Asara Sells 25% Stake in Loreto Project, Ending Legal Battle

Background to the Dispute

Asara Resources Limited (ASX: AS1) has successfully concluded a legal dispute with its incorporated joint venture partner, Costa Rica Dos SpA, concerning the Loreto Copper Project in northern Chile. The litigation, initiated in late 2023, arose from disagreements linked to project ownership and joint venture arrangements involving Asara and Teck Resources Chile Limitada.

Settlement Terms and Structure

The resolution was reached through an out-of-court settlement that avoids any admission of liability by either party. Central to the agreement is the creation of a new holding company, Compañía Minera Loreto SpA, which will hold the Loreto Project assets. Asara will transfer the project to this entity at book value and sell a 25.26% stake to Costa Rica Dos for approximately A$87,000. Notably, payment will be made through future profits generated under the existing option and joint venture agreement with Teck Chile, which holds rights to acquire up to 75% of the project.

Implications for Project Operations

This settlement provides a clear and stable ownership framework, enabling Asara and Costa Rica Dos to move forward collaboratively. The parties will enter into a shareholders’ agreement mirroring previous arrangements, ensuring continuity in governance. Additionally, the settlement includes mutual waivers of claims and the withdrawal of the civil lawsuit, effectively closing the dispute under Chilean law.

Strategic Focus and Future Outlook

While the Loreto Project’s path is now clarified, Asara continues to maintain its Paguanta Copper and Silver-Lead-Zinc Project on care and maintenance, actively seeking divestment opportunities. This aligns with the company’s strategic pivot towards its flagship Kada Gold Project in Guinea, which boasts a substantial indicated and inferred gold resource. The resolution of the Loreto dispute removes a significant overhang, potentially allowing Asara to concentrate resources and investor attention on its gold assets in West Africa.

Market and Investor Considerations

Although the settlement involves a relatively modest immediate cash consideration, the structure tying Costa Rica Dos’s payment to future profits introduces some uncertainty regarding timing and cash flow impact. Investors will be watching closely how the joint venture with Teck Chile develops and how Asara manages its portfolio divestments and capital allocation moving forward.