US Gold + Minera Andes = McEwen Mining

Today I attended the special meeting for US Gold and Minera Andes.  Us Gold meeting took place first at 4pm where the 5 proposals were reviewed and presented, all passed with 95% support.  During the Minera Andes side of the meeting it passed with about high 80% support.  Rob passed the chair of the meeting role over to legal to avoid conflict of interest.  One interesting point in the 5 US gold proposals was a restriction of repricing options with shareholder approval, you don’t see that much these days.  Shows a sense of integrity from my perspective.  There was is also a proposal to allow them to move go from 250 million shares to 500 million shares which passed.


The new name is McEwen Mining as expected and is expected to be reflected on the exchanges by the end of January.

Of course the interesting part was Rob’s presentation, which was somewhat deeper than past presentations, after the formal meeting and discussions after that were more insightful, see below.  In his presentation he touched on the ETF’s and compared them to people that get into mutual funds and then edge into stocks and see’s people that are comfortable with ETF’s moving into mining stocks.  He presented a slide that showed the inconsistency of the major gold miners share price vs production increases vs the gold price increases.  Making it harder for shareholders to make sense of the mining stocks.

There was an update by Jim, head of exploration at Minera Andes who highlighted the Los Azules Titan 24 target.  He highlighted the significant grades over 269m of copper at .5%.  On the map showing Titan 24 southwest of the main deposit he indicates that it is very significant in size and the planned open pit would easily allow them to extend the pit into this area.  They are planning more step out drilling from Titan 24.

Ian and Stefan presented an update on Mexico and Nevada, nothing new but progressing along.  Ian noted there will be resource updates around Q2 from the significant drill program that has completed near El Gallo.

At the end of the meeting Rob announced he was doing his part for quantitative easing, he asked everyone to remain seated while his staff handed out a Zimbabwe 100 trillion dollar note, a nice touch.


TNR update

I was talking to some staff afterwards and asked about the TNR proposed settlement of $125 million, to which he commented that if they really wanted to make an impact they would have announced it a few hours before the special meeting.  I personally see the settlement offer as a sign of weakness on TNR’s part.  This person and Rob noted that they need to go before the Alberta courts tomorrow to ratify the final agreement.  When asked why this was required he noted that its technically a hearing that any MAI shareholder could come forward at this hearing. Of course it’s also possible TNR would show up.

Casual Discussions on San Jose

I asked one of there VP’s about the fact that Minera Andes had received agreement by Hochschild to almost double exploration and whether Rob helped move this along. He noted that Rob had met the head of Hochschild and convinced him that increasing the exploration budget was a good move to increase value in both firms.  Hoshschild has agreed to increase the drill program in 2012 at San Jose from around 50,000 m to 93,000 m.  It should be noted that Hochschild is majority controlled by the Hochschild family at 51% and they would likely never give up control.  Hence they would need to be careful on raising money to not dilute their stake.  Also this would make any takeovers tricky to protect their majority control.  This builds a strong case to increase exploration in order to raise the value of both firms.
It was also noted that Hochschild notified Minera Andes yesterday that they were putting out a press release with some interesting results.  McEwen Mining’s people were caught a bit off guard and haven’t seen the raw data yet so time will tell how these results pan out.  It should be noted that Hochschild doesn’t have to follow the same rules that McEwen Mining does with regard to 43-401.  See here for the reference press release.  If you look up the San Jose results in this press release you’ll note most of the grades are significant but are over short ranges of a 1 – 3 meters.  There is one particular entry that the VP noted that showed 26g/t gold and almost 1000 g/t of silver over 22 meters!  I looked up the reference from the press release here, “SJD988 21.8m at 26.24 g/t Au & 922 g/t Ag”.  Needless to say it would seem there is still great potential at San Jose for some time to come.
It was also noted that Goldcorp is grabbing every explorer and miner for their Cerro property making it very hard to find people.
The merger of US Gold and Minera Andes allows US Gold’s Mexico team to be used for new exploration targets in Argentina and avoid the resource crunch.
It was also pointed out in Minera Andes Q4 numbers yesterday, see here, that a 20,000 m exploration plan was defined for 2012 on Minera’s 100% owned properties.  I asked what area’s the plan will target?  Below I’ve shown a red circle where it was indicated was a focus for drilling.
On the topic of Los Azules it was noted that exploration copper plays seem to either be valued very low or high, nothing in between.  This would seem to imply more development will be done at Los Azules to increase the value.  I’ve always assumed that at the right moment Rob would use funds from a spinout of the copper play to further develop the silver plays, time will tell.

 

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