Alta Gold, Echo Bay winners of Robinson gold mine litigation

Now that the Robinson gold mine litigation is officially settled, Alta Gold (NASDAQ) and partner Echo Bay Mines (TSE) expect to produce about 115,000 oz. gold at Robinson in 1990.

Kennecott recently granted Alta Gold and two subsidiaries of Echo Bay Mines an option to purchase the Robinson gold mining property near Ely, Nev., for about US$16.5 million.

This announcement follows a summary judgment against Kennecott (handed down by Nevada courts last November). It was determined that Kennecott’s earlier attempts to terminate a lease agreement with Silver King Mines, a predecessor company to Alta Gold, was erroneous. All related litigation between the companies has now been dismissed.

Dan Bushnell, chairman and chief executive officer of Alta Gold, said the company was pleased to have the lawsuit behind it.

“It has been very costly to our companies, created great damage to our shareholders, and should never have occurred in the first place,” he stated.

The Robinson property is being leased by Alta Gold and the Echo Bay subsidiaries (through their Alta Bay joint venture) from Kennecott under a 10-year agreement with Silver King signed in 1985. Alta Gold is the operator and 60% owner of the Alta Bay joint venture with 40% partner, Echo Bay.

The irrevocable option awarded to Alta Gold will expire in mid- December, 1990. If the purchase option is not exercised, the lease will be extended by six years and the present production royalty on heap-leached gold, payable to Kennecott, will be reduced to 8% from a sliding scale of 10-12% of net smelter returns.

The option agreement covers all gold and copper deposits on the 12,000-acre Robinson property, as well as water rights, physical facilities and utilities.

“Now that we have the opportunity to produce both copper and gold from the Robinson district, our profitability will be greatly enhanced,” stated Stuart Havenstrite, Alta Gold’s president and chief operating officer.

The announcement that the Robinson mine litigation was dropped occurred about the same time Alta Gold became the surviving company from a merger of Pacific Silver and Silver King Mines.

According to Bushnell, the assets were consolidated to create a mining company that is now among the top 20 North American gold producers, and one of the top six U.S.-owned gold producers.

Bushnell noted that Alta Gold expects during 1990 to be producing gold at a rate of 150,000 oz. per year in addition to 27.0 million lb. of zinc, 3.0 million lb. of copper, 1.5 million lb. of lead and 300,000 oz. of silver.

“We are significantly more diversified now than a year ago with the added production of base metals from our major zinc-copper-silver- lead mine in Nevada and our copper-silver mine in Idaho,” he stated.