Equatorial Mining has settled its litigation with Cyprus Climax Metals Company, a wholly owned subsidiary of Phelps Dodge Corporation, in relation to its obligations under the purchase option agreement linked to Equatorial’s purchase of the Tonopah mine in Cyprus.
Under the settlement Equatorial will pay Cyprus $US10 million by August 26 and either selectively buy back its shares held by Cyprus at $US1 a share or Cyprus will appoint an agent for the placement of those shares.
In the event of the placement option, Equatorial will be entitled to the proceeds of the sale less $US1 a share.
Under the purchase option agreement, Equatorial was required to pay Cyprus $US15 million less the value of about 745,000 Equatorial shares held by Cyprus.
The legal stoush relates to a disagreement about how the Equatorial shares would be valued. It also involved a Cyprus step to seek a garnishment order for monies owed to Equatorial together with certain counterclaims raised by Equatorial.
Equatorial had provided $US14.5 million against the liabilities arising from the purchase option agreement.