The El Morro project located in the center of a huge legal dispute, but New Gold Inc. went ahead and bought it anyway.
Yesterday, the Vancouver-based miner said it closed a transaction to 70% of El Morro, a copper-gold deposit in Chile, buy Xstrata PLC for U.S. $ 463-million. The game then transferred to Goldcorp Inc., which plans to team with New Gold to develop the project.
New Gold and Xstrata went and closed the transaction despite a lawsuit by Barrick Gold Corp., which claims that the rightful owner of the 70% interest in El Morro and has no plans to fight for.
Barrick hit a deal to buy the stake of Xstrata last fall, but New Gold took the ride with the exercise of its right of first refusal to purchase the interest. However, Barrick Gold says that New Chilean law violated by immediate transfer to Goldcorp.
In its statement of claim, Barrick said that an injunction preventing the new Gold and Gold Corp buying interest Xstrata search. However, Xstrata still decided to go and sell, even with the lawsuit hanging over the transaction.
Randall Oliphant, Executive Chairman of New Gold, said he is convinced that fits Barrick will be rejected. “Our position has always been that we absolutely a right of first refusal and we will work on the completion of our transaction,” he said.
As part of the deal with Gold Corp., New Gold received U.S. $ 50 million in cash, and Gold Corp agreed to pay for all costs of development in El Morro.
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