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a plague o both your houses

Minera Andes (MAI.to): Suddenly it’s a raging buy….


…isn’t it? I mean, accuse me of being a bit slow on this if you like…….

It occurred to me, lying in bed last night and about to drop off that Minera Andes (MAI.to) is a raging, stonking total buy right now (yes it is sad that I obsess about these things so much….I pity myself, too). Here’s the reasoning in simple bullet point form:
  • Hochschild (HOC.L) has run a six month long dirty play on MAI.to to get its hands on 100% of the San José silver/gold mine. Basically it deferred sales in 3q08 while costs were high, thus causing a cash crunch at MAI.to. Then HOC.L as operator made an unexpected cash call of $11.3m on MAI.to that it knew it couldn’t cover, then once the PPS had dropped made a cash offer for the company. That’s so low it could limbo under a rattlesnake while wearing a top hat.
  • However, Rocking Rob McEwen screwed up HOC’s plan and gave them the bird royal style by funding MAI.to via the recently announced placement (details of which found here).
  • So HOC.L now cries “not fair” and is trying to stop McEwen via the regulators. By the way, McEwen will win this one, be in no doubt. Even if the TSX stuffed suits say “can’t do that” he’ll just take it to a full shareholder vote and get approval that way.It’ll take a while longer, but he’s got it in the bag whatever.
  • But wait, there’s more. Now who in their right mind would want to JV with HOC.L at San José after the sneaky trick it tried to pull? Answer; nobody. Not MAI.to, because HOC.L (as operator, remember) can continue to play silly financial game with MAI.to and make sure it never makes a decent profit.
  • The bid that’s on the table is the C$0.66 offer from Hochschild. It’s unlikely anyone will come in to counterbid that, as who would want a crummy partner like HOC.L anyway?
  • So what’s going on here? Seems simple, really. McEwen is going for a quick and VERY profitable flip by taking control of the company, adding 121m shares at $0.33 to the 46m or so he already owns, then “considering offers” from HOC.L who’ll have to come up with more cash. I mean, maybe HOC.L reduces that offer to, let’s say $0.55 to take into account the extra dilution, but whatever happens here, if HOC.L wants control of San José it will have to pay more than it tried to pay with its bullshit lowball backdoor tactics.
  • And with McEwen in 53% control of the company, he’ll be able to vote the deal he wants. Anything above $0.33 means he’s in the money, but i’ll bet you anything you like that he doesn’t take a penny under $0.60 on this.
So, there’s the logic, as thunked through by your humble correspondent last night on his pillow. Anyone think of a reason why Minera Andes isn’t a raging buy right now?

PS: I don’t own, but if that nice Mr. Market lets me in at under 50c I will very soon.

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Minera Andes: In Play

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