Andina Minerals Acquired by Hochschild

Canadian junior gold miner Andina Minerals (TSX-V:ASM) was acquired by Hochschild (LON:HOC), a mining company based in Peru. Hochschild paid $105 million 80¢ a share for Andina.

The takeover was a friendly one, as Andina and Hochschild already had a joint venture in place in Chile.

Andina probably accepted the deal because of its poor share performance, which stood at over the offered price earlier in 2012, and had traded as high as $5 a share in 2007 and 2008. Hochschild offer was about twice the closing Wednesday price of the gold miner.

Concerns over share dilution have weighed on the company as it sought capitalization of its Volcan gold property in Chile.

Cost inflation remains a challenge for all gold miners, with juniors being especially vulnerable. Of course that problem will be solved as the price of gold rises and companies focus on lowering production costs.

CEO, George Bee, said this in a statement, “After reviewing the alternatives available to our company, we believe that the offer is the best option for Andina shareholders.”

The Chilean Volcan project has about 6.6 million ounces in gold reserves itself, which had an estimated capital cost of $547 million in the early part of 2011. Since then costs have risen for other miners, making these types of deals more probable in the near future.