excluding the financial year ended 31 December 2017 (as explained above). The Tulin Gold Plant had EBITDA of AUS$1.1million in 2016. The Tulin Gold Plant is licensed for 70 tpd and averaged approximately 37 tpd in FY16 with all ore being purchased from licensed artisanal gold miners in the local mining district. The Tulin Gold Plant has profitably milled over 50 000 t of ore grading approximately 17-20 g/t since 2014 and has produced approximately 7500 oz – 8600 oz of refined gold/yr, excluding the financial year ended 31 December 2017 (as explained above).

Vista Gold Plant

Andina is constructing the Vista Gold Plant in southern Peru, located near the San Santiago and Torrecillas Gold Projects. Andina is targeting 2Q18 for completion of construction of the Vista Gold Plant. When complete, the Vista Gold Plant will provide the combined group with significant cash flow opportunity in the near term. The team intends to acquire and process high grade ore from licensed artisanal miners in the region and utilise the Vista Gold Plant to process any ore mined at the Torrecillas mine and/or San Santiago concessions, providing significant synergies to the group. When complete and licensed, the Vista Gold Plant will have a nameplate capacity of 200 tpd, more than double the operating capacity of the existing Tulin Gold Plant. The Vista Gold Plant has been designed to increase its capacity to 350 tpd with minimal capital outlay, when warranted by supply of ore. Andina aims to have the Vista Gold Plant commissioned for operation in 3Q18, subject to timely receipt of all requisite permits and approvals.

Details of the Bid

The Bid will be implemented by way of an off-market takeover bid, wherein Andina shareholders will receive 1 Titan share for every 1.18 Andina shares held. The Bid will extend to any Andina shares that are issued as a result of the vesting of Andina performance rights during the offer period. The Bid is subject to the following conditions:

  • 90% minimum acceptance by Andina shareholders;
  • all applicable regulatory approvals being obtained;
  • Titan shareholders approving the Bid for the purposes of ASX Listing Rule 10.1; and
  • no material adverse change or prescribed occurrence in relation to Andina. Titan and Andina have agreed to a deal protection regime including no shop and no talk rights, a right to match any superior proposal and payment of an agreed break fee in certain circumstances. Further details of the Bid are set out in the BIA, contained in Annexure A to this announcement, and will be provided in the Titan bidder’s statement and Andina target’s statement which will be dispatched to Andina shareholders in the coming weeks. Titan will dispatch a notice of meeting to Titan shareholders for the purposes of ASX Listing Rule 10.1 approval in due course. Additionally, Andina is required to obtain an independent expert's report as to whether the Bid is fair and reasonable to Andina shareholders, as Matthew Carr is a director of both Titan and Andina. This report will be included in the Andina target’s statement.

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