Metminco to enlarge Colombian gold territory with friendly takeover

Metminco plans to produce 50,000 ounces of gold every year for a nine-year initial mine life at the Miraflores project. Image: Metminco

Metminco will merge with unlisted company Andes Resources to establish a dominant position in the richly gold-copper endowed Mid-Cauca gold belt in Colombia.

The merger will bring together Metminco’s advanced Miraflores gold project, Chuscal joint venture (JV) with AngloGold Ashanti and other surrounding prospects, with Andes’ extensive gold-silver-copper tenement holding in the Middle Cauca and Choco copper-gold belts.

This transaction will generate one of the largest portfolios of gold-copper exploration assets in the Cauca Valley with significantly reduced debt.

Junior producer Metminco intends to complete the merger by acquiring 100 per cent of Andes’ issued capital through an off-market takeover offer.

The two companies will also support the merger by raising up to $2.3 million of capital with the major support of Andes’ largest shareholder Sandfire Resources.

“This transaction is transformational for both Metminco and Andes, providing Metminco with further exposure to a large exploration portfolio in the Mid-Cauca gold belt of Colombia, access to an experienced board, management and a new shareholder base of influential, experienced and financially strong shareholders,” Metminco chairman Kevin Wilson said.

“The funds to be raised, together with the favourable restructure of our existing repayments to RMB, ensures we can accelerate exploration activities on our merged projects.”

Metminco purchased Miraflores Compania Minera SAS, which includes the Mirafores gold project, from RMB Resources Australia in 2016.

The merger is conditional upon Metminco acquiring a minimum of 90 per cent of Andes and raising $4 million of total capital, including Metminco and Andes’ fund raising in support of the transaction.

Sandfire also plans to commit $1.165 million to the merged company to acquire a 15 per cent interest in Metminco.

Cauca Valley is one of the world’s most richly endowed gold belts. Metminco’s Miraflores deposit, holds existing mineral resources of over 877,000 ounces of gold and reserves of 457,000 ounces, in proximity to Andes’ exploration projects.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.