Homestake to appeal Troilus judgment

Barrick Gold (ABX-T) will appeal an $88-million judgment against subsidiary Homestake Mining over the cancelled purchase of the Troilus gold mine in northern Quebec.

The judgment, handed down last month by the British Columbia Supreme Court, found that Homestake in breach of contract when it refused to close its purchase of the mine from Inmet Mining (IMN-T). The judge awarded the sum in lieu of ordering Homestake to complete the sale.

Homestake had argued in court that the data base Inmet had provided was inadequate to assess the resource at the gold deposit. The court found that Homestake had not relied on missing or inadequate information when it offered to buy the mine.

The case will be heard by the British Columbia Court of Appeal. No date has been set for the appeal hearing.

In another development affecting Inmet, BHP Billiton (BHP-N) has closed the transfer of its 52% interest in the Ok Tedi copper mine in Papua New Guinea to a new company, PNG Sustainable Development Program Ltd., allowing the Australian major to exit the project.

Ok Tedi Mines, the operating company, will now be owned 52% by PNG Sustainable, 18% by Inmet, and 30% by the Papua New Guinean government. The new ownership structure was arranged in tandem with new environmental-protection and mine closure agreements for Ok Tedi, which has faced problems with tailings disposal in the Ok Tedi and Fly Rivers. Under the new closure plan, dredging of the rivers, previously done on a test basis, will become a permanent measure for the life of the mine. A US$150-million reclamation fund is to be built up over the remaining mine life.