McEwen Mining capitulates over Los Azules back-in right

If it covers twice its share of past pro-rata exploration costs, TNR Gold can earn a 25% interest in northern claims covering the Los Azules copper deposit.

Sparring between McEwen Mining (TSX, NYSE: MUX) and TNR Gold (TSX-V: TNR) over rights to claims covering part of the Los Azules copper project in San Juan state Argentina is over.

In separate press releases on Tuesday both companies said litigation would be dropped and that TNR would be given back a 25-percent back-in right on claims comprising a significant portion of the Los Azules deposit.

McEwen Mining said if the TNR triggered the earn-in it would hold rights to about 15 percent of total project resources.

This could make for quite the tally for TNR given that after substantial exploration by McEwen Mining, resources at Los Azules now stand at 323 million tonnes @ 0.65 percent copper, 0.07 g/t gold and 1.8 g/t silver in the indicated category and 948 million tonnes @ 0.52 percent Cu, 0.06 g/t Au and 1.8 g/t Au in the inferred category (@ 0.35 percent Cu cutoff).

In terms of contained metal, TNR’s take, were it to meet the terms of its re-established back-in right, amounts to about 2.3 billion pounds copper.

As was the case in a previous back-in agreement, albeit one with a disputed expiry date, McEwen Mining said TNR can earn the 25 percent interest on northern claims at Los Azules after it finishes a feasibility study.

The cost of the back-in right will be two times attributable expenses, McEwen Mining said, and then TNR can either pay its way from that point or take a 0.6 percent net smelter return royalty on the northern Los Azules claims, which reportedly cover over half of Los Azules resources.

Separately, TNR is also to get a million McEwen Mining shares, which had a value of about C$4 million as of presstime.

While the agreement with McEwen Mining is clearly a victory for TNR, which has alleged it was duped over an expiration date on the back-in right by Xstrata, the previous project operator, neither side was declaring the other in the wrong on Tuesday.

The statements from both parties were cordial and steered clear of blame, a marked departure from the past.

McEwen Mining framed the settlement as allowing the company to accelerate development of the project with clear title under its belt free from a “legal obstacle,” as McEwen Mining put it. Kirill Klip, TNR chairman, said much the same.

  • No comments so far

Comments on this article are closed.


Verification Image