Last checked at 17 Mar 2010 11:00
17 March 2010
Hochschild files suit against Minera Andes seeking project financing repayment
·; Despite a $65 million loan disbursement by Hochschild, Minera Andes, Inc. 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 José 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 José mine, which is operated by Hochschild
Hochschild Mining plc ("Hochschild") today announces that it has filed suit in the New York State Supreme Court, asking that Minera Andes, Inc. ("MAI") of Alberta, Canada and its subsidiary, Minera Andes SA ("MASA"), be required to execute formal loan agreement documents for the $65 million project financing loan Hochschild provided to the San José gold and silver project in Argentina.
The mine, a co-venture between Hochschild and MAI, has been in operation since June 2007. Under the terms of 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 MAI and MASA have unduly delayed the execution of formal loan documents and repayment of the loan by the co-venture entity, known as Minera Santa Cruz. Hochschild has made repeated attempts to finalize the formal loan agreement documents, but the suit alleges that MAI and MASA have made demands never contemplated by the original letter agreements.
The suit lists five separate causes of action. It seeks a decree by the court requiring MASA and its parent company to execute formal loan agreement documents with Hochschild, consistent with the previous agreements between the two companies. It asks that Minera Andes, Inc. and MASA be enjoined from further interference in the repayment of the project finance loan, asks the court to order payment to Hochschild of benefits derived by MAI and MASA as a result of the loan, and requests an order declaring that other shareholder loans are subordinate to the project finance loan.
The law suit has no impact on the running of the San José mine, which is operated by Hochschild. The mine initiated operations in 2007 with a plant capacity of 265ktpa, and following a successful expansion in 2008, it doubled plant capacity to 530ktpa. In 2009, the mine produced approximately 5 million ounces of silver and 77 thousand ounces of gold.
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico as well as numerous long-term prospects throughout the Americas. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits. For further information please visit www.hochschildmining.com.
Enquiries:
Hochschild Mining plc +44 (0)20 7907 2932
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Robin Walker +44 (0)20 7251 3801
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