An administrative oversight by Coeur d’Alene Mines Corp. cost the company $10 million in cash plus a share of the revenue from the sale of silver from its Rochester Mine near Lovelock.
The beneficiary: Vancouver’s Rye Patch Gold Corp., which jumped to stake claims on the property after Coeur Mining failed to make required federal maintenance payments in late 2011 on 447 claims covering 8,600 acres at Rochester.
Coeur Mining staked new claims on the property, and the two sides headed for the state courts to determine the ownership dispute.
Last week, executives of Idaho-based Coeur Mining said they agreed to settle the case for $10 million in cash. Rye Patch also will get a 3.4 net smelter royalty covering the sale of 39.4 million ounces of silver (or the equivalent in gold) from the Rochester Mine.
Coeur said it expects to pay off the royalty within four years, beginning next January.
Rye Patch Gold also got an option to buy a 19.5-acre claim about two miles west of the Rochester. The claim isn’t strategic to the Rochester operation, Coeur Mining said, but it’s next to a property that Rye Patch is exploring.
Mitch Krebs, the president and chief executive of Coeur Mining, said the company was confident in its legal position in the claims dispute, but it wanted to get the matter behind it. He said the company expects later this year to announce plans to ramp up production at Rochester.
William Howald, the president and CEO of Rye Patch, said the settlement provides a stream of cash to help the company develop its properties along the Oreana trend of west-central Nevada.
Reno-based Erwin & Thompson LLP, led by Tom Erwin and Frank Thompson, served as U.S. counsel for Rye Patch.
Rochester produced 2.8 million ounces of silver and 38,066 ounces of gold in 2012 at an average operating cost of $9.62 per ounce of silver. At the end of last year, Rochester’s proven and probable reserves totaled approximately 44.9 million ounces of silver and 308,000 ounces of gold.
NNBW staff
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