U.S. REPORT — Placer, Royal Gold settle Pipeline project

Litigation between wholly owned subsidiaries of Placer Dome (TSE) and Royal Gold (NASDAQ) over the Pipeline gold project in Nevada has been resolved.

Under the settlement, all but one part of the claim by Royal Crescent, a unit of Royal Gold, will be dismissed.

The agreement also calls for the creation of the South Pipeline project, just south of the Pipeline discovery announced earlier this year by the Cortez Gold Mines joint venture. Placer has a 60% interest in Cortez and Kennecott has a 40% interest.

Placer Dome, project operator, will spend a minimum of US$1.4 million on South Pipeline by the end of 1994. Royal Gold will receive a 20% net profits royalty or, if it chooses, a net smelter return royalty tied to indexed gold prices.

Also as part of the agreement, Cortez was granted the right to purchase and has purchased 1,000 units of Royal Gold at US$800 per unit. The units consist of 500,000 Royal Gold common shares and rights to buy up to 600,000 additional shares.