MCK's Andacollo deal falls through

An attempt by Canadian junior MCK Mining (TSX-V: MMC) to buy Vancouver-based Pacific Rim Mining's (TSX: PMU) Andacollo gold mine in north-central Chile has collapsed, both companies said in separate statements Tuesday. The Andacollo mine, shut down in December 2000 during a period of low gold prices, is an indirect, non-core holding of Pacific Rim, the latter's statement said. The company "intends to restart its efforts to monetize this asset." The deal fell through because of difficulties raising finance on aceptable terms, MCK president and CEO John Purkis told BNamericas. "It was just considered too risky and too small" by financial backers, he said. The company had been close to securing an equity-style financing package with Australia's Macquarie bank last week, he added. The Andacollo assets, held by Pacific Rim subsidiary Dayton Mining, include the mineral rights, mining, crushing and stacking equipment, rights to two 200l/s water wells and tax losses. Pacific Rim gave MCK in July a six-month extension to close the deal, pushing the deadline back to December 15. The deadline to finalize the sale, first announced in April, had already been put back a month from the original May 31. The 18,000t/d, open-pit, heap-leach mine had been operated by Vancouver-based Dayton Mining, which merged with Pacific Rim in April 2002. MCK had been looking to restart the operation with production of 70,000oz/y for four years from 2005, although the inferred resources could extend the life to up to eight years, Purkis said. To finalize the deal, MCK had to make payments of just over US$5mn plus 4 million of its common shares, although the company was looking at raising some U$$10mn to restart the operation, he added. MCK said it will seek similar "near term" production opportunities in Chile and elsewhere and is continuing to explore its Chepica copper-gold exploration property in south-central Chile, where it is close to starting a drill program. Pacific Rim is focusing on its El Dorado gold project in El Salvador.