Vancouver — With a 40% stake in two of the lowest-cost gold mines in the world and the price of the yellow metal soaring, one would assume that shares of Iamgold (IMG-T) would be heading higher. However, a 10-year-old legal battle with Kinbauri Gold (YKB-V) has thrown cold water over the mid-tier producer’s stock price.
The Supreme Court of Canada dismissed Iamgold’s request to appeal an earlier decision of the Ontario Appeal Court, which upheld the trial judgement in favour of Kinbauri on the issue of liability regarding a breach of contract over a proposed amalgamation in 1990.
At the time, a merger would have had shareholders of Kinbauri holding a 2% stake in Iamgold. This deal was subsequently terminated.
In August 1991, Kinbauri filed suit, seeking $3 million in damages. By 1993, the junior had bumped up its claim to $10 million.
The issue of damages, which has not been adjudicated, is now expected to proceed to discovery and trial.
The continued uncertainty appears to be hindering the share price of the producer. As the price of gold surged to an 18-month high of US$293 per oz., shares of Iamgold headed down by 24 to $2.84.
Earlier this month, partners Iamgold and Anglogold (AU-N) officially opened the Yatela gold mine in western Mali.
Yatela is immediately north of the two companies’ Sadiola Hill mine and has reserves of 13.4 million tonnes at a grade of 3.7 grams gold per tonne.
AngloGold expects to produce 136,000 oz. gold in 2001 and 1.4 million oz. gold over the mine’s 66-month life.
Total cash costs (including royalties) in 2001 are expected to be US$185 per oz. They are expected to average US$175 over the mine’s life.
Be the first to comment on "Legal battle hurts Iamgold"