TORONTO (miningweekly.com) – TSX-V-listed explorer Samco Gold has terminated a 2014 participation and option (P&O) agreement with director Dr Ricardo Auriemma after a strategic review of its business, instead opting to enter into an agreement with Yamana Gold for the sale of the company's Corina property, located adjacent to Yamana's Cerro Moro property, in Santa Cruz, Argentina.
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.
In January 2014, 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 had awarded $244-million in damages.
Samco advised on Thursday that total consideration payable by Yamana regarding the purchase of the Corina property was $4-million.
The transaction was expected to close on June 16 subject to Yamana’s due diligence, and Samco would retain a 2% net smelter return royalty on the Corina property.
Under the agreement, both parties also agreed to stay a civil claim and entered mutual covenants not to sue in connection with certain proceedings and threatened proceedings.
Yamana would be entitled to receive a reimbursement of at least $1-million from the termination payments Samco would receive as a result of terminating the P&O agreement. Should the transaction close successfully, the funds would be spent on the Corina property. Should Yamana determine not to acquire the Corina property, the total payment would reduce to $3-million.
Further, upon closing, the British Columbia litigation started by Yamana and its subsidiary, 0805346 BC against, among others, Samco and its subsidiary, 5R, which related to the EDM property, would be discontinued and the parties would sign a mutual covenant not to sue.
Samco advised that, as a result of the expected discontinuance of the BC legal proceedings against the company and 5R, joint venture partner Pan American Silver, through its Argentinean subsidiary, would now be able to move forward with the exploration and development work planned under the option agreement over the EDM property.
The company believed that, as a result of these transactions, it would be in a better position to further develop its business.