Too soon to decide on Donlin, judge rules
NovaGold must wait until November deadline in joint venture agreement to see if Barrick fulfills its requirements at Alaska project
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Last updated 7/29/2007 at Noon
A U.S. District Court judge in Anchorage has dismissed NovaGold's lawsuit against Barrick Gold over the Donlin Creek project where the two companies are joint venture partners. Vancouver-based NovaGold had asserted that Toronto-based Barrick, the world's largest gold producer, breached the terms of the companies' Mining Venture Agreement. Judge Timothy Burgess ruled that Barrick has until Nov. 12, 2007 - the date stipulated in the MVA - to fulfill its obligations on the project, and the company's success or failure cannot be assessed before that date.
"We are satisfied that the Alaskan court found in Barrick's favor and has entirely dismissed NovaGold's series of allegations," Patrick Garver, Barrick's executive vice president and general counsel, said in a release July 19. "We vigorously disputed NovaGold's allegations that implied improper conduct by Barrick and we are glad that the federal court has dismissed this ill-conceived action."
NovaGold's management thinks Barrick won't meet the Nov. 12 deadline to produce a feasibility study for Donlin and to make a decision to begin construction, which would enable Barrick to earn an additional 40 percent interest in the project on top of the 30 percent it has currently. "NovaGold believes Barrick cannot deliver a meaningful construction decision, plan or budget without completing the environmental assessment process. NovaGold believes Barrick cannot meet the back-in requirements as outlined in the Agreement," NovaGold said in a July 19 statement.
Judge: November the milestone
"Any number of intervening events could occur between now and November 2007 to change the nature of this dispute," Judge Burgess wrote in his ruling. "Therefore, interpreting the contract would not settle all aspects of the controversy, nor would it serve a useful purpose in clarifying the legal relations at issue. ... The parties have contracted to allow (Barrick) to perform, fail to perform, or elect not to perform under the contract until November 2007. No other milestones for performance were set in the agreement."
Barrick has already fought out a failed takeover bid for NovaGold, and the companies also have a dispute over the Galore Creek project in northwestern British Columbia. Defeating a rival bid by NovaGold, Barrick bought most of the shares of Pioneer Metals, a junior that owns the Grace claims adjacent to Galore Creek. NovaGold hopes to locate its tailings facility on the Grace claims, but Pioneer argued that more exploration drilling should be done in the area. Barrick's control of the Grace claims could hinder NovaGold's plans for development of Galore Creek, where permits are in place and road construction has just begun.
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