Monday, September 20, 2010

Gold and Copper in Argentina: Minera Andes and Hochschild settle lawsuit loan row, TNR.v, CZX.v, HOC.L, GG, TCK, BHP, BVN, AUY, ABX, ATX.v,,,,,,,,


   We have a very interesting news from London this morning: apparently Minera Andes has settled the lawsuit with Hochschild over the loan arrangements for financing the San Jose Gold and Silver mine in Argentina. We do not have details yet and do not know about "who won and who lost" in the settlement - it is not so important - the important fact is that Rob McEwen has made out-of-the-court settlement, we were talking about here, and we hope that the next one, this time with TNR Gold regarding the Los Azules and Escorpio IV will be done as well soon.

We have a feeling that it is the first news to come from what seems to be called by investment banks as packaging the assets. With cleared legal overhead the stock could easily revisit CAD2.0 with recent Gold, Silver and Copper prices. Drills will be turning on Los Azules soon as well, providing more food for imagination about potential bid for the Los Azules or maybe even for the whole company. We hope that fair settlement with TNR Gold will confirm Rob McEwen's "shareholder friendly" status and this deal will allow Minera Andes to enjoy the proper valuation of its assets.

"We have today fireworks with another junior: Minera Andes surges 18% on volume to 1.11CAD. Globe has run an article about potential takeover targets in Copper space recently:

"Globe says Minera, others could be takeover targets Minera Andes with its huge Los Azules copper deposit in Argentina is primed for M&A play with rising Copper price and Chinese appetite for commodities, will be interesting to see what will happen with TNR Gold's legal claims on part of the deposit and whether Rob McEwen will be ready to make a deal with this junior in order to consolidate the project and appreciate full upside of the valuation in any potential deal. He values Los Azules up to 375 Mil in his "imprecise estimate of value"

And yesterday Rob McEwen has announced:

"Rubicon Announces Secondary Offering of its Common Shares

Press Release Source: Rubicon Minerals Corporation On Thursday September 16, 2010, 7:20 pm EDT

VANCOUVER, Sept. 16 /PRNewswire-FirstCall/ - Rubicon Minerals Corporation ("Rubicon" or the "Company") ( - News) announced today that it has filed a preliminary short form prospectus in all the provinces of Canada except Quebec in connection with an overnight-marketed secondary offering (the "Offering") by Evanachan Limited and McEwen Trading LP (the "Selling Shareholders"), entities owned or controlled by Robert R. McEwen, of 45,714,357 common shares of Rubicon owned by the Selling Shareholders.
The Offering will be priced in the context of the market with the final terms of the offering to be determined at the time of pricing. It is intended that upon completion of the offering, the Selling Shareholders will own no common shares of the Company. Rubicon will not receive any proceeds from this Offering. Closing of the Offering is expected to occur on or about October 5, 2010 and is subject to certain conditions, including the approval of the Canadian securities regulatory authorities.

Mr. McEwen has expressed his continued confidence with the Company but advised the Company that it has grown to represent a disproportionate share of his portfolio for an investment where he is not actively involved in management, and he noted that this step is designed to focus his interests on the companies he runs, U.S. Gold Corporation and Minera Andes."

We can only guess whether the share price spike today is due to the Rob McEwen already buying or he will finance the next round of exploration in the company. Stretched between two lawsuits with both major company assets: with TNR Gold on Los Azules and with Hochschild Mining on San Jose mine, it will be difficult for the company to achieve a proper valuation for its assets, but now we have a hope that company will not miss this exploration season and Los Azules will continue to grow. With every new drill hole expectations about the value in the ground will be rising with the size of the deposit, high grade core will provide a much better return of CAPEX - we are surprised that Minera Andes has not attempted to settle the legal cases and clear the titles of its properties before this run in Copper, Gold and Silver.

It is important to note, that not a lot of people are reading documents these days: according to the Statement of Defence by TNR Gold, company claims that it has the back in right into the Northern Half of Los Azules (not all deposit) of 25%, which could represent more than 12.5% of total deposit as a "metal in the ground" - with the bigger part of high grade core on its claimed grounds. Every lawsuit has an inherited legal risks for all parties, please read Minera Andes latest MD&A and TNR Gold Statement of Defence NR legal disclaimer - but it is exactly why we think that Robert McEwen is not going to "focus his interests on the companies he runs, U.S. Gold Corporation and Minera Andes." and just sit in the courts with other companies and he will be able to resolve the situation in out-of-the-court settlement and move forward using this unique opportunity.

We will throw another wild card here, maybe with all that chunk of cash Robert McEwen can pursue a radical move like buying out Hochschild Mining interest in San Jose mine or even all TNR Gold's Argentina portfolio with all its Gold and Copper properties - among them are strategic interest in Los Azules and Escorpio IV. Minera Andes can easily revisit its CAD2.0 price tag with cleared titles on its properties and record prices for Gold and Silver with Copper learning Mandarin day by day.

We have a position in these companies, please, do not consider anything as an investment advise, as usual, on this blog.

In any case Argentina is going to have a hot summer this season. We will continue to monitor the situation."

Hochschild and MAI settle loan row

" - Hochschild Mining has dropped its law suit against Minera Andes after settling a dispute over a loan.

Hochschild said Minera Andes had signed a formal loan agreement regarding $65m project financing for the e San José gold and silver mine in Argentina.

And the two firms have also agreed to restructure a $50m shareholder loan by Hochschild and MAI to a co-venture entity, Minera Santa Cruz.

Both loans will now be repaid over eight years with fixed interest rates of 7% per annum.

Future payments on both loans may be accelerated based on mine performance and metal prices thus maximising cash flows for both MAI and Hochschild.

Story provided by


More update:

DJ Hochschild Mining Signs Agreement With Minera Andes Inc Over $65M Loan

LONDON, Sep 20, 2010 (Dow Jones Commodities News via Comtex) --

Hochschild Mining Plc (HOC.LN), an gold and silver exploration company announced Monday that it has signed an agreement with Minera Andes Inc or MAI and its subsidiary, Minera Andes SA or MASA, regarding the $65 million project financing loan provided by Hochschild to the San José gold and silver mine in Argentina.


-The parties have also agreed to restructure the 2004 shareholder loan agreement pursuant to which Hochschild and MAI lent $50 million to the co-venture entity, known as Minera Santa Cruz or MSC.

-Subject to final closing, which is expected to occur this week, the parties have agreed to a repayment schedule for the project finance loan and the shareholder loan over a maximum period of 8 years, with fixed interest rates of 7% per annum.

-Future payments on both the shareholder loan and project finance loan may be accelerated based on mine performance and metal prices thus maximizing cash flows for both MAI and Hochschild.

-Hochschild has agreed to provide Minera Andes with the right to consent to certain extraordinary capital expenditures (not including regular sustaining CAPEX) in certain limited circumstances.

-The San Jose mine, a co-venture between Hochschild and MAI, has been in operation since June 2007.

-Under the terms of letter agreements between the parties executed in October 2006, Hochschild alone provided the full amount of the project financing, totaling $65 million in installments between October 2006 and July 2007.

-On Mar. 17, Hochschild filed a lawsuit against Minera Andes alleging the undue delay in the execution of formal loan documents and repayment of the loan by MSC.

-Under the terms of the settlement, Hochschild will discontinue the litigation filed in the New York State Supreme Court.

-The lawsuit had no impact on the running of the San José mine, which is operated by Hochschild.

-The mine has a throughput capacity of 530 kilo-tons per annum and in the first half of 2010, produced 2 million ounces of silver and 36 thousand ounces of gold.

-Shares closed Friday at 418 pence

-By Zechariah Hemans, Dow Jones Newswires; 44-20-7842-9411 begin_of_the_skype_highlighting 44-20-7842-9411 end_of_the_skype_highlighting;

(END) Dow Jones Newswires
09-20-10 0229ET"

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