Goldcorp Purchases Andean

Goldcorp GG and Andean AND agreed to a purchase for cash and shares. The offer modestly trumps the earlier all stock offer from Eldorado Gold EGO The remaining outstanding shares were purchased for approximately $3.4 billion. Based on yesterdays close, the transaction is at a 35% premium states Dahlman Rose. Dahlman Rose says Andean's key asset is the Cerro Negro gold and silver district in the Santa Cruz province of southern Argentina, where the company has identified roughly 3MM ounces of gold and 26MM ounces of silver in high-grade, epithermal vein mineralization. Based on the feasibility study, the known resources, and assumptions about brownfield exploration success, we modeled a production scenario starting in mid-2012 with a 22 year mine life. At current forward curves for gold and silver (oil & peso), we calculate an NAV of roughly $1.65Bn, significantly below the deal value. Goldcorp closed yesterday at $43.80 Andean closed yesterday at $4.81