Minera Andes gets Los Azules back-in notice from TNR

2010-04-26 17:37 ET - News Release

Mr. Nils Engelstad reports

MINERA ANDES REJECTS TNR GOLD CORP.'S CLAIM OF A BACK-IN RIGHT TO THE LOS AZULES COPPER PROJECT

Minera Andes Inc. has received a notice from Solitario Argentina SA, a wholly owned subsidiary of TNR Gold Corp., purporting to back into a portion of Minera Andes's Los Azules copper project by waiving the requirement that Minera Andes have completed a feasibility study.

As the company mentioned in its April 1, 2010, news release in Stockwatch, Minera Andes rejects the ability of TNR to back into any part of the Los Azules copper project. As also previously announced, Minera Andes has filed a statement of claim against TNR in the Supreme Court of British Columbia in respect of the same.

The executed agreement in question (as further described below) contains the following clause: "If, within 36 months of exercising the option, Xstrata completed a feasibility study on any part of the property, Xstrata must notify Solitario, and Solitario will have the right to elect to buy back up to a maximum of 25 per cent equity in the property at any time within 120 days of receiving the said notification by giving written notice to Xstrata of the exercise of the back-in right."

The obligations of Xstrata under the contract in question were assigned to Minera Andes in the fall of 2009 -- see background to the TNR dispute below.

TNR also claims in its separate suit brought against Xstrata that its back-in right is not subject to the 36-month timeline that appears in the executed agreement. TNR claims the 36-month limit was never the commercial intention of the parties. In particular, TNR claims the 36-month requirement was added by Xstrata, overlooked by TNR (and their lawyers), and not discovered for a number of years -- all the while Xstrata made payments on their option. In this respect TNR brought a claim in the Supreme Court of British Columbia in October of 2008.

Minera Andes encourages you to read the full background to the TNR dispute below. The company believes the facts of this case will speak for themselves.

Background to the TNR dispute

The project was, until the fall of 2009, subject to an option agreement between Xstrata Copper and Minera Andes. In the fall of 2009, Xstrata elected not to exercise its option to back into the project and subsequently transferred all properties then held by Xstrata (and forming part of the project) to Minera Andes. Minera Andes now owns 100 per cent of the project. Certain portions of the project that were formerly held by Xstrata and transferred to Minera Andes following the termination of the option agreement remain subject to an underlying option agreement between Xstrata and TNR. The TNR agreement provides that TNR has the right to back into up to 25 per cent of the subject properties, exercisable by TNR upon the satisfaction of certain conditions within 36 months of Xstrata exercising its option, including the completion of a feasibility study. The 36-month period following the exercise of the option expired on April 23, 2010, and no feasibility study has been completed on the project. The subject properties comprise the northern half of the Los Azules copper project, and does not represent 25 per cent of the Los Azules deposit by area or resources identified.

The TNR agreement is the subject of two legal disputes:

1. A dispute between TNR and Xstrata, commenced by TNR against Xstrata in the Supreme Court of British Columbia in October, 2008. The dispute surrounds the validity of the 36-month time limit in which to complete a feasibility study, which TNR claims was never the commercial intention of the parties. In particular, TNR claims the 36-month requirement was added by Xstrata, overlooked by TNR (and their lawyers) and not discovered for a number of years -- all the while Xstrata made payments on their option. In this respect TNR brought a claim in the Supreme Court of British Columbia in October of 2008.
2. A dispute between Minera Andes and TNR, commenced by Minera Andes against TNR in the Supreme Court of British Columbia on April 1, 2010. Minera Andes is seeking a declaration that any back-in notice delivered by TNR prior to or on April 23, 2010, will be null, void and of no force and effect on account that a feasibility study must be completed on the project prior to TNR being entitled to exercise its back-in right. A feasibility study has never been completed on the project. Further, Minera Andes disputes the legal ability of TNR to waive this condition. Minera Andes received TNR's statement of defence on April 23, 2010.

As an additional point of clarification, Minera Andes wishes to confirm that, notwithstanding references by TNR to its Los Azules project, the project remains 100 per cent owned by Minera Andes and Minera Andes has no agreement or working relationship with TNR.