RNS Number : 7239I
Hochschild Mining PLC
17 March 2010
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 Jos?ine 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 Jos?ine, 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 Jos?old 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 Jos 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
Finsbury
Robin Walker +44 (0)20 7251 3801
Public Relations
Forward looking statements
This announcement contains certain forward looking statements, including such statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, such forward looking statements may relate to matters such as the business, strategy, investments, production, major projects and their contribution to expected production and other plans of Hochschild Mining plc and its current goals, assumptions and expectations relating to its future financial condition, performance and results.
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The forward looking statements reflect knowledge and information available at the date of preparation of this announcement. Except as required by the Listing Rules and applicable law, the Board of Hochschild Mining plc does not undertake any obligation to update or change any forward looking statements to reflect events occurring after the date of this announcement. Nothing in this announcement should be construed as a profit forecast.
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