Mines Management hit with lawsuit

Frank Wall, a former consultant for a group of Idaho mine claimholders who have battled Mines Management, Inc., over access to the potential Montanore Mine site in both state and federal court since 2007, filed his own civil action against Mines Management yesterday morning, accusing them of fraud, conspiracy and malfeasance.

This is the latest legal wrangle between Mines Management, Wall and the claimholders, and most recently, Optima Inc, regarding access to a 14,000-foot adit, or underground tunnel, into the copper and silver mine worth an estimated $8 billion.

Wall, who is acting on his own, said his lawsuit is not intended to stop the mine from operating, only to stop Mines Management from damaging Libby Creek. The lawsuit also includes Newhi Inc. and Montanore Minerals Corporation as subsidiaries. Wall alleges the defendants have “repeatedly overshot their legal bounds” for the approved plan of operations for hard-rock mining permits on the creek.

“I’m not against resource mining and good paying, long-term jobs for Montana residents which is desperately needed in Lincoln County,” Wall stated. “I’m just against a bunch of financial know-it-all people that mislead people with empty promises and soak their stockholders for millions.”

In March 2013  District Court Judge James Wheelis ruled in favor of the claimholders and granted summary judgement, preventing Mines Management from crossing the unpatented claims. The ruling was appealed by Mines Management to the Montana Supreme Court.

On May 5, 2014, a U.S. District Judge in Missoula ruled that Mines Management may access the adit through a condemnation ruling of the claims. Similar to the government’s eminent domain law, parties can enter arbitration to determine the dollar value of just compensation to be paid to the claimholders for crossing their claims.

While the fight over the validity of the claims has been between Mines Management and the claimholders only, the game changed in earlier in the year when Optima Inc. purchased 14 of the 58 claims where the adit is located.

Now instead of suing a small group of claimholders over access to the adit, Mines Management is up against a private company that includes former Montana governor and chairman of the board of directors for Stillwater Mining Company, Brian Schweitzer.

Other names on Optima’s board of directors include former president of Sterling Mining Frank Duval and Vancouver stock trader David Elliott and a former official with the U.S. Forest Service minerals division, Bruce Ramsay. The board also includes claimholder Arnold Bakie, who sold four of his claims to Optima.

Last month Mines Management president Glenn Dobbs said that Optima had demanded $10 million as compensation for Mines Management’s “successful condemnation of a right of way through Optima’s asserted claims.”

 Mines Management was “vigorously” responding to Optima on all fronts, including in the courts, Dobbs stated.

 “We believe that Optima’s claim for $10 million is frivolous because it attempts to establish value based upon the wrong measure, not in accordance with the law, and we are confident our legal initiatives will continue to be successful,” Dobbs stated.

Wall said Dobbs was running a “smoke-and-mirrors” legal battle and that Optima had the resources to bring the controversy “to a final and equitable conclusion.”

While Mines Management reported $11.8 million in cash equivalents in 2012, this had dropped to $4.7 million, according to a quarterly report released in May, despite a near doubling of Mines Management stock price from 65 cents to $1.15 per share in the past year.

Wall, who is not one of the original claimholders, said his role throughout the legal battles had been as a consultant to claimholder Arnold Bakie and former claimholder Louise Voves and their mining company Libby Creek Ventures. Wall had been attempting to raise $9.5 million to launch the Libby Creek Ventures Mine project when he was included in Mines Management’s 2007 lawsuit over access to the adit – and charged with slander and defamation of Mines Management -  after Mines Management would not recognize a grant of easement agreement between Libby Creek Ventures and former mine site owners, Noranda Minerals Corporation.

The lawsuit had joined “everyone together at the hip” from that point on, Wall said.  “I have a problem with the way Dobbs and his cohorts have conducted themselves. Dobbs has an entitlement mentality.”

Wall also stated in yesterday’s lawsuit that he believed the U.S. Forest Service and MT DEQ were acting without legal authority on the Montanore project for more than a year and believed, because of an expired memorandum of understanding, the environmental impact statement (EIS) process should start all over again.

Glenn Dobbs was out of the country and unavailable for comment yesterday, but his son and Mines Management president Doug Dobbs said Mines Management was in compliancy with all environmental regulations.

Mines Management was not aware of Wall’s lawsuit until after it was filed, Doug Dobbs said. He was reluctant to comment on the lawsuit without first seeing it.

Montanore Minerals Corp. – a wholly owned subsidiary of Mines Management – was currently working to advance the Montanore Silver-Copper Project through the final steps in the permitting process, Doug Dobbs said in a statement, late yesterday.

“The company’s activities and operations are conducted in accordance and in conformance with all of its permits currently in effect,” Doug Dobbs wrote. “The company’s policy is to respond appropriately to legitimate legal matters and will review news of any recent legal actions and respond if it deems necessary.

“The company is committed to advancing the Montanore project in a responsible manner as good neighbors within the community and as stewards to the environment.”