An arbitrator has ruled that Battle Mountain Gold (NYSE) is not required to make the first two US$1-million penalty payments to Crown Resources (TSE) under the companies’ Crown Jewel joint-venture agreement.
That agreement gives Battle Mountain the right to earn a 51% interest in the Crown Jewel gold project in northeastern Washington by bringing the mine into production by July 1, 1993.
Battle Mountain must fund all costs to production, after which time operating profits will be split 51-49 with no capital payback provision. The agreement states that Battle Mountain must pay Crown US$1 million for each quarter that the mine is not in operation after July 1. Permitting delays forced Battle Mountain to declare a condition of force majeure on the project which, in the arbitrator’s opinion, allowed it to miss the two US$1-million quarterly payments.
Louis Lepry, vice-president of corporate development for Crown, said an environmental impact statement is expected in August, which would pave the way for construction to begin in the first quarter of 1995. Production could potentially start in early 1996.
Proven and probable reserves are estimated at 8.7 million tons grading 0.18 oz. gold per ton at a stripping ratio of 11-to-1.
The operation is expected to produce 175,000 oz. of gold per year at an average cost of US$165 per oz.
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