Dispute over Argentina’s Los Azules copper project just got uglier

With the recent announcement that there’s much more copper in the Los Azules copper project in Argentina than initially thought, the stakes in a lawsuit contesting its ownership have become much higher.

Last week, McEwen Mining Inc. doubled resources at Los Azules, announcing that “resource estimate for its 100% owned Los Azules Copper Project in San Juan Province, Argentina… has increased by 109% to 4.6 billion lbs. and the estimated contained copper metal in the Inferred Resource category increased by 4% to 10.8 billion lbs.”

"Los Azules is one of the world's largest undeveloped copper deposits,” Rob McEwen, the company’s Chairman and Chief Owner, said in a news release. “We are looking forward to commencing our most ambitious drill program this November. This deposit appears to have good potential to expand in size.”

This week, however, TNR Gold Corp. and Solitario Exploration & Royalty, sent out their own news release, stating that their lawsuit contesting rights to a substantial portion of Los Azules is proceeding, despite McEwen’s ownership claims. The suit is challenging the title of Minera Andes Inc. (a subsidiary of McEwen) to the mineral properties constituting the northern half of the Los Azules project (or the "Solitario Properties").

The dispute dates back to 2009 and involves an option agreement between Xstrata and Minera Andes, a company that was combined with U.S. Gold to form McEwen Mining in January 2012.

“TNR is seeking return to it of a 100% interest in the Solitario Properties or damages; and, effectively, in the alternative, recognition of TNR's right to back-in to a 25% interest in the properties,” the release states. “A trial in the Courts of British Columbia is set to commence in November, 2012 and last for approximately six weeks.”

The Los Azules Project is located in western San Juan Province within a belt of porphyry copper deposits that straddles the Chilean/Argentine border. This belt contains some of the world’s largest copper deposits, including Codelco’s El Teniente and Andina mines, Anglo American’s Los Bronces mine, Antofagasta PLC’s Los Pelambres mine and Xstrata’s El Pachón project, among others.

Meanwhile, McEwen Mining is continuing a significant expansion-drilling program at Los Azules. The company has signed a contract with Major Drilling to provide four core drills and one reverse-circulation drill for the 2012-13 drill season.

These core rigs are considerably more powerful than the ones used during the 2011-12 season and the Company believes this will increase the likelihood of reaching target depths (+700 meters), where high-grade copper mineralization has been encountered. McEwen Mining anticipates starting the upcoming drill season in November and plans a total of 15,000 meters of drilling.

With the contribution of Suzanne Soto, owner of Si! Corporate Communications, a Greater Toronto Area company providing public relations services in both English and Spanish.