A settlement has been reached in the dispute over the mining contract at the Castle Mountain open-pit, heap-leach gold mine in California.
Joint-venture partners Viceroy Resources (TSE) and MK Gold (NASDAQ), which own 75% and 25%, respectively, of Castle Mountain, settled their fight out of court. The terms call for MK Gold to retain its mining contract at a reduced rate.
The original dispute stemmed from Viceroy’s contention that MK’s mining contract ended in mid-1996, and that this freed the joint venture to put the contract out for competitive bid.
MK Gold, on the other hand, contended that its mining contract covered the life of the mine.
Under the settlement, the joint venture will buy out the remainder of the mining contract, including the mobile equipment and site facilities, from MK Gold for US$11.9 million.
MK Gold will mine the Oro Belle, Hart Tunnel and Jumbo deposits under a new contract at a cash cost of US74 cents per ton.
The companies have also redefined the area of influence of the 75-25 joint venture. It now includes the entire property claim block of more than 65 square miles, compared with the original agreement, which covered only 4.5 square miles around the known deposits.
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