27th Jan 2010 15:42
MINCO TAKES LEGAL PROCEEDINGS AGAINST SILVEREX TO RECOVER DEBT
Dublin, 27 January, 2010 - Minco Plc (AIM-"MIO") announces that through a wholly owned subsidiary it has initiated legal proceedings in the State of Durango, Mexico against Silverex, S.A. de C.V. to recover certain monies owed to Minco from the sale of Minera Sisa, S.A. de C.V. ("Minera Sisa").
In June 2007, Minco's wholly owned subsidiary Orca Mining (Mexico) Limited ("Orca") sold its 50% interest in Minera Sisa to Silverex, S.A. de C.V. ("Silverex"), a company owned by Minco's former joint venture partners, Sr. Victor Salas Gamero and Ing. Victor Salas Martos ("Salas"), the original owners of Minera Sisa. To document the sale of the 50% interest in Minera Sisa, several agreements were signed between Orca and Silverex pursuant to which Silverex agreed to pay to Orca US$3,100,000, payable in the following manner:
On July 2, 2007 the amount of $400,000
On or before June 30, 2008 the amount of $400,000
On or before December 31, 2009, the amount of $2,200,000. In addition two further payments of $250,000 are due on or before December 31, 2010 and December 31, 2011, respectively or at Orca's election, a net smelter royalty of 0.5% payable to Orca on any production from the Minera Sisa properties.
In the event of non-payment the agreements provided that Orca has the right to reacquire a 50% interest in Minera Sisa for $2,500
The payment of $400,000 due on July 2, 2007 was made on schedule.
Subsequent to the purchase from Orca, in June 2007 Silverex entered into a joint venture with Orex Minerals Inc., a Canadian company listed on the TSX Venture Exchange (TSXV: REX), under which Silverex granted Orex an option to acquire up to a 75% interest in Minera Sisa's Santa Cruz property. Under that joint venture agreement Orex was required to issue shares and make payments to Silverex in installments, including payments of $800,000 due in each of November 2007 and November 2008, and to bring the value of cash payments and shares to a total of $ 4 million by November 30, 2009.
As previously disclosed, the payment of $ 400,000 due to Orca on June 30, 2008 was not made. At that time Minco made demand for payment and entered into discussions with Silverex and Salas in which they proposed a revised payment schedule which Minco rejected. Minco was led to believe that Silverex or Salas would make the outstanding payments to Orca when they received expected payments from Orex. Minco understands that during 2007 and 2008 Orex issued shares and made payments to Silverex of $1,316,000, but did not make a required payment of $350,000 on November 30, 2008 or any of the payments due to Silverex on November 30, 2009. Minco had insisted that all outstanding amounts had to be paid to Orca before December 31, 2009.
The amounts due on December 31, 2009 were not paid by Silverex or Salas. Minco understands that Orex has withdrawn from its agreement and, having reported expenditure of over $3.8 million on the Sisa property (as of October 31, 2009), has handed the property back to Silverex.
Following the default by Silverex Orca has now initiated legal proceedings in Mexico against Silverex seeking to recover the amount due of $2,600,000, plus interest, costs and expenses. Orca will vigorously pursue this legal action, and any other remedies it may have against Silverex and Salas, but at this time Minco is not able to determine the likelihood of success in the Mexican courts, the recoverability of the Sisa property, or the collectability of any judgment or award against Silverex. In its accounts for the year ended December 31, 2008 Minco recorded an impairment charge of $ 1,000,000 against this receivable, which at December 31, 2008 and June 30, 2009 was carried at $1,715,000.
About Minco
Minco PLC is an AIM quoted precious and base metals exploration and development company engaged in zinc exploration on the Pallas Green property in Ireland in a joint venture with Xstrata Zinc and investments in zinc-silver projects in Mexico through its 60% shareholding in Xtierra Inc. listed on the TSX Venture Exchange (Toronto) under the symbol "XAG".
|
For further information, www.minco.ie or contact: |
|
|
John Kearney: Executive Chairman |
+1 416 362 6686 |
|
Terence McKillen: Chief Executive |
+1 416 362 8243 |
|
Danesh Varma: CFO & Company Secretary |
+44 (0) 8452 606 034 |
|
John Frain / Fergal Meegan: (NOMAD) Davy |
+353 (0)1 6796363 |
Related Shares:
Minco PLC