Century wins latest court decision in Shahuindo battle (August 27, 2007)

There was little surprise for Sulliden Exploration (SUE-T, EXSDF-O) in the latest ruling by a Lima court concerning a dispute over the Shahuindo gold-silver property in Peru.

The Commercial Chamber of the Superior Court of Lima ruled in favour of Algamarca, a Peruvian company now owned by Century Mining (CMM-V, CMNZF-O).

The court declared that an arbitral agreement granted in Sulliden’s favour in 2006 was invalid.

The two companies have been fighting over Shahuindo since 2002 when Algamarca, under different management, transferred the property to Sulliden.

In its latest decision, the court said the former president of Algamarca did not have the authority to include a certain provision in the transfer contract.

Sulliden was not surprised at the ruling because the company objected to the makeup of the judicial panel and did not participate in the public hearing held on June 27.

“Sulliden has been uncomfortable with the processes,” said Sulliden president John Kearney in a statement.

The company’s lawyers say the ruling is “wrong in law.” Sulliden has filed an appeal relating to the judicial panel as well as a nullity petition seeking to set aside the hearing.

The latest court decision does not address the actual transfer contract between Algamarca and Sulliden, but the case may still be decided by the courts instead of being dealt with through arbitration.

Sulliden has started legal action in Canada against Algamarca to enforce the contract and for damages of US$200 million. The company has begun a 5,000-metre drill program at Shahuindo, which will last about three months. The company will drill up to 20 holes to test for potential extensions of the San Jose zone.

Sulliden has also completed a geophysical magnetic ground survey over 90 km of new lines north and northwest of San Jose. A soil geochemistry survey was also completed, involving 140 samples from 68 old underground adits and small pits.

In 2003 and 2004, Sulliden drilled nearly 12,000 metres on the property.

Shahuindo has an indicated resource of 38 million tonnes grading 0.95 gram gold per tonne and 22.99 grams silver, or 1.2 million oz. gold and 28 million oz. silver. The inferred resource is 17.2 million tonnes grading 0.62 gram gold per tonne and 12.83 grams silver, or 342,000 oz. gold and 7 million oz. silver.