TORONTO (miningweekly.com) – Latin America-focused explorer Samco Gold on Friday announced that it would receive $88.4-million under a participation and option agreement, after an Argentinean court-appointed expert arbitrator had quantified damages in the matter between one of Samco’s directors and Northern Orion Resources (GNOR), now named 0805346 BC and owned by Yamana Gold.

In May 2013, the Argentinean Commercial Court of Appeals ruled in favour of Samco director Dr Ricardo Auriemma on the breach-of-agreement case against GNOR, which was acquired by Yamana in 2007. GNOR was found to have breached a regional alliance agreement with Auriemma relating to dividend payments.

In January, Samco signed an agreement with Auriemma to support the development of its El Dorado-Monserrat (EDM) gold/silver project and the Corina zinc/lead/silver project. Under the participation deal, Samco had the right to participate, on a sliding-scale basis, in any benefits arising from future enforcement of the judgment.

The arbitrator awarded $244-million in damages.

Yamana Gold believed the arbitrator's assessment to be a gross miscalculation of the actual value and said it had identified "significant errors in the assessment of value resulting from the arbitrator's use of improper valuation methodologies and his failure to follow the court's instructions causing the assessment to be significantly inflated".

"The company's subsidiary will seek an annulment of this assessment through the judicial process.

"Despite the determination by the Argentine court on the existence of this preemptive right, the company believes there is no valid basis for the claim and the company's subsidiary will continue to utilise all legal remedies and forums to vigorously defend against this claim including any action taken to enforce the assessment against the company's subsidiary," Yamana outlined in a statement Friday.

The participation agreement also granted Samco an option, which was instead of its participation right and for a prescribed period of time, to acquire all rights arising under the judgment in favour of Auriemma against Northern Orion, by paying the grant or $50-million, provided these purchase funds were not raised through issuing shares or convertible securities of Samco or its affiliates.

Should Samco choose this option, its share of the arbitrator’s award would be $194-million.

Samco executive chairperson and CEO Charles Koppel in November explained to Mining Weekly Online that the company would use the funds to support further development of its gold and silver assets in Argentina, including the core EDM and Corina properties, without any equity dilution to shareholders.