Globex and Royalstar terminate proposed Tonkin Springs deal

Based on results of a preliminary review, Globex Mining Enterprises (ME) has decided not to pursue plans to acquire Royalstar Resources’ (TSE) controlling interest in Gold Capital (NASDAQ).

Gold Capital is operator and 60% owner of Tonkin Springs, a former gold producer in Eureka Cty., Nev.

Globex withdrew from the agreement after alleging that Royalstar and Gold Capital had misrepresented the project’s reserves.

Royalstar, in turn, alleges that Globex was trying to find a basis to renegotiate the agreement.

Royalstar says its reserve figures were substantiated by a new report by MHP Consulting, which increased the proven and probable estimate for the open-pit project to 956,000 from 418,000 oz. gold.

Globex decided to terminate the agreement after reviewing data from Gold Capital’s office in Denver, as well as from that company’s consultant.

Globex concluded that a significant portion of the minable reserves could be more properly termed a probable resource.

The company now believes the proposed acquisition is not in the best interest of its shareholders. Says Globex President Jack Stoch: “If I were buying a Cadillac, I’d be willing to pay a Cadillac price.”

Since the agreement has been terminated and the right of exclusivity with Globex no longer applies, Royalstar and Gold Capital are negotiating with other parties regarding financing or acquisition of the project.