Placer Dome, Gold Fields settle Pipeline dispute

Litigation concerning the Pipeline project in Nevada’s Lander Cty. has been resolved, Placer Dome (TSE) reports.

The legal dispute began in 1992 when Gold Fields Mining challenged the conduct of Placer subsidiary Placer Dome U.S. in securing an option contract to purchase Gold Fields’ mining claims in the Pipeline area. About 40% of the Pipeline deposit is on Gold Field’s claims.

Gold Fields was seeking US$158 million in damages. It also sought the right to void the option contract.

The resolution of the litigation comes after several decisions by the Federal Court in Reno, Nev. The court ruled in Placer’s favor on all disputes concerning mining claim validity and boundaries. The court also dismissed all claims alleging geophysical and surface trespasses by Placer on Gold Fields’ claims during negotiations in 1991.

Under the settlement, Gold Fields receives US$30 million, about US$27 million more than it would have under the 1991 option contract. In exchange, Placer receives legal title to Gold Fields’ mining claims within the Pipeline deposit, where reserves are estimated at 1.7 million oz., and the remaining block of Gold Fields’ claims for future exploration. Formal dismissal of all remaining claims and counterclaims is expected this month.

Meanwhile, in a related case against ECM Inc. of Billings, Mont., Placer says the court has granted summary judgement for Placer on all claims by ECM, which alleged that it had been fraudulently or otherwwise improperly induced to give up a 5% net value royalty on the Pipeline deposit.

The court also dismissed all but two of ECM’s claims alleging that in 1991 it was wrongfully induced by Placer to convey to Royal Gold (NASDAQ) a 1.25% net value royalty on the GAS property (which hosts the South Pipeline discovery, currently undergoing a feasibility study.) ECM ‘s claims for fraud and Placer’s counterclaim for attorneys fees are scheduled for trail beginning April 18.