Canyon Resources Files Lawsuit in Montana to Overturn Anti-Mining Initiative
Or Obtain Takings Damage Award
GOLDEN, Colo., April 11 /PRNewswire/ -- Canyon Resources Corporation
(Amex: CAU), a Colorado-based mining company; its wholly owned subsidiary, the
Seven-Up Pete Joint Venture; and 10 individual plaintiffs today filed a
lawsuit against the State of Montana in the State First Judicial District
Court. The lawsuit seeks to overturn Initiative 137, the anti-mining
initiative passed in November of 1998, or, if that fails, to obtain a damage
award for the value of the Seven-Up Pete Joint Venture properties in Lewis and
Clark County, Montana, which the Company believes could be in excess of one
half billion dollars. A similar lawsuit was earlier filed in United States
District Court for the District of Montana. A motion will be made to stay the
federal action until resolution of the lawsuit in the state court system. "We
don't want to file this lawsuit, but we have no alternative in order to
protect our property and contract rights," said Richard H. De Voto, President.
With the enactment of I-137, the State of Montana banned any new gold or
silver mines using surface mining and cyanide processing techniques. After
extensive testing and analysis of alternative mining and recovery
technologies, Canyon has determined that the only technologies that can be
economically applied to the gold and silver deposits of the Seven-Up Pete
Joint Venture properties are open-pit mining and heap-leach treatment using
cyanide.
The lawsuit requests that the court find I-137 unconstitutional and
invalid for violating several of the plaintiffs' rights guaranteed by both the
Montana and United States Constitutions, including the following:
1) The right not to be deprived of property without due process of law
(Art. II, Sec. 17 Montana Const.; Fifth & Fourteenth Amendments,
U.S. Const.)
2) The right to equal protection of the laws (Art. II, Sec. 4, Montana
Const.; Fifth & Fourteenth Amendments, U.S. Const.)
3) The right to be protected against laws which impair the obligation
of existing contracts (Art. II, Sec. 31, Montana Const.; Art. II,
Sec. 10, U.S. Const.)
4) The right to be protected against laws imposing retrospective
liability with respect to existing transactions (Art. XIII, Sec. 3,
Montana Const.)
The suit further asserts that the State, by enacting I-137, has breached
its contractual obligations and its covenant of good faith and fair dealing
with respect to the Venture. Since 1986, the State has granted six mineral
leases to the Venture for the purpose of mining metalliferous minerals. In
1994, the lease agreements were amended, with the State's understanding that
the McDonald Project would be developed as an open-pit gold and silver mine
utilizing the cyanide recovery process. The Seven-Up Pete Joint Venture
submitted a Plan of Operations and Operating Permit application to the State
of Montana in November of 1994, and has worked diligently to obtain all
necessary permits, including funding of an Environmental Impact Statement
(EIS) under contract with the State. As a direct result of these contracts
with the State, the Joint Venture has expended more than $70 million in
exploration and development of the properties.
If the court does not overturn I-137, the lawsuit requests that the court
award full compensation to the plaintiffs for the taking of or damage to the
property rights of each plaintiff. Article II, Sec. 29, of the Montana
Constitution states that the State may not take or damage private property for
public use without just compensation to the full extent of the loss paid to
the owner. In the case of Canyon Resources Corporation, the takings damage
would represent the full value of the mineral properties of the Seven-Up Pete
Joint Venture or the marketplace value of the world-class McDonald Project and
other deposits as the principal assets of the Company.
If the court determines that I-137 is invalid, the suit requests that the
court make temporary takings awards to the plaintiffs which would, at a
minimum, represent the additional expenses incurred by the Joint Venture due
to the imposition of I-137, which the Company estimates to be several millions
of dollars.
The Seven-Up Pete Joint Venture properties include three gold deposits
which contain at least 9.9 million ounces of gold and 30 million ounces of
silver. Feasibility studies for the McDonald gold project and the Seven-Up
Pete gold deposit indicate that both deposits can be mined economically, as
open-pit mines using heap-leach cyanide treatment, with gold prices as low as
$250 per ounce.
Because most of the McDonald gold deposit is located on Montana School
Trust Land dedicated to Montana Tech in Butte, a royalty ranging from
$70 million to $85 million, depending on the price of gold, would have been
paid to the Montana Tech School Trust account over the life of the mine had
the operation been allowed to proceed. In addition, the mine would have
created over 400 jobs paying an average annual wage of $45,000. Over the life
of the mine, an estimated $150 million in taxes would have been paid to the
State and local governments by the mine and its employees. "Unfortunately,
I-137 has deprived, not only the plaintiffs, but the people and the State of
Montana of the values of the McDonald Gold Project."
"Canyon Resources' objective has always been, and continues to be, to
design, develop, and operate an environmentally safe and secure, showpiece
mining operation at the McDonald Gold Project. I-137 has deprived us of that
opportunity and has taken our mineral rights and values from the Company.
Fundamentally, our contract rights, our property rights, and basic fairness
have all been violated by the enactment of I-137.
We have explored every avenue available, and have been unsuccessful in
gaining relief from I-137. It is with great reluctance that Canyon files this
lawsuit, but our only alternative is to seek overturn of I-137 or a damage
award for the full value of the mineral properties to the Company," said
Richard H. De Voto, President.
Actual results may vary materially from any forward-looking statement that
Canyon makes. Refer to the Cautionary statement in Canyon Resources' 1998
Form 10-K.
SOURCE Canyon Resources Corporation
-0- 04/11/2000
/CONTACT: Richard H. De Voto, President of Canyon Resources Corporation,
April 11, in Helena: 406-442-8560, April 12 onward: 303-278-8464/
/Web site: canyonresources.com
(CAU) |
