TORONTO, ONTARIO--(Marketwired - Jan. 2, 2015) - Samco Gold Limited (TSX VENTURE:SGA) ("Samco Gold" or the "Company") announces that further to the Argentinean Commercial Court of Appeals judgment of May 22, 2013 (the "Judgment") for breach of contract against Northern Orion Resources Inc. (now named 0805346 B.C. Ltd. and owned by Yamana Gold Inc.; referred to herein as "Northern Orion"), the Argentinean court appointed expert arbitrator has quantified the damages at US$244 million (the "Arbitrator's Award").
On January 10, 2014 the Company announced that it had entered into a participation and option agreement (the "Participation Agreement") with Ricardo Auriemma (the "Grantor"), a director of the Company, under which the Company could acquire the sole and exclusive right to participate in any benefits arising from the enforcement of the Judgment. On February 11, 2014 the Company announced that it had received all required approvals and proceeded with closing the Participation Agreement.
The Participation Agreement grants Samco Gold the exclusive right to participate in the proceeds arising out of the damages awarded in relation to the breach of a regional alliance agreement by Northern Orion entered into between the Grantor and Northern Orion.
The Company's participation right is based on a sliding scale basis which, further to the Arbitrator's Award, entitles Samco Gold to receive US$88.4 million. The Participation Agreement also grants Samco Gold an option, in lieu of its participation right and for a prescribed period of time, to acquire all rights arising under the Judgment in favour of the Grantor against Northern Orion, by paying the Grantor US$50 million, provided these purchase funds are not raised through the issue of shares or convertible securities of Samco Gold or its affiliates. Should the Company elect this option, Samco Gold's share of the Arbitrator's Award would amount to US$194 million.
By way of background to today's announcement, the Grantor was party to a regional alliance agreement entered into with Northern Orion. This regional alliance agreement provided that the Grantor and Northern Orion had a right to participate equally in mining opportunities generated by the other party in Argentina, among other jurisdictions (the "Priority Right"). In 2004, the Grantor commenced a legal action against Northern Orion for breach of his Priority Right. Yamana Gold Inc. acquired Northern Orion in 2007. The Grantor lost in the Argentinean court of first instance and appealed in 2008. In its Judgment in 2013, the Argentinean Commercial Court of Appeals found that Northern Orion had breached the Grantor's Priority Right. Further, in relation to Northern Orion's acquisition of a 12.5% interest in the Bajo de la Alumbrera mine in Argentina, the Court determined that the damages to be awarded to the Grantor represented 15% of Northern Orion's dividends (subject to certain adjustments) commencing from its original investment in 2003 to the expected end of the mine life. The court appointed expert arbitrator had been appointed to quantify the damages and has now concluded that the damages are US$244 million.
By way of background, following the Commercial Court of Appeals Judgment of May 22, 2013;
| - | On June 12, 2013 Northern Orion filed an extraordinary proceeding with the Commercial Court of Appeals seeking referral to the Argentinean Supreme Court of Justice, which was rejected by the Commercial Court of Appeals on December 11, 2013; |
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| - | On February 3, 2014 Northern Orion made an extraordinary motion of complaint to the Supreme Court of Justice in Argentina requesting that it accept the extraordinary proceeding that had been rejected by the Commercial Court of Appeals. This extraordinary motion of complaint was unanimously denied by the Supreme Court of Justice on October 28, 2014. |
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| - | With the rejection by the Supreme Court, all possible appeals of the Judgment had been exhausted by Northern Orion and the proceedings to quantify damages against Northern Orion pursuant to the Judgment remained the only matter outstanding. |
The decision of the court appointed expert arbitrator in Spanish together with a certified English translation thereof will be filed on SEDAR, and will be accessible at www.sedar.com.
Further details of the Participation Agreement and Judgment are found in the Company's press releases dated January 10, 2014 and February 11, 2014. The Participation Agreement and an English translation of the Judgment were publicly filed by Samco on www.sedar.com.