Both companies announced the signing of a Binding Letter of Intent that provides for a combination of the two companies to create a new Peru-focused gold exploration and development company with a combined Measured and Indicated resource estimate of approximately 2.1 million ounces of gold equivalent and an additional combined Inferred resource estimate of approximately 0.9 million ounces.
The focus on Crucero will drive shareholder value through the addition of new estimated resources and discoveries on 10 additional targets within the project area.
Lupaka and Andean American believe that the merge will result in significant benefits to the shareholders of each company, including geographic diversification and balance through an asset base spread across three regions of Peru, while taking advantage of country-wide synergies, relationships and expertise.
Other benefits are near-term underground gold and poly-metallic development potential at Invicta and exposure to the substantial and prospective AntaKori copper-gold deposit through a strategic 17% stake in Southern Legacy Minerals Inc.
The merge will also provide a platform to pursue further accretive acquisitions with a pro forma cash balance of approximately US$18 million as at June 30, 2012.
Complementary on-site management teams and in-country experience offering relative strengths in exploration, permitting, community relations and development.
Proven management track record of creating shareholder value through growth and acquisitions; and a merging of two complementary shareholder bases.
President and CEO & Director of Andean American, David Rae, said Andean American has conducted a strategic review over the past eight months and reviewed many potential transactions and partnerships.
“We believe this proposed transaction provides our shareholders with the most value for our current assets, along with the continued exposure to positive developments at Invicta and AntaKori in addition to the exciting potential of Crucero," he added.
"Lupaka has proven highly effective in advancing the Crucero project since acquiring its initial ownership position in 2009, and we believe the new management team and board of directors will continue its success at Crucero, and unlock additional value at Invicta."
Lupaka and Andean American expect the business bombination will take place by way of a plan of arrangement whereby Lupaka and/or a wholly-owned subsidiary will enter into an arrangement agreement with Andean American.
The proposed transaction is expected to be completed in September 2012 or such later date as the parties may agree.
Lupaka Gold is aggressively exploring and developing the Crucero Gold Project, its 5,500 hectare gold property located in southern Peru. Lupaka is based in Vancouver, Canada, and is project operator and holds a 100% indirect interest in the property.
Since commencing active exploration in April 2010, Lupaka has outlined NI 43-101 measured and indicated resources of 1.145 million oz Au at a 1.03 grams per tonne capped grade, plus inferred resources of 0.647 million oz Au at 0.69 grams per tonne capped grade.
In addition to the existing resource estimate, Lupaka Gold has identified a number of exploration targets within the Crucero Project that display similar anomalous characteristics.
Andean American is an international mining and exploration company focused on value growth through the development of gold and copper projects in Peru.
Their key assets include the 31,600 hectare Invicta gold-silver-copper development project and a 17% strategic stake in Southern Legacy Minerals, owner of the AntaKori gold-silver-copper exploration project.