Minera Andes continued to hitch its star to mining über investor Rob McEwen Tuesday, announcing McEwen would participate in a two-step transaction enabling him to assume a Macquarie bank loan.
The Spokane, Washington-based junior miner and explorer is under pressure to make payments on the loan as well as to meet a cash call from its partner Hochschild Mining.
Under a new agreement announced Tuesday, McEwen will buy 18.3 million shares of the company at Cdn$1 per share. McEwen also has the option to convert the $17.5 million bank loan he plans to assume in exchange for 21,700,030 common shares at a price of Cdn$1/sh.
The bank loan is due on or about March 7, 2009.
Meanwhile, Minera's partner in the San Jose mine, Hochschild, has offered to provide bridge financing to the San Jose project so that payment of the outstanding cash call could be deferred, and make a US$17.5 million loan to Minera to repay the Macquarie loan.
However, a special committee of Minera's board of directors insists that Hochschild could not make a bid for Minera Andes until April 2009 at the earliest.
With its financial condition improved, the Special Committee believes the corporation will be in a position to undertake a review of the options available to it for the medium and longer-term, the committee asserted.
The transactions could result in McEwen owning 37.4% of Minera Andes, instead of the 53.7% originally proposed in his bid to rescue the junior miner from its current financial difficulties.