Toronto, Ontario, Canada October 24 2008 Sulliden Exploration Inc. (TSX: SUE) reports this update on the litigation concerning the dispute with regard to Sulliden’s ownership of the Shahuindo gold/silver property in Peru.
As previously announced, in July 2008 Sulliden and Algamarca agreed to temporarily suspend the appeal proceedings before the Supreme Court of Peru pending further negotiations on a possible settlement of the Shahuindo dispute and litigation. These negotiations are continuing but have not yet resulted in a resolution of the dispute.
The Supreme Court of Peru has fixed November 13, 2008 for the hearing of Sulliden’s appeals in three separate legal proceedings.
Supreme Court hearing on Arbitration
1. By resolution dated July 24, 2008 the Supreme Court of Peru ordered the suspension for a period of sixty days of the hearing of the appeal taken by Sulliden against the decision of the Commercial Chamber of the Superior Court of Lima dated August 9, 2007 granting Algamarca’s Nullity Petition against the Arbitration Decision of July 2006, which had declared that Sulliden had fully met the terms and obligations of the Shahuindo Transfer Contract dated November 6, 2002, and declaring null and void the Arbitration Decision. By unanimous decision dated December 13, 2007 the Supreme Court of Peru agreed to hear Sulliden’s appeal. The Supreme Court of Peru has now fixed November 13th for the hearing of Sulliden’s appeal.
Supreme Court to also hear two other Sulliden Appeals
2. The Supreme Court of Peru has also fixed the date of November 13, 2008 to hear Sulliden’s appeal against the decision of the Superior Court of Cajamarca dated January 18, 2008, confirming the decision of the Civil Judge of San Marcos dated January 20, 2006 granting an injunction against certain officers of Sulliden from entering the Shahuindo property.
In 2003 Algamarca had commenced a civil action against certain Sulliden employees seeking possession of the mining concessions at Shahuindo and in 2004 obtained a temporary injunction against Sulliden and its employees from the Civil Court of San Marcos. Upon the hearing of the action the Court of San Marcos in its decision issued January 20, 2006 accepted the motion of Algamarca. Sulliden appealed to the Superior Court of Cajamarca which by Resolution dated February 24, 2006 confirmed the Resolution of the Judge of San Marcos. Sulliden appealed to the Supreme Court of Peru which by Resolution dated May 8, 2007 upheld Sulliden’s appeal and overturned the Resolution of the Superior Court of Cajamarca and directed the Court of Cajamarca to reconsider the action taking into consideration all of the arguments and new facts presented by Sulliden.
In January 2008, the Superior Court of Cajamarca again considered the action and again granted the motion of Algamarca. Sulliden again appealed to the Supreme Court of Peru and this appeal will now be heard on November 13, 2008.
3.The Supreme Court of Peru has also fixed the date of November 13, 2008 to hear Sulliden’s appeal against the decision of the Superior Court of Lima dated May 9, 2007, which refused Sulliden’s appeal against a resolution of the Registry Tribunal of the National Superintendente of Public Registers SUNARP (Peruvian Title Registry) rejecting the original registration of 20 of the Shahuindo mining concessions in Sulliden’s name. Although all mining concessions at Shahuindo were all subsequently registered in Sulliden’s name, Sulliden is maintaining this appeal against the earlier decisions of the Superior Court of Lima and the SUNARP as a technical matter in order to protect the priority of its registration.
ADDITIONAL LITIGATION APPEALS NOT INCLUDED IN NOVEMBER 13, 2008 HEARING
Cancellation of Sulliden’s injunction referred to Supreme Court
(A) Following the Arbitration Decision of July 2006 Sulliden had obtained an Injunction from the 55th Civil Judge of Lima ordering Algamarca to comply with the Arbitration Decision. Following the decision of the Commercial Chamber of August 2007 granting Algamarca’s Nullity Petition against the Arbitration Decision, Algamarca applied to the 55th Civil Court of Lima to have Sulliden’s injunction nullified.
Algamarca’s application was granted by another Judge of the 55th Civil Court of Lima and the injunction was cancelled on September 12, 2007. Sulliden appealed against that decision. The new Judge also rejected Algamarca’s application for certified copies of the decision cancelling the injunction pending Sulliden’s appeal and Algamarca cross appealed that rejection.
By resolution dated October 15, 2007 the Civil Chamber of the Superior Court of Lima declared that it was not competent to hear the appeals and sent the appeals to the Commercial Chamber of the Superior Court.
By resolutions dated October 16 and October 20, 2008 the Commercial Chamber of the Superior Court of Lima decided that it did not have the competency to resolve the appeals and ordered that the matter be referred to the Supreme Court of Peru to resolve the conflict of jurisdiction between the Civil and Commercial Courts and to decide if the Civil Court or the Commercial Chamber is the proper court of competency. The reference of this conflict to the Supreme Court of Peru is still pending.
Sulliden’s Appeal of Decision of 10th Civil Court on validity of Contract
(B) Algamarca had re-activated a civil action in the 64th Civil Court of Lima, originally filed in 2004, seeking a declaration of nullity of the Transfer Contract dated November 6, 2002. This action was transferred to the 10th Civil Court of Lima. On June 19, 2008, the 10th Civil Court of Lima issued its decision declaring the nullity of the Transfer Contract. On July 10, 2008 Sulliden filed an appeal against the decision to the Superior Court of Lima and appeal is still pending.
In addition, at the same time, Sulliden also filed a formal complaint against the Judge of the 10th Civil Court. That complaint has now been reviewed by the ODICMA (Supervisor of Judges), and by resolution dated September 18, 2008, (notified October 17, 2008) the ODICMA opened an investigation against the 10th Civil Judge. If the ODICMA investigation results in an adverse finding against the 10th Civil Judge her decision of June 19, 2008 will be nullified. The results of the investigation will also be utilized in Sulliden’s appeal of that decision to the Superior Court.
SUMMARY
The Supreme Court of Peru has indicated that it wishes to accumulate three of Sulliden’s appeals and has fixed November 13, 2008 to hear all three separate applications on the same date. The most significant is Sulliden’s appeal of the decision of the Commercial Chamber nullifying the Arbitration Decision and Award.
Sulliden’s appeal against the decision of the 55th Civil Court, which cancelled the injunction previously granted to Sulliden enforcing the Arbitration Award, has also been referred to the Supreme Court of Peru on October 20, 2008 for the purposes of determining the appropriate Court or jurisdiction to hear the appeal.
Finally, Sulliden’s appeal against the decision of the 10th Civil Court declaring the nullity of the Transfer Contract is pending before the Superior Court of Lima, while at the same time an official investigation was initiated on September 18, 2008 against the Judge of the 10th Civil Court who issued that decision.
COMMENT
The ongoing numerous legal procedures, petitions, motions and appeals in the Shahuindo litigation are continuing. As previously stated, Sulliden remains confident that the outcome of the various legal procedures will ultimately be decided in Sulliden’s favour. Most of the substantive issues to date have been resolved in Sulliden’s favour however, as in any litigation where there is a dispute, Sulliden cannot predict with certainty the outcome of the various legal actions or the impact of these actions on Sulliden’s rights and entitlements to the Shahuindo property.
Notwithstanding the ongoing litigation and various appeals, Sulliden is continuing in negotiations with Algamarca on a possible settlement of the Shahuindo litigation and dispute. However there can be no assurance that these negotiations will reach a satisfactory conclusion and Sulliden cannot predict the outcome of the negotiations for a potential settlement.
The foregoing is a summary only of the certain aspects of the Shahuindo litigation. A more detailed review of the background to the dispute and ongoing litigation may be found in Sulliden’s Annual Information Form for the year ended April 30th, 2008, and in Management’s Discussion and Analysis for the quarter ended July 31, 2008, both available on ww.sedar.com.
For further information please contact us at Sulliden Exploration Inc. at (416) 703-8287 or via email at contact@sulliden.com.
ABOUT SULLIDEN:
Sulliden Exploration Inc. is a mineral exploration company focused on the development of its Shahuindo gold and silver Project. The Shahuindo project is located in northern Peru, in one of the world’s most prospective gold and silver regions, sitting approximately 25 km north of Barrick’s Laguanas Norte-Alto Chicama 1,100,000 oz/gold per year mine; 70 km south of Newmont’s multi-million oz/gold Yanacocha district and 200 km north of Barrick’s Pierina 650,000 oz/gold per year mine.
The Shahuindo resource stands at 38 million tonnes grading 0.95 g/t Au and 22.99 g/t Ag, containing 1.2 million oz of gold and 28 million oz of silver (equivalent to 1.6 million oz of gold at a gold to silver ratio of 1:60) in the Indicated Category; and 17.2 million tonnes grading 0.62 g/t Au and 12.83 g/t Ag, containing 342,000 oz of gold and 7 million oz of silver (equivalent to 460,000 oz of gold at a gold to silver ratio of 1:60) in the Inferred Category - (Resource Estimation – Met-Chem Canada Inc. April 2005 filed on www.sedar.com).
Caution regarding forward-looking information:
Statements contained in this document which are not historical facts are forward-looking statements that involve risk, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. This forward-looking information includes, or may be based upon, estimates, forecasts, and statements as to management’s expectations with respect to, among other things, the outcome of legal proceedings, the issue of permits, the size and quality of the company’s mineral resources, progress in development of mineral properties, future production and sales volumes, capital and mine production costs, demand and market outlook for metals, future metal prices and treatment and refining charges, and the financial results of the company. Factors that could cause such differences, without limiting the generality of the following, include: volatility and sensitivity to market metal prices impact of change in foreign currency exchange rates and interest rates; imprecision in reserves estimates; environmental risks including increased regulatory burdens; unexpected geological conditions; adverse mining conditions; political risks arising from operating in developing countries; legal title to properties, outcome of litigation, changes in government regulations and policies, including laws and policies; and failure to obtain necessary permits and approvals from government authorities; and other development and operating risks.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that mineral resources will be converted into mineral reserves.
Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this document. The Company disclaims any intention or obligation to update or revised any forward-looking statement, whether as a result of new information, future events or otherwise.
Contacts:
John F. Kearney, President
Tel: (416) 703-8287
e-mail: contact@sulliden.com
Craig A. Geier, Vice President, CFO
Tel: (416) 703-8287
e-mail: craig.geier@sulliden.com
