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Yamana applies to annul second arbiter report in Auriemma proceedings

27th September 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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VANCOUVER (miningweekly.com) – Yamana Gold has applied to annul a second arbiter report regarding the award to Dr Ricardo Auriemma in litigation dating back to 2003.

In May 2013, the Argentinean Commercial Court of Appeals ruled in favour of Auriemma on the breach-of-agreement case against Northern Orion Resources (GNOR), which was acquired by Yamana in 2007.

GNOR was found to have breached a regional alliance agreement with Auriemma relating to dividend payments and lost opportunity under a contested agreement providing GNOR a pre-emptive right to participate in the acquisition of Minera Alumbrera in 2003.

According to Yamana, the litigation is now at the stage where an arbitrator is required to determine the value of an appropriate award.

This is the second time that such an arbitrator has been appointed for this purpose.

The first arbitrator provided a report in early 2015, to which GNOR objected. At that time, GNOR applied for an annulment of the award suggested in the report on the basis that the valuation was flawed. The annulment was granted and the matter was then sent for a second arbitration, which has now been completed.

According to Yamana, the current report provides only a suggested value of $54.2-million. While this represents a significant improvement over the original annulled report, which suggested a value of $244-million, the amount in the current report continues to be well in excess of the amount GNOR considers reflective of the claim. As part of this valuation process, GNOR came to the conclusion that the value could be as low as $5-million, if any value could be ascribed at all, it said in a statement.

GNOR believes there are several flaws in this latest report, as was the case in the first report, and that the instructions of the court were not followed.

Yamana also believes that the current report is advisory of the amount of the award and is not a determinative award.

“GNOR believes that pursuant to the instructions for conducting the valuation, any award should be at most de minimis or nominal,” it stated on Monday.

Further, GNOR will continue to consider all its legal options to defend its interests, Yamana said.

ARGENTINA UPDATE
Yamana also advised on Monday that recent resolutions passed by a municipal committee of a town near the Agua Rica project, in Argentina, that purports to ban openpit mining has no bearing on the project, since the use of rivers, mining activities and environmental matters, as set out in the Constitution, are the purview of the provincial government of Catamarca, rendering the municipal ordinance not binding or legal and mostly symbolic.

While no formal action has been taken to vacate the municipal ordinance, discussions are continuing on the most effective manner for the development of the project, respectful of local communities, the province and the country, the company noted.

On September 8, the municipality of Andalgala passed a municipal ordinance, effective on September 21, with the intention to bar openpit mining in the high river basin of the town with a population of about 14 000.

Yamana said it remains committed to the future development of Agua Rica and has been working towards developing an improved project design that is expected to improve the economics of the project and decrease the environmental footprint.

One development scenario expects the integration of Agua Rica into the infrastructure of the neighbouring Alumbrera mine. Under this scenario, the Alumbrera mine infrastructure could continue to operate and provide significant benefits to the local communities for upwards of a further 25 years.

Yamana expects to communicate these project updates and this development scenario to the provincial government in the following weeks, while it will also endeavour separately to ensure that the residents of the local community remain supportive of the project.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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