Minera Andes, La Mancha aim to merge

Vancouver Major mining houses are not the only companies feeling the urge to merge. Junior explorers have also been busy teaming up in an attempt to diversify property holdings and create a more financially attractive corporate structure. The latest move has Spokane-based Minera Andes (MAI-V) and Vancouver-based La Mancha Resources (LMA-V) joining forces to advance projects in Argentina.

Under the merger proposal, 4.5 Minera Andes shares would consolidate into one share of a new company called La Mancha Mining. After the merger and consolidation, each existing La Mancha share will be exchanged for one share in La Mancha Mining. The proposal is still subject to the approval of La Mancha’s shareholders and due diligence by both companies. In order to ensure that the new company has sufficient funds to carry on exploration activities, a private placement must also be completed before the merger goes through.

Minera’s management team of Allen Ambrose and Brian Gavin will be in charge of the day-to-day operations of the combined companies, while La Mancha’s Walter Berukoff will act as executive chairman. Berukoff was the founder of Miramar Mining and Northern Orion.

The combined company will have two advanced projects and a portfolio of active exploration projects in Argentina. La Mancha brings to the table the Hualilan property in Argentina’s San Juan province, which hosts a measured and indicated resource of 444,579 tonnes grading 14.59 grams gold equivalent, plus some 976,539 tonnes grading 13.37 grams gold equivalent in the inferred category.

Gold production on the property pre-dates the Spanish era, and reached its peak in the 1870s. Gold mineralization is currently identified at 19 sites along a northerly trending ridge of limestone, which sits on a westerly dipping thrust fault. Historic production has been mainly from conformable "manto-type"structures, which extend for the major portion of the two-km length of the ridgeline.

Minera Andes main asset is the San Jose land package in Argentina’s Santa Cruz province. With the large property, the Huevos Verdes project hosts an independently calculated resource pegged 1.86 million tonnes grading 214.5 grams silver and 2.1 grams gold in the indicated category, plus an additional 2.69 million tonnes grading 253.5 grams silver and 2.5 grams gold in the inferred section.

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

Minera Andes is completing an audit of the US$3million work program expenses submitted by Mauricio Hochschild. The junior aims to exercise its rights to maintain its 49% interest through development and production of the mine.

Prior to the proposed merger announcement, Minera Andes had 37 million fully diluted shares outstanding and traded at around $0.30, while La Mancha had 5 million fully diluted shares and traded at $1.95.