Annual Report 2007 - Antofagasta plc

Notes to the Financial Statements continued37 Related Party Transactions continuedf) Acquisition of Equatorial Mining LimitedDuring 2006 the Group acquired Equatorial Mining Limited, a company listed on the Australian Stock Exchangein which AMP held an interest of approximately 97%. Equatorial’s principal asset was a 39% interest in MineraEl Tesoro, in which the Group held the remaining 61% and which it accounted for as a subsidiary. AMP was arelated party of the Group for the purposes of the Listing Rules of the United Kingdom Listing Authority as itheld an indirect substantial interest in Minera El Tesoro. The total consideration for the acquisition of Equatorialamounted to US$406.1 million. Further details of the acquisition are given in Note 30(b), and in the 2006 AnnualReport and Financial Statements.g) Ingeniera y Servicios Computacionales Geovectra S.A.In 2007, the Group paid fees of approximately US$66,000 (2006 – US$78,000) for geological and technologyservices to Ingeniera y Servicios Computacionales Geovectra S.A. (“Geovectra”), a company controlled byMr. J W Ambrus. Mr. Ambrus was a Director of the Company in both 2006 and 2007. These services wereon normal arm’s length commerical terms for services performed by employees of Geovectra.h) Directors and other key management personnelInformation relating to Directors’ remuneration and interests are given in the Remuneration Report pages 72 to75. Information relating to the remuneration of key management personnel including the Directors is given inNote 7(c).38 Contingent Assets and Contingent LiabilitiesThere are a number of claims currently outstanding to which Antofagasta plc or its subsidiaries (“the Group”)is a party, for which no provision has been made in the financial statements and are currently not expected toresult in any material loss to the Group. Details of the principal claims are set out below:a) Los Pelambres – Mauro tailings dam(i) In November 2006, the Court of Appeals of Santiago upheld a challenge by claimants in the Pupio Valleyagainst the Chilean Water Authority (Direccion General de Aguas) in relation to the award of one of the sectoralpermits issued during 2005 for the construction of the Mauro tailings dam by Los Pelambres. The Court of Appealshas rejected four requests by the claimants that work on the dam should be suspended. This has enabledLos Pelambres to continue construction pending a final resolution by the Chilean Supreme Court, whereLos Pelambres has sought to reverse the November decision as an affected party together with the DireccionGeneral de Aguas. The Group believes that Los Pelambres has received all the necessary technical and legalpermits and that these have been properly applied for and granted entirely in accordance with the applicableregulations. It is confident that this view will be upheld by the Chilean Supreme Court.FINANCIAL STATEMENTS(ii) On 19 April 2007 a first instance court in Santiago upheld a claim relating to a purchase agreement enteredinto in 1992 between two former owners of land in the area of the Mauro tailings dam, in which the validity ofthat purchase agreement was challenged by the plaintiff seller. Los Pelambres, which acquired the land in 2001,participated in this trial to protect its interest and has appealed against this decision to the Court of Appealsof Santiago. The appeal has the effect of suspending the effect of the first instance resolution. The Group isconfident that Los Pelambres’ legal title to the land in question will be upheld on appeal. On 18 May 2007 theCourt rejected a second petition by the plaintiff in that case that works on the Mauro tailings dam should ceaseimmediately, confirming Los Pelambres’ right to complete its construction. The court nevertheless has held thatoperation of the dam by depositing tailings cannot for the moment commence.(iii) On 24 August 2007, a first instance court in Los Vilos notified Los Pelambres of a new claim made by thesame individuals involved in other litigation against the Mauro tailings dam. The claim was filed earlier the same132Antofagasta plc Annual Report and Financial Statements 2007