LIMA, Peru, Feb. 07, 2022 (GLOBE NEWSWIRE) -- Proyectos La Patagonia S.A.C. (“Patagonia”) offers the following comments on the status of its September 17, 2014, mining assignment agreement with PPX Mining Corp. (“PPX”), as amended (the "Agreement"), and the conduct of PPX in relation to the Agreement.
Pursuant to the Agreement, PPX, through its Peruvian subsidiary, Sienna Minerals S.A.C., granted to Patagonia rights under Peruvian law to the Igor 4 mining concession, site of the Callanquitas resource, until June 7, 2024.
During the term of the Agreement, only Patagonia is authorized to mine, extract and to commercialize minerals from the concession. Patagonia also controls mining operations at the Callanquitas Mine, which was built and developed by Patagonia within the area of the Igor 4 mining concession.
During the term of the Agreement, Patagonia and PPX agreed to share the net profits from the mine operations on the Igor 4 concession. Patagonia has, to this point, made all profit payments due to PPX under the Agreement. As of May 2022, Patagonia will have paid over US$5.5 million to PPX through PPX's subsidiary, Sienna Minerals S.A.C.
Pursuant to the Agreement, PPX agreed to construct a cyanidation plant, with a capacity of 150 metric tons per day, that could be used to process the gold ore extracted from the concession. Notwithstanding repeated demands, PPX has breached its obligations under the Agreement by failing to construct the plant.
Construction of the processing plant went to the core of PPX's obligation to Patagonia under the Agreement, as it would allow ore to be processed within the area of the concession. Instead, it has been necessary to transport ore to third party processing facilities, and to pay for third party ore processing, significantly reducing returns to both Patagonia and PPX from the concession.
As a result of PPX's breaches, Patagonia asked the Peruvian judiciary to grant an injunction over the Igor 4 mining concession, to protect Patagonia's right to claim the losses generated by PPX’s failure to comply with the Agreement.
On May 26, 2021, the 16th Civil Superior Court of Lima ordered the Public Registry to record a Precautionary Measure, in the form of a seizure over the Igor 4 mining concession in favor of Patagonia. The lien has been dully recorded with the Peruvian Public Registry on November 17, 2021.
On January 25, 2022, Patagonia filed a claim against Sienna Minerals in Peru, seeking to be indemnified for the losses generated by PPX’s failure to comply with the Agreement. Patagonia is also considering further steps, including self-help remedies, in relation to net profit payments otherwise due to PPX under the Agreement.
About Patagonia:
PROYECTOS LA PATAGONIA S.A.C. Patagonia is a gold bearing material producer currently operating the “Callanquitas Mine”, located in the region of La Libertad in northern Peru; while it also carries out exploration activities in nearby locations. The Company produced over 170,000 tons of gold bearing material in 2021. The Callanquitas Mine was developed and built by Patagonia upon the execution, in 2014, of a Mining Assignment Agreement with Sienna Minerals S.A.C., the Peruvian subsidiary of PPX, which agreement remains in force and good standing until 2024.
Patagonia, now in its sixth year of commercial production, is a Small-Scale Mining Company, led by an experienced management group that has brought in the best mining operating and technical team for this size of underground mine.
Peru is the largest Latin-American gold producer and the world’s sixth-largest producer of gold.
For additional information, please contact:
Luciana Rodriguez, CFO, Patagonia
+51 996 406 230
lrodriguez@plp.pe
