Golden Tag (TSX VENTURE:GOG) Reports Initial Rulings of Arbitration-ECU is Removed as Operator of San Diego Joint Venture
MONTREAL, QUEBEC--(http://www.investorideas.com/ gold and mining blog) - Sept. 27, 2010) - Golden Tag Resources Ltd (TSX VENTURE:GOG) ("GOG") is pleased to announce that it has received a decision in the matter of arbitration between Golden Tag and ECU Silver Mining Inc. ("ECU") over numerous breaches by ECU of the Joint Venture Agreement ("JVA") governing the highly prospective San Diego Property in Velardeña, Mexico.
GOG requested arbitration in June 2009 to resolve many difficulties encountered with ECU. This action was taken after a 3 month period in which time ECU failed to resolve the outstanding issues. The first stage of the arbitration focused on the question of liability and the arbitration Award was issued on September 20th, 2010.
A second stage of arbitration to deal with the issue of damages may proceed as GOG has now been successful in proving fault by ECU. GOG has the right to elect to proceed with the second stage hearing by notification to the arbitration panel within 30 days of the Award.
The arbitration panel has confirmed:
1/ GOG was justified in commencing and proceeding with the arbitration. ECU admitted significant breaches of the JVA. It admitted that it used GOG's funds to pay creditors that were not creditors of the Joint Venture and commingled these funds with its own. In addition to these egregious breaches, ECU committed other defaults under the JVA including, among others, improper removal of ore-bearing stockpiles, failure to produce financial statements and failure to advise of lack of funds to complete the Phase 4 program.
2/ ECU failed to pay invoices of the two principal contractors during Phase 4 drilling which resulted in the premature termination of the program in December 2008 when drills were removed from the property by the contractor and reporting on all assay results was suspended. As of mid-2009 the contractors remained unpaid by ECU and full payment was only confirmed in March 2010.
3/ ECU failed to pay its share of the costs of the Phase 4 exploration program on a timely basis. In addition ECU used funds received from GOG during Phase 4 to pay invoices that were not connected with the Joint Venture.
4/ ECU failed to provide required financial statements.
The conclusion outlined by the Arbitrators in the Award of September 20th states that ECU's behavior is "Egregious". The Award makes the following immediate orders:
1/ECU is to pay GOG's costs.
2/ Neither party will be diluted from their current 50% interests.
3/ An audit of the financial records of the Joint Venture by an independent firm of Chartered Accountants is to prepare adequate financial statements for the Joint Venture for December 31, 2010. The parties have 60 days to agree on auditors. Audit costs will be paid 2/3rds by ECU and 1/3rd GOG.
4/ ECU is to transfer to GOG a 50% interest in the Cortez Mining Rights (San Diego) for no additional consideration.
5/ ECU is to pay GOG 50% of the gross revenue it reported from metals in the stockpile material mined from the property in 2009, an amount equal to US$60,565.12.
6/ ECU has been removed as Operator. The Management Committee is to meet within 30 days to select a new Operator. If there is no agreement on selection of Operator after 60 days, additional submissions may be made for arbitration of this decision.
7/ GOG may, within 25 days of the date of the Award, make submissions seeking payment of its legal fees.
It is the Company's intention to work with ECU to resolve outstanding issues related to the arbitration ruling in an expedient manner as possible so that work may re-commence on the property as soon as possible. The Company intends on issuing more information in the near future.
San Diego Property, Durango State, Mexico
Four phases of surface exploration have been undertaken by the JV on the San Diego Property. Successful exploration drilling has to date identified a major new polymetallic Silver –Lead – Zinc – (Gold) [Ag-Pb-Zn-(Au)] mineral discovery on an extension of the Velardeña Mine trend. NI 43-101 compliant reporting in January 2009 [News Release: Jan 19th 2009] identifies combined Joint Venture Mineral Resources of:
Golden Tag is a junior exploration company exploring for high grade gold and silver deposits at the San Diego silver project in Durango State, Mexico; the Aquilon Gold project in James Bay, Quebec; and the McCuaig gold project in Red Lake, Ontario. Golden Tag has 39,770,958 issued and outstanding shares.
Statements in the release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially. We undertake no duty to update any forward-looking statement to conform the statements to actual results or changes in our expectations.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
GOG requested arbitration in June 2009 to resolve many difficulties encountered with ECU. This action was taken after a 3 month period in which time ECU failed to resolve the outstanding issues. The first stage of the arbitration focused on the question of liability and the arbitration Award was issued on September 20th, 2010.
A second stage of arbitration to deal with the issue of damages may proceed as GOG has now been successful in proving fault by ECU. GOG has the right to elect to proceed with the second stage hearing by notification to the arbitration panel within 30 days of the Award.
The arbitration panel has confirmed:
1/ GOG was justified in commencing and proceeding with the arbitration. ECU admitted significant breaches of the JVA. It admitted that it used GOG's funds to pay creditors that were not creditors of the Joint Venture and commingled these funds with its own. In addition to these egregious breaches, ECU committed other defaults under the JVA including, among others, improper removal of ore-bearing stockpiles, failure to produce financial statements and failure to advise of lack of funds to complete the Phase 4 program.
2/ ECU failed to pay invoices of the two principal contractors during Phase 4 drilling which resulted in the premature termination of the program in December 2008 when drills were removed from the property by the contractor and reporting on all assay results was suspended. As of mid-2009 the contractors remained unpaid by ECU and full payment was only confirmed in March 2010.
3/ ECU failed to pay its share of the costs of the Phase 4 exploration program on a timely basis. In addition ECU used funds received from GOG during Phase 4 to pay invoices that were not connected with the Joint Venture.
4/ ECU failed to provide required financial statements.
The conclusion outlined by the Arbitrators in the Award of September 20th states that ECU's behavior is "Egregious". The Award makes the following immediate orders:
1/ECU is to pay GOG's costs.
2/ Neither party will be diluted from their current 50% interests.
3/ An audit of the financial records of the Joint Venture by an independent firm of Chartered Accountants is to prepare adequate financial statements for the Joint Venture for December 31, 2010. The parties have 60 days to agree on auditors. Audit costs will be paid 2/3rds by ECU and 1/3rd GOG.
4/ ECU is to transfer to GOG a 50% interest in the Cortez Mining Rights (San Diego) for no additional consideration.
5/ ECU is to pay GOG 50% of the gross revenue it reported from metals in the stockpile material mined from the property in 2009, an amount equal to US$60,565.12.
6/ ECU has been removed as Operator. The Management Committee is to meet within 30 days to select a new Operator. If there is no agreement on selection of Operator after 60 days, additional submissions may be made for arbitration of this decision.
7/ GOG may, within 25 days of the date of the Award, make submissions seeking payment of its legal fees.
It is the Company's intention to work with ECU to resolve outstanding issues related to the arbitration ruling in an expedient manner as possible so that work may re-commence on the property as soon as possible. The Company intends on issuing more information in the near future.
San Diego Property, Durango State, Mexico
Four phases of surface exploration have been undertaken by the JV on the San Diego Property. Successful exploration drilling has to date identified a major new polymetallic Silver –Lead – Zinc – (Gold) [Ag-Pb-Zn-(Au)] mineral discovery on an extension of the Velardeña Mine trend. NI 43-101 compliant reporting in January 2009 [News Release: Jan 19th 2009] identifies combined Joint Venture Mineral Resources of:
- Indicated Resources: 0.371 Million tonnes (MT) grading 245 grams Ag per tonne (Ag g/t), 1.80 percent Pb (% Pb), 1.33 percent Zn (% Zn) and 0.339 grams Au per tonne (Au g/t); representing
- 4.25 Million Ounces of Silver-equivalent (oz.Ag.EQ); and,
- Inferred Resources: 21.63 Million tonnes (MT) grading 110 Ag g/t, 1.84 % Pb, 2.21 % Zn and 0.134 Au g/t; representing an additional
- 214.3 Million oz.Ag EQ.
- Micon International Inc. also estimated that the property remains highly prospective with additional mineral potential, on strike and at depth, of an additional estimated
- 173.5 to 389.5 Million oz.Ag EQ.
Golden Tag is a junior exploration company exploring for high grade gold and silver deposits at the San Diego silver project in Durango State, Mexico; the Aquilon Gold project in James Bay, Quebec; and the McCuaig gold project in Red Lake, Ontario. Golden Tag has 39,770,958 issued and outstanding shares.
Statements in the release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially. We undertake no duty to update any forward-looking statement to conform the statements to actual results or changes in our expectations.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
For more information, please contact
Golden Tag Resources Ltd.
Marc A Carrier, President
514-426-8542
514-426-8543 (FAX)
pres@goldentag.ca
www.goldentag.ca
Golden Tag Resources Ltd.
Marc A Carrier, President
514-426-8542
514-426-8543 (FAX)
pres@goldentag.ca
www.goldentag.ca
More mining stocks info from Investorideas.com and our Gold and Mining Stocks Blog:
Visit Investorideas.com leading mining portals - http://www.gold-miningstocks.com/
and www.miningsectorstocks.com to get stock news, directories and showcase mining stocks to follow. Gold and mining investors can research stocks with the mining stocks directory, featuring Gold Stocks, Silver Stocks, Uranium Stocks, Copper Stocks, Zinc Stocks and Precious Metals TSX, TSX Venture, OTC, NASDAQ, AMEX, NYSE, ASX, AIM and other leading Stock Exchanges. The investorideas.com mining stock directory lists over 1100 publicly traded mining stocks for investors. Preview the directory here : http://www.investorideas.com/Gold_Stocks/Stocks_List.asp
