Saturday, May 21, 2011

Mineweb: Minera Andes drops plans to spin-out Los Azules because of a court case with TNR Gold questioning its full ownership of the project. tnr.v,, tck, cuu.v, czx.v,,,,,,,,,, bhp, fcx

Now we have the links to the documents discussed in the article:

  Los Azules drives a lot of attention these days and the story has spilled out into the media now. Rob McEwen was giving to the Mineweb his view on the Los Azules litigation story in the interview, but TNR Gold has simply sent its latest court application documents, which are public now; and the story in the article became so much interesting. We guess, that a lot of investors in Minera Andes are taken by complete surprise how the litigation is turning now. 
"While McEwen denied the merit of TNR Gold's claims to Los Azules, he reasoned the postponent of the spin out was in part necessary as the court case, now set to take longer, raised "questions investors don't like to hear."

  We think, it is more like some managers do not like to answer those questions. We guess, that all shareholders of Minera Andes and TNR Gold would like to hear more about this case and all facts surrounding it.
  Mineweb has made a great investigative journalist job to dig out all these facts and publish this article. They raise the bar very high with its slogan of "Uncompromising Independence" and we can see them in action. Now all interested parties can draw their own conclusions and we encourage everyone interested do not take anything lightly and study the all available litigation documents by themselves.
  We hope that Gary Schellenberg from TNR Gold will be able to provide his side of the story for the Los Azules litigation, but suggestion that George Macintosh, Q.C. from Farris, who leads TNR Gold litigation team, is engaged in any kind of "blackmail" sounds very desperate to us already. In his previous litigation with Hochschild Rob McEwen had "a partner from hell", now one of 2011 Lawyers Of The Year named by Best Lawyers is "blackmailing" him. 

"30 NOVEMBER 2010
Best Lawyers, the oldest peer-review publication in the legal profession, has named George Macintosh, Q.C. as the “Vancouver Best Lawyers Best-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."

  Judge will not look at the headlines, but will look at the facts: emails, calculations, witnesses' testimonies  - and we, finally, can get a grasp of these facts from this article.
   We must admit, that all this time we were at lost why has Xstrata decided not to exercise its own option with Minera Andes for 51% of all Los Azules in October 2009? Why has the Copper company like Xstrata decided just to walk away from such a deposit like Los Azules, when copper market was turning up with the recovering economy? Does Rob McEwen really think that he outsmarted Xstrata for the free gift here? Now we have some indications that, maybe, TNR Gold litigation team has found the real reasons behind Xstrata's move out of the project.
  We will be monitoring this situation with increased interest, particularly after all these revelations from the court documents obtained by the Mineweb and the facts produced in this article; and will publish links to TNR Gold's latest application sited in this article and recent Judge decision once they will become available.
  TNR Gold meanwhile was trustworthy enough with its shareholders, with Nova Gold and Barrick Gold among them, for the leading Chinese Lithium manufacturer Ganfeng Lithium to take strategic stake in its IPO of International Lithium, which will start trading on 24th of May with ILC.v ticker on TSX venture exchange.
  Talking about Chinese interest in TNR Gold and its projects, we have to mention another shareholder in that company - Canada Zinc Metals - Chinese Copper and Zinc giant Tongling Nonferrous Metals Group who owns now 36% of CZX.v Further developments around Los Azules promise to be very interesting.

  "Minera Andes Defers Spin-Out of Los Azules Copper Project. Rob McEwen's decision was very fast, we have mentioned today that he can be really surprised by some recent findings in the discovery stage of preparations to Los Azules litigation. Time is to check the legal file properly.

"The New Claim alleges that Xstrata and Minera Andes did not complete the required exploration expenditures required for Xstrata's exercise of its option on April 23, 2007 to acquire the Properties. On that basis, TNR and Solitario advance a claim of breach of contract and intentional interference with economic relations, and seek the return of the Properties, or alternatively, damages as against the defendants or any of them."

These properties are called Xstrata on the map below. TNR Gold litigation team now seeks in this new claim that Northern half of the Los Azules deposit to be returned to TNR Gold. The level of the case is elevated now by this action from potentially 15% after back-in into the project for TNR Gold (it is 25% for the Northern Half of the deposit, but high grade core is located on TNR Gold property called Xstrata on the map) to the claim that seeks the return of the all Solitario (TNR Gold subsidiary in Argentina) properties, which comprise roughly half of the Los Azules deposit at this moment - above the line on the map called Xstrata.

Nobody will take these kind of developments lightly just before the trial which was due to commence in June 2011. It took Judge two days to consider the application of George Macintosh litigation team and it was granted to TNR Gold.
  Actually, Minera Andes has warned about this potential situation in its latest MD&A:

   We think that maybe from now on it will be more prudent to call Los Azules not 100% owned project, but subject to ongoing litigation and CIBC has already noticed this litigation before.
  Our take here is that, maybe, during the-so-called discovery stage, when all involved parties in litigation are producing the documents and witnesses are called to testify; new information was discovered, which was not available to TNR Gold at the moment of option execution and it allowed George Macintosh litigation team to convince the Judge that this claim is material enough for the court to consider it during the trial.
  We will provide for your consideration the description of Los Azules and its value by Minera Andes and NRs from both companies. Los Azules is building up in the very important Copper project with word size potential and we can not agree more with Rob McEwen that it will become the major Copper mine one day. The project is very highly leveraged to the Copper price and Rob McEwen has done a great job to increase its size - now we are waiting for another drill results from Minera Andes, which are already long time due with five rigs on the property. 
  We can not speak for Rob McEwen, of course, but think that he has a few nasty surprises from these legal stage of discovery in this trial - potentially how the former management at Xstrata and Minera Andes have been dealing with TNR Gold. But Judge will be to decide in any case in all this situation. Relationship between Minera Andes and Xstrata will be another interesting topic to watch. More"

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Minera Andes' McEwen calls competing claim to Los Azules ‘blackmail'

Minera Andes drops plans to spin-out Los Azules in part because of a court case questioning its full ownership of the project.

Posted: Saturday, 21 May 2011

Reverberations of a significantly expanded legal claim to a much larger portion of Minera Andes' massive Los Azules copper deposit in Argentina - which Minera Andes's president and CEO Rob McEwen quickly and vociferously rejected - is having an immediate impact on Minera Andes' plans to spin out the deposit into a separate company. On Friday Minera Andes announced it was shelving those plans, made public last February, given financial and legal considerations.

The postponement followed news TNR Gold, which has for a number of years sought through the Supreme Court of British Columbia to regain partial property rights to Los Azules, had been given a green light by the court to advance an additional claim that, if successful, would see it get a substantially bigger chunk of Los Azules than previously sought.

TNR Gold has for years contested Minera Andes' 100-percent ownership of Los Azules. The thrust of TNR Gold's argument until recently had been that it should have been allowed to exercise a 25-percent back-in right on concessions that cover the northern portion of the Los Azules deposit, which in total holds indicated resources of some 2.2 billion pounds of copper.

That back-in right flowed from TNR Gold's original ownership of a significant, northern portion of Los Azules that in the early 2000s it farmed out to Xstrata, which then optioned the concessions to Minera Andes.

A court hearing to consider TNR Gold's claims to the northern area of Los Azules through its back-in right had previously been set for this June, the same month Minera Andes had intended to spin out Los Azules into a separate company. McEwen told Mineweb in an interview Friday he had hoped those legal proceedings would have been underway before Minera Andes shipped off Los Azules.

But in mid-May TNR Gold threw a wrench into those plans. It gave notice that the BC Supreme Court would allow it to add a new claim to the case alleging Xstrata and Minera Andes did not meet required exploration expenditures to exercise the option agreement governing the property in 2007. The implication: TNR Gold believes it still owns the entire northern portion of Los Azules, and not just a 25-percent back in right.

Rob McEwen said of TNR Gold's claims over part of Minera Andes' Los Azules project "To me it's a form of blackmail."

That is a charge TNR Gold President and CEO Gary Schellenberg was not available to respond to, as Chief Operating Officer Michael Sieb, deferring comment, noted Schellenberg would be out of the office until May 25, 2011. In lieu of comment, however, Sieb pointed to the arguments set out in TNR Gold's court application to advance its new claim of unmet exploration expenditures, which it provided to Mineweb.

Back in early September, 2007, TNR Gold had originally signed off on the option agreement, stating in a press release, "All cash payments due by May 15, 2008 have now been received. All exploration expenditures have also been incurred."

But, according to court documents, TNR Gold now alleges Minera Andes and Xstrata failed to meet those expenditures as they rushed to hit the $1 million mark so they could as quickly as possible "take-out" TNR Gold's 25-percent back-in right on the property.

TNR Gold has long maintained it was more or less duped into signing off on a back-in right with an expiration date. The final draft of an option agreement stipulated TNR Gold could acquire a 25 percent stake over a 120-day period if Xstrata (or as it would turn out, Minera Andes) completed a feasibility study within 36 months of exercising the TNR Gold-Los Azules option.

However, in a case of what boils down to not reading the fine print, TNR Gold said it never discussed the time-limit clause with Xstrata and that initial drafts of the option did not contemplate one. TNR Gold wrote in court documents that the 36-month stipulation was added after initial discussions on the option agreement and "in lengthy blacklined text along with various non-substantial changes." It, TNR Gold said, went unnoticed for some years.

Moreover, TNR Gold charged, Xstrata never intended to produce a feasibility study. To that alleged end, in its application to advance its new claim TNR Gold quoted an email apparently sent between two Xstrata employees at the time. According to TNR Gold it read, "Yes, taking Solitario (TNR Gold subsidiary) out of the game is a good idea. All we have to do now is not complete a feasibility study within the next three years!"

Though a feasibility study was not completed within the 36 months period, in early 2010 TNR Gold signalled to Minera Andes that it wanted to exercise its back-in right anyway by waiving the feasibility requirement. Minera Andes disagreed with TNR Gold's standpoint on the matter.

"It is Minera Andes' view that TNR's back in right is dependent upon the production of a feasibility study which has never been produced," Minera Andes responded to the back-in request in an April 1, 2010 press release. "Further, Minera Andes disputes the legal ability to waive this condition."

On that score Minera Andes wants the court to rule in its favour. "Minera Andes is seeking a declaration that any back-in notice delivered by TNR prior to or on April 23, 2010 will be null, void and of no force and effect on account that a feasibility study must be completed on the Project prior to TNR being entitled to exercise its back-in right," Minera Andes wrote in late April, 2010.

Now, with the new claim, TNR Gold has considerably upped the ante by challenging Xstrata and Minera Andes on exploration expenditures, claiming these were inflated. TNR Gold contended in court documents that 250 metres of 1,574.15 metres of drilling it said were claimed as part of satisfying $1 million in exploration expenditures came from holes that did not lie on its claims. The point, TNR Gold alleged: Xstrata "had not met the conditions for exercising the option" and was therefore in breach of their agreement.

As a result TNR Gold, in its new court claim, said it wants the northern - and highly valuable - Los Azules properties back, or damages.

For its part Minera Andes categorically rejected the new claim it had made insufficient exploration expenditures at Los Azules in a press release responding to the new allegation. And on Friday Minera Andes' McEwen called all of TNR Gold's court arguments "creative" and referred to the most recent concerning exploration spending as strange.

"They must think there's something there," McEwen said. "Or they're just looking for a delay."

McEwen summed up TNR Gold's claims as follows: First TNR Gold said it had been fooled in signing the option agreement. Then, McEwen said, came the assertion it could waive the feasibility clause. "Now it's, ‘You didn't spend the (exploration) money'," McEwen said. "But they signed off on it."

In the interim, between now and the new court hearing, McEwen ruled out settlement, saying the court proceedings would "take its course."

Based on what others have told him, McEwen suggested the new court hearing could be as much as eight to 12 months away. While McEwen denied the merit of TNR Gold's claims to Los Azules, he reasoned the postponent of the spin out was in part necessary as the court case, now set to take longer, raised "questions investors don't like to hear."

McEwen also explained Minera Andes delayed the spin out as it might jeopardize a listing on AMEX. Companies wanting to join AMEX need to hold onto prices above a $2 basement, McEwen said. But with the spin out of Los Azules, whether Minera Andes could stay on the plus side of $2 was no guarantee."
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