Hochschild Sues Minera Andes Over Loan

Hochschild Mining has filed suit in the New York State Supreme Court, asking that Minera Andes be required to execute formal loan agreement documents for a $65m project loan. Hochschild provided the facility to the San Jose gold and silver project in Argentina, a joint-venture between Hochschild (51%) and Minera Andes (49%). The complaint alleges that Minera Andes Inc (MAI) and Minera Andes SA (MASA) unduly delayed execution of formal loan documents and repayment of the loan by the JV, known as Minera Santa Cruz. “Hochschild has made repeated attempts to finalize the formal loan agreement documents, but the suit alleges that MAI and MASA have made demands never contemplated by the original letter agreements,” says Hochschild. Under the terms of agreements signed in October 2006, Hochschild alone provided the full amount of the project financing, totaling $65m in installments between October 2006 and July 2007. The suit asks that MAI and MASA be enjoined from further interference in the repayment of the project finance loan, asks the court to order payment to Hochschild of benefits derived by MAI and MASA as a result of the loan, and requests an order declaring that other shareholder loans are subordinate to the project facility. “Despite claims by Hochschild, Minera Andes has and continues to be willing to execute definitive loan documentation with Hochschild that reflects the commercial agreement of the parties as set out in a letter agreement dated October 10, 2006,” says Minera Andes in a statement. “We look forward to reaching a resolution in respect of these project finance loan documents,” adds Rob McEwen, chairman, president and CEO of Minera Andes. Minera Andes says it is reviewing in detail the claim by Hochschild with its legal advisors and will respond accordingly.