Business
Settlement of Minera Andes la
Settlement of Minera Andes la.
About this update from Hochschild Mining Plc
[{"type":"text","content":"\n RNS Number : 9436S Hochschild Mining PLC 20 September 2010 \n \n\n\n\n \n\n\n20 September 2010 \n \n \nHochschild Mining and Minera Andes agree on settlement of lawsuit\n \n· Minera Andes signed formal loan agreement regarding $65 million project financing loan\n· Settlement signed with immediate discontinuation of pending litigation \n\nHochschild Mining plc (\"Hochschild\") today announces that it has signed an agreement with Minera Andes Inc (\"MAI\") and its subsidiary, Minera Andes SA (\"MASA\") regarding the $65 million project financing loan provided by Hochschild to the San José gold and silver mine in Argentina. The parties have also agreed to restructure the 2004 shareholder loan agreement pursuant to which Hochschild and MAI lent approximately $50 million to the co-venture entity, known as Minera Santa Cruz (\"MSC\").\n\nSubject to final closing, which is expected to occur this week, the parties have agreed to a repayment schedule for the project finance loan and the shareholder loan over a maximum period of 8 years, with fixed interest rates of 7% per annum. Future payments on both the shareholder loan and project finance loan may be accelerated based on mine performance and metal prices thus maximizing cash flows for both MAI and Hochschild. \n \nHochschild has agreed to provide Minera Andes with the right to consent to certain extraordinary capital expenditures (not including regular sustaining CAPEX) in certain limited circumstances.\n\nThe San Jose 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. On 17 March 2010 Hochschild filed a lawsuit against Minera Andes alleging the undue delay in the execution of formal loan documents and repayment of the loan by MSC. Under the terms of the settlement, Hochschild will discontinue the litigation filed in the New York State Supreme Court.\n\nThe lawsuit had no impact on the running of the San José mine, which is operated by Hochschild. The mine has a throughput capacity of 530ktpa and in the fir...