Zuleika Gold shares popped more than 16 per cent after the WA Supreme Court found in its favour in litigation taken against fellow explorer Vango Mining and its subsidiary Dampier (Plutonic), or “DPPL” over a Goldfields tenement.
Zuleika declared it had been “wholly successful” following the handing down of a judgment by Her Honour Justice Smith and flagged an imminent claim for damages.
The litigation centred on a farm-in joint venture binding terms sheet, or “BTS” the parties signed in May 2017.
The BTS terms stipulated Zuleika, then called Dampier Gold, would contribute up to $3 million towards the development of the K2 gold deposit on tenement M52/183 to earn up to a 50 per cent interest.
The tenement sits north of Meekatharra and 35km to the north-east of Superior Gold’s Plutonic gold mine and hosts the K2 gold deposit.
K2 is part of the Plutonic Well Greenstone Belt that holds a large number of gold occurrences that have produced more than 5 million ounces of gold since 1990 – mostly from the Plutonic mine’s five open pits and two underground operations.
Zuleika says Vango and DPPL frustrated its efforts to spend funds to earn that interest and so it instigated action in the Supreme Court in May 2020.
The ensuing trial in the Supreme Court lasted six days in March this year and seven months later Her Honour Justice Smith has ordered Vango and DPPL to transfer to Zuleika a 4.1 per cent stake in tenement M52/183. That stake was determined by monies Zuleika had spent on the tenement.
In its decision the Supreme Court ruled Vango and DPPL had breached the terms of the BTS and wrongfully repudiated it, whilst also preventing Zuleika from contributing to its expenditure.
Justice Smith made the findings that Vango and DPPL had failed to make reasonable efforts to participate in the JV proposed in the BTS, they had breached the terms and wrongfully repudiated the BTS and they had wrongfully prevented Zuleika from contributing to its planned expenditure.
Zuleika Gold Managing Director, Jonathan Lea said: “This is an excellent outcome for Zuleika. The ruling agreed with Zuleika Gold’s position on all material aspects of the litigation.”
“The next stage of litigation will determine the quantum of damages payable by Vango on account of their determined breaches of the BTS. Zuleika intends to bring that aspect of its claim to trial as quickly as possible.”
Though the judgment has been handed down it is not the end of the matter.
Written submissions on costs will be made by all parties and if Zuleika’s claim for damages goes to court, any trial would not be expected until next year.
Zuleika’s legal action has been financially supported by Annie Guo, its former Managing Director and now Chairman.
In 2020 Ms Guo’s private entity, Auracle Group, agreed to make up to $1 million available to Dampier Gold to pay for its legal costs. In return, Auracle was to receive a $300,000 share placement in the company and the balance of $700,000 was to be provided as a loan.
Ms Guo’s funding was aimed at preserving the company’s own funds at a time when it had been enjoying some success with the drill bit on the well-known Zuleika Shear, west of Kalgoorlie.
Vango said it is reviewing the decision to determine if it wishes to appeal the Supreme Court decision and will update shareholders once that review is complete.
The partially developed K2 gold mine has a measured, indicated and inferred underground resources to 374,000 tonnes at 8.9 grams per tonne for 107,000 ounces gold.
Gold has previously been extracted from an open pit in the 1990s and an underground mine was partially completed before operations stopped in 1998 because of the falling gold price.
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By Matt Birney
