Nordgold (OREA) now HochschildThis seems to becoming much more of an issue in S. American. Auplata gold processor closed in FG along with exploration licenses sat on and the Montagne d’Or denied. Now Hochschild gets blindsided in Peru.
Note the article comment from Hochschild below – Does this sound anything like Macron’s move in late 2019 to turn 180 degrees against Montagne d’Or after a near decade’s support?
Wonder how many other S. American miners are now looking in the rear-view mirror and considering their active mines and exploration endeavors after COP26, including the anti-deforestation agreement?
Hochschild ready to meet Peruvian prime minister to resolve threat of mine closu
Hochschild is seeking dialogue with the Peruvian government after being blindsided by reports that their Pallancata and Inmaculada mines will be denied licences to continue operating.
"We believe that this proposed action is completely without merit and completely illegal," Bustamante said. "Under Peru's legal system, if you comply with the requirements, you are entitled to the permit. The state cannot arbitrarily deny granting the permit."
Bustamante said environmental issues cited by the Peruvian prime minister had not been raised by with them prior to the announcement. "We are part of the formal mining sector, the formal mining sector is completely and permanently regulated and supervised. The claims that the government are referring to have not come from those supervising authorities," he said. OREA remains silent on the NG Montagne d'Or issue although you can bet their lawyers are in full analytical swing. I can only imagine Giustra’s recent interactions with his NG counterparts. Oleg Pelevin of NG sat on OREA’s board and yet never said a word since June 2020! The Russians, IMO, delayed going public this past summer specifically because of this issue. A private company has much less transparency required than a public company with shareholders.
I am sure NG will get a substantial cash settlement out of France with this 1989 treaty in effect (no environmental defence listed) and Macrons switcheroo and election ambitions in 2022. We won’t know its details and it presently appears that OREA are screwed. Seen their latest sp and volume? For OREA, to sit and do nothing is to die. Self-directed legal arbitration as I have already suggested is to move into limbo!
I am trying to remember the past NG(CGT)/OREA agreements. I think that OREA can not be diluted below a 15% interest (maybe others can cite) even if they choose to allow NG to foot the entire mine buildout. Therefroe, would NG at this stage acquire OREA for a 15% share of any French settlement? An US$8 billion total mine valuation with total damages of approx. 900 mill’. For example France agrees on a 50% payment = 450 mill with 15% to OREA = 68 mill (play with your own numbers).
For NG the above method costs them nothing upfront to acquire OREA while seeing only 15% going to the Canadians on any settlement footed by France. Seems a win for NG regardless of the award amount and leaves OREA with the risk.
One problem, I don’t even know if it is legally possible at this stage for NG to enact such an acquisition (or alternatively a buyout) of OREA and include their damages in the present NG claim? France may want this total settlement and not object, or, they may prefer to let OREA dangle for years in the C of Arbitration?
Any experienced speculative investors in gold out there want to take a crack at this one?
GLTA -
https://twitter.com/EarthsRare