Note: we are not sure that this particular Judge will be involved in this court hearing.
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TNR Gold's Gary Schellenberg Discusses Gold Mining in Alaska and Los Azules Copper Project on Midas Letter Money TNR.v
Update February 12th, 2012. CNNMoney:
$1.7M of MUX sold by Allen Ambrose
We guess, that at some stage Mr Allen Ambrose - former CEO of Minera Andes, will be questioned during the Los Azules litigation on what exactly were his intentions explained in his emails presented by TNR Gold litigation counsel in Amended Claim.
Los Azules: Gold bug McEwen eyes big copper play - TNR Gold claims Northern Part of the project back
Mcewen Mining: SEC filing: ITEM 1A. Risk Factors"The Los Azules copper project is subject to ongoing legal proceedings with the potential that we may lose all or part of our interest in the project.
Form 10-Q for MCEWEN MINING INC.
Los Azules Copper Project, Argentina
During the first quarter of 2012, drilling at the project was slow due to difficult ground conditions and equipment problems. A total of 2,835 meters was drilled during the field season which ran from early January to late April and fell short of the 8,000 meters that was originally planned. Most of the drill holes started were unable to reach their target depth. We expect to report assay results from the drilling during the second quarter of 2012 and provide an updated resource estimate for the project by June 30, 2012.
In order to solve the problems encountered with the recent drilling at Los Azules, we signed a contract with a drilling company to provide us four core drills considerably more powerful than the ones used this season. We anticipate starting the upcoming drill season in October 2012, weather permitting.
The Los Azules properties are located in the high Andes within the San Juan region of Argentina. Minera Andes, a wholly-owned subsidiary of McEwen Mining, has held exploration and mineral exploitation rights to properties in the Los Azules region (the ''Minera Andes Properties'') since the late 1990s. In the early 2000s, the exploration and exploitation rights to the properties north of the Minera Andes Properties (the ''Solitario Properties'') were held by Solitario, a wholly-owned subsidiary of TNR Gold, a junior mining company based in Vancouver, British Columbia, Canada.
The Los Azules litigation was commenced in the Supreme Court of British Columbia, Canada as follows:
a) TNR Gold Corp. and Solitario Argentina S.A. [Plaintiffs] v. MIM Argentina Exploraciones S.A., Minera Andes Inc., Minera Andes S.A., Los Azules Mining Inc. and Andes Corporacion Minera S.A. [Defendants] (Court File No. S-084670, Vancouver Registry) initiated June 30, 2008. Minera Andes was joined as a Defendant in this proceeding in September 2010, consolidated in April 2012 with Minera Andes S.A., Minera Andes Inc., Los Azules Mining Inc. and Andes Corporacion Minera S.A. [Plaintiffs] v. TNR Gold Corporacion and Solitario Argentina S.A. [Defendants] (Court File No. VLC-S-S-102992) initiated April 1, 2010.
While the proceedings were commenced separately, these proceedings have been consolidated, and the pleadings amended, so that all issues will be heard together under a newly assigned case management judge anticipated to be in November 2012. The following is a non-exhaustive summary of the claims made by the plaintiffs in respect of these actions.
There are essentially four issues raised by the Los Azules litigation which can be generally described as follows:
a) The Expenditure Requirement Issue. Whether or not Xstrata Copper made the development expenditures required for the proper exercise of the option agreement between Xstrata and Solitario (the ''Xstrata-Solitario Option Agreement''), whether or not Minera Andes or its subsidiaries engaged in intentional interference with
b) The Back-in Right Issue. Whether or not Solitario has a contractual 'back-in' right to purchase a 25% equity position in the Solitario Properties currently owned by Minera Andes pursuant to the Xstrata-Solitario Option Agreement or as that Agreement may be rectified by the court. If a 'back-in' right exists and it cannot be performed, TNR seeks damages;
c) The Waiver Issue. Whether TNR can waive the requirement that a feasibility study be completed prior to its having the right to 'back in' to 25% of the equity of the Solitario Properties. If the requirement for a feasibility study could be waived, but the 'back-in' right can no longer be performed, TNR seeks damages as an alternative remedy. Otherwise, TNR seeks performance of the 'back-in' right; and
d) The Escorpio IV Issue. Whether or not a certain property described as 'Escorpio IV' was included in the property optioned by Xstrata under the Xstrata-Solitario Option Agreement.
The following is a summary of the Los Azules dispute:
� The Los Azules project was, until the fall of 2009, subject to an option agreement between Xstrata and Minera Andes.
� In the fall of 2009, Xstrata elected not to exercise its option to back-in to the Solitario Properties and subsequently transferred all properties then held by Xstrata (and forming part of the Los Azules project) to Minera Andes. Minera Andes is now of the position that it owns 100% of the Los Azules project including the Solitario Properties.
� The Solitario Properties formerly held by Xstrata and transferred to Minera Andes following the termination of the option agreement remain subject to the Xstrata-Solitario Option Agreement.
� The Xstrata-Solitario Option Agreement provided that Solitario had the right to back-in up to 25% of the Solitario Properties, exercisable by Solitario upon the satisfaction of certain conditions within 36 months of Xstrata exercising its option, including the completion of a feasibility study. The 36-month time limit was not included in an earlier letter of intent which precedes the Xstrata-Solitario Option Agreement.
� The 36-month period following the exercise of the option expired on April 23, 2010 and no feasibility study had been completed on the Los Azules project and Minera Andes is of the position that Solitario's back-in right also expired on April 23, 2010.
� Expenditure Requirement Claim. As a condition of exercising the option under the Xstrata-Solitario Option Agreement, Xstrata was required to make five option payments over a five-year period. In addition, Xstrata was also required to spend a total of $1 million in exploration expenditures in respect of the Solitario Properties. TNR now disputes that the expenditure obligation had been met and, therefore, that the option was properly exercised. In May 2011, TNR was granted leave by the Supreme Court of British Columbia to amend its pleadings to include a new cause of action related to whether Xstrata met the expenditure requirements under the Xstrata-Solitario Option Agreement so as to properly exercise the option over the Solitario Properties on April 23, 2007. More specifically, TNR claims that Xstrata never incurred the necessary expenditures to entitle it to exercise the option because some of the expenditures, particularly those related to drilling activity were not located on the Solitario Properties, but instead were located on the property to the south. Minera Andes rejects TNR's claim that insufficient expenditures were made. As part of this claim, TNR seeks the following relief:
� A declaration that the exercise of the option by Xstrata was a nullity;
� A constructive trust in favor of Solitario as constructive trustee over the Solitario Properties;
� An order that Minera Andes take all necessary steps to transfer ownership of the Solitario Properties to
� Damages against Minera Andes for breach of contract and intentional interference with Solitario's economic relations.
� Back-In Claim. TNR amended its claim in August 2008 to assert that the above back-in right is not subject to the 36-month timeline that appears in the executed Xstrata-Solitario Option Agreement. In fact, TNR claims the 36-month limit was never the commercial intention of the parties as the 36-month limit was not included in the original letter of understanding between the parties which was subsequently superseded by the formal Xstrata-Solitario Option Agreement. In particular, TNR claims that the 36-month requirement was added by Xstrata, overlooked by TNR (and its lawyers) and not discovered until November 2007, all while Xstrata made payments on their option. As part of this claim, TNR seeks:
� rectification of the Xstrata-Solitario Option Agreement to make the back-in right accord with the letter of understanding; a declaration that such rectification is enforceable as against Minera Andes;
� a declaration that the 36-month restriction is unenforceable for want of consideration;
� damages for breach of the implied term that Xstrata, and later Minera Andes, would exercise best-efforts to complete a feasibility study within 36 months of Xstrata exercising its option; and
� a declaration that Solitario is entitled to waive completion of a feasibility study and that its April 23, 2010 back-in notice is valid and enforceable.
� Waiver Claim. In addition, on April 23, 2010, Solitario delivered notice of exercise of the back-in right and waiver of the condition of the completion of the feasibility study and claimed that it had the right to back-in to the Solitario Properties prior to the expiry of the option period on the basis that they could waive the requirement that a feasibility study be completed.
� Escorpio IV Claim. TNR filed a claim on June 30, 2008 in relation to the ongoing unresolved claim against Xstrata as to whether or not Escorpio IV is included in the properties subject to the Xstrata-Solitario Option Agreement. Minera Andes has publicly disclosed that the current resource estimates for the Los Azules project are not located on Escorpio IV, and that the current intention is to locate certain mine infrastructure on Escorpio IV. Minera Andes is currently entitled to the surface rights in respect of Escorpio IV. TNR is of the position that Escorpio IV is not part of the Xstrata-Solitario Option Agreement and that it has retained ownership of this claim.
If TNR is successful in any of its claims against Minera Andes, this could have a significant and material negative impact on the ability of McEwen Mining to further develop the value of the Los Azules Project.
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.
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