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Location
Los Azules is located in the San Juan province of Argentina in the
prolific Andean cordillera region. It contains a mineralized porphyry
copper deposit that is one of the world's largest undeveloped copper
deposits.
Technical Details
In 2006 drill results released by
Minera Andes confirmed significant high-grade copper on the Los Azules property.
An 11-hole drill program returned intervals up to 1.62 per cent copper over 221
metres and 1 per cent copper over 173 metres in separate holes. The new core
drilling focused on the previously defined enriched copper target in an area
approximately 2,500 metres by as much as 1,500 metres, defined by prior
drilling. For NI 43-101 compliant mineral resource information, please refer to
the project page on the website
of Minera Andes Inc.
On June 30,
2008, TNR and its Argentinean subsidiary Solitario
Argentina S.A (together, "TNR") commenced
an action in the Supreme Court of British Columbia against MIM Argentina
Exploraciones S.A. ("MIM"), a subsidiary of Xstrata PLC ("Xstrata"). That
action has since been amended to include additional claims and also to name
Minera Andes Inc. and three of its subsidiaries as defendants. The lawsuit
concerns claims relating to three issues over mineral properties in the northern
part of the Los Azules area.
In May 2011, following a two-day hearing before the British Columbia Supreme Court, TNR and its subsidiary, Solitario Argentina S.A., have been granted leave to amend their pleadings to add a new claim to the litigation (the "New Claim") over the Los Azules project in Argentina. The litigation involves TNR, Minera Andes Inc., MIM Argentina Exploraciones S.A. ("Xstrata") and related entities. The Los Azules project is an advanced exploration project currently reporting a National Instrument 43-101 compliant Inferred Resource.
The New Claim alleges that Xstrata and Minera Andes did not complete the required exploration expenditures required for Xstrata's exercise of its option on April 23, 2007 to acquire the Properties. On that basis, TNR and Solitario advance a claim of breach of contract and intentional interference with economic relations, and seek the return of the Properties, or alternatively, damages as against the defendants or any of them.
As a result of the New Claim being added to the litigation, the trial scheduled to commence on June 20, 2011 in Vancouver, BC has been adjourned so that documents relating to the New Claim can be produced. A new date for the trial will be set in due course.
In the original Notice of Claim, among other claims, TNR and Solitario seek rectification of a 2004 Exploration and Option Agreement with Xstrata (later assigned to Minera Andes) to restore a right on the part of Solitario to back-in to up to 25% of certain properties constituting the northern half of the Los Azules project (the "Properties") any time within 120 days of the production of a feasibility study. Minera Andes and Xstrata oppose rectification and the other relief sought by TNR and Solitario.
TNR will be vigorously defending its legal position and invite all shareholders
to learn more about the case proceedings via the publicly available documents.
The claims are described in a
recent judgment
of the British Columbia Supreme Court which allowed TNR to make additional
amendments to its claims and granted an adjournment of the trial, which had been
set to commence on June 20, 2011. See the
news release issued on that
subject. Also linked is a copy of TNR's
Amended Notice of Civil Claim
which the court has permitted to be filed. The three claims are summarized
below. Note that none of these claims have been proven in court and the
defendants oppose each of the claims.
First, TNR's
claim challenges the validity of the exercise of an option under a May 15, 2004
Exploration and Option agreement between Solitario and MIM. Solitario
claims that prior to exercising its option and taking 100% ownership of
Solitario's mineral properties in Los Azules (subject to a back-in right for
Solitario), MIM did not meet the required $1 million in expenditures in relation
to the exploration of the properties so as to be entitled to the option.
Solitario says that as a result, MIM's exercise of the option was a nullity such
that the properties should be returned to Solitario, or, in the alternative,
that the defendants are liable to Solitario for damages. The defendants
oppose this claim and deny that the exercise of the option was invalid.
Second, TNR's
claim seeks to rectify the terms of a back-in right in the May 15, 2004
Exploration and Option Agreement. TNR says the back-in right incorrectly
indicates that Solitario could only exercise its back-in right if MIM produced a
feasibility study within 36 months of exercising its option to purchase the
properties. TNR claims that the agreement that was made, and which was
reflected in a May 15, 2003 Letter of Understanding, was that Solitario can
back-in to the property anytime within 120 days of a feasibility study being
produced. TNR says that the back-in clause in the Exploration and Option
Agreement should be rectified to remove the reference to the 36 month period,
and claims that Minera Andes and its subsidiaries, as assignees of the mineral
properties, should be subject to the rectified back-in right. In the
alternative, TNR claims that the 36 month limitation is unenforceable for lack
of consideration, and in the further alternative says that the effect of the
reference to 36 months is that it is an implied term that the defendants had to
produce a feasibility study within 36 months or pay damages to TNR. The
defendants oppose the claims made by TNR and say that the back-in right as
presently worded accurately reflects the agreement that was made with Solitario.
Third, TNR
seeks a declaration that a property called Escorpio IV, which is adjacent to the
properties that were subject to the May 15, 2004 Exploration and Option
Agreement, is solely owned by Solitario and not subject to the Exploration and
Option Agreement. In this claim, TNR asserts that MIM is bound by an
October 20, 2003 irrevocable assignment of all of its rights with respect to
Escorpio IV. The defendants disagree and claim that Escorpio IV was part
of the properties subject to the Exploration and Option Agreement, and they
counterclaim for an order that TNR transfer the property to the defendants.
In addition to
the above noted action, on April 1, 2010, Minera Andes and its subsidiaries
commenced an action in the Supreme Court of British Columbia against TNR,
pre-emptively contesting its ability to waive the requirement that a feasibility
study be produced in advance of issuing a back-in notice for up to 25% of the
Los Azules properties that are subject to the May 15, 2004 Exploration and
Option Agreement. Notwithstanding the lawsuit, on April 23, 2010,
Solitario waived the requirement for a feasibility study and issued a back-in
notice for 25% of those properties. Minera Andes and its subsidiaries
rejected the back-in notice. TNR says the action commenced by Minera Andes
and its subsidiaries is without merit, and has brought a counterclaim for a
declaration that the back-in notice issued on April 23, 2010 is valid.
The two
actions have been joined for hearing in one trial, which will take place in the
Supreme Court of British Columbia, located in Vancouver, British Columbia, on a
date to be set.
Download Links:
Original
Notice of Civil Claim
Amended Statement of Defence & Counterclaim
Amended Notice of Claim
Official BC Supreme Court
Database ($6 fee per document
https://eservice.ag.gov.bc.ca/cso/index.do
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