Rob McEwen Proposes Merger of US Gold and Minera Andes: Creating a High Growth, Low-Cost, Mid-Tier Silver Producer Focused in the Americas

Marketwire | June 14, 2011 | 1:56 pm Precious Metals Gold 

US Gold Corporation (NYSE:UXG)(TSX:UXG) and Minera Andes Inc. (TSX:MAI)(OTCBB:MNEAF) announce that Rob McEwen, Chairman, CEO, and largest shareholder of both companies has proposed to combine these companies to create a high growth, low-cost, mid-tier silver producer focused in the Americas. Mr. McEwen’s investment in the combined company (market close on June 13, 2011) would be approximately US$ 345 million.

“The merger of US Gold and Minera Andes would be transformative, creating a dynamic, new precious metal company. A mid-tier silver producer diversified throughout the Americas. The combined company would be low-cost and possess a significant pipeline of production growth in addition to owning an exciting portfolio of exploration properties. Importantly, this combination would move us one step closer to our goal of qualifying for inclusion in the S&P 500 Index by 2015.”

– Rob McEwen

Highlights of the Combined Company Would Include:

  • Significant Growth: projected production of 2.5 million silver ounces in 2011 expected to increase to 7.5 million silver ounces by 2014;
  • Industry Leading Costs: estimated cash cost of negative US$0.40 per silver ounce (net of gold by-product), with costs expected to reduce further as new production commences;
  • Strong Balance Sheet: US$122 million in cash, including silver/gold bullion, and no bank debt;
  • Exciting Exploration: significant land packages adjoining Goldcorp’s Cerro Negro Project, Barrick’s Cortez Mine and US Gold’s own El Gallo Project;
  • Resources (NI 43-101): Silver, measured + indicated totals 81.2 million ounces and 51.1 million inferred ounces; Gold, measured + indicated totals 3.8 million ounces and 900,000 inferred ounces; and Copper, indicated totals 2.2 billion pounds + 10.3 billion inferred pounds;
  • Market Capitalization: approximately US$1.4 billion;
  • Listings: the combined company’s shares would trade on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).

As proposed by Mr. McEwen, Minera Andes shareholders would receive 0.4 of a US Gold common share for each 1.0 Minera Andes share currently held. This ratio is within an average trading range established during the past six months and presents a slight premium over the previous day’s closing price on June 13th, 2011. The total number of shares outstanding in the combined company would be approximately 252.7 million.

Completion of the business combination is conditional on approval of US Gold’s and Minera Andes Board of Directors and their special committees, confirmatory due diligence, the approval of each company’s shareholders, and satisfaction of customary approvals, including regulatory, stock exchange, and court approvals. In that regard, the board of directors of each of US Gold and Minera Andes have each formed special committees of independent directors to consider the proposed transaction.

The business combination, if approved, is anticipated to become effective in late October 2011. Upon completion of the proposed transaction the combined entity would change its name to McEwen Mining Inc.

Read the full news release here.

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