This can't possibly be good for MAIMore the reason for Minera Andes to want to focus on Los Azules, no?
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Minera Andes faces lawsuit over San Jose loan financing
2010-03-17 07:52 ET - News Release
Ms. Isabel Lutgendorf of Hochschild reports
HOCHSCHILD FILES SUIT AGAINST MINERA ANDES SEEKING PROJECT FINANCING REPAYMENT
Hochschild Mining PLC has filed suit in the New York StateSupreme Court, asking that Minera Andes Inc. and its subsidiary, MineraAndes SA, be required to execute formal loan agreement documents forthe $65-million project financing loan Hochschild provided to the SanJose gold and silver project in Argentina.
Highlights include the following:
- Despite a $65-million loan disbursement by Hochschild, Minera Andes and Minera Andes SA have refused to execute formal loan agreement documents for three years.
- Hochschild provided a project finance loan to the co-venture entity, Minera Santa Cruz, for the construction of the San Jose mine in Argentina.
- Minera Andes has caused an undue delay in documentation and repayment of this loan by refusing to execute formal loan documents.
- Legal action has no impact on the running of the San Jose mine, which is operated by Hochschild.
The mine, a co-venture between Hochschild andMinera Andes, has been in operation since June, 2007. Under the termsof letter agreements between the parties executed in October, 2006,Hochschild alone provided the full amount of the project financing,totalling $65-million, in instalments between October, 2006, and July,2007.
The complaint alleges that Minera Andes and MASA have undulydelayed the execution of formal loan documents and repayment of theloan by the co-venture entity, known as Minera Santa Cruz. Hochschildhas made repeated attempts to finalize the formal loan agreementdocuments, but the suit alleges that Minera Andes and MASA have madedemands never contemplated by the original letter agreements.
The suit lists five separate causes of action. It seeks adecree by the court requiring MASA and its parent company to executeformal loan agreement documents with Hochschild, consistent with theprevious agreements between the two companies. It asks that MineraAndes and MASA be enjoined from further interference in the repaymentof the project finance loan, asks the court to order payment toHochschild of benefits derived by Minera Andes and MASA as a result ofthe loan, and requests an order declaring that other shareholder loansare subordinate to the project finance loan.
The lawsuit has no impact on the running of the San Jose mine,which is operated by Hochschild. The mine initiated operations in 2007with a plant capacity of 265,000 tonnes per year, and following asuccessful expansion in 2008, it doubled plant capacity to 530,000tonnes per year. In 2009, the mine produced approximately five millionounces of silver and 77,000 ounces of gold.
About Hochschild Mining
Hochschild Mining is a leadingprecious metals company listed on the London Stock Exchange with aprimary focus on the exploration, mining, processing, and sale ofsilver and gold. Hochschild currently operates four undergroundepithermal vein mines, three located in southern Peru, one in southernArgentina and one open-pit mine in northern Mexico, as well as numerouslong-term prospects throughout the Americas. Hochschild has over 40years experience in the mining of precious metal epithermal veindeposits.
We seek Safe Harbor.