Los Andes Copper Ltd. ("Los Andes", or the "Company") is pleased to announce that it has entered into a memorandum of understanding (the "TBML Transaction") to indirectly acquire non-consumptive water rights for the Rocin River, which currently runs through the Company's mining claims, together with studies for the development of a 29 MW run of river hydroelectric project (collectively, the "Hydro Power Project").
Los Andes has agreed to issue to Turnbrook Mining Ltd. ("TBML") a total of 37,500,000 shares in the capital of the Company at a deemed price of $14,450,000 or $0.39 per share in exchange for all of the issued and outstanding shares of DK Corporation, a company incorporated pursuant to the laws of the Bahamas, which owns all of the issued and outstanding shares of Rocin SpA, a company incorporated pursuant to the laws of Chile. Rocin SpA is the registered and beneficial owner of the Hydro Power Project. The issue price per share represents a significant premium to today’s closing price.
Completion of the TBML Transaction is subject to agreement on and completion of formal documentation, due diligence, approval of all governmental and regulatory authorities, shareholders and third parties, including the approval of disinterested Los Andes shareholders, and the receipt by Los Andes of an independent fairness opinion supporting the value attributed to the Hydro Power Project.
Los Andes management believes that the acquisition of the Hydro Power Project will bring a number of important benefits to the Company. Securing power at reasonable costs has become one of the key challenges for the mining industry in Chile, and the Hydro Power Project will not only ultimately provide a portion of the power requirements for the Company's mine at a very low cost, but will also provide Los Andes with a regular source of cash flow until the power is required by the Company. These funds will help fund the mine's pre-construction development and other ongoing costs, and reduce the need for future dilution of the Company's shares.
The Company will complete a Filing Statement setting out information concerning the TBML Transaction, and once the Filing Statement has been approved by the TSX Venture Exchange and filed on SEDAR, the Company will distribute Forms of Consent to be executed and returned to the Company. Current shareholders of the Company who are not at arm's length with TBML will not be entitled to vote on the approval of the TBML Transaction.
The Vizcachitas Project offers potential for a low strip, open pit operation in an area of low elevation with excellent infrastructure, including water and power in central Chile. The Vizcachitas deposit occurs in the same metallogenic belt as the giant copper-molybdenum porphyries Rio Blanco-Los Bronces, Los Pelambres and El Teniente. Based on 35,255 metres of drilling in 130 diamond drill holes, the project contains an indicated resource of 515 million tonnes grading 0.39% copper and 0.011% molybdenum and an inferred resource of 572 million tonnes grading 0.34% copper and 0.012% molybdenum at a 0.30% copper equivalent cutoff. Additional information about the Vizcachitas Project is available in the National Instrument 43-101 Technical Report prepared by AMEC and filed by the Company on SEDAR on August 29 2008, and on our website at www.losandescopper.com.
Antony J. Amberg, M.Sc., C.Geol., a qualified person as defined by National Instrument 43-101, supervised the preparation of the technical information in this news release.