A motion to appoint an independent mine manager and freeze operating profits from the Dome Mountain project near Smithers, B.C. was recently dismissed by an Ontario court.
The court has appointed a chartered accountant to monitor Timmins Nickel’s income and expenses related to the project.
Habsburg Resources (VSE) had petitioned the court to replace Timmins Nickel (TSE), the current operator of the property. Habsburg alleges that Timmins has not met the terms of the company’s original agreement.
Timmins is earning a 60% interest in the project by funding all capital and operating costs until the mine is in commercial production. Under the terms of the agreement, Habsburg retains a 20% interest in the project until 325,000 tons of material are processed after which the interest increases to 40%.
At last report, proven and probable reserves at the Dome Mountain mine were estimated at 325,000 tons grading 0.36 oz. gold per ton plus an additional preliminary reserve of 100,000 tons grading 0.52 oz. gold.
Stafford Kelley, president of Habsburg, said the mine has not yet reached the commercial production volume of 250 tons per day for 30 consecutive days as stipulated in the contract.
Kelley did say, however, that he is pleased with the court’s decision in that it gives Habsburg more control of the situation. The court ordered that all revenue generated from the property be deposited into a joint venture bank account at the Royal Bank of Canada in Smithers.
In addition, a court appointee will approve all expenditures on the project and operating profits will be split as to 20% to Habsburg and 80% to Timmins. Kelley said he is proceeding with legal action against Timmins to terminate the property agreement, but noted that the company probably will not be able to book a court date for at least 18 months.
Kelley said there is a slight possibility that the two companies can clear up the dispute through arbitration.
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