Tesoro Gold has successfully dismissed initial legal claims from joint venture partner Wanaco SpA and increased its ownership in the El Zorro Gold Project to over 90%, reinforcing its strategic position in Chile.
- Initial legal proceedings by Wanaco SpA dismissed by Chilean court
- Court found Wanaco's claims regarding 2021 capital increase without merit
- Tesoro Mining Chile awarded legal costs
- Tesoro increased ownership in El Zorro Gold Project to 95.4% via capital contribution
- Tesoro Gold Ltd's effective ownership in El Zorro rises to approximately 90.6%
Legal Victory Strengthens Tesoro's Position
Tesoro Gold Limited has achieved a significant legal milestone with the dismissal of initial proceedings brought by its joint venture partner Wanaco SpA. The First Instance Court in Santiago, Chile, ruled against Wanaco's claims related to the valuation and process of a capital increase approved in early 2021 for the El Zorro Gold Project. This outcome not only reinforces Tesoro's governance standards but also removes a notable legal overhang that had clouded investor sentiment.
Background of the Dispute
The dispute originated from allegations by Wanaco that Tesoro's Chilean subsidiary, Tesoro Mining Chile SpA, breached Chilean Mining Code, Corporations Law, and Civil Code during a capital increase at El Zorro SCM. Wanaco contended that the valuation and procedural steps were flawed. However, the 7th Civil Court de Santiago de Chile found these claims to be without merit and awarded costs to Tesoro Mining Chile, signaling judicial confidence in Tesoro's compliance and corporate governance.
Ownership Consolidation at El Zorro
In a parallel development, Tesoro Mining Chile SpA has increased its stake in the El Zorro Gold Project to 95.4% through a capital injection of approximately CLP5.2 billion (around US$5.4 million). This move, aimed at covering capitalised project expenditures, has effectively raised Tesoro Gold Ltd’s overall ownership in El Zorro to about 90.6%. This consolidation enhances Tesoro’s control over one of Chile’s promising gold assets, potentially positioning the company for greater operational and strategic flexibility.
Remaining Legal Challenges and Outlook
While this initial legal hurdle has been cleared, other ancillary proceedings initiated by Wanaco remain active in the courts. Wanaco also retains the right to appeal or seek annulment under Chilean procedural law, meaning some legal uncertainty persists. Tesoro has affirmed its commitment to defending its position vigorously. Investors will be watching closely to see how these remaining legal matters unfold and what impact they may have on project timelines and valuations.
Strategic Implications
With the legal cloud partially lifted and ownership stakes consolidated, Tesoro Gold is better positioned to advance development at El Zorro. The project sits in Chile’s Coastal Cordillera, a region known for world-class mineral deposits and robust mining infrastructure. Tesoro’s strengthened foothold could accelerate exploration and development activities, potentially unlocking significant value for shareholders. However, the company must navigate ongoing legal risks and maintain operational momentum to fully capitalise on this opportunity.
Bottom Line?
Tesoro’s legal win and ownership boost mark a turning point, but lingering court battles keep the stakes high.
Questions in the middle?
- How will the remaining legal proceedings and potential appeals impact Tesoro’s project timelines?
- What are the financial implications of the increased ownership stake on Tesoro’s balance sheet and future funding needs?
- Could Tesoro’s strengthened control over El Zorro accelerate exploration and development milestones?