Last checked at 9 May 2011 07:00
Fresnillo Plc
28 Grosvenor Street
London W1K 4QR
United Kingdom
www.fresnilloplc.com
9 May 2011
Fresnillo Plc Comments on Arbitration Decision
Fresnillo plc today announced that an Arbitration Panel formed according to the Arbitration Rules of the International Chamber of Commerce has delivered its decision in respect of claims made by Vancouver-based MAG Silver Corp (TSX: MAG and NYSE:MVG), Fresnillo's joint venture partner in the advanced exploration stage Juanicipio silver project in Mexico.
The Arbitration Panel rejected MAG's claims that Fresnillo was deficient in the execution pace or performance of drilling at the project. The Arbitration Panel denied both of MAG's principal demands, specifically: (a) that Fresnillo be ordered to pay damages to MAG of up to US$61 million related to MAG's claims that delays by Fresnillo delayed the start of production; and (b) that Fresnillo be ordered to sell or transfer its equity participation in the Minera Juanicipio joint venture to MAG.
The Arbitration Panel upheld certain other MAG claims, including claims related to Fresnillo's announcement in December 2008 that it intended to make an unsolicited bid to acquire MAG. Fresnillo announced its intention based on the opinion of external legal counsel regarding a certain clause in the JV Agreement. The Arbitration Panel, based on a different interpretation of that clause, ordered Fresnillo to reimburse MAG for legal fees of US$1.86 million incurred by MAG in connection with the announcement of Fresnillo's intended offer.
The cost of the arbitration was US$775,000. The Arbitration Panel ruled that each party should pay 50% of the arbitration cost and bear its own legal costs.
Jaime Lomelin, Chief Executive Officer, said, "We are pleased that the Arbitration Panel has dismissed MAG's most serious claims. We continue to believe Fresnillo has acted appropriately and in accordance with the terms of the joint venture agreement."
For further information on Fresnillo, please visit our website: www.fresnilloplc.com or contact:
Fresnillo plc
London Office
Arturo Espinola
Head of Investor Relations Tel: +44(0)20 7339 2470
Mexico City Office
Gabriela Mayor Tel: +52 55 52 79 3203
For European Media:
Brunswick Group
Carole Cable (Partner) Tel: +44(0)20 7404 5959
David Litterick (Director)
For North American Media:
Longview Communications Inc.
Alan Bayless Tel: +1 604 694 6035
About Fresnillo plc
Fresnillo plc is the world's largest primary silver producer and Mexico's second largest gold producer, listed on the London and Mexican Stock Exchanges under the symbol FRES.
Fresnillo has five producing mines, all of them in Mexico - Fresnillo, Ciénega, Herradura, Soledad-Dipolos and Saucito; one development project - Noche Buena; and six advanced exploration prospects - San Ramon, San Julián, Orysivo, Centauro Deep, Las Casas and Juanicipio, as well as a number of other long term exploration prospects and, in total, has mining concessions covering approximately 1.91 million hectares in Mexico.
Fresnillo has a strong and long tradition of mining, a proven track record of mining development and reserves replacement, and a low cost of production, being in the lowest quartile of the cost curve for both silver and gold.
Fresnillo's goal is to maintain the Group's position as the world's largest primary silver company, producing 65 million ounces of silver and over 400,000 ounces of gold by 2018.