Andina Minerals Inc. (ADM : TSX-V : C$1.95 | SPECULATIVE BUY, C$3.20 target)
Valuation Metrics
Basic shares outstanding (M): 92.3
Market Capitalization (M): US$181 Working Cap (M): US$20
Potential Acquirers: Kinross, Barrick, New Gold
Rationale: Future production growth potential in proximity to existing
operations/development projects in Maricunga district, Chile. Kinross’ acquisition of Lobo-
Marte and Barrick’s acquisition of a 70% stake in El Morro (30% held by New Gold)
reaffirms interest in assets in the region.
Discussion
Andina Minerals is a Toronto-based junior gold exploration company that is presently
focused on expanding the 10.5 Moz gold resource base of the Volcan project in northern
Chile’s Maricunga gold belt. In addition to Volcan, the company’s project portfolio in Chile
includes four other assets, all of which are at an early stage of development.
Andina Minerals is currently focused on resource expansion and advancement of the
100%-owned Volcan property in Chile. The Volcan project is strategically located in the
Maricunga district of Chile, within 10 km of Yamana’s La Pepa project and 35 km of
Kinross’ Maricunga (Refugio) mine. We view Kinross and Barrick as potential interested
buyers.
The current gold resource at Volcan in the Dorado zones stands at 10.5 Moz (9.8 Moz M&I
and 0.8 Moz Inferred). A recent resource update and the release of certain conceptual
development plan parameters highlighted the economic potential of the Volcan project.
Activities in the upcoming season will include additional drilling and work towards a
preliminary economic assessment on the project.
At a market capitalization of US$181 million, the shares are valued at only $15/oz Au (net
of cash) based on the total resource of 10.5 Moz compared to the junior explorer/developer
average of US$37/oz.
Our 12-month target price of C$3.20 reflects 0.8 times our diluted 10%/$1100 peak gold
NAVPS of US$3.56 adjusted for a US$0.90/C$1.00 exchange rate.
Next Catalysts: Conceptual development plan (CDP) and preliminary economic assessment
(PEA) expected early 2010