Mining Quarterly NewsAn update on the litigation going on...
Employees could still negotiate with Queenstake
By ADELLA HARDING - Mining Quarterly Editor
Published: Tuesday, March 9, 2010 5:47 PM CST
ELKO — Negotiations are still possible between lawyers for former Jerritt Canyon Mine employees and Queenstake Resources before an April 26 hearing in Reno on Queenstake’s motion to dismiss the class-action lawsuit.
“Nothing prevents a negotiated settlement prior to that time,” Queenstake attorney Gary DiGrazia said, reporting there also is a case management conference on March 23 for lawyers on both sides.
Travis Gerber, the lawyer for the employees who were only paid half of their severance pay when Queenstake shut down the Jerritt Canyon Mine north of Elko in August 2008, laying off 400 workers, questioned why Queenstake is paying off vendors but not the employees.
“They’re paying all the contractors now and put the employees on the back burner,” he said.Queenstake is up and running again, with underground mining under way at the Smith Mine, which is operated by Small Mine Development, and gold production at the mill.
Queenstake parent Yukon-Nevada Gold Corp. Chief Operating Officer Graham Dickson said in a Mining Quarterly interview last month that the company was paying back vendors since resuming gold production, but the company couldn’t simply pay back employees while a lawsuit is pending.
“It’s a simple lawsuit,” Gerber said, explaining that the employees are seeking the other half of the severance pay and payment of medical claims. “They’re stalling this out.”
DiGrazia said negotiations are necessary to resolve the multiple claims, and he said he thought the two sides were going to negotiate back in December but apparently there was “some confusion.”
The motion hearing on April 26 will be held in U.S. District Court in Reno, where a handful of employees filed their lawsuit. Roughly 150 employees have put in their names since then, Gerber said.
Queenstake in turn filed a lawsuit in the federal court asking the court to dismiss the employee lawsuit.The employees accused Queenstake of breach of contract, violation of the WARN Act that requires advanced layoff notifications and compensation for employees for their back severance and medical claims, and put the estimated value at $5 million.
Gerber said he didn’t have the figures of what Queenstake actually owed employees, however.
DiGrazia said he believes the number is under $5 million.
Reno attorneys are working on the lawsuits for both sides — Mark Thierman for Gerber and Anthony Hall and Dora Lane for Queenstake.
The overall issue is whether Queenstake and parent Yukon-Nevada can bring in enough revenue to cover all their bills, and Yukon-Nevada reported last week the company signed an agreement letter with a banking firm, BNP Paribas-New York, to help the company arrange financing for projects at Jerritt Canyon.
With the financing, Queenstake hopes to reopen the SSX and Steer underground mines, seek permitting to develop the Starvation Canyon site and look for additional ore sources.
Dickson said last month that Jerritt Canyon has 152 employees and SMD has 30 workers on site.