AuRico Gold has begun to reap the benefits of its own radical steps. Starting out the year with six mines, today the company has two. From forecasts just a year ago for production of 730,000 ounces of gold a year by 2013, the company is now looking at potential output of 240,000 ounces from one mine in northern Ontario and another in northern Mexico.Getty Images/iStockphoto
Editor's note: This article has been updated
After an unusual clash of press releases in the last week, the proposed partnership between gold miner Kinross Gold Corp. and Southridge Enterprises Inc. seems to be off the table.
But the junior gold explorer maintains that it has signed agreements in hand, and it has shared a theory on why Kinross would state that no partnership or investment was ever agreed upon between the two businesses.
The back-and-forth began on Boxing Day, when Dallas-based, Mexico-focused Southridge issued a press release naming Kinross as the new joint partner for its Cinco Minas and Gran Cabrera properties in Jalisco, Mexico. It attributed a value of between $550 and $600-million (U.S.) to the agreement, which it said it was finalizing documents for. Company shares soared.
But one day later, after a Bloomberg story said the claims were untrue, Kinross weighed in with its own press release denying any partnership or investment had been made. The company said it didn't anticipate any such deal would be struck in the foreseeable future. According to the miner, the statements were, "to the best of Kinross' knowledge, without any basis in fact." Quotes attributed to Kinross exploration manager Martin Moscosa were incorrectly attributed, the company said. Southridge shares plummeted from $0.0148 to $0.0057 –a price lower than before they filed their press release.
Following the stock price yo-yo, the Securities and Exchange Commission stepped in to halt trading of Southridge's shares on Dec. 27. The regulator needed time to assess company operations and "certain claims regarding a joint partnership and an arrangement to obtain funding and to change the listing venue for Southridge stock," the SEC said. Trading was still suspended on Dec. 31.
After consulting with their legal department, Southridge responded to Kinross' comments in an e-mailed statement. "What we can say is that Southridge Enterprises does have two signed agreements from Mr. Martin Moscosa, and we have e-mails to confirming his direct quotation."
Southridge commented that it was not clear on why the county's third-largest gold miner would issue a statement denying any agreement to a joint partnership but speculated that " it would be our best guess that they do not want the company's exploration strategy within Mexico to be publicly revealed."
But according to Kinross, communications or documents indicating an actual agreement do not exist. "We will confirm once again that we are aware of no communications which establish any partnership or joint venture between Southridge and Kinross," a company spokesperson said in an e-mail on Monday.
So where does this leave Southridge? The properties in question are two of the three sites the company is involved in through its subsidiary Southridge Minerals Inc., according to the company's website. The company may again be considering selling the properties – a move it hoped to avoid by partnering with Kinross.
"While we are disappointed that the relationship with Kinross is no longer a viable option, we have interest from numerous other suitors regarding our Jalisco properties, and we will continue to pursue those potential partners," said Southridge.