Company sues over ouster from mill north of Elko

ELKO, Nev. - Golden Eagle International Inc. has filed a $40 million lawsuit against Yukon-Nevada Gold Corp. subsidiary Queenstake Resources USA over the operations of a mill at Jerritt Canyon Mine north of Elko.

The lawsuit filed Thursday in Elko District Court alleges breach of contract.

Vancouver, British Columbia-based Yukon-Nevada evicted Golden Eagle from the mill June 10 after the Nevada Division of Environmental Protection ordered a shutdown until new mercury emission controls are installed.

Salt Lake City-based Golden Eagle was hired in October to manage the mill site and prepare it to start processing gold ore stockpiles. It had been running the mill since April.

Golden Eagle attorney Barbara Torvinen says the suit alleges Golden Eagle was wrongfully ousted from Jerritt Canyon and is losing $40 million in fees and profits assured with the contract.

"In essence, the action cost 82 jobs. It's a significant issue, and Golden Eagle is on the hook for all those paychecks and benefits," she told the Elko Daily Free Press.

Queenstake said in a statement that it filed a lawsuit against Golden Eagle on June 10 and will oppose any counterclaims.

Queenstake's complaint accuses Golden Eagle of breach of good faith and negligence, and states that after an inspection, Queenstake discovered Golden Eagle has been operating the Jerritt Canyon Mill in a manner that falls well below industry standards, with production being far below what the parties had reasonably anticipated.

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Information from: Elko Daily Free Press, http://www.elkodaily.com

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