Search for the truth is the noblest occupation of man; its publication is a duty.
We are looking forward to the 19th of January when US Gold and Minera Andes shareholders will be voting on the proposed merger between two companies.
There never was a good war or a bad peace.
Insiders continue to buy TNR Gold.
| TNR Gold Corp. TSX VENTURE : TNR  |
January 11, 2012 08:30 ET
TNR Gold Provides Update on Litigation With Minera Andes Over the Los Azules Project
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 11, 2012) - TNR Gold Corp. (TSX VENTURE:TNR) (the "Company") and its wholly owned subsidiary Compañía Minera Solitario Argentina S.A. ("Solitario") are pleased to provide the following update on the Los Azules project and its litigated dispute with Minera Andes Inc. and others.
The Los Azules project is subject to litigation in the Supreme Court of British Columbia involving the Company and Solitario, Minera Andes and various of its subsidiaries and a subsidiary of Xstrata Copper. The various proceedings in the dispute have been consolidated and the pleadings are being amended, so that all issues will be heard together in a six week trial scheduled for late 2012. The Court filings relating to the litigation are available from the BC Supreme Court registry database (BC Online) and are hosted on TNR's webpage: www.tnrgoldcorp.com/s/LosAzules.asp.
Recent Developments
Minera Andes has recently announced that it has agreed to be acquired by US Gold Corporation pursuant to a Plan of Arrangement. If the transaction is approved by the shareholders of Minera Andes and US Gold at shareholder meetings to be held on January 19, 2012, and if the other conditions to closing are satisfied or waived, Minera Andes will become an indirect subsidiary of US Gold, which will be renamed "McEwen Mining Inc.". Whether or not the transaction is completed, TNR Gold advises that it will continue to vigorously pursue the Los Azules litigation uninterrupted against Minera Andes and several of its subsidiaries.
Notwithstanding the litigation, Minera Andes has continued to develop the Los Azules project and reported an increase in the mineralized resource in June, 2010. Minera Andes has also reported that, as of September 30, 2011, it has expended a total of $37.8 million on exploration activities at Los Azules, much of this directed to drilling and engineering work to support a preliminary feasibility study.
Further to the Company's news release of September 9, 2011, concerning drilling undertaken by Minera Andes on the Escorpio IV property, the Company is now taking steps to investigate and confirm the fact and extent of any trespass by Minera Andes on the Escorpio IV mineral claims, which are registered to Solitario. Specifically, with the seasonal opening of the High Andes in which the project is located, the Company is in the process of engaging a Notary Public to conduct a physical site verification of the Escorpio IV mining property, accompanied by the Argentinean mining police, under the Ministry of Mines - San Juan Province.
Background to the Los Azules Litigation
The Los Azules dispute involves certain properties constituting the northern half of the project (the "Solitario Properties") which are subject to an option agreement (the "Solitario Option") between Solitario and Xstrata Copper, a predecessor in title to Minera Andes. The Company disputes that Xstrata's expenditure obligations under the option were properly met and asserts that the option was not properly exercised. On that basis, the Company and Solitario are asking the Court to convey 100% of the Solitario Properties to the Company or to award the Company damages equivalent to the value of the Solitario Properties.
The Company is also seeking rectification and recognition of its right under the Solitario Option to 'back in' to 25% of the equity of the Solitario Properties; together with a declaration that a disputed property adjacent to the Solitario Properties and known as Excorpio IV was not subject to the Solitario Option and that the Company has retained ownership of this property.
ABOUT TNR GOLD CORP. / INTERNATIONAL LITHIUM CORP.
TNR is a diversified international mineral exploration company focusing on the advancement of existing properties and identifying and acquiring new prospective projects. TNR has a portfolio of 18 active projects, of which 9 rare metals projects, including Mariana, is now held by TNR's now-listed subsidiary, ILC. TNR remains a large shareholder in ILC at 28% of outstanding shares.
The recent acquisition of lithium, other rare metals and rare-earth elements projects in Argentina, Canada, USA and Ireland confirms the TNR and ILC's commitments to generating projects, diversifying its markets, and building shareholder value.
On behalf of the board,
Gary Schellenberg, President - TNR Gold Corp.
Statements in this press release other than purely historical information, historical estimates should not be relied upon, including statements relating to the Company's future plans and objectives or expected results, are forward-looking statements. News release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements. In particular, there are no assurances that the Company will achieve a favourable outcome in the Los Azules litigation.
CUSIP: #87260X 109
SEC 12g3-2(b): Exemption #82-4434
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Background of the Los Azules litigation:
TNR Gold: Los Azules Litigation: U.S. Gold, Minera Andes CEO urges holders to approve merger
This headline U.S. Gold, Minera CEO urges holders to approve merger is from Stockwatch and you should read the full NR from Rob McEwen below. Why is the worry about the approval outcome? Both stocks - US Gold and Minera Andes have collapsed since last spring. US Gold has made the top at 9.2CAD with MC over 1.2 billion dollars and now is trading at 3.26CAD with MC at 456 mln CAD. Minera Andes has made a top at 3.3CAD before the new claim for Los Azules was advanced by TNR Gold in May and now is trading at 1.42CAD with MC at 407 mln CAD. Combined companies will be valued at current market prices in the range of 863 mln CAD - a far cry from last spring almost 2 billion valuation at the top.
We can only speculate why the market does not like Gold juniors now or this particular deal or what else is affecting the valuations now. Some shareholders are raising very interesting questions about the valuations in proposed merger between Minera Andes and US Gold.
Circular leaves more questions than answers now: why the sudden collapse in value of Los Azules? Could the litigation discount in case with TNR Gold be so large according to investment banks? Is the risk of litigation outcome properly disclosed to US Gold and Minera Andes side? Why the San Jose and Los Azules valuation range is so wide and out of touch with previous numbers published by Minera Andes? What Minera Andes did to address the litigation risk and preserve the value for its shareholders? Have they even tried to settle the case before this down beat valuations or it will be settled after Minera Andes existing shareholders will be diluted?
Interesting to mention the large short position in US Gold and that it was driving Minera Andes down which is locked with the exchange ratio. Can we still expect the surprise counter bid for the Minera Andes? A lot of disgruntled retail shareholders of Minera Andes are still waiting for it. But who reads all these boards anyway? That is why we are surprised with this letter - we have thought that the deal is done already from the beginning.
Circular leaves more questions than answers now: why the sudden collapse in value of Los Azules? Could the litigation discount in case with TNR Gold be so large according to investment banks? Is the risk of litigation outcome properly disclosed to US Gold and Minera Andes side? Why the San Jose and Los Azules valuation range is so wide and out of touch with previous numbers published by Minera Andes? What Minera Andes did to address the litigation risk and preserve the value for its shareholders? Have they even tried to settle the case before this down beat valuations or it will be settled after Minera Andes existing shareholders will be diluted?
Interesting to mention the large short position in US Gold and that it was driving Minera Andes down which is locked with the exchange ratio. Can we still expect the surprise counter bid for the Minera Andes? A lot of disgruntled retail shareholders of Minera Andes are still waiting for it. But who reads all these boards anyway? That is why we are surprised with this letter - we have thought that the deal is done already from the beginning.
Los Azules deal with TNR Gold - when company was paying 5 mln dollars for the 12.5% of the Los Azules with its attempt to back in and was refused by Minera Andes in 2010 - looks like a sweet distant memory now. TNR Gold has advanced the new claim in May 2011 and is seeking now the return of all the Northern Half of the Los Azules deposit. We can not assess the risk involved in this litigation for the all parties, but still think that more proactive approach on the part of Minera Andes in order to resolve the dispute with TNR Gold could lead to the benefit of all shareholders. The litigation disclosure from the company is still very modest to put it mildly and we will provide the links in order that it will not be a total surprise later for all shareholders involved.
Update 1.01.2012 Charts below can provide further ideas about potential valuations for Los Azules:
Chris from "On The Hunt for Value" has made a terrific forensic accounting job following the proposed valuations for Minera Andes and US Gold including the communication with US Gold. We highly recommend to read his Blog in its entirety, even if he takes in some part a different view on TNR Gold side of litigation:
"A recent data point not included below is the purchase of Peregrine Metals' 12b lbs Cu, 0.42% grade Altar deposit, for an implied price of $0.03-$0.04 per lbs Cu.
My Question to US Gold: In the NAV approach on Los Azules, using the assumptions that Raymond James stated, why is it that their sensitivity table says that LA is valued between $248.6m and $379.5m yet in the NAV summary, Raymond James has LA valued at between $87.0m and $132.8m?
Update 1.01.2012 Charts below can provide further ideas about potential valuations for Los Azules:
Chris from "On The Hunt for Value" has made a terrific forensic accounting job following the proposed valuations for Minera Andes and US Gold including the communication with US Gold. We highly recommend to read his Blog in its entirety, even if he takes in some part a different view on TNR Gold side of litigation:
Minera Andes (MNEAF) merger with US Gold (UXG)
Assuming at buyout-price of 54% of NPV, as based on recent M&A activity (see above slide), than Los Azules could have a potential value around $790m.
UPDATE:
My Question to US Gold: In the NAV approach on Los Azules, using the assumptions that Raymond James stated, why is it that their sensitivity table says that LA is valued between $248.6m and $379.5m yet in the NAV summary, Raymond James has LA valued at between $87.0m and $132.8m?
ANSWER FROM US GOLD: The sensitivity table refers to the NPV of the Los Azules Project – based on 100% ownership and unadjusted for trading value. The NPV is then adjusted according to what is stated in the Formal Valuation “Raymond James applied a risk adjusted developer multiple to Los Azules, in line with industry comparables, to reflect the current stage of development of the project, and also made additional adjustments to reflect the risks associated with the current litigation.”
As a result, we adjusted the NPV by a multiple of 0.35x and the range becomes US$87-US$132.8M from US$248-US$375. There are essentially no copper development stage companies that trade at 1.0x NPV, and given the political, technical and litigation risk associated with this project the 0.35x multiple was merited."
End of quote.
Los Azules Litigation TNR Gold vs Minera Andes - Trial Date is Set for November 2012
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.
TNR Gold: Los Azules Litigation: Minera Andes: Los Azules Project Exploration Progress Update
"Some Minera Andes shareholders are not very happy these days with the valuation proposed in the merger with US Gold. The "Big Copper in Argentina" has been promoted by Minera Andes as one of the largest Copper deposits in the world -before TNR Gold was allowed its new claims last May - now it has shrunk dramatically on paper in valuation of the "independent financial advisers" in order to support the proposed acquisition price by US Gold. This shrinkage has affected even the 49% in the Silver producing mine in Argentina as well.
Business is tough in Canada and who said that relationships with junior partners should be any different than with the small shareholders? Some of them are talking now about lawsuits to follow, misrepresentation of facts and other heavy litigation staff - people are getting emotional and frustrated. We would think as well that by now COO of the company should know better and made the clarification that TNR Gold is now seeking return of the Northern Half of the Los Azules deposit and not only 25% back in right, but we are sure Minera Andes shareholders are already better informed.
Business is tough in Canada and who said that relationships with junior partners should be any different than with the small shareholders? Some of them are talking now about lawsuits to follow, misrepresentation of facts and other heavy litigation staff - people are getting emotional and frustrated. We would think as well that by now COO of the company should know better and made the clarification that TNR Gold is now seeking return of the Northern Half of the Los Azules deposit and not only 25% back in right, but we are sure Minera Andes shareholders are already better informed.
In the other news about the project the very important information is that the Copper is still there in the ground, there are NO glaciers in the area and NO other shrinkages was reported in the area. We can expect the size of the deposit to grow further:
"During the last season, nine wells were drilled in order to confirm the previously defined resources, in addition to two deep exploration wells. In one of the latter a new mineralized areas was found, located southwest of the already defined resources area. With regards to diamantine, 5,655 meters were drilled and 4,793 meters were drilled with reverse air. Due to this new mineralized area, it is possible that the amount of resources may increase."
"During the last season, nine wells were drilled in order to confirm the previously defined resources, in addition to two deep exploration wells. In one of the latter a new mineralized areas was found, located southwest of the already defined resources area. With regards to diamantine, 5,655 meters were drilled and 4,793 meters were drilled with reverse air. Due to this new mineralized area, it is possible that the amount of resources may increase."
Los Azules Litigation: TNR Gold Contests Drilling by Minera Andes on Escorpio IV Property, Argentina
June 23, 2011
Vancouver B.C.: TNR Gold Corp. (the "Company"). TNR advises that it has taken note of the proposed merger of Minera Andes Inc. with US Gold to form McEwen Mining Inc. or some other similar entity. For further information please see the news release from Mineral Andes dated June 14, 2011.
As TNR is currently engaged in litigation against Minera Andes Inc. and three of its subsidiaries, TNR advises that it will be monitoring the developments with Minera Andes Inc. and intends to ensure that TNR's rights in the litigation are not prejudiced by any changes to the ownership of Los Azules or the identity of the Minera Andes parties.
Additional information can be obtained on the TNR corporate Los Azules webpage -
We have found emails between Minera Andes and Xstrata presented in TNR Gold's application particularly entertaining:
TNR Gold (Solitario) properties are called Xstrata on the map below and above that line.
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.
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