Gold Standard Mercur suit is old-fashioned slugfest

A court case involving Gold Standard Inc. (NASDAQ) and American Barrick Resources (TSE) has turned into a legal slugfest. The dispute involves the Mercur mine in Utah in which Gold Standard presently holds a 15% net profits interest.

In its latest interim report, Gold Standard makes no bones about the fact that it “seeks the return of 100% of the Mercur mine and all of the gold produced by the mine since the beginning of production in 1983 (about 500,000 oz) as well as substantial damages.”

The law suit was filed in 1986 against Texaco Inc., Getty Oil, American Barrick, and various of their subsidiaries for what Gold Standard describes as “breaches of fiduciary duty by Getty Oil Company, which resulted in the improper conversion of Gold Standard’s 25% participating interest in Utah’s Mercur mine into a 15% net profits interest.” The company claims to have spent the past few months “successfully uncovering facts and compiling evidence” for its case.

Gold Standard also says it has obtained depositions from several key executives employed by the defendants including American Barrick President Peter Munk and H. E. Wendt, former president of Getty Mining. “Counsel are presently scheduling other depositions, including Barrick’s former executive vice-president for Corporate Finance, Stephen R. Dattels,” it added.

In addition, Gold Standard is involved in a second law suit against London-based Samuel Montagu & Co., Montagu Mining Finance, both wholly-owned subsidiaries of Midland Bank PLC, and a director of Montagu Mining Finance. The suit alleges that the defendants illegally used confidential information provided to them by Gold Standard for their own benefit, giving the information to American Barrick in return for fees and other financial remuneration.

“Montagu also obtained representation on Barrick’s board and control of a substantial amount of Barrick stock,” argued Gold Standard. Its law suit also charges that the defendants breached their fiduciary duty to Gold Standard and interfered with Gold Standard’s rights.

No trial date has been set for the case against Texaco, Getty and American Barrick but June 19, 1989 is the date for the law suit against Montagu.

Gold Standard President, Scott Smith said in the interim report that his company had a strong capital base of nearly $3 million because of a share placement with FCMI Financial of Toronto.