Handbags at dawn! Hochschild vs McEwen goes to court

Oh, now this one could run and run....and be fun along the way, too. Funnily enough I was looking at MAI and wondering if it were shortable at its $1+ prices registered, as a couple of e-mail pals will stand witness. I didn't short it in the end, so just a sideline spectator as this stuff unfolds. I can't wait for the Rob Mac E reply PR:

Hochschild files suit against Minera Andes seeking project financing repayment

    -   Despite a $65 million loan disbursement by Hochschild, Minera Andes,
       Inc. and Minera Andes SA have refused to execute formal loan
       agreement documents for three years
   -   Hochschild provided a project finance loan to the co-venture entity,
       Minera Santa Cruz, for the construction of the San José mine in
       Argentina
   -   Minera Andes has caused an undue delay in documentation and repayment
       of this loan by refusing to execute formal loan documents
   -   Legal action has no impact on the running of the San José mine, which
       is operated by Hochschild

LONDON, March 17 /CNW/ - Hochschild Mining plc ("Hochschild") today announces that it has filed suit in the New York State Supreme Court, asking that Minera Andes, Inc. ("MAI") of Alberta, Canada and its subsidiary, Minera Andes SA ("MASA"), be required to execute formal loan agreement documents for the $65 million project financing loan Hochschild provided to the San José gold and silver project in Argentina.

The mine, a co-venture between Hochschild and MAI, has been in operation since June 2007. Under the terms of letter agreements between the parties executed in October 2006, Hochschild alone provided the full amount of the project financing, totalling $65 million in instalments between October 2006 and July 2007.

The complaint alleges that MAI and MASA have unduly delayed the execution of formal loan documents and repayment of the loan by the co-venture entity, 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.

The suit lists five separate causes of action. It seeks a decree by the court requiring MASA and its parent company to execute formal loan agreement documents with Hochschild, consistent with the previous agreements between the two companies. It asks that Minera Andes, Inc. 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 finance loan.

The law suit has no impact on the running of the San José mine, which is operated by Hochschild. The mine initiated operations in 2007 with a plant capacity of 265ktpa, and following a successful expansion in 2008, it doubled plant capacity to 530ktpa. In 2009, the mine produced approximately 5 million ounces of silver and 77 thousand ounces of gold.

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