Asarco requests court approval of settlement to avoid litigation related to mining at Mission Mine, Ariz.

By Jennifer Lanning Drey

Portland, Ore., March 17 - Asarco LLC requested court approval of a settlement that the company said would allow it to avoid litigation over claims related to its mining activities at the Mission Mine site in Pima County, Ariz., according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The agreement is between Asarco and the Tohono O'Odham Nation, the San Xavier District, the San Xavier Allottees Association and the United States of America. The claimants alleged that the company is liable for delinquent lease payment and reclamation obligations at Mission Mine.

The Mission Mine claims are scheduled to be estimated beginning on May 28. The total face amount of the non-duplicative portion of the Mission Mine claim is $661 million.

Under the settlement, Asarco will deposit $33 million into an escrow account for the purpose of funding the implementation of the mine reclamation component of an agreed mining and reclamation plan.

The United States will be allowed a $225,000 unsecured claim for pre-bankruptcy royalties related to the Tract I Mining lease on the site.

Additionally, within 10 days of the effective date of Asarco's plan of reorganization, the company will pay the United States $172,755 in cash for pre-bankruptcy royalties and penalties allegedly related to the Tract II Mining lease.

All parties will release Asarco from any pre-bankruptcy claims related to operations and physical disturbance at the Mission Mine Complex, all claims related to the Tract I Mining lease and all mining plan and reclamation obligations that "might, under the law or contracts, burden Asarco as a result of Asarco's past, present and future operations and physical disturbance resulting from those operations within the operational footprint on the leases."

Asarco will release the parties from any claims related to operations and physical disturbance resulting from its operations on Tract II and Tract III through the petition date and Tract I through the effective date.

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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