ANDEAN PRECIOUS METALS ACQUIRES PRODUCING HEAP LEACH GOLD MINE; EXPANDS ITS FOOTPRINT INTO THE U.S. Acquisition of Golden Queen Mining LLC aligns with Andean’s focus on diversification in the Americas, value creation and achieving mid-tier producer status
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ANDEAN PRECIOUS METALS ACQUIRES PRODUCING
HEAP LEACH GOLD MINE; EXPANDS ITS FOOTPRINT INTO THE U.S.
Acquisition of Golden Queen Mining LLC aligns with Andean’s focus on diversification in the
Americas, value creation and achieving mid-tier producer status
Attractive deal structure preserves Andean’s strong cash position and
provides the Company with the flexibility to act on future growth opportunities
(All amounts are in U.S. dollars unless otherwise stated)
TORONTO, ON – November 27, 2023 – Andean Precious Metals Corp. (“Andean” or the
“Company”) (TSX-V: APM) (OTCQX: ANPMF) is pleased to announce that, late Friday November
24, 2023, through its wholly-owned subsidiary Soledad Holdings, Inc., Andean signed and closed
a transaction to acquire a 100% int erest in Golden Queen Mining Company, LLC (“Golden
Queen”) from Auvergne Umbrella LLC (the “Seller”).
Golden Queen operates the Soledad Mountain mine and heap leach operation located in Kern
County, Southern California. (See Appendix – Figure 1 – “Location of Soledad Mountain”.) Since
its commercial start-up in mid-2016, Soledad Mountain has produced more than 340,000 ounces
of gold and approximately 3.5 million ounces of silver1.
“Andean’s acquisition of Golden Queen represents an important step towards achieving our vision
of becoming a multi -jurisdictional mid -tier producer in the Americas,” stated Alberto Morales,
Andean’s Executive Chairman and CEO. “After an extensive review of available acquisition
targets and thorough due diligence, Golden Queen stood out as a strong foundational asset that
sets us up to diversify and increase annual production and move into a tier one mining jurisdiction.
Furthermore, the structure of the transaction and its payment terms allow us to maintain our strong
cash liquidity position and pursue other opportunities for future growth.”
Mr. Morales added, “With recent mine infrastructure investments now complete, our focus is on
developing a new mine plan to ensure Soledad Mountain is well positioned to benefit from an
improved production and cost profile. Potential catalysts, including mine optimization, ore control,
operational improvements, an updated NI 43 -101 mineral reserve and resource estimate, and
exploration opportunities, are expected to unlock further value for our shareholders.”
Transaction Highlights
• Established Mine Performance
o Since mid-2016, Soledad Mountain has produced more than 340,000 ounces of gold
and approximately 3.5 million ounces of silver1. Based on a historical total proven and
probable mineral reserve estimate at Soledad Mountain, as defined in 2022, Andean
is targeting to maintain steady-state annual production until 2028. See section entitled
“Historical Mineral Resource and Mineral Reserve Estimate”.
o Management team is focused on driving ongoing and sustainable improvements to
production, operations, cash flow and costs per ounce at Soledad Mountain.
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• Value Creation Opportunities Through Optimization, Efficiencies & Exploration
o Extensive due diligence and strategic reviews conducted by Andean and third -party
consultants highlight opportunities to surface underlying value at Soledad Mountain
through mine plan optimization, ore control processes and production efficiencies.
o Additionally, there is potential exploration upside at Soledad Mountain. The epithermal
mineral system consists of a cluster of northwest trending veins and vein breccias and
features near-pit and near -surface mineralization within permitted boundaries. It is
deemed favourable for new discoveries that may yield expansion of Soledad
Mountain’s mineral resources and mineral reserves. See Appendix – Figure 2 –
“Soledad Mountain Exploration Map”.
• Attractive Deal Structure Allows Andean to Maintain Liquid Assets of $81.1 Million2
o Golden Queen is expected to be accretive to Andean’s production and mineral
reserve and resource base. See section entitled “Historical Mineral Resource and
Mineral Reserve Estimate”. See Appendix Table 1 – “Golden Queen Historical Mineral
Resource Estimate” and Table 2 – “Golden Queen Historical Mineral Reserve
Estimate”.
o The acquisition added $133.4 million in net assets 3 to Andean’s pro forma balance
sheet; the carrying value of the net assets is based on Golden Queen’s audited
financial statements as at December 31, 2022.
o The acquisition price included $5 million in upfront cash consideration paid out of
Andean’s cash on hand plus net working capital adjustments. Additionally, there are
two deferred payments of $5 million each. Andean may choose to pay the two $5
million deferred payments in either cash or common shares , allow ing time for a
potential re-rate of Andean’s common shares before payment is due. See section
entitled “Deal Structure”.
• Low Capex Requirements
o In 2021 and 2022, approximately $23 million was invested in Soledad Mountain’s
infrastructure, including a stage 3 leach pad and new mining and processing
equipment. Andean does not foresee any major future capital requirements.
• Kern County, CA USA: A Mining Friendly County in a Tier One Mining Jurisdiction
o Kern County prioritizes the development of energy and natural resource projects.
o Local communities and government show great support for mining, with certain mine
reclamation not expected to commence until the end of aggregates mining at Soledad
Mountain, which is currently permitted to continue until 2061.
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• Transforms Andean into a Multi-Jurisdictional Precious Metals Producer
o With its acquisition of Golden Queen, Andean has two producing assets, providing it
with geographic and commodity diversification, as well as a solid platform for growth
in the U.S.
o Andean’s pro forma consolidated annual production is expected to significantly
increase based on historical production at Soledad Mountain, which produced 4.6
million silver equivalent ounces in 20224.
Kappes, Cassiday & Associates (“KCA”) – Historical Estimates
The historical proven and probable mineral reserve estimate at Soledad Mountain, as defined by
Golden Queen in an unpublished report dated June 2022, was 28.1 million tonnes at an average
grade of 0.74 grams of gold per tonne (g/t) and 10.44 g/t of silver, containing 670,000 gold ounces
and 9.4 million silver ounces5. KCA contributed to the reserve estimates (operating expenses and
recoveries) and Independent Mining Consultants, Inc. reviewed and signed off. See section
entitled “Historical Mineral Resource and Mineral Reserve Estimate”.
KCA, I ndependent Mining Consultants, Inc. , RESPEC Company LLC and George Klemmick
(AIPG Certified Professional Geologist, Consulting Geologist, Chugiak, AK ) have been retained
by the Company to perform an independent evaluation and update the mineral reserve and
resource estimate s and mine plan for Soledad Mountain . The mineral reserve and resource
estimate is to be filed within 45 days of this announcement.
About Golden Queen
Golden Queen has been operating the Soledad Mountain gold and silver mine in the western
Mojave Desert since 2016. The mine is located approximately five miles south of the town of
Mojave in Kern County, Southern California. The project is easily accessed from either Las Vegas,
Nevada or via ~100 miles of paved roads from the Los Angeles International airport.
The mine’s history dates back to the late 1800s, when precious metals were discovered in float
samples, leading to the discovery and development of the Queen Esther underground mine at
Soledad Mountain. Today, the mine utilizes conventional open pit mining methods, cyanide heap
leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated o re.
The mine processes an average of approximately 4.0 million short tons of ore per year.
Exploration
The mine produces gold and silver from multiple, northwest -trending, northeast- and southwest-
dipping epithermal veins, vein breccias and vein splays hosted in Miocene -aged felsic volcanic
rocks. It is one of the newest gold mines in the state of California.
The epithermal mineral system at Soledad Mountain, consisting of a cluster of northwest trending
veins and vein breccias, is deemed favorable for new discoveries that may yield expansion of the
project's mineral resources and mineral reserves. Of immediate interest is the potential to upgrade
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the project's inferred mineral resources followed by testing extensions of the main mineralized
structures outside of the limits of the project's mineral reserves and resources. These and the
potential for discovery of new mineralized structures, to the ea st and west of the main deposit,
will be examined and prioritized by Andean going forward . Andean intends to begin a new
exploration program shortly to unlock these potential inferred resources.
Deal Structure
For 100% ownership and control of Golden Queen, aggregate consideration to the Seller consists
of the following:
(i) $5 million plus net working capital adjustments in cash paid by Andean to the Seller at
closing;
(ii) $5 million payable in either cash or common shares of Andean, at Andean’s option, on
the 12-month anniversary of closing; and
(iii) $5 million payable in either cash or common shares of Andean, at Andean’s option, on
the 22-month anniversary of closing.
The $5 million payable on each of the 12 - and 22-month anniversary dates will be priced at the
volume weighted average price of Andean’s common shares on the TSXV for a 20 consecutive
trading day period ending on the second trading day immediately preceding the applicable
anniversary, after applying the Bank of Canada exchange rate on the date that is two business
days prior to the date of issuance. The issuance of the common shares is subject to TSXV and
other regulatory approvals.
As part of the acquisition agreement, Golden Queen will retain a Main Street Priority Loan
(“MSPL”) with CommerceWest Bank of California. The MSPL bears interest at the 3-month LIBOR
rate plus 3% and is payable monthly. A first principal payment of $7.5 million and $0.2 million of
accrued interest was paid through Golden Queen concurrent with the closing of this acquisition,
reducing the total amount owing on the MSPL from $51.6 million to $43. 9 million. A second
principal payment of $7.5 million is due on November 24, 2024, with the remaining principal
balance due upon maturity on November 24, 2025.
Advisors
MPA Morrison Park Advisors Inc. acted as Andean’s exclusive financial advisor. Fogler, Rubinoff
LLP acted as the Company’s legal advisor in Canada and Musick, Peeler & Garrett LLP acted as
Andean’s U.S. counsel. Other advisors included Ernst & Young LLP.
Canaccord Genuity Corp. acted as Seller’s exclusive financial advisor and Morgan, Lewis &
Bockius LLP acted as Seller’s legal counsel.
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Webcast
Management will host a conference call and webcast to discuss Andean’s acquisition of Golden
Queen. Details are as follows:
Date and time: Monday, November 27, 2023 at 9:00 a.m. ET / 6:00 a.m. PT
Conference call: Canada/USA Toll Free: 1-800-319-4610
Toronto Toll: +1-416-915-3239
International Toll: +1-604-638-5340
Webcast: A live audio webcast of the earnings call will be available at
https://www.gowebcasting.com/13103
Notes: To access the live webcast, please connect at least 15 minutes prior to
the start time to ensure adequate time for any software download that
may be required to join the webcast.
Replay: An archived replay of the webcast will be available for 90 days at
https://www.gowebcasting.com/13103 and on Andean’s website:
www.andeanpm.com.
Historical Mineral Resource and Mineral Reserve Estimates
Scientific and technical information relating to the Golden Queen Mining project contained in this
news release has been derived, and in some instances extracted , from a technical report
prepared for Golden Queen in accordance with National Instrument 43 -101 — Standards of
Disclosure for Mineral Projects (“NI 43-101”) entitled “Feasibility Update Technical Report on the
Soledad Mountain Heap Leach Project, Kern County, California USA” dated June 20, 2022 (the
“Technical Report ”) prepared by Kappes, Cassiday & Associates, RESPEC Company LLC ,
Independent Mining Consultants, Inc. and George Klemmick (AIPG Certified Professional
Geologist, Consulting Geologist, Chugiak, AK).
A qualified person has not done sufficient work on behalf of the Company to classify the mineral
resource and mineral reserve estimate contained in the Technical Report (the “Historical Mineral
Resource and Mineral Reserve Estimate”) as current and the Company is not treating them as
current. The Historical Mineral Resource and Mineral Reserve Estimate was calculated using
mining industry standard practices for estimating Mineral Resource and Mineral Reserves (as
defined by the CIM Definition Standard on Mineral Resources and Mineral Reserves dated May
10, 2014). The key assumptions, parameters and methods used to prepare the Historical Mineral
Resource Estimate on the Soledad Mountain Project are described in the Technical Report.
While the Company considers the Historical Mineral Resource and Mineral Reserve Estimate to
be relevant to investors, it cautions readers that it should not be unduly relied upon in drawing
inferences on the current mineralization at Golden Queen, or amoun ts of future production from
the feed material, as additional work is required to update the Historical Mineral Resource and
Mineral Reserve Estimate. This additional work includes (but may not be limited to) mining
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depletion, new technical and financial studies, new sampling and assaying of available core,
assay rejects and/or pulps, use of Certified Reference Materials for QAQC purposes, verification
of assay certificates and digital assay data, verification of sele ct drill hole collars, review and
verification of drill hole geologic logs versus the preserved core and RC cuttings, incorporation of
assays to provide a general understanding of metallurgical characteristics, review and verification
of mineralization controls and modelling techniques.
Andean has engaged Kappes, Cassiday & Associates, RESPEC Company LLC, Independent
Mining Consultants, Inc. and George Klemmick (AIPG Certified Professional Geologist,
Consulting Geologist, Chugiak, AK) to perform an independent evaluation and updated miner al
resource and mineral reserve estimate of the Soledad Mountain Project.
Qualified Persons for Golden Queen
The following people served as the Qualified Persons for Golden Queen as defined in National
Instrument 43- 101 – Standards of Disclosure for Mineral Projects, and in compliance with Form
43-101F1:
• Carl E. Defilippi, SME Registered Member, Engineering Manager, Kappes Cassiday &
Associates, Reno NV.
• Michael M. Gustin, AIPG Certified Professional Geologist, RESPEC Principal Consultant.
• Joseph C. McNaughton, PE, Partner, Independent Mining Consultants, Inc., Tucson AZ.
• George Klemmick, AIPG Certified Professional Geologist, Consulting Geologist, Chugiak,
AK.
Qualified Persons for Andean
The scientific and technical content disclosed in this press release was reviewed and approved
by Donald J. Birak, Independent Consulting Geologist to the Company, a Qualified Person as
defined by National Instrument 43-101 – Standards for Disclosure for Mineral Projects, Registered
Member, Society for Mining, Metallurgy and Exploration (SME), Fellow, Australasian Institute of
Mining and Metallurgy (AusIMM). Mr. Birak visited the Soledad Mountain mine and heap leach
operation on October 5 and 6, 2023.
About Andean Precious Metals
Andean is a growing precious metals producer focused on top-tier jurisdictions in the Americas.
The Company owns and operates the San Bartolomé project in Potosí, Bolivia and the Soledad
Mountain mine in Kern County, California, and is well-funded to act on future growth opportunities.
Andean’s leadership team is committed to creating value; fostering safe, sustainable and
responsible operations; and achieving our ambition to be a multi-asset, mid-tier precious metals
producer.
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For more information, please contact:
Trish Moran Anna Speyer
VP Investor Relations NATIONAL Capital Markets
[email protected] [email protected]
T: +1 416 564 4290 T: +1 416 848 1376
Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Statements
Certain statements and information in this release constitute “forward-looking statements” within
the meaning of applicable U.S. securities laws and “forward -looking information” within the
meaning of applicable Canadian securities laws, which we refer to collectively as “forward-looking
statements”. Forward -looking statements are statements and information regarding possible
events, conditions or results of operations that are based upon assumptions about future
economic conditions and courses of action. All statements and information other than statements
of historical fact may be forward-looking statements. In some cases, forward-looking statements
can be identified by the use of words such as “seek”, “expect”, “anticipate”, “budget”, “plan”,
“estimate”, “continue”, “forecast”, “intend”, “believe”, “predict”, “potential”, “target”, “may”, “could”,
“would”, “might”, “will” and similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in this release include, but are not limited to, statements and
information regarding: the acquisition of Golden Queen and the Company’s expectations
regarding production and processing capacity, plans for growth through explorat ion activities,
acquisitions or otherwise, the appropriateness of the materials for use as a feed source for the
Company’s mill and capital requirements of the Company. Forward-looking statements are
necessarily based on a number of estimates and assumptio ns, while considered reasonable by
the Company as at the date of this press release in light of management's experience and
perception of current conditions and expected developments, are inherently subject to significant
business, economic and competitive uncertainties and risks. Such forward-looking statements are
based on a number of material factors and assumptions, including, but not limited to: the
Company’s ability to carry on exploration and development activities; the Company’s ability to
secure an d to meet obligations under property and option agreements and other material
agreements; the timely receipt of required approvals and permits; that there is no material adverse
change affecting the Company or its properties; that contracted parties provide goods or services
in a timely manner; that no unusual geological or technical problems occur; that plant and
equipment function as anticipated and that there is no material adverse change in either the price
of silver or costs associated with production or recovery. Known and unknown risks, uncertainties
and other factors which may cause actual results, performance or achievements, or industry
results, to differ materially from those anticipated in such f orward-looking statement s set out
herein. The Company believes the expectations reflected in such forward-looking statements are
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reasonable, but no assurance can be given that these expectations will prove to be correct, and
you are cautioned not to place undue reliance on forward-looking statements contained herein.
Some of the risks and other factors which could cause actual results to differ materially from those
expressed in the forward-looking statements contained in this release include, but are not limited
to: risks and uncertainties relating to the interpretati on of drill results, the geology, grade and
continuity of mineral deposits and conclusions of economic evaluations; results of initial feasibility,
pre-feasibility and feasibility studies, and the possibility that future exploration, development or
mining results will not be consistent with the Company’s expectations; risks relating to possible
variations in reserves, resources, grade, planned mining dilution and ore loss, or recovery rates
and changes in project parameters as plans continue to be refined; mining and development risks,
including risks related to accidents, equipment breakdowns, labour disputes (including work
stoppages and strikes) or other unanticipated difficulties with or interruptions in exploration and
development, including risks relat ing to permitting; the potential for delays in exploration or
development activities or the completion of feasibility studies; risks related to the inherent
uncertainty of production and cost estimates and the potential for unexpected costs and
expenses; risks related to co mmodity prices and foreign exchange rate fluctuations; the
uncertainty of profitability based upon the cyclical nature of the industry in which the Company
operates; risks related to failure to obtain adequate financing on a timely basis and on acceptable
terms or delays in obtaining governmental or local community approvals or in the completion of
development or construction activities; risks related to environmental regulation and liability;
political, legal and regulatory risks associated with mining and exploration; risks related to the
uncertain global economic environment; and other factors contained in the section entitled “Risk
Factors” in the Company’s Management Discussion and Analysis dated August 15, 2023.
Many of these uncertainties and contingencies can affect our actual results and could cause
actual results to differ materially from those expressed or implied in any forward -looking
statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements
are not guarantees of future performance. All of the forward-looking statements made in this press
release are qualified by these cautionary statements. Specific reference is made to the Risk
Factors section in the Company's most rece nt MD&A on file with Canadian provincial securities
regulatory authorities for a more detailed discussion of some of the factors underlying forward -
looking statements and the risks that may affect the Company's ability to achieve the expectations
set forth in the forward -looking statements contained in this press release. The Company
disclaims any intention or obligation to update or revise any forward-looking statements whether
as a result of new information, future events or otherwise, except as required by applicable law.
Endnotes
1. Based on Golden Queen’s disclosure and audited financial statements.
2. Liquid assets of $81.1 million include the total of $64.1 million of cash, $1.9 million in
accounts receivable, $10.2 million bullion in inventory, $3.4 million in marketable securities
and $1.5 million of VAT certificates as at November 22, 2023.