Taseko plans to sue Cominco regarding Fish Lake property

After losing an appeal this summer, Taseko Mines (VSE) is taking another run at Cominco (TSE) in an attempt to regain control of the Fish Lake deposit, 100 miles west of Clinton, B.C. Taseko President Lorne Ross said the company plans to file a new suit against Cominco claiming that the major’s option on the copper-gold deposit has lapsed.

Preliminary estimates place reserves on the property at about 201 million tons grading 0.24% copper, 0.015 oz. gold, and 0.33 oz. silver per ton with a strip ratio of about 1-to-1.

Taseko negotiated its original option with Bethlehem Copper, which has since been taken over by Cominco. The 1979 agreement granted Bethlehem the right to earn an 80% interest in the deposit by bringing it into production.

The 1979 option agreement called for Cominco to give notice by Nov. 30, 1984, that it was taking the property into production. The agreement included a clause stating that in the event that Bethlehem (now Cominco) determined it was not economically feasible to bring the property into production (due to market conditions or other factors beyond its control), it could maintain the option on a year-by- year basis. (The clause also stated that a consultant acceptable to both parties could be called in to verify the conclusion.)

This is exactly the position taken by Cominco after the deadline was reached when it viewed the deposit as not being economically viable.

Taseko subsequently filed a suit in 1986 and lost. This summer the British Columbia Court of Appeal dismissed Taseko’s appeal of the decision. Ross reflected that Taseko’s major failing in the suit was not calling on expert witnesses who could support a production decision given current metal prices.

In the new suit, Ross said the company plans to argue that the property has been economic since 1988. The price of copper, at about US65 cents per lb. at the time of the original suit in 1986, made a significant move at the end of 1987 and has remained above US$1 per lb. since.

Taseko recently negotiated a private placement of 1.17 million shares at 50 cents per share plus warrants to buy an additional 1.17 million shares at 50 cents. The placement went to four individuals, including Robert Hunter and Robert Dickinson who headed Continental Gold before the company was taken over by Placer Dome (TSE).

Dickinson said the group views the deposit as a major one and in view of the success of Mount Milligan, “an investment in the company (Taseko) makes good sense.”

Continental’s Mount Milligan deposit contains an estimated reserve of 110 million tons grading 0.019 oz. gold and 0.23% copper in a larger reserve of 550 million tons grading a 0.57% copper equivalent.