U.S. Gold seeks to overturn appeal

In what Atlanta Gold (TSE) sees as a highly unusual move, U.S. Gold (NASDAQ) has made an application to the British Columbia Court of Appeal for a rehearing to determine which slate of directors was elected to Atlanta’s board at the annual meeting in June, 1989.

The fight for control of Atlanta Gold started a year ago when U.S. Gold announced its acquisition of 13.4% of Atlanta. U.S. Gold and Ventures Trident Ltd. partnership, which held about 13% of Atlanta at the time, failed to elect their own slate of directors at the company’s annual meeting.

U.S. Gold then challenged the validity of some of the proxies voted at the annual general meeting and won the case which was heard by Mr. Justice Hinds in the Supreme Court of British Columbia.

Last December Atlanta Gold won an appeal of that case in the Court of Appeal, which overturned the decision rendered by Justice Hinds and reinstated the board of directors led by current President Olaf Tolpinrud.

As a result, U.S. Gold is seeking a limited rehearing of the appeal of this decision on the basis that the Court of Appeal “overlooked or misapprehended the reasons of Mr. Justice Hinds.”

The disagreement between the two involves the development of Atlanta’s major asset, the Atlanta gold property in Idaho. U.S. Gold had proposed to use its proprietary bio-oxidation technology to treat the refractory sulphide reserve on the Atlanta property. Atlanta’s original management is against this, claiming that U.S. Gold would be using the property as a guinea pig for its unproven technology.

U.S. Gold is in the startup phase at its Tonkin Springs mine which will use the bio-oxidation technology. As a pretreatment step, bio- oxidation uses bacteria to oxidize sulphide ores, before gold is extracted in a conventional carbon-in- leach mill.

During the first two months of startup on the oxide portion of the plant, U.S. Gold produced 1,800 oz. of gold. The company indicates that some operating problems were encountered but that the plant should not have any trouble reaching the 1,500-ton-per-day target.

The company said the bio-oxidation plant is now in a startup phase, which is expected to last two or three months.