Aguia Resources eyes cash flow opportunities with takeover of Andean Mining

Aguia Resources (ASX: AGR) has signed an agreement with South American precious and base metals developer Andean Mining in an off-market takeover offer to acquire what it believes is a near-term cash flow opportunity.

Andean Mining has a portfolio of 100%-owned, high-grade Colombian gold, silver and copper projects including the Santa Barbara gold mine and separate exploration assets.

The Santa Barbara mine includes a 30 tonnes per day pilot plant that has treated 500t of ore, with average recoveries of 20 grams per tonne of gold.

Andean has shown its support for the proposed deal with an independent board committee of executive director William Howe and non-executive directors Paul Ingram and James Green recommending the bid in the absence of a superior offer.

Warwick Grigor, a director of Andean and the chair of Aguia, has recused himself from being involved in the assessment of the proposed offer on behalf of Andean or the recommendation of the proposed offer by Aguia.

Under the proposed offer, Aguia will offer approximately 453 million shares in consideration for 100% of the issued shares in Andean.

It is subject to a 90% minimum acceptance condition.

If the takeover is completed, Andean shareholders will collectively own approximately 44% of the issued capital of Aguia.

Aguia was trading at $0.009 overnight.

Cash-generating asset

Aguia non-executive director Ben Jarvis said that, while the company will maintain a major focus on its Brazilian assets, the Andean acquisition provides the company with a game-changing opportunity to obtain a near-term cash-generating asset.

“The very high-grade Santa Barbara gold project in Colombia has already demonstrated its merit following a pilot scale operation that established underground mining conditions, metallurgical parameters and excellent recovered grades.”

“Aguia will seek to recommission the existing treatment facility at an expanded, continuous operating capacity of 50 tonnes per day at minimal capital cost.”

“A subsequent priority will be the drilling of the veins proximate and along strike to the existing underground workings in order to increase confidence levels in mineable resources and to better understand the exploration potential, which is believed to be considerable.”

Colombian exploration upside

Mr Jarvis said Aguia will also be aiming to progress the Atocha high-grade silver/gold project and the El Dovio copper-gold project.

“While Aguia’s Tres Entradas phosphate project has been delayed by obstructive litigation for the last couple of years, we are optimistic that the company will eventually overcome this obstacle,” he said.

“In the meantime, Aguia shareholders will benefit from the Colombian projects. The Brazilian properties continue to offer promising speculative opportunities, particularly when you consider that there are five carbonatites that are yet to be tested.”

“The combination of the assets of both entities will make for a much stronger company with a pipeline of development and exploration projects.”

Board changes proposed

If the takeover is successful, it is proposed that Andean managing director William Howe will join the board of Aguia.

Mr Howe said the proposed transaction will provide his company’s shareholders with an opportunity to be part of an ASX-listed public company with multiple assets in South America.

“Andean delivers to Aguia a company that can be quickly cash-generative through Santa Barbara, and one that has huge exploration upside.”

“Colombia is a well-regarded and established mining and exploration jurisdiction, and we are confident we can generate considerable value here.”

“If this transaction is completed, I look forward to joining Aguia and being integral to its success.”