Background on TNR Gold, Los Azules, Minera Andes and Xstrata.
With five drills turning on the property Minera Andes advances Los Azules project into the next stage. "We are de risking the project" as Rob McEwen has put in his recent interviews. Hopefully, this definition will involve litigation risk as well and we will see some kind of legal certainty in the project title and claims between different parties will be settled straight in the courtroom. With time running fast and such an aggressive development program we are expecting to see this case going into the court as it is planed for June 2011.
LatinoMinera:
Minera Andes will invest US$30 millions in Los Azules. to fund a 30,000 meter drilling campaign. This is comparable with the drilling carried out over the last six years and three times more than was drilled in the previous campaign. Located in the Argentinean department of Calingasta, in western San Juan, ten kilometers from the Chilean border, the copper deposit has sparked great expectations among executives at Canada-based Minera Andes. The firm’s head of operations Jim Duff said that the company will begin the prefeasibility stage for the project once the drilling campaign is complete.
One more M&A candidate from CIBC report is gone now. The Next Leg of Growth In The Copper Supply has highlighted quite a few companies and projects we are following here.
Los Azules copper project in Argentina is among the most interesting after Minera Andes, operator on the property, has announced new PA with NPV standing at 2.8 billion dollars now.
This new deal in copper M&A space bring new dramatic increase to the valuations of the projects and price paid per pound of Copper in the ground. We have run some numbers before for Los Azules based on First Quantum Minerals deal to buy out Antares Minerals with US4¢ paid per pound of copper resource.
Now market will be taking US13¢ per pound of copper resource as a new benchmark for the new deals. All projects are different, but this deal could be a tipping point and ignite rush for the new deals to secure Copper Supply for Chinese growth.
"News from Los Azules are getting better and better - now we have a new PA with increased NPV of this project from just under 500 million to 2.8 billion us dollars! Two out of five planned drills will be on the site shortly and deposit will grow even more in its size.
Now we can realise why TNR Gold was so determined in its legal fight for the back-in right into this deposit. At stake now is up to 15% of the project (12.5% technically, but with high grade core on the former TNR Gold - Xstrata land) with value of 420 million dollars, according to this latest estimations from Minera Andes. There is a legal risk in every lawsuit and our position is that the court should always decide about the property ownership between TNR Gold and Minera Andes, but for the junior with market cap just over 20 million CAD it could be a very important development - the higher the value of the prise the higher the chances of out-of-the-court settlement. We will be really surprised if Rob McEwen will drag this project along into the court battle - which date is set for the June 2011 - increasing its value further with announced drilling program.
George Macintosh Q.C. is leading TNR Gold litigation team. His personal engagement and new twist in litigation strategy, "that "production of a feasibility study, whether produced within 36 months or some other time, was a condition solely for the benefit of Solitario (TNR Gold sub - S.), and as such, could be waived" - provides necessary support that TNR Gold legal claims to the part of 2.8 billion NPV story of Los Azules should be taken seriously.
"30 NOVEMBER 2010
Best Lawyers, the oldest peer-review publication in the legal profession, has namedGeorge Macintosh, Q.C. as the “Vancouver Best Lawyers Bet-the-Company Litigator of the Year” for 2011.
“The lawyers being honoured as “Lawyers of the Year” have received particularly high ratings in our surveys by earning a high level of respect among their peers for their abilities, professionalism, and integrity” states Best Lawyers.
To view a copy of George Macintosh’s biography please click here."
The recent professional award shows that TNR Gold shareholders are in the right company to defend thier property rights in this legal case, which some people are already calling "MAI's bullying tactics are on trial here. It is truly a 'David and Goliath' case." We will address you to the Statement of Defence by TNR Gold and Los Azules propery maps on the links below to make you own conclusions, as always.
"TNR Gold Corp.'s litigation in the Supreme Court of British Columbiarelated to the LosAzules project in Argentina, involving TNR, Minera Andes Inc., MIM ArgentinaExploraciones S.A. (Xstrata) and related entities, has been joined for hearing and scheduled for a new trial date of June 20 to July 15, 2011. The trial will be held in Vancouver."
"It is important to remember, that now, according to this NR, all litigation around Los Azules between TNR Gold, Minera Andes and Xstrata is joined in one trial and TNR Gold will seek, according to the Statement of Defence above, not only rectification of the option agreement to reflect its true intentions - without 36 months condition, but that "production of a feasibility study, whether produced within 36 months or some other time, was a condition solely for the benefit of Solitario (TNR Gold sub - S.), and as such, could be waived".
Also at stake is Escorpio IV property:
"We did not understand why Minera Andes did not accepted the back in right by TNR Gold and lost opportunity to consolidate the project and secure a very important Escorpio IV property, where according to Minera Andes mining plan part of mining facilities supposed to be located, but Rob McEwen must has his own strategy. With this kind of presentation it will be not cheap any more to settle out of the court, but it is always better then drag such a project in litigation for years to come."
"Los Azules emerges in this light as a very important Copper deposit with a lot of upside in its valuation among the leaders in this particular quality, relatively high CAPEX requirements, but in the solid middle or to the higher band in a lot of different investment metrics compare to the other juniors in the analysis provided by CIBC."
It is very important that, according to CIBC report page 42, legal claims of TNR Gold are communicated properly within the industry now. Junior can fully rely on its litigation strategy, court decision or potential out-of-the-court settlement, should Minera Andes decide to clean the house before calling the real estate agents.
We will always leave it to the lawyers and court to decide - who owns what in this case in its proper time.
Copper is going up and the deposit is growing - we guess that nobody is in a hurry here. Argentina will become more fluent in Mandarin and the value of every lb of Copper in the ground will go up - to reflect fundamental picture described in the CIBC report."
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.
Minera Andes to spin out Los Azules into new company
2011-03-17 08:36 ET - News Release
Mr. Perry Ing reports
MINERA ANDES ANNOUNCES PROPOSED SPIN-OUT OF LOS AZULES COPPER PROJECT
Minera Andes Inc. intends to complete a spin-out its Los Azules copper project into a new publicly traded company.
The Los Azules project is a 100-per-cent-owned advanced-stage porphyry copper exploration project located in the Cordilleran region of San Juan province, Argentina, near the border with Chile. It is one of the world's largest undeveloped copper deposits with an indicated mineral resource of 137 million tonnes grading 0.73 per cent copper, equivalent to 2.2 billion pounds of copper, and an inferred mineral resource of 900 million tonnes grading 0.52 per cent copper, equivalent to 10.3 billion pounds of copper. Exploration and infill drilling continue with five drills currently operating at the Los Azules copper project.
Management believes now is the time to unlock the value and potential of Minera Andes's world-class Los Azules copper project.
The spin-out of the Los Azules copper project allows Minera Andes shareholders to retain exposure to a world-class copper deposit with a copper-focused management in a pure copper vehicle.
Minera Andes will continue to aggressively advance priority gold and silver projects with the objective of adding ounces to the San Jose mine and making discoveries at its 100-per-cent-owned grassroots projects surrounding Goldcorp's Cerro Negro property (recently acquired by Goldcorp for $3.6-billion).
An updated preliminary assessment on the Los Azules copper project was released in December, 2010. It is based on the updated resource estimate announced in June, 2010, and higher base case metal price assumptions:
Using a copper price of $3 per pound;
Base case pretax net present value (NPV) is $2.8-billion and the internal rate of return (IRR) is 21.4 per cent, at a discount rate of 8 per cent;
Life of mine cash operating costs of 96 cents per pound of copper net of gold and silver byproduct credits;
Initial capital of $2.9-billion;
Capital payback in three years;
Mine life of 25 years;
Forecasted annual copper production: First to fifth years: 500 million pounds, life of mine: 375 million pounds.
The spin-out transaction will be affected under a statutory plan of arrangement in the Province of Alberta. Under the proposed terms of the arrangement, the shareholders of Minera Andes will retain their common shares in Minera Andes and will be entitled to receive one common share of the new company for every share of Minera Andes held on the record date for the arrangement.
The completion of the arrangement will be subject, among other things, to Toronto Stock Exchange, court and shareholder approval; as well, a favourable tax ruling from the Canada Revenue Agency.
Additional prospective copper exploration assets currently owned by Minera Andes will be included with the Los Azules copper project in the arrangement.
Further details regarding the arrangement will be set out in an information circular that will be sent to shareholders in advance of the extraordinary shareholders meeting, anticipated to be held in late June, 2011, to seek approval for the arrangement and related matters.
We seek Safe Harbor.
Excellent analysis on MAI, very in depth, see more details here on today's copper news
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