Pipeline dispute not included in gold Fields-Santa Fe deal

A legal dispute between Gold Fields Mining and Placer Dome (TSE) relating to about 40% of the Pipeline gold deposit in Nevada will not be part of an asset exchange between Gold Fields and Santa Fe Pacific Minerals.

Gold Fields is a division of England-based Hanson (NYSE), which earlier this year announced it would exchange Gold Fields’ gold assets for the coal and quarry assets of the Santa Fe companies. The exchange is intended to allow Santa Fe Pacific Minerals and Hanson to focus on their respective core mineral businesses.

Gold Fields operates the Chimney Creek gold mine in Nevada, the Mesquite gold mine in California, and holds rights to a number of sites currently under exploration. Mesquite produced 199,000 oz. gold and Chimney Creek produced 245,000 oz. gold in Hanson’s fiscal 1992, ended Sept. 30.

Santa Fe expects that the joint operation of Chimney Creek with its adjoining Rabbit Creek mine will produce operating efficiencies and increase annual gold production and recoverable reserves. Last year, Santa Fe produced 295,000 oz. gold from its Rabbit Creek and Lone Tree mines, both in north-central Nevada.

Once the asset exchange is completed, Santa Fe Pacific Minerals would become one of the top six North American gold producers with an estimated annual gold production (combined) of more than 750,000 oz. gold and reserves estimated to be more than 11 million oz. gold. Some analysts speculate the transaction may even lead to Santa Fe Pacific Minerals becoming a publicly traded company, spun off from parent Santa Fe Pacific Corp. (NYSE). Santa Fe Pacific Minerals is already one of the largest private mineral landholders in the western U.S., with some 7.2 million acres of fee mineral rights. The acquisition of Gold Fields’ exploration properties in the U.S., Canada, Mexico and Chile will add to this portfolio.

As well, Gold Fields’ advanced exploration properties at Elkhorn, Mont., and Mule Canyon, Nev., are considered to have significant potential for adding to future gold reserves.

Several years ago, Gold Fields was exploring claims near the Pipeline gold deposit in Nevada now being advanced to feasibility by the Cortez joint venture 60% owned by Placer Dome. These claims are central to Gold Fields’ lawsuit against Placer Dome which includes various allegations of racketeering, fraud, breach of contract and breach of fiduciary duty. Gold Fields and parent Hanson intend to continue the legal dispute, and will be seeking title to about 40% of the main Pipeline deposit now estimated to host 35.3 million tons grading 0.12 oz. gold per ton.