Minera Andes announces revised C$40.0 million private placement with Robert R. McEwen at a subscription price of C$1.00



    
    TSX: MAI
    NASD-OTCBB: MNEAF
    

    SPOKANE, WA, Feb. 17 /CNW/ - Minera Andes Inc. (the "Corporation" or
"Minera Andes", TSX:MAI and US OTC:MNEAF) announced today that it has agreed
with Robert R. McEwen, a director and existing shareholder of the Corporation,
to amend the terms of the private placement with Mr. McEwen, as first
announced on February 9, 2009.
    Mr. McEwen has agreed to complete the private placement in a two step
transaction designed to alleviate the Corporation's immediate financial
pressures. First, Mr. McEwen will purchase 18,299,970 common shares of the
Corporation at a price of C$1.00 per share for proceeds to the Corporation of
C$18,299,970 which will be used, as to $US11.3 million, to satisfy the cash
call made in respect of the Corporation's 49% interest in the San José Project
("Step 1"). Second, Mr. McEwen will assume the bank loan owing by the
Corporation to Macquarie Bank Limited ("Macquarie") in the aggregate principal
amount of US$17.5 million ("Step 2"). The subscription price of C$1.00 per
share represents a 108% premium to the closing price of Minera Andes' common
shares on the TSX on February 13, 2009 of C$0.48 per share.
    In order to initiate the transfer of funds to Argentina for the cash call
by February 20, 2009, Step 1 is to be completed by the close of business in
Toronto on February 18, 2009.
    The Step 2 assignment of the Corporation's bank loan from Macquarie to
Mr. McEwen, is subject to Mr. McEwen reaching agreement with Macquarie, and
Macquarie has already indicated its agreement to this. The security for the
bank loan also has to be transferred to Mr. McEwen, and Step 2 requires
Hochschild Mining plc ("Hochschild") consenting to the transfer of the
security in the San José Project from Macquarie to Mr. McEwen. If agreement is
not reached with either or both of Macquarie and Hochschild by the close of
business (Toronto time) on February 25, 2009, Mr. McEwen will purchase a total
of 21,700,030 common shares of the Corporation at a price of C$1.00 per share
and the Corporation will use the proceeds thereof to repay Macquarie directly.
    The bank loan, once assumed by Mr. McEwen, will be convertible at the
option of Mr. McEwen into common shares of the Corporation at a price of
C$1.00 per share (for a total of 21,700,030 common shares), at any time,
subject to approval by the shareholders of the Corporation. If such
shareholder approval is not obtained by 60 days after closing, the bank loan
(as assumed by Mr. McEwen) will be due and payable by the Corporation 15
business days after the date of the shareholders' meeting.
    In addition, if prior to such shareholder approval being obtained there
is a change of control of the Corporation, involving a person other than Mr.
McEwen or one his affiliates, the bank loan (as assumed by Mr. McEwen) will be
immediately converted into common shares of the Corporation at a price of
C$1.00 per share (for a total of 21,700,030 common shares).
    Step 1 and Step 2 of the transaction with Mr. McEwen are subject to the
approval of the TSX.
    Mr. McEwen will not demand repayment of any amounts under the bank loan
(including the sum of US$7.5 million which is currently due on or about March
7, 2009) prior to the receipt of shareholders approval or, failing such
approval, 15 business days after the date of the shareholders' meeting
convened to obtain such approval. In addition, Mr. McEwen has agreed to waive
all existing events of default under the Macquarie credit agreement.
    Mr. McEwen has also confirmed that the Corporation may complete an
offering of common shares on similar terms as the proposed transaction with
Mr. McEwen for the purpose of funding its exploration activities.
    Step 1 and Step 2 are intended to improve the Corporation's financial
situation and provide shareholders the opportunity to approve the issuance of
shares to Mr. McEwen, where time permits such approval to be sought, without a
material adverse effect on the financial condition of the Corporation.
    On February 9, 2009, the Company announced that it had entered into a
letter agreement with Mr. McEwen pursuant to which Mr. McEwen or his
affiliates would purchase 121,212,121 common shares of the Corporation at a
price of C$0.33 per share (the closing price of the Company's common shares on
the TSX on February 4, 2009), for proceeds of C$40.0 million.
    Subsequent to that announcement, the Corporation received advice from
Hochschild that it was prepared to make a formal bid to acquire all of the
issued and outstanding shares of the Corporation at an exchange ratio of 0.24
ordinary shares of Hochschild (which is listed on the London Stock Exchange)
for each common share of the Corporation. Based on the closing price of
Hochschild's shares and the Corporation's shares on February 15, 2009 this
bid, if made would have an implied price of C$0.8658 per common share of the
Corporation. Hochschild is not currently listed on any Canadian stock market
so any bid if made, could not be made until at least April 2009, at which time
the requisite technical reports in respect of Hochschild's material properties
are scheduled to be completed.
    Hochschild indicated that it would (i) provide bridge financing to the
San José project so that the payment of the outstanding cash call by MAI could
be deferred until expiry of the formal bid by Hochschild; and (ii) make a loan
available to the Corporation in the principal amount of US$17.5 million so
that the Corporation could repay its indebtedness to Macquarie and that the
maturity date of such loan would effectively be extended until December 1,
2009, provided in each case, among other things, that the Corporation would
immediately express support for any such bid by Hochschild and negotiate the
terms of a definitive support agreement for the making of any such bid (with a
view to settling the terms of such agreement by February 26, 2009). The
proposal from Hochschild also provides that any such financial assistance
shall be immediately due and payable upon the Corporation supporting an
alternative transaction.

    
    The Special Committee, together with its advisors, considered the
Hochschild proposal for a bid some time after April 2009 and financial
assistance and concluded that the proposed transaction with Mr. McEwen is in
the best interests of shareholders. In reaching this conclusion, the Special
Committee considered, without limitation, the following factors:

    -   the implied price of the proposed Hochschild bid, if made, is
        inferior to the price offered by Mr. McEwen;
    -   the financial assistance offered by Hochschild is expressly
        conditional upon the Corporation negotiating the terms of a support
        agreement (the proposed material terms of which are unknown) and
        failing which the proposed transaction with Mr. McEwen will have been
        withdrawn and the Corporation will again be subject to untenable
        financial pressure;
    -   the proposed Hochschild bid, if made, will be based on an exchange
        ratio determined today, however any bid made by Hochschild cannot be
        made until April 2009 at the earliest;
    -   the possibility that financial assistance provided by Hochschild
        would become immediately due and payable upon a competing proposal
        supported by the Corporation is coercive and
    -   the proposed transaction with Mr. McEwen does not prevent a
        subsequent transaction with Hochschild or any other third party and
        its effect on the Corporation's financial condition should enable the
        Corporation to vigorously negotiate the terms of any such proposal
        without the pressures of financial hardship.
    

    Mr. McEwen presently owns, or exercises control or direction over,
46,057,143 common shares, or 24.3% of the issued and outstanding common
shares. The issuance of 18,299,970 common shares to Mr. McEwen under Step 1
will result in Mr. McEwen owning or exercising control or direction over
approximately 30.9% of the then issued and outstanding common shares of the
Corporation. The issuance of 21,700,030 common shares under Step 2 will result
in Mr. McEwen owning or exercising control or direction over approximately
37.4% of the then issued and outstanding common shares of the Corporation.
    Under the TSX Company Manual, shareholder approval would be required as a
result of the fact that together Step 1 and Step 2 will result in greater than
10% of the outstanding common shares of the Corporation being issued to an
insider of the Corporation.
    The Corporation applied to the Toronto Stock Exchange (the "TSX") under
the provisions of Section 604(e) of the TSX Company Manual for an exemption
from securityholder approval requirements in respect of the issue of
40,000,000 common shares to Mr. McEwen at a price of C$1.00 per share on the
basis that the Corporation is in serious financial difficulty, in each in the
circumstances described above The members of the Special Committee of the
Corporation's Board of Directors, Allan Marter, Donald Quick and Victor
Lazarovici (each of whom is free from any interest in the offering),
authorized such application concluding, each time, that the Corporation is in
serious financial difficulty as a result of the cash call for the San José
Project and the outstanding bank indebtedness, and the transactions with Mr.
McEwen are reasonable for the Corporation under the circumstances.
    With its financial condition improved, the Special Committee believes the
Corporation will be in a position to undertake a review of the options
available to it for the medium and longer-term. At present, the Special
Committee believes that the Corporation's ability to obtain maximum value for
its shareholders is limited and constrained by financial distress caused by
the cash call due imminently and the bank loan which may be called upon seven
days notice.
    As a result of its previous announcement concerning the private placement
with Mr. McEwen, the TSX has advised that it has initiated a de-listing review
of the Corporation as a consequence of relying on the financial hardship
exemption under Section 604(e). The Corporation believes that, upon completion
of the private placement, it will be in compliance with all of the TSX listing
requirements.
    The transactions described above with Mr. McEwen will also be a related
party transaction for the purposes of Multilateral Instrument 61-101
Protection of Minority Shareholders in Special Transactions. It is the
intention of the Corporation to avail itself of certain exemptions set out in
such Instrument from provisions that would otherwise require the Corporation
to obtain a formal valuation and the approval of its minority shareholders in
connection with the private placement.
    Minera Andes is a gold, silver and copper exploration company working in
Argentina. The Corporation holds approximately 304,000 acres of mineral
exploration land in Argentina. Minera Andes holds a 49% interest in the San
José Project, an operating gold and silver mine. Minera Andes is also
exploring the Los Azules copper project in San Juan province, where an
exploration program has defined a resource and a preliminary assessment has
been completed. Other exploration properties, primarily silver and gold, are
being evaluated in southern Argentina. The Corporation presently has
190,158,851 shares issued and outstanding.
    This news release is submitted by Allan J. Marter, a Director and the
Chairman of the Special Committee of the Board of Directors of Minera Andes
Inc.

    Caution Concerning Forward-Looking Statements:

    This press release contains certain forward-looking statement and
information. The forward-looking statements and information express, as at the
date of this press release, the Corporation's plans, estimates, forecasts,
projections, expectations or beliefs as to future events and results.
Forward-looking statements involve a number of risks and uncertainties, and
there can be no assurance that such statements will prove to be accurate.
Therefore, actual results and future events could differ materially from those
anticipated in such statements. In particular, there can be no assurance that
financing will be secured within the time required. Risks and uncertainties
that could cause results or future events to differ materially from current
expectations expressed or implied by the forward-looking statements include,
but are not limited to, factors associated with fluctuations in the market
price of precious metals, mining industry risks, risks associated with foreign
operations, the state of the capital markets, environmental risks and hazards,
uncertainty as to calculation of mineral reserves and other risks.





For further information:

For further information: Art Johnson at the Spokane office, or Krister
A. Kottmeier, investor relations - Canada, at the Vancouver office. Visit our
Web site: www.minandes.com; Spokane Office: 111 East Magnesium Road; Ste. A,
Spokane, WA, 99208, USA, Phone: (509) 921-7322, E-mail: info@minandes.com;
Vancouver Office: 911-470 Granville Street, Vancouver, B.C., V6C 1V5, Phone:
(604) 689-7017, (877) 689-7018, E-mail: ircanada@minandes.com

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MINERA ANDES INC.

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