OURAY – Negotiations have been underway since last September to transfer majority ownership of the historic Camp Bird Mine from Federal Resources Corp. to Caldera Mineral Resources, Inc.
But just as that deal was set to close, a lawsuit between the United States government and Federal Resources Corp. principal Bentley Blum over three environmentally troubled mining properties in Idaho may send a large chunk of the money that Caldera is poised to pay for the Camp Bird Mine into Uncle Sam’s coffers.
Federal Resources has owned the Camp Bird Mine under its subsidiary Camp Bird Colorado Inc. since the 1950s (with Blum at its helm since 1983). The California-based Caldera Mineral Resources Inc. is in the process of acquiring the historic gold mine in a majority acquisition deal that includes all of the mine’s existing patented claims. The transaction was set to close at the end of March.
On March 11, the United States District Court for the District of Idaho granted an application from U.S. Department of Justice / Environmental Enforcement Section seeking to “sequester” up to $5.9 million of the funds that would otherwise complete the purchase.
In other words, the United States has asserted that it has a lien of sorts on the property, that must be satisfied before Federal Resources sees any money. As the case wends its way through court, $5.9 million of the undisclosed price that Caldera is poised to pay for the Camp Bird Mine will be held by the court – in escrow, as it were – until the outcome of the case is determined.
The action comes exactly two years after the United States Government sued Federal Resources under the Comprehensive Environmental Response, Compensation Act (CERCLA) to recover over $7 million in cleanup costs allegedly incurred at three Idaho mining sites, where the government alleges that Federal Resources conducted mining activities from the 1950s through the early 1970s.
According to court documents, the government also alleges that after this action was filed, Federal Resources fraudulently transferred its only significant asset (the Camp Bird Mine) to a trust, the trustee of which (Blum) is also a majority shareholder and director of Federal Resources.
Caldera CEO John Bryan, who has spent much of his career as a turnaround specialist dealing with troubled mining companies, said this week that Federal Resources’ legal entanglements in Idaho caught his company by surprise, but that it is essentially “a fight between other people” and that Caldera’s plans for acquiring and developing the Camp Bird property remain essentially on track. He could not comment on whether the targeted closing date for the purchase is now in question.
“We remain fully committed to the mine,” Bryan said. “It doesn’t affect my excitement about our future; we continue to work. Our excitement and enthusiasm has never been higher. To use a chess metaphor, the end game has started.”
That game began in September 2011, when Caldera closed on a financing deal to obtain a complete perpetual lease on the Camp Bird mining property with an option to purchase six months down the road. Payment to Blum, and transfer of ownership of the patented mining claims associated with the Camp Bird Mine, was deferred to that time.
When the acquisition is finalized, it is structured such that Caldera will obtain 60 percent ownership of the property and Camp Bird Colorado Inc. ownership will reduce to 40 percent. Caldera will have a further option to increase its stake more over a period of time, Bryan said.
In the meantime, work at the Camp Bird Mine under Caldera’s watch continues full speed ahead. Since September, workers there have almost completed constructing all surface infrastructure and are poised to start conducting underground stabilization and exploration in the near future.
“We are currently working on collecting data and information to really know what took place in there (when the mine was formerly active) and to determine where our exploration targets are,” Bryan said.
Bryan, meanwhile, continues to coordinate principal investors in the United States, Singapore and Hong Kong. As work progresses at the Camp Bird, Bryan said his company continues to seek other mining investment and development opportunities in the region.