VANCOUVER, Aug. 31, 2016 /CNW/ - Goldgroup Mining Inc.
("Goldgroup" or the "Company") (TSX:GGA, OTC:GGAZF, BMV
SIX:GGAN.MX) is pleased to announce the favorable results and award
("Award") from the conclusion of the arbitration ("Arbitration")
between Goldgroup and Dyna USA,
Inc. ("DynaUSA"). The results and Award were issued by the American
Arbitration Association – International Centre for Dispute
Resolution ("Arbitrator" or "ICDR") on August 24, 2016. This Award is final, binding and
may be enforced in court. A copy of the Award has been filed on
SEDAR and posted to our website.
https://www.goldgroupmining.com/assets/docs/news/2016-08-24-icdr-award.pdf
In addition, the Company would like to respond to DynaUSA's
legal claims on its recent press release dated August 24, 2016.
Results and Award from Arbitration
Under Article 78 of the Mexican Commercial Code: "In
mercantile agreements, each party assumes his obligation in the
manner and terms he has chosen; the validity of the commercial
transaction depends neither on compliance with formalities nor on
specific requirements." In other words, commercial contracts
generally are enforceable as drafted. Measured against this
standard, the Arbitrator concluded that there is no doubt that
DynaUSA has failed to do what they are obligated to do under an
Earn-In/Option Agreement with Goldgroup, dated September 1, 2006 (the "Agreement").
The Award, in summary, clarifies several doubts arising from
misleading news releases issued by DynaUSA:
- The Award confirms that the Agreement is in full force and
effect;
- The expenditures made by DynaUSA without the approval of the
joint Management Committee have to be reimbursed to DynaResource
Mexico S.A. de C.V. ("DynaMexico"), an entity in which Goldgroup
owns 50% equity of, since Goldgroup did not participate in those
decisions;
- A detailed accountability assessment by DynaUSA must be done
for Goldgroup for the last 5 years when DynaUSA excluded Goldgroup
from the management of DynaMexico and delivered to Goldgroup within
20 days of the issuance of the Award;
- The use of the Power of Attorney of Mr. K.D. Diepholz to negate and circumvent the
Agreement was illegal;
- DynaUSA has acted in bad faith and breached the terms of the
Agreement;
- Certain amounts must be reimbursed to Goldgroup which includes
and not limited to the fees paid and to be paid in the Mexico City case related to the current
dispute;
- A fifth director must be jointly appointed in DynaMexico and
the names of prospective candidates exchanged by the parties, no
later than 10 calendar days from the date of the Award ; and
- The deliberate dilution by DynaUSA of Goldgroup's equity
interest in DynaMexico was illegal and therefore invalid.
The Award was rendered in Denver according to the US Federal Arbitration
Act and is fully enforceable in the
United States without the need of going through the Mexican
judiciary, since the main defendant was DynaUSA, an American
company, domiciled in Texas. The
merits of the case and the arbitration award are not subject to any
review by any court in the US or abroad. Canada, the US and Mexico are signatories of the UN Convention on
the Recognition and Enforcement of Foreign Arbitral Awards which
provides for the enforcement and recognition of arbitral awards
with no authority to enter into the merits of the resolution by the
judicial authorities of the parties to that convention.
There may be more proceedings either in Mexico or in the U.S. However, as at the date
of this news release, the Company now has a clear definition and
legal direction from the Arbitrator.
In detail, the Arbitrator awarded the following to
Goldgroup:
- Agreement remains in full force and effect, and is enforceable,
in accordance with its terms. This includes, without limitation,
the arbitration clause in the Agreement.
- DynaUSA has breached its obligations to Goldgroup under the
Agreement, each breach of the Agreement is also a breach of
DynaUSA's obligations to act in good faith, which is required under
the Agreement pursuant to Mexican law.
- Each of Goldgroup and DynaUSA are entitled to appoint two
directors to the board of directors of DynaMexico, and the board of
directors shall consist of a total of five members. Within no later
than 30 calendar days (i.e by September 23,
2016) from August 24, 2016,
Goldgroup and DynaUSA shall hold a meeting of the Shareholders of
DynaMexico for the purpose of appointing the fifth member of
DynaMexico's Board of Directors, as required under the Agreement.
Each of Goldgroup and DynaUSA shall act in good faith with respect
to this appointment. The parties shall exchange, in writing, the
names of potential candidates for the fifth director by no later
than 10 calendar days (no later than September 3, 2016) from the date of the
Award.
- Per the Agreement, the Management Committee shall continue to
exist unless and until the parties agree otherwise in writing. The
Management Committee has all of the authority and responsibilities
described in the Agreement. The Management Committee has the
authority to approve a budget for any expenditures ("Expenditures")
within the terms of the Agreement. Any Expenditures that are not
included in a budget approved by the Management Committee are
improper and unauthorized. The powers of attorney purportedly
granted to Mr. Diepholz (Chairman and Chief Executive Officer
("CEO") of DynaUSA) before the date of the Agreement cannot validly
be construed to authorize Mr. Diepholz to circumvent the Management
Committee's power to approve and oversee Expenditures. Therefore,
unless the parties agree otherwise in writing, neither Mr. Diepholz
nor anyone else, has any authority to cause DynaMexico to incur
Expenditures that are not included in a budget approved by the
Management Committee and overseen by the Management Committee.
- By no later than 20 calendar days (no later than September 13, 2016) from the date of this Award,
DynaUSA must account to Goldgroup, in writing and with
particularity and in detail, for any and all Expenditures that
DynaMexico has incurred since June
2011. Further, any Expenditures that have been incurred
since June 2011 that were not
included in a budget approved by the Management Committee were
improper, and must be refunded to DynaMexico by no later than 45
days from the date of this Award. To the extent that Mr. Diepholz
caused DynaMexico to incur Expenditures that were not authorized by
the Management Committee, the Arbitrator concluded that Mr.
Diepholz (as DynaUSA's Chairman and CEO) was acting on DynaUSA's
behalf. Thus, as a shareholder in DynaMexico, DynaUSA must pay to
DynaMexico the full amount of the unauthorized Expenditures that it
(through Mr. Diepholz or otherwise) caused DynaMexico to incur from
June 2011 through (and including) the
date of this Award. The amounts that DynaUSA must pay to DynaMexico
include, without limitation, the amount of USD$1,044,952.46 for various legal and other
expenses that DynaUSA originally paid.
- By causing DynaMexico to issue new shares and thus dilute
Goldgroup's 50% equity interest in DynaMexico, Dyna breached its
obligations of acting in good faith under the Agreement and
otherwise acted in violation of Goldgroup's rights under the
Agreement. Although the Arbitrator concluded that Goldgroup is
entitled to a declaration that Dyna breached its obligation of good
faith under the Agreement and otherwise acted in violation of
Goldgroup's rights under the Agreement, the Arbitrator lacked the
extraterritorial jurisdiction to order DynaMexico to hold a
shareholders' meeting to rescind the unauthorized issuance of new
shares to DynaUSA. The Arbitrator recommended Goldgroup remedy the
situation through the Mazatlan Litigation, the Mexican court
proceedings under which Goldgroup is asserting its non-arbitral
claims for breaches of DynaMexico's bylaws and the Mexican General
Law of Commercial Companies.
- For the reasons explained above, DynaUSA must pay Goldgroup a
total of USD$403,913.92 including
- (i) USD$325,000.00 for attorneys'
fees and costs attributable to Holland & Hart;
- (ii) USD$2,795.00 for the cost of
the hearing transcript; and
- (iii) USD$76,118.92 for
attorneys' fees and costs attributable to Loperena, Lerch y
Martin Del Campo.
- The administrative fees and expenses of the ICDR, totaling
USD$20,800.00, and the compensation
and expenses of the Arbitrator, totaling USD$64,813.00, shall be borne entirely by
DynaUSA. Therefore, DynaUSA shall reimburse Goldgroup the sum of
USD$85,613.00, representing that
portion of said fees and expenses in excess of the apportioned
costs previously incurred by Goldgroup, upon demonstration by
Goldgroup that these incurred costs have been paid.
- As DynaUSA sought to enjoin this arbitration through
Mexico City litigation, DynaUSA
flagrantly and in bad faith breached their obligations under the
Agreement and thus has caused harm to Goldgroup. DynaUSA must
promptly reimburse Goldgroup for all amounts that Goldgroup incurs
to challenge the order of the court in the Mexico City litigation concerning
arbitrability .
DynaUSA press release dated August
24, 2016
Goldgroup would like to address DynaUSA's legal claims against
the Company, which were press released on August 24, 2016 and October 13, 2015. Goldgroup will mainly focus on
the legal claim in regards to DynaUSA's award in excess of
USD$48 million in damages against the
Company.
Goldgroup's position in response to the US$48 million claim remains the same with its
previous press release (see Goldgroup's October 14, 2015 press release). Goldgroup was
never notified of the purported court case, and does not recognize
any of the claims mentioned therein and is of the belief that such
claims are entirely without merit. More importantly, the Company
expects the claim to be voided due to the unambiguous result and
Award in favor of Goldgroup.
"After years of legal disputes, we are getting closer to
regaining control of San Jose de
Gracia," said Keith Piggott,
Chairman, President and CEO of Goldgroup, "We'll continue to work
towards the enforcement through a Federal United States judge to
monetize the Award." Mr. Piggott also commented, "Due to the Award
from the Arbitration, Dyna's award of damages in excess of USD
$48 million against Goldgroup, by
virtue of a ruling issued on October 5,
2015 by the Thirty Sixth Civil Court of the Superior Court
of Justice of the Federal District of México, is voided."
Goldgroup is a Canadian-based gold production, development, and
exploration Company with significant upside in a portfolio of
projects in Mexico, including a
50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of the
high-grade gold exploration project, San José de Gracia located in the State of Sinaloa. The Company also operates
its 100%-owned Cerro Prieto
heap-leach gold mine, in the State of
Sonora.
Goldgroup is led by a team of highly successful and seasoned
individuals with extensive expertise in mine development, corporate
finance, and exploration in Mexico. Goldgroup's mission is to increase
gold production, mineral resources, profitability and cash flow,
with a view to building a leading gold producer in Mexico.
For further information on Goldgroup, please
visit www.goldgroupmining.com
On behalf of the Board of Directors,
Mr. Keith
Piggott, Chairman, President and CEO
Tel:
1-520-247-5753
Investor Relations
Toll Free:
1-877-655-ozAu (6928)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
INFORMATION
Certain information contained in this news release, including
any information relating to future financial or operating
performance, may be considered "forward-looking information"
(within the meaning of applicable Canadian securities law) and
"forward-looking statements" (within the meaning of the United
States Private Securities Litigation Reform Act of 1995). These
statements relate to analyses and other information that are based
on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. Actual results could
differ materially from the conclusions, forecasts and projections
contained in such forward-looking information. These
forward-looking statements reflect Goldgroup's current internal
projections, expectations or beliefs and are based on information
currently available to Goldgroup. In some cases forward-looking
information can be identified by terminology such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe",
"estimate", "projects", "potential", "scheduled", "forecast",
"budget" or the negative of those terms or other comparable
terminology. Certain assumptions have been made regarding the
Company's plans at the Cerro
Prieto project. Many of these assumptions are based on
factors and events that are not within the control of Goldgroup and
there is no assurance they will prove to be correct.
Forward-looking information is subject to a variety of known and
unknown risks, uncertainties and other factors that could cause
actual events or results to materially differ from those reflected
in the forward-looking information, and are developed based on
assumptions about such risks, uncertainties and other factors
including, without limitation: uncertainties related to actual
capital costs, operating costs and expenditures, production
schedules and economic returns from Goldgroup's projects;
uncertainties associated with development activities; uncertainties
inherent in the estimation of mineral resources and precious metal
recoveries; uncertainties related to current global economic
conditions; fluctuations in precious and base metal prices;
uncertainties related to the availability of future financing;
potential difficulties with joint venture partners; risks that
Goldgroup's title to its property could be challenged; political
and country risk; risks associated with Goldgroup being subject to
government regulation; risks associated with surface rights;
environmental risks; Goldgroup's need to attract and retain
qualified personnel; risks associated with potential conflicts of
interest; Goldgroup's lack of experience in overseeing the
construction of a mining project; risks related to the integration
of businesses and assets acquired by Goldgroup; uncertainties
related to the competitiveness of the mining industry; risk
associated with theft; risk of water shortages and risks associated
with competition for water; uninsured risks and inadequate
insurance coverage; risks associated with potential legal
proceedings; risks associated with community relations; outside
contractor risks; risks related to archaeological sites; foreign
currency risks; risks associated with security and human rights;
and risks related to the need for reclamation activities on
Goldgroup's properties, as well as the risk factors disclosed in
Goldgroup's Annual Information Form and MD&A. Any and all of
the forward-looking information contained in this news release is
qualified by these cautionary statements. Although Goldgroup
believes that the forward-looking information contained in this
news release is based on reasonable assumptions, readers cannot be
assured that actual results will be consistent with such
statements. Accordingly, readers are cautioned against placing
undue reliance on forward-looking information. Goldgroup expressly
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, events or otherwise, except as may be required by, and
in accordance with, applicable securities laws.
SOURCE Goldgroup Mining Inc.