The deal was reached prior to a trial that was set to begin on November 19 in Vancouver, British Columbia.
TNR Gold and its subsidiary, Solitario Argentina S.A., were previously contesting the ownership to the northern half of the Los Azules copper deposit, seeking to have the court recognize a right to back into the project.
This goal was achieved with the settlement, with TNR retaining its back-in right to the property, as well as receiving 1 million shares of McEwen Mining, which was created back in January of this year from the combination of Minera Andes and U.S. Gold.
McEwen Mining is backed by prolific mining investor, Rob McEwen, who has described the Los Azules project as one of the largest undeveloped copper deposits in the world.
TNR will have a back-in right for up to 25 per cent in certain claims comprising the northern portions of Los Azules. The northern half represents around 62 per cent of the known resource at the property, McEwen noted.
Currently, this means that the 25 per cent interest, when taken in the context of the whole property, would be equivalent to around a 15 per cent stake in the total estimated resources at Los Azules.
The settlement resolves all litigation between the two parties, and gives McEwen title to the Escorpio IV claim, which is situated to the west of the deposit. TNR will transfer to McEwen the contested Escorpio IV claim, which is suited for all processing and administrative facilities of any future mine development, McEwen said.
"Removing the uncertainty over the rights to Los Azules will allow the project to now achieve its full potential for the benefit of the shareholders of both TNR Gold and McEwen Mining, and I consider our stake in McEwen Mining as a strategic holding for TNR Gold.”
TNR said its back-in right can be used after a bankable feasibilty study is wrapped up, and after it pays two times the expenses attributable to its percentage on the northern portion.
Once it has earned its right, TNR can choose to continue to participate in the Los Azules development, or be diluted down to a 0.6 per cent net smelter returns royalty on the same northern claims.
"It allows us to accelerate and expand the magnitude of our exploration effort. With this legal obstacle behind us, we are now embarking on the largest drill program in the project's history."
Drilling at Los Azules began last month, with a total of seven drills operating, with McEwen believing that the more powerful drills will increase the likelihood of reaching target depths - where high grade mineralization has been found.
Initial results from the drilling are expected in early 2013, with McEwen planning to drill around 15,000 metres this season.
Los Azules is widely credited as one of the world's largest undeveloped copper deposits with a mineral resource of 10.8 billion pounds of copper in the inferred category, and 4.6 billion pounds of copper in the indicated category. Silver and gold resources have also been estimated.
The property encompasses 50,933 acres and surrounds a large alteration zone that contains the resource, which measures roughly 4 kilometres long by 1.5 kilometres wide.
The settlement between TNR and McEwen has been a long time coming, with the resolution "highly significant" to TNR given the magnitude of the claim.
TNR Gold's prime focus, however, is on its Shotgun property in Alaska, from where it recently released the best drill results ever obtained from the property.
Here, TNR has a 100 per cent ownership and is looking for a large, bulk-tonnage gold deposit, similar to what is being developed at the Donlin gold project by NovaGold (TSE:NG) (AMEX:NG) and Barrick Gold (TSE:ABX) (NYSE: ABX).
The property holds an historic (pre NI 43-101) resource of about 1 million ounces so far, and a significant result of this year's program was that it opened the door for discovering a much larger deposit.
In a follow-up to the announced 2012 drill program results from hole SR12-56, which returned 242 metres averaging 1.25 grams per tonne (g/t) gold, the company unveiled further results from the second hole, returning 209 metres averaging 1.02 g/t gold across the full length of the targeted porphyry system.