McFinley Red Lake Gold Mines (TSE) and contractor Dominion Bridge have agreed to shelve litigation over a Red Lake, Ont., gold project while they look for a joint venture partner willing to develop the property.
While Dominion Bridge is entitled to seize on McFinley’s Bateman Twp. claims because the junior hasn’t paid for construction of a $2.3-million mill, the two sides are co-operating for the time being.
Last December, Dominion Bridge agreed to give McFinley until Sept. 30 to find a partner and pay the construction firm $1.8 million plus interest accruing from the date the agreement was signed.
But the current market climate and low gold prices have prevented McFinley from finding a partner, says McFinley President Bill Cummins. He says part of the problem was that interested parties weren’t willing to meet the specific terms of the McFinley-Dominion deal.
But because of market conditions, Cummins says, Dominion Bridge has decided to be more flexible in a bid to get the best deal possible.
However, while co-operating with McFinley, Dominion Bridge also reserves its right to take independent action at any time in pursuit of its remedies as a judgment creditor, he says.
As the 100-ton-per-day facility at Bateman Twp. had an over-rotating ball mill when construction was completed in 1988, McFinley was never able to take a 15,000-bulk sample needed to determine the project’s economic viability. As a result, the head grade of Bateman Twp. ore still remains a mystery even though preliminary reserves stand at 890,000 tons of grade 0.21 oz. gold per ton. Those reserves are contained within the same geological formation that hosts the nearby Campbell and Dickenson gold mines.
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