U.S. REPORT Court demands Mercur document

U.S. exploration company Gold Standard (NASDAQ) has successfully gained access to more documentation relating to the acquisition by American Barrick Resources (TSE) of the Mercur gold mine in Utah. A Utah Supreme Court recently ordered Barrick to release a document that Gold Standard says may prove important as it attempts to win back what it regards as its rightful interest in the Mercur operation. The ruling was handed down following an appeal.

In a lawsuit which is still in the pre-trial stage, Gold Standard says its participating 25% interest in the Mercur mine was wrongly converted by former joint venture partner Getty Oil into a non-participating 15% net profits royalty.

According to Gold Standard President Scott Smith, the document contains information that he says proves Barrick was aware of the lawsuit before it bought the mine from Texaco in 1985.

“They (Barrick) agreed to pay the attorney’s bills to defend the problem,” said Smith.

However, according to Gregory Wilkins, Barrick’s chief financial officer, Salt Lake City law firm Parsons Behle & Latimer was originally hired to represent Barrick and Texaco. But he denied that Barrick is paying Texaco’s legal fees.

Now that the documents are in the hands of Gold Standard lawyers, Smith said his company is looking forward to what it will find before the discovery cutoff date which has been set for Feb. 28.

Wilkins maintains that after studying all of Gold Standard’s claims before buying the mine, his company concluded there was no merit to any of them. “Nothing that has been found in the discovery process has changed our opinion of their lawsuit,” he said.

The latest ruling comes just two months after Gold Standard won access to an internal Getty document that shows it was never supplied with a proper feasibility study as required under contract.

Also, Gold Standard has won the right to appeal a ruling that its original interest in the Mercur mine, which last year produced 117,536 oz., was properly converted.