Update of the Chile Legal Proceedings against Barrick Gold Corporation
Jan 16 15
This is an update of the one of the legal proceedings in Chile relating to the claim by Jorge Lopehandia, that Jorge Lopehandia, and not Barrick Gold Corporation, owns the key Chile mining claims which form that portion of the Pascua Lama Project located in Chile (the Pascua Lama project straddles the Chile - Argentina border with the main ore body located on the Chile side of that border). Recall that Mountainstar has entered into an option agreement with Jorge Lopehandia to acquire an interest in the Chile portion of the Pascua Lama Project. Mountainstar announced that on Wednesday January 14, 2015, the 23rd Civil Court in Santiago, Chile dismissed an application by the Chile Government and ordered that the Chile Government pay costs to Jorge Lopehandia. The Government of Chile had applied to have the Protocol Legal Proceedings struck for want of prosecution (abandonment of the legal proceedings). On January 14, 2015 the 23rd Civil Court dismissed the application of the Chile Government and ordered that the Chile Government pay costs to Jorge Lopehandia. For clarity on January 14, 2015 the 23rd Civil Court in Santiago did not make a final decision on the propriety of the Protocol.
Silver Wheaton Provides Updates to Barrick and Campo Morado Silver Stream Agreements
Jan 5 15
Silver Wheaton Corp., through its wholly owned subsidiary Silver Wheaton (Caymans) Ltd., has amended the silver streaming agreement with Barrick Gold Corporation regarding the Pascua-Lama project, extending both the completion test date and the silver production entitlement from the Lagunas Norte, Pierina, and Veladero mines. Silver Wheaton has also agreed with Nyrstar Mining Ltd. and certain of its affiliates to the cancellation of the Campo Morado silver stream in exchange for cash consideration of USD 25 million. As per Silver Wheaton’s news release dated October 31, 2013, the company had been entitled to production, through the end of 2016, from three of Barrick’s currently producing mines — the Lagunas Norte, Pierina, and Veladero mines (collectively "Barrick's Other Mines") — to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion test. As part of the newly revised agreement with Barrick, Silver Wheaton will now be entitled to the production from Barrick's Other Mines until March 31, 2018. The original contract with Barrick provided Silver Wheaton with a completion test, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. The contract has been amended several times, and currently has a completion test deadline of December 31, 2017. In exchange for the extension of the entitlement of the production from Barrick’s Other Mines, Silver Wheaton has agreed to extend the completion test deadline to June 30, 2020. According to the silver purchase agreement, if the requirements of the completion test have not been satisfied by the amended completion date, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton will be entitled to the return of the upfront cash consideration of USD 625 million less a credit for any silver delivered up to that date. As of September 30, 2014, the company had received approximately 12.0 million ounces of silver related to Barrick’s Other Mines under the agreement, generating cumulative operating cash flow of approximately USD 275 million. As a result, the cash obligation owed to Silver Wheaton should Barrick not satisfy the completion test, was approximately USD 350 million as of September 30, 2014. Silver Wheaton has reached an agreement with Nyrstar Mining Ltd. and certain of its affiliates resulting in the cancellation of the silver purchase agreement relating to the Campo Morado mine in Mexico in exchange for cash consideration of USD 25 million payable on or before January 31, 2015. As part of this agreement, Silver Wheaton will be entitled to 75% of the silver contained in concentrate produced at the Campo Morado mine on or prior to December 31, 2014, and will be granted a five year right of first refusal on any silver streaming or royalty transaction in relation to any Nyrstar NV group property, globally. As per Nyrstar’s third quarter 2014 interim management statement, there has been a continuing reduction of ore grades at the Campo Morado mine as the G9 orebody nears exhaustion and the mine begins treating the remaining ore bodies, which have lower overall grades than G9.
Chilean Supreme Court Refuses to Consider Barrick Appeal on Pascua-Lama Project
Dec 31 14
Barrick Gold Corporation announced the Chilean Supreme Court of Chile has refused to consider an appeal of a lower court decision on sanctions imposed by the country's environmental regulator on its $8.5-billion Pascua-Lama project. An earlier ruling by Chile's Environment Court had found that the environmental regulator, known as the SMA, improperly determined administrative fines levied against Barrick for permit infractions identified in 2013. Barrick sought to appeal this decision to the Supreme Court, arguing the fines were calculated based on applicable law and commonly accepted legal principles. However, Barrick says the Supreme Court refused to consider the appeal on procedural grounds, ruling that Barrick is not a party to the case because the original action was brought against the government regulator. As a result of the ruling, the SMA will now re-evaluate the administrative fines it imposed on the Pascua-Lama project.