A group of investors that won a 24% stake in the Kassandra property in northern Greece in a 1998 suit for breach of fiduciary duty now finds itself caught between the defendant,
The Alpha Group has been named in a suit brought in the Superior Court of Ontario and the English High Court of Justice by 1235866 Ontario Inc., the successor to bankrupt Curragh Resources, and two associated companies. The company alleges a breach of fiduciary duty by two of the Alpha investors, who once worked for Curragh.
The Alpha Group, made up of businessmen Hendrik Visagie, David Lean and James Stephenson, successfully sued to have the terms of an earlier agreement reinstated. The Ontario Court’s judgment gave the group a 12% carried interest and an option to take up a 12% working interest in the Kassandra property.
Kassandra, a complex of mines in the Khalkidiki area of northeastern Greece, had been seized for debt by the National Bank of Greece in the 1980s.
Curragh, began negotiations with the bank in 1991 but went into bankruptcy in 1993 following a fatal explosion and fire at its Westray mine in Nova Scotia.
The Alpha Group approached the bank to take up where Curragh left off, and concluded an agreement with TVX in 1993 that enabled TVX to earn the Alpha Group’s rights to negotiate with the bank. The group retained the 12% carried interest and 12% back-in right.
TVX subsequently dropped the option when the Greek government mandated a tender process to sell the mine. TVX won that process with a bid of US$47 million in 1995, and has since brought the two main Kassandra projects — the Olympias polymetallic deposit and the Skouries gold-copper deposit — to the feasibility stage.
The new suit lodged by Curragh’s successor company seeks precisely the same relief Alpha had sought earlier: the court’s
declaration that the property owners hold their interests in a constructive trust for the plaintiff. It names the Alpha Group, three
associated private companies (H.M. Visagie Consulting, Cinnabar Limited and Endeavour Financial) and TVX as defendents. The claim is based on duties the plaintiff says were owed to Curragh by Lean and Visagie, who worked for Curragh when it was trying to pick up Kassandra between 1991 and 1993.
TVX and the Curragh companies have already made peace. An agreement reached at the end of July between TVX and 1235866 Ontario provides that the plaintiff company will seek only Alpha’s carried interest and right in its suit.
TVX, which, during the trial, had maintained that the information it received from the Alpha Group was either public or belonged to Curragh is appealing the decision in the Ontario Court of Appeal, and the Alpha partners are cross-appealing. In the event TVX wins its appeal, the agreement between TVX and 1235866 Ontario gives Alpha’s stake to the Curragh companies.
TVX’s Greek unit, TVX Hellas, has meanwhile received a site pre-approval permit from the Greek environment ministry for work at Olympias. The company expects to have a complete environmental impact study ready for the government in the third quarter of 1999, and a revised bankable feasibility study around the same time.
Olympias has a reserve of 9.1 million tonnes that grades 4.6% lead, 5.8% zinc, 8.7 grams gold and 138 grams silver per tonne. There is also a stockpile of 300,000 tonnes grading 22.9 grams gold and 24 grams silver, and a total of 2.4 million tonnes of tailings grading 3.4 grams gold and 14 grams silver. The tailings are expected to be reprocessed.
TVX reported revenues of US$46.5 million and net earnings of US$6 million for the three months ended June 30. For the first six months of 1999, TVX showed a profit of US$16.3 million on revenue of US$87.6 million and produced 140,800 oz. gold and 7.2 million oz. silver.
In 1998, TVX showed a second-quarter profit of US$2.4 million on revenue of US$40 million, and a first-half profit of US$3 million on revenue of US$77.2 million. By the middle of last year, the company had produced 182,700 oz.
gold and 1.9 million oz. silver.
This quarter’s US$6-million profit includes US$4.2 million gained on the disposal of minority interests in other projects, part
of the deal between TVX and
The TVX-Normandy alliance has also dealt an option to earn a half-interest in the Santa Barbara gold property in Ecuador to
TVX, which remains operator of the project, and Normandy will receive warrants to buy up to 3 million Valerie shares during the course of the agreement, with voting rights retained by the Valerie board. The initial work commitment is for US$500,000 within nine months after regulatory authorities approve the share issue.
Santa Barbara, about 425 km south of Quito, is a 24-sq.-km property with three principal prospects: Santa Barbara, a copper-gold showing; El Hito, a copper geochemical target; and Napintza, an area with gold and zinc values in stream sediments.
At Santa Barbara, TVX has defined an anomaly measuring 1.2 by 1.5 km, where soils have gold concentrations in excess of 0.3 gram per tonne. A bulldozing program showed an average gold grade of 0.85 grams per tonne, as well as an average copper grade of 0.25%, over the whole length of a 650-metre trench.
El Hito is another geochemical anomaly, where initial surface trenching shows grades of “up to 0.92% copper,” and Napintza is an area of about 1.5 sq. km where reconnaissance soil samples have confirmed indications of gold and zinc found in stream sediments.
An induced-polarization survey is under way, and drilling is expected to begin once the deal is approved by regulators.
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