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TOPIC: TNR Gold vs Minera Andes/US Gold
TNR Gold vs Minera Andes/US Gold 3 Years ago Karma: 0

As many of you already have been following, there is a proposed merger on the table between Minera Andes [MAI] and US Gold [UXG]. But what may have slipped through the cracks is this story involving Minera Andes and TNR Gold [TNR], with regarding a lawsuit over the Los Azules copper project in Argentina.

TNR claims that it has the right to "back in" for 25% of the project based on a previous option deal with Xstrata Copper that would've let Xstrata obtain 100% of the property that was previously held outright by TNR. Minera Andes, who acquired the rigths from Xstrata, doesn't believe that TNR has the right to do so, but the dispute goes further...

TNR also claims that Xstrata didn't meet the $1m expenditure requirement that would've earned the property from TNR. To be fair, Minera Andes has pointed out that TNR did previously release a statement confirming that Xstrata had in fact met the requirements. But now, in retrospect, it looks as though TNR's claim has changed to state that Xstrata had included drilling operations outside of the disputed lands in their $1m calculation.

Anyways, the lawsuit is set up for a legal battle that will take place in the BC Supreme Court in November of 2012. Both sides are lobbing press release bombs at each other, and the outcome is still very much up for grabs.

I gave a much better account of the story on VantageWire today. I'm very interested in your takes on the case, and how it could all play out. My intention is to follow the story all the way through to its conclusion.

The Battle of Los Azules: TNR Gold vs Minera Andes in Copper Showdown
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Re: TNR Gold vs Minera Andes/US Gold 3 Years ago Karma: 273
Fascinating stuff Joel, and congrats on your new gig!

Now HERE is something that I can sink my own teeth into: a tricky LEGAL battle between two mining companies.

Obviously (as an outsider) it is totally impossible for me to realistically "handicap" the dispute and predict a likely winner. However, while the normal assumption in contested legal battles is that the party with "deeper pockets" will win, there are a few reasons not to write-off "the little guy" here.

First of all, based on Joel's presentation of the facts (and my own interpretation) it appears that Minera Andes "position" (and their interpretation) of this business deal at least suggests that Minera Andes (and Xstrata before it) were attempting to take advantage of TNR. Courts do NOT like it when either a plaintiff or defendant attempts to argue an "interpretation" of a business deal which results in ONE SIDE obviously ending up with "the short-end of the stick".

So IF TNR's interpretation of this agreement is fair/reasonable given the ENTIRE CONTEXT of these business dealings, there is a reasonable chance of it emerging with at least a partial victory here - which financially would represent a MAJOR victory for the company.

Let me add that even with my legal background I tend to shy away from "betting" on companies involved in legal disputes. The combination of LESS than "perfect information", the unpredictability of most litigation, and the fact that the dispute could be DRAWN-OUT over an extended period of time usually causes me to wait for the dust to settle first.

In that respect, I draw a clear distinction between true "legal battles" like this (where there are OBVIOUS issues to be tried in court) versus the "nuisance law-suits" we see filed against these companies with quite a bit of regularity. I tend to NOT place much credence in these minor legal disputes - as history shows the vast majority (i.e. almost all of them) never amount to anything significant.
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Re: TNR Gold vs Minera Andes/US Gold 3 Years ago Karma: 0
It's a tough call to say who will come out on top. Both sides have very compelling arguments, and I believe there is a lot more to come in the days between now and the court date.

Minera Andes appears to have a great case, that includes TNR's press release stating that the obligations were met. From their standpoint, they haven't done anything wrong... and that they obtained their rights from Xstrata fair and square. Now the piece that's important is whether Xstrata had the rights to give in the first place.

On the other side, TNR could show that Xstrata never quite spent the $1M required to obtain 100%. If so, this is a whole new ball game. If TNR does prove this side of the case, then the $125M settlement offer that Minera Andes could've taken along the way looks cheap in comparison. Or else, should TNR prove that it still has the right to back in for that 25%, it's still a big deal for the $11M mkt cap TNR. It's pretty obvious as to why they would fight so hard, and why this has stretched on for as long as it has.

We'll see what happens... but I'll be sure to keep following it to the conclusion. Be sure to check out my updates.
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