ECU Silver Receives Favourable Ruling in Arbitration Hearing
TORONTO, ONTARIO -- (Marketwire) -- 09/23/10 -- ECU Silver Mining Inc. ('ECU Silver') (TSX: ECU) is pleased to report that it has received, what it considers to be, a very favourable decision from the panel of arbitrators (the 'Arbitration Panel') in the matter of the arbitration between Golden Tag Resources Ltd. ('Golden Tag') and ECU Silver.
Golden Tag commenced the proceedings by issuing a Notice of Arbitration to ECU Silver dated June 23, 2009 alleging that ECU Silver committed various breaches of the joint venture agreement (the 'JV Agreement') including that a lien had been attached to the San Diego Property and that ECU failed to pay suppliers on a timely basis.
Golden Tag had sought relief by way of i) dilution of ECU Silver's 50% interest in the San Diego Property, ii) application to have Golden Tag appointed Operator, and iii) request for damages. The decision of the Arbitration Panel concludes that no dilution of ECU Silver's interest is warranted, Golden Tag is not appointed Operator and no damages are warranted and payable to Golden Tag by ECU Silver.
Michel Roy, CEO and Chairman of ECU Silver stated, 'We would like to thank our legal advisors, Kaufman Laramee, for their professional approach to the arbitration and for their efforts in understanding a complex situation. We believe the decision of the Arbitration Panel is fair and equitable based on Quebec law which was the governing law of the JV Agreement. We are very pleased with all aspects of the decision and are confident that the arbitration process is now behind us.'
Pursuant to the Notice of Arbitration, Golden Tag claimed that ECU Silver allowed encumbrances in the form of a charge to be registered against the San Diego Property and as such, sought remedies in association with this claim. The Arbitration Panel ruled that there was no violation by ECU Silver and no remedy was warranted.
Golden Tag further claimed that ECU Silver did not pay its share of the exploration costs on a timely basis for the most recent exploration program (the Phase 4 Program) during the financial crisis of late 2008 and as such, sought to have ECU Silver's 50% interest diluted. The Arbitration Panel concluded that the evidence indicated that ECU Silver had made its payments current and may have contributed more than its share of the Joint Venture costs. The Arbitration Panel dismissed Golden Tag's claim for dilution.
ECU Silver's evidence that it had contributed more than its share of the Joint Venture costs and that Golden Tag has not, to date, made any payments to ECU Silver in respect of these Joint Venture costs, resulted in a claim by ECU Silver that Golden Tag's interest be diluted. The Arbitration Panel has dismissed this claim as well and instead has ordered that an audit of the accounting and financial records of the Joint Venture, and the preparation of financial statements be undertaken by an independent accounting firm. The Arbitration Panel has ruled that given ECU Silver's dual role as both the Operator and a Participant, the costs of conducting the required audit and preparing financial statements be borne two-thirds by ECU Silver and one-third by Golden Tag.
Golden Tag had also made the request that ECU cease the removal of material from old tailings on the San Diego Property, which ECU complied with, over a year ago, on August 13, 2009 and Golden Tag also requested that in consideration for all the alleged breaches of the JV Agreement, ECU be condemned to pay over twenty one million dollars (US$21,000,000) in damages. The Arbitration Panel determined that ECU Silver improperly removed material from the old stockpiles on the San Diego Property and awarded Golden Tag a payment of approximately sixty thousand five hundred and sixty five dollars (US$60,565) for the material removed from the stockpiles, but did not award damages.
Golden Tag has the option to requisition a second stage of the arbitration hearing if it wishes to attempt to prove that it suffered damages, however, the Arbitration Panel has advised Golden Tag that proving and quantifying damages caused by ECU Silver, if any, would be difficult and probably a highly speculative exercise.
Golden Tag also demanded that ECU Silver be removed as the Operator and that Golden Tag be appointed as the Operator. The Arbitration Panel did not appoint Golden Tag as Operator and has allowed the removal of ECU Silver as Operator under the JV Agreement. The Arbitration Panel is of the view that the selection of a new Operator under the JV Agreement should be conducted equally by both ECU Silver and Golden Tag.
ECU Silver shall pay for the costs of these arbitration hearings that include engaging the arbitrators, room rentals and other incidentals.
Stephen Altmann, President stated 'While we consider the outcome of the arbitration hearing to be favourable to ECU, we are disappointed that Golden Tag elected to undertake such a lengthy and costly process despite repeated attempts, over the past year, by ECU to fairly rectify the situation amicably and quickly. Although, the future of exploration on the San Diego Property remains uncertain, ECU will work constructively with Golden Tag while we assess the state of the Joint Venture relationship. In the meantime, ECU will continue to focus its attention, as it has over the past 15 months, on mining, milling and future exploration on its two primary projects, Velardena and Chicago.'
The parties have 60 days, or such additional time as they may agree in writing, to determine the firm, entity, or person that will conduct the audit and prepare financial statements. The Management Committee has 30 days to meet to select a new Operator and must agree within 60 days on the selection of a new Operator, or such additional time as they may agree to in writing.
Cautionary Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 27E of the Exchange Act. Such statements include, without limitation, statements regarding the future results of operations, performance and achievements of the Company, including potential property acquisitions, the timing, content, cost and results of proposed work programs, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, proposed production rates, potential mineral recovery processes and rates, the proposed construction of a mill, business and financing plans, business trends and future operating revenues. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located, significant downward variations in the market price of any minerals produced, the Company's inability to obtain any necessary permits, consents or authorizations required for their activities, to produce minerals from their properties successfully or profitably, to continue their projected growth, to raise the necessary capital or to be fully able to implement their business strategies. All of the Company's public disclosure filings may be accessed via www.sedar.com and readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this Press Release.
Contacts:
ECU Silver Mining Inc.
Michel Roy
Chairman and CEO
Torreon, Mexico
011 52 871 747 5750
ECU Silver Mining Inc.
Stephen Altmann
President
Toronto, Canada
(416) 366-2428
ECU Silver Mining Inc.
Mark Butler
Investor Relations
Toronto, Canada
(905) 602-4248
