Continental files counterclaim against BP

The legal battle for control of the Mt. Milligan gold-copper deposit, north of Prince George, B.C., took another turn as Continental Gold (VSE) filed a countersuit against BP Resources Canada.

Several months ago BP filed a writ against joint venture partner Continental alleging it has a right of first refusal to acquire a greater interest in Mt. Milligan. As it stands now, Continental has a 70% interest and BP 30%.

Continental Gold states in its counterclaim that it lost an approximate $15-million line of credit commitment for financing as a result of the writ. It also claims the suit caused a major mining company to suspend discussions involving a proposed offer for all outstanding Continental shares at a substantial premium to market price.

Robert Dickinson, president of Continental Gold, said the counterclaim represents a “sizeable multimillion-dollar damage suit that we expect to win.”

At issue is a porphyry gold- copper deposit that is currently estimated to contain geological reserves of 200,000 million tons grading 0.3% copper and 0.02 oz gold per ton, including a higher-grade core of 45 million tons grading 0.35% copper and 0.027 oz gold. In addition, a second zone called the Southern Star is estimated to contain a mineral inventory of a further 100 million tons at a grade that is yet to be determined.

Dickinson said the company has started permitting and engineering for a proposed mining operation in the 50,000-ton-per-day range.

The initial infill drill program has been completed on the Mt. Milligan deposit, Dickinson noted, and a reserve calculation is under way. In addition, a bulk sample program is approaching completion to confirm the metallurgical characteristics and anticipated gold and copper recoveries.