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Tuesday, 5 February 2013
TNR Gold finalizes settlement with McEwen, shares gain
TNR Gold Corp. (CVE:TNR) says it has finalized the settlement announced back in November with McEwen Mining(NYSE:MUX) (TSE:MUX) relating to their ownership dispute on the Los Azules copper project in San Juan province, Argentina.
The junior gold company, whose shares shot up by one penny on the news today to 7 cents, said formal documentation and the details of the agreement have now been signed, and will be filed on SEDAR.
The deal was reached late last year, prior to a trial that was set to begin on November 19 in Vancouver.
TNR Gold and its subsidiary, Solitario Argentina S.A., were previously contesting the ownership to the northern half of the Los Azules copper deposit, seeking to have the court recognize a right to back into the project.
This goal was achieved with the settlement, with TNR retaining its back-in right to the property, as well as receiving 1 million shares of McEwen Mining, which was created more than a year ago from the combination of Minera Andes and U.S. Gold.
"I welcome the positive resolution of the Los Azules litigation in the out of court settlement between TNR Gold and McEwen Mining," said TNR chairman, Kirill Klip.
"I would like personally to thank Rob McEwen as this resolution is a highly beneficial outcome for both our companies. Removing the uncertainty over the rights to Los Azules will allow the project to now achieve its full potential for the benefit of the shareholders of both TNR Gold and McEwen Mining, and I consider our stake in McEwen Mining as a strategic holding forTNR Gold."
Indeed, McEwen Mining is backed by prolific mining investor Rob McEwen, who has described the Los Azules project as one of the largest undeveloped copper deposits in the world.
TNR will have a back-in right for up to 25 per cent in certain claims comprising the northern portions of Los Azules, following the completion of a feasibility study. The northern half represents around 62 per cent of the known resource at the property, the companies noted.
Currently, this means that the 25 per cent interest, when taken in the context of the whole property, would be equivalent to around a 15 per cent stake in the total estimated resources at Los Azules.
If TNR chooses to back-in for 5 per cent or less, or has its interest diluted by that much, it will receive a net smelter royalty of 0.6%.
The settlement also gives McEwen title to the Escorpio IV claim, which is situated to the west of the deposit. As part of the deal, TNR will transfer to McEwen the contested Escorpio IV claim, which is suited for all processing and administrative facilities of any future mine development.
TNR Gold said Tuesday that the 1 million shares of McEwen as part of the settlement deal have now been issued, and it expects to receive the shares once the transfer of the mineral rights to the Escorpio claim to McEwen has been completed.
The Vancouver-based junior said it expects this transfer to take place later this month. Its main focus going forward will be the development of its Shotgun gold deposit in Alaska, from where it recently released the best drill results ever obtained from the property.
At Shotgun, TNR has a 100 per cent ownership and is looking for a large, bulk-tonnage gold deposit, similar to what is being developed at the Donlin gold project by NovaGold (TSE:NG) (AMEX:NG) and Barrick Gold (TSE:ABX) (NYSE:ABX).
The property holds an historic (pre NI 43-101) resource of about 1 million ounces so far, and a significant result of last year's program was that it opened the door for discovering a much larger deposit.
The company has said that all of its other assets will be advanced based on joint venture models or converted into the stakes in the companies developing them and/or royalties attributed to them.