Fresnillo plc

May 09, 2011 08:01 ET

Fresnillo plc Comments on Arbitration Decision

LONDON, UNITED KINGDOM--(Marketwire - May 9, 2011) - Fresnillo plc (LSE:FRES)(BMV:FRES) today announced that an Arbitration Panel formed according to the Arbitration Rules of the International Chamber of Commerce has delivered its decision in respect of claims made by Vancouver-based MAG Silver Corp, Fresnillo's joint venture partner in the advanced exploration stage Juanicipio silver project in Mexico.

The Arbitration Panel rejected MAG's claims that Fresnillo was deficient in the execution pace or performance of drilling at the project. The Arbitration Panel denied both of MAG's principal demands, specifically: (a) that Fresnillo be ordered to pay damages to MAG of up to US$61 million related to MAG's claims that delays by Fresnillo delayed the start of production; and (b) that Fresnillo be ordered to sell or transfer its equity participation in the Minera Juanicipio joint venture to MAG.

The Arbitration Panel upheld certain other MAG claims, including claims related to Fresnillo's announcement in December 2008 that it intended to make an unsolicited bid to acquire MAG. Fresnillo announced its intention based on the opinion of external legal counsel regarding a certain clause in the JV Agreement. The Arbitration Panel, based on a different interpretation of that clause, ordered Fresnillo to reimburse MAG for legal fees of US$1.86 million incurred by MAG in connection with the announcement of Fresnillo's intended offer.

The cost of the arbitration was US$775,000. The Arbitration Panel ruled that each party should pay 50% of the arbitration cost and bear its own legal costs.

Jaime Lomelin, Chief Executive Officer, said, "We are pleased that the Arbitration Panel has dismissed MAG's most serious claims. We continue to believe Fresnillo has acted appropriately and in accordance with the terms of the joint venture agreement."

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About Fresnillo plc

Fresnillo plc is the world's largest primary silver producer and Mexico's second largest gold producer, listed on the London and Mexican Stock Exchanges under the symbol FRES.

Fresnillo has five producing mines, all of them in Mexico - Fresnillo, Ciénega, Herradura, Soledad-Dipolos and Saucito; one development project - Noche Buena; and six advanced exploration prospects - San Ramon, San Julián, Orysivo, Centauro Deep, Las Casas and Juanicipio, as well as a number of other long term exploration prospects and, in total, has mining concessions covering approximately 1.91 million hectares in Mexico.

Fresnillo has a strong and long tradition of mining, a proven track record of mining development and reserves replacement, and a low cost of production, being in the lowest quartile of the cost curve for both silver and gold.

Fresnillo's goal is to maintain the Group's position as the world's largest primary silver company, producing 65 million ounces of silver and over 400,000 ounces of gold by 2018.

Contact Information

  • Fresnillo plc
    London Office
    Arturo Espinola
    Head of Investor Relations
    +44(0)20 7339 2470

    Fresnillo plc
    Mexico City Office
    Gabriela Mayor
    +52 55 52 79 3203

    For European Media:
    Brunswick Group
    Carole Cable, Partner
    David Litterick, Director
    +44(0)20 7404 5959

    For North American Media:
    Longview Communications Inc.
    Alan Bayless
    +1 604 694 6035