Andean Mining IPO to ride Colombia exploration boom with high-grade copper-gold target
Andean Mining is planning 15,000m of drilling to firm up a maiden JORC resource at its El Dovio copper-gold project.
Andean Mining is seeking to raise up to $7 million to advance its El Dovio copper-gold project. The offer is open now and is due to close 9 December with a listing around 22 December.
The company acquired 100% ownership of El Dovio in a 2020 deal with Canadian listed Newrange Gold Corporation, which chose to focus on its projects in Ontario and Nevada.
Newrange will hold close to 3 million shares representing about 4% of Andean.
Colombia rated number one mining destination in South America
The extent to which Colombia has transformed its image in the past few years is shown by that fact that, in the annual Fraser Institute ratings of mining jurisdictions for 2020, Colombia is rated the number one destination in South America, well ahead of mining powerhouses, Chile and Peru.
It also ranks 13th in the world, counting states and provinces of Canada, the United States and Australia as individual jurisdictions, or fifth in the world on a country-by-country basis.
So Andean Mining’s initial public offering (IPO), which is raising funds for an advanced project, is offering local investors exposure to not only to a high-grade copper and gold play but also early entry to South America’s up and coming number one mining jurisdiction.
Highly experienced team
Andean chief executive officer and managing director William Howe has deep experience in exploration along the Andean chain, in particular Colombia, where he has lived for four years and will return to live there once the company is listed.
He led a team that discovered two porphyry copper systems, one in Chile and the other in Peru, as well as completed a feasibility study for the development of an underground gold mine in Colombia. This gives Mr Howe a detailed knowledge of current cost structures in Colombia, which he estimates to be, on average, around half what they would be in Australia or Canada.
As a part of the purchase of the project from Newrange, Andean also took over the on-ground team in Colombia, complete with an extensive exploration database.
Very high grades
The advanced El Dovio project has confirmed grades that on average range from 4-6 grams per tonne of gold and 2.5-3.5% copper over average widths of between 3-6m. Individual samples as high as 17% copper and 104g/t gold have been found.
In his letter to investors, Andean chairman Dr Phillip Wing said the company’s volcanogenic massive sulphide (VMS) target is located on an “extensive” mineralised belt that runs through western Colombia and into Ecuador.
“Work to date indicates a deposit with high unit value, exceptional metallurgical characteristics and [with] low price sensitivity,” he added.
Mineralisation remains open at both strike and depth.
Work program and maiden JORC resource
Andean is planning 15,000m of infill and step-out drilling, aimed at establishing a maiden JORC resource at El Dovio. Andean expects to complete the drilling program within about nine months of listing and be able to declare the JORC resource well inside 12 months.
A client note from Sydney-based corporate advisers Novus Capital said Andean’s “overriding” strategy is, firstly, to develop sufficient resources within the high-grades lenses at El Dovio to sustain a 1,000-tonne-per-day operation for at least 10 years as a starter operation.
“This option presents the best case with respect to low capital and operating costs and maximising shareholder returns,” Novus said.
Colombia emerging as ‘major’ mining destination
Andean notes in its IPO presentation that “Colombia is emerging as a major new mining destination” with several majors developing copper and gold mines.
Neighbouring projects to Andean’s El Dovio include the operating El Roble VMS copper-gold mine, owned by Canadian listed Atico Mining, and China’s Zijin Mining’s Buritica gold operation also in production.
The other nearby project is the 28 million-ounce equivalent Quebredona deposit owned by AngloGold Ashanti (ASX: AGG).
Competitive cost structure
Andean’s standout features are its high-grade copper gold VMS deposit in a jurisdiction that has a positive attitude towards mining and a cost structure that makes it very competitive with other countries. It also has the benefit of a first-class team, both in Australia and on the ground in Colombia.
“The IPO offer is very well priced compared to peer companies with similar prospects,” the company stated.
Andean Mining will trade under the ASX code ‘ADM’ once listed next month.