Court case over African miner’s collapse ends abruptly Great Basin debentureholders drop lawsuit
Stockwatch Daily12 Jan 2017 By Mike Caswell
A LAWSUIT over the demise of Great Basin Gold Ltd. and its purported $1.3-billion (U.S.) in assets has come to an unspectacular conclusion in the Supreme Court of British Columbia. The debentureholders behind the suit have dropped the case. Each side will bear its own legal costs.
The lawsuit was brought by a group, led by Linden Advisors LP, that held $45.7-million in unsecured convertible debentures in Great Basin. The group lost most of its investment after Great Basin entered insolvency proceedings in 2012. The lawsuit sought damages from Great Basin’s former management, claiming that the company had misrepresented the value of its assets.
The case was being actively litigated and had been set for trial in September, 2017, but the matter came to a sudden end on Dec. 19, 2016. On that date, Linden and the other plaintiffs filed a consent order dropping the matter in its entirety. The order states that there will be no costs, which means that each side must pay its own legal fees.
The order concludes a case that Linden and two other investors filed on Aug. 14, 2014. The other plaintiffs were Crystalline Management Inc. and Wolverine Asset Management LLC. The defendants were former officers and directors of Great Basin. These included Ferdinand Dippenaar, the company’s president from August, 2005, to August, 2012. The suit also named Great Basin chairman Ron Thiessen.
The lawsuit sought to hold management accountable for what the debentureholders saw as a substantial misrepresentation of the value of the company’s assets. Linden said that it acquired Great Basin debentures in 2009, based on the value the company attributed to its two main projects, Hollister and Burnstone. The company had valued Burnstone between $414-million (U.S.) and $1.17-billion (U.S.), with a mine life of 19 years. After adding the value of Hollister, the company’s two main projects were worth $1.3-billion (U.S.), the suit stated.
After the initial investment, all seemed to be well, according to Linden. The Burstone project went into production in January, 2011, and the project’s reserves and mine life increased too. Meanwhile the Hollister project received a boost to its reserves as well. Alongside these purportedly positive developments, Mr. Dippenaar called the Burnstone a “world class project” that would produce into the future. The company expected Burnstone to start contributing cash flow in July, 2011.
There were no concerns throughout 2011 and into 2012 about the company’s cash position, Linden said. On Oct. 24, 2011, the company claimed to have enough working capital. It also increased its valuation of the Burnstone project, placing a $1.53-billion (U.S.) figure on the project. The company acknowledged some production delays, but in an April 3, 2012, earnings call Mr. Dippenaar assured investors that those issues were resolved. As the debentureholders understood things, the company was advancing without any troubles, the suit stated.
President, CEO and Director Ronald Thiessen, a Chartered Professional Accountant (FPCA, FCA) with more than 25 years of corporate development experience, leads Northern Dynasty’s corporate development and financing activities. In addition to his role as President and CEO, Mr. Thiessen is a Director of the Pebble Limited Partnership. He is also President and CEO of Hunter Dickinson Inc....”
VANCOUVER, Dec. 21, 2017 /CNW/ - Northern Dynasty Minerals Ltd. (TSX: NDM; NYSE MKT: NAK) ("Northern Dynasty" or the "Company") announces that its wholly-owned US-based subsidiary Pebble Limited Partnership (the "Pebble Partnership") has finalized documentation and will file for a US Clean Water Act 404 permit with the US Army Corps of Engineers on Friday, December 22, thereby initiating federal and state permitting for the Pebble Project under the National Environmental Policy Act ("NEPA").
"At the outset of 2017, we established three ambitious corporate objectives for Northern Dynasty and the Pebble Project," said Northern Dynasty President & CEO Ron Thiessen. "We committed to reaching a resolution with the US Environmental Protection Agency ("EPA") to restore the Pebble Project to normal course permitting, to re-partnering on the Pebble Project and to initiating permitting under NEPA. As we approach the end of the year, I'm proud to report that we will hit our mark on all three important milestones."
On May 12, 2017, Northern Dynasty announced a settlement agreement with EPA, whereby the federal agency agreed to initiate a process to withdraw its Proposed Determination under Section 404(c) of the Clean Water Act, thereby clearing the way for Pebble to apply for a CWA 404 permit with the US Army Corps of Engineers. On December 18, 2017, Northern Dynasty announced a framework agreement with First Quantum Minerals Ltd. ("First Quantum") (TSX: FM), which contemplates that an affiliate of First Quantum will subsequently execute a US$150 million option agreement with Northern Dynasty, which provides for a future right to acquire a 50% interest in the Pebble Partnership for a further investment of US$1.35 billion. Northern Dynasty has now received an initial US$37.5 million Early Option Installment Payment from First Quantum.
"We are very pleased to move the Pebble Project forward to the next important phase by initiating the NEPA permitting process this year, as we committed to do," said Tom Collier, Pebble Partnership CEO.
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