Hi all. I don't post a lot, but I'd like to put back more, so...

Hi all. I don't post a lot, but I'd like to put back more, so here are some 3am thoughts on this prospect (I'm a shiftworker, so the time of the posting isn't totally weird in that context, but still a bit).

For what it's worth I know enough to be dangerous, but not enough to be any sort of expert. I'm not a geologist, but I am a scientist from a very different field. I've been interested in mining and investments for 10 years, but only got serious over the past 3, losing a lot to start with, and then wrote my own computer programs to structure my choices and timings via processing price, volume, and valuation inputs such as resource estimates and NPV. I've done pretty well lately with that approach, but have much more to learn. Please consider these reflections with caution, as it is 3am after all...

• I attended one of the IPO seminars with the management and the broker (@Futuristic, it's Novus Capital, and the prospectus is readily available if you search for the Andean Mining home page).
• I've also read the prospectus and listened to two podcasts (********* and *)
• The prospect is in Colombia, which the CEO notes has increased its prosperity in the post Escobar era, to now be safe, professional, and rated as the no.5 location in the world in terms of prospectivity by the Fraser Institute (no idea who they are, but it sounds cool).
• The main "El Dovio" deposit is what they claim to be (I have no contrary evidence, just trying to be clear) "high grade" copper and gold, "and a bit of silver and zinc" (said on *********)
• The CEO calls the El Dovio deposit "big" (1km long, 200m vertically, up to 60m wide, and there are other deposits nearby they own) (size from the prospectus, though what he said in the ********* podcast differed, so I'm not entirely sure of the total size)
• there's other, big deposits/mines within 120km of the site, one has been pulling up gold since the 70's
• The previous owner of the asset, New Range Gold, apparently sold it to Andean "so they could focus on their North American assets". New Range provided an extensive amount of quality survey data in a large database when they sold out. I asked in the seminar why New Range would sell it, and William gave the focus on North America answer. I don't run businesses so I don't know, but if it's a great asset in an apparently safe and friendly and professional country then perhaps I wouldn't mind the distraction.
• Andean have two other deposits nearby they aim to explore if their tenement applications are granted.
• they have an "experienced board and management team" - William Howe started Straits Resources in the 90's, Mined gold in Guyana thereafter, then ran Hargraves Resources, then ran a private co. (Matminco Ltd.) that became Los Cerros after he departed in 2018)
• William mentions in his appearances that the company operates in the ZOMAC zone, which are parts of Colombia that were once affected by civil war, and companies operating in it have 50% of their tax going to community projects (in my shallow research on the topic I didn't see that the 50% was a discount - I could be wrong)
• the gold is at surface, so low cost to drill, and is in the prospective Andean Mountains.
• The management point out that mining on flat ground means you need to lift ore up against gravity, whereas with mining in terrain you roll it out downhill, which is apparently easier/cheaper (not my claim, just repeating)
• Infrastructure: port 230km away, 2 lane highway 25km away, that 25km is unsealed road, lots of water, power 30km away
• 67% of IPO $$ to go towards exploration and a resource definition (maiden, due in 2022).
• Existing SHs hold ~47m shares. IPO shares are 30m. Options held by Dirs and Existing SHs is 33m, and performance shares is ~8m. So the amount of options outstanding is 43% of the number of shares that will be current after the IPO. Seems too many to me. (pg11 prospectus)
• Dirs hold about 4m shares each, 1.5m dir options, ~4.5m seed options, ~2m performance shares (so they hold roughly as many options as shares) (pg12)
• the free float of company shares (i.e not subject to escrow/i.e. not prevented from immediate sale) is 40% (pg13)
• goal is raising at least $6m for 15km of drilling
• metallurgical recovery rate estimations are given on pg 19 (95% all metals)
• pg33 shows the estimated cost of exploration, showing they'll spend most of their cash on exploration in a 2yr period
• they spent ~1m on admin last FY (pg 37)
• Mr Howe will earn $240k AUD/yr as salary, and an allowance of $10k AUD per month for accommodation in Medellin (Colombia) and to cover the cost of flying him and his partner to Sydney for business meetings. (pg 63)

My reflections:

• I'm not going to buy in the IPO, but I might pick up some if the shares tank on market after the IPO.
• ...but then again there's a lot of options there that will attenuate future price rises to a degree
• I wasn't persuaded by the line of the previous owners wanting to focus on other things. I get it happens, but I'd at least want to know more about why they sold
• I would like to know more about the benefits of this ZOMAC tax zone thing, i.e. does it actually reduce the costs for the company (perhaps if you consider that every miner really needs to spend capital on social benefits anyway I guess...?)
• I also asked in the webinar what dollar value the management and had put into their investments of the company, and at what approximate price per share (post IPO prices) as I would like to get a sense for whether or not the mgmt/private investors have an incentive to sell to take profits after listing. One manager (William) started answering (a bit awkwardly), and the other dismissed the question and said the material is in the prospectus. I can't see it, except for the number of shares on pg 11, which was not the question. If someone knows I'd be grateful if you could point me to it.
• I initially thought 10k AUD per month for accom in Colombia and flights back to Sydney was too much, and I still feel so to some degree, though I do see that a nice loft apartment in Medillin is ~50k AUD per year (AirBnb). I'm not sure why shareholders need to pay for a partner to fly though. It's nice, sure, and I wish them well, but I don't believe it's a company cost.

So there's a couple of things that I'm not sure about, particularly the large amount of options outstanding, and what the management and other owners have at stake. I'm standing this one out. Best of luck if you have a go. Please don't rely on my early morning ramblings, take a look yourself.

Buenos dias.