Dispute holds up Dome Mountain project

The ongoing dispute among the participants in the Dome Mountain project is heating up, and in the process holding up construction of the new gold- silver mine near Smithers, B.C. The project has mineable ore reserves of 319,280 tons at 0.37 oz gold and 2.0 oz silver, and was to be sized at 350 tons per day with production to start in early 1989.

Present operator Teeshin Resources (VSE) announced in early November that although it had received approval-in-principle from the British Columbia government for the start of construction — and had in hand firm pricing on all major components of mill construction and mine development — work wouldn’t begin “until all avenues were exhausted” in its negotiations to acquire a larger interest in the project and to resolve its damage claim against the other parties.

Earlier this year, Teeshin began legal proceedings against Canadian- United Minerals (VSE), Total Energold Corp. (TSE) and several other companies originally involved in the project. Central to the dispute is Teeshin’s claim that Canadian- United released data to the other companies in breach of confidentiality provisions in the Teeshin/Canadian-United option agreement. As a result, Teeshin said it lost the opportunity to obtain certain financing and the 50% back-in right originally held by Noranda Exploration (TSE), which was sold to Total Energold (then Total Erickson Resources).

According to Canadian-United, however, the right of Teeshin to earn an interest in the project has expired due to termination of its option agreement with Canadian- United, and the underlying option agreement between Canadian- United and Total Energold. Canadian United said both agreements were terminated “as a result of Teeshin’s failure to fulfil work requirements needed to preserve the options.” Continuance of the options was conditional upon (among other requirements) Teeshin making $5 million of exploration expenditures on specific claims by Oct 31, “which was not done,” the company maintains.

Michael Callahan, president of Canadian-United, adds that as a result, “Teeshin Resources is removed from the project and future exploration and development on the Dome Mountain property will be shared by Canadian- United and Total Energold.”

Although it’s safe to say Teeshin will have something to say about all this in the courts, Canadian- United explains that under an agreement made earlier with Total Energold (for jointly pursuing the exploration and development of the project in the event of termination of the 1985 option agreements), it will have a 29.5% interest in Dome Mountain while Total Energold will have 70.5% and be project manager. A program of exploration and development work will be planned by the management committee established by these agreements, Callahan said.