Rather than face a lengthy court battle, Chelsea has settled out of court with Australia-based G & B Exploration Pty. which in 1987 agreed to participate in a private placement of Chelsea shares.
The private placement of 900,000 Chelsea shares, at $3 per share fell through. Under the terms of the settlement, Chelsea has agreed to pay G & B $336,511 by issuing 350,000 shares.
However Chelsea has the option to buy back 130,000 of those shares on or before August 26 at $1 per share plus an additional 150,000 shares on or before Feb 27, 1990 at the same price.
The Chelsea board has agreed to pay off $97,500 resulting from legal and accounting costs by issuing shares for debt.
However, no sooner had Chelsea settled the G & B law suit than it was faced with another one.
Beardmore Resources (VSE) of North Bay, Ont. is claiming damages for breach of contract after Chelsea elected not to pursue an alleged joint venture on the Gold Hill project in Montana.
The Gold Hill property is adjacent to the Chelsea’s Spotted Horse gold mine which has experienced some severe problems (including operating costs per ounce of $943(US) per oz) last year.
Chairman Fernando Nuflo-Moya expects to have cut those costs to around $370 per oz when first quarter results are announced. He also plans to increase gold production this year to 16,000 oz from 4,234 oz in 1988.
Under the alleged agreement, Beardmore says it was scheduled to earn a 50% interest in Gold Hill by spending $1.25 million.
Nuflo-Moya has denied that he ever entered into any agreement with Beardmore.
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