UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 16,
1997
HOMESTAKE MINING COMPANY
(Exact name of Registrant as specified in its charter)
DELAWARE 1-8736 94-2934609
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
650 CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94108-2788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 981-8150
HTTP://WWW.HOMESTAKE.COM
<PAGE>
ITEM 5. OTHER EVENTS.
1. Termination of Troilus Mine Acquisition.
In October 1997, the Company announced that Homestake Canada
Inc. ("HCI"), a wholly-owned subsidiary of the Company, and Prime
Resources Group Inc. ("Prime," 50.6% owned by HCI), had entered
into an agreement to purchase the Troilus gold mine in Quebec
from Inmet Mining Corporation ("Inmet"). On December 10, 1997,
the Company announced that HCI and Prime had terminated the
agreement to acquire the Troilus mine. HCI and Prime determined
that on the basis of due diligence studies, the conditions of the
offer to purchase would not be satisfied and accordingly that
they would not proceed with the transaction as announced. HCI
and Prime have been advised by Inmet that Inmet disputes the
termination of the agreement. The Company's press release with
respect to the termination of the agreement is included as
Exhibit 99.11 to this Form 8-K Report.
2. South Dakota Natural Resource Damages Claims.
Reference is made to Part II - Other Information: Item 1 -
Legal Proceedings, of the Company's Form 10-Q Report for the
quarter ended June 30, 1997. In that report, the Company
disclosed that it had received a letter from the United States
Fish and Wildlife Service stating that the Department of the
Interior intended to file suit, subject to final approval of the
Department of Justice, against the Company's wholly-owned
subsidiary, Homestake Mining Company of California ("HMCC"), to
recover alleged natural resource damages and assessment costs
under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") and the Clean Water Act with respect to
alleged releases of hazardous substances at Whitewood Creek in
South Dakota. HMCC agreed to a limited waiver of statutes of
limitations until November 26, 1997.
Reference also is made to Part II - Other Information: Item
1 - Legal Proceedings, of the Company's Form 10-Q Report for the
quarter ended September 30, 1997. In that report, the Company
reported that on September 25, 1997 the State of South Dakota
filed an action against HMCC, State of South Dakota v. Homestake
Mining Company of California, U.S. Dist. Ct., W.D.S.D., Civ.
Action No. 97-5078. The action relates to the same general
matter which is the subject of the above referenced letter -
placement of mine tailings in Whitewood Creek. In the complaint,
the State of South Dakota alleges that HMCC disposed of mine
tailings in Whitewood Creek and that such disposal resulted in
injuries to natural resources in Whitewood Creek and downstream
in the Belle Fourche River, the Cheyenne River and Lake Oahe on
the Missouri River (the "NRD Site"). The complaint also alleges
that the State of South Dakota incurred assessment costs. The
State of South Dakota claims that it is a trustee authorized
under CERCLA to bring such action. The complaint also contains a
pendent state law claim, alleging that the tailings placed in
Whitewood Creek constitute a continuing public nuisance in and
around the NRD Site downstream from Whitewood Creek. The
complaint asks for abatement of the nuisance, damages in an
unascertained amount, costs and interest.
<PAGE>
Whitewood Creek was a site where mining companies operating
in the Black Hills of South Dakota, including HMCC, placed mine
tailings beginning in the nineteenth century. Some tailings
placed in Whitewood Creek eventually flowed into the Belle
Fourche River and downstream therefrom. Placement of mine
tailings into Whitewood Creek was authorized by the laws of the
United States, the Dakota territory and the State of South
Dakota, and Whitewood Creek was later specifically designated by
the State of South Dakota as a disposal stream for mine tailings
and for the disposal of raw sewage and other municipal waste.
Consequently, all mine tailings placed by HMCC in Whitewood Creek
were placed there with the consent and encouragement of the State
of South Dakota and the United States government and in
compliance with applicable laws. In response to changes in legal
requirements, HMCC ceased the placement of mine tailings into
Whitewood Creek and for many years the Homestake mine has
impounded all mine tailings that are not redeposited in the mine.
In its answer, HMCC denied that there has been any
continuing damage to natural resources or nuisance caused by HMCC
as a result of the placement of tailings in Whitewood Creek.
Among other defenses, it is also the position of HMCC that as a
result of the State of South Dakota's ownership of Whitewood
Creek and designation of Whitewood Creek as an authorized
disposal site under state authority, the State of South Dakota
was and is the owner and operator of the Whitewood Creek waste
disposal site and is responsible for all past and future damages
and any continuing nuisance resulting therefrom. HMCC has also
counterclaimed against the State of South Dakota seeking cost
recovery, contribution and indemnity from the State of South
Dakota, in its capacity as an owner and operator of a disposal
facility, for expenses previously incurred and to be incurred in
the future with respect to Whitewood Creek and downstream areas.
On November 25, 1997, the United States government and the
Cheyenne River Sioux Tribe filed an action against HMCC, United
States of America et al. v. Homestake Mining Company of
California, U.S. Dist. Ct, W.D.S.D., Civ. Action No. 97-5100.
This action relates to the matters referenced in the letter
described above and which are the subject of the federal cause of
action brought by the State of South Dakota, described above,
with respect to the NRD Site. The complaint seeks response costs
and damages in unspecified amounts, costs and attorneys fees.
HMCC intends to vigorously defend these actions and to seek
recovery, contribution and indemnity from the State of South
Dakota, federal, state and other government entities and
agencies, and other persons who participated in ownership and/or
operation or otherwise encouraged use of Whitewood Creek as a
waste disposal site, who disposed of waste in any part of the NRD
Site, or who have owned property or otherwise conducted
activities which may have contributed to any alleged damage in
the NRD Site. The Company's press release with respect to the
filing of the federal trustees' action is included as Exhibit
99.12 to this Form 8-K Report.
In the opinion of the Company, there is no basis for the
claims by the State of South Dakota or by the federal government
and the Cheyenne River Sioux Tribe. The Company is also of the
opinion that HMCC has valid defenses and counterclaims against
the State of South
<PAGE>
Dakota, the United States government, other
governmental entities and agencies, and other persons who
participated in ownership and/or operation or otherwise
encouraged use of Whitewood Creek as a waste disposal site, who
disposed of waste in the NRD Site, or who have owned property or
otherwise conducted activity within the NRD Site which may have
contributed to any alleged damage. The Company does not believe
that resolution of these matters will have a material adverse
effect on the business or financial condition or results of
operations of the Company.
As previously reported in the Company's Form 10-K Annual
Reports, an 18-mile stretch of land along Whitewood Creek on
which tailings were deposited was designated as a superfund site
and placed on the National Priorities List ("NPL") in 1983.
During the period from 1982 through 1990 extensive studies of the
superfund site were conducted to identify any public health and
environmental issues related to the site and appropriate remedial
action. In August 1990, HMCC signed a consent decree with the
United States Environmental Protection Agency ("EPA") in United
States of America v. Homestake Mining Company of California, U.S.
Dist. Ct., W.D.S.D., Civ. Action No. 90-5101. Under the Consent
Decree, HMCC conducted remedial work at its expense and also
reimbursed the EPA for its oversight costs. Remedial field work
was completed in 1993. The decree also provided for the three
counties in which the property is located to enact institutional
controls which would limit the future use of the property
included within the area of the superfund site. Institutional
controls were adopted in all three counties. In addition, HMCC
offered to purchase all properties along Whitewood Creek that
were affected by the institutional controls. Approximately $3
million has been spent to date to acquire property along
Whitewood Creek and the Company estimates that the total cost for
purchasing all of the remaining affected property would be an
additional $3 million.
The Consent Decree was terminated by the Court on January
10, 1996. The Whitewood Creek site was deleted from the NPL on
August 13, 1996. In the deletion notice, the EPA stated that
"EPA, in consultation with the State of South Dakota, have
determined that the Site poses no significant threat to public
health or the environment."
3. Arbitration with Goldstake Explorations (S.D.) Inc.
On September 24, 1997, Whitewood Development Corporation
("WDC"), a wholly-owned subsidiary of the Company, terminated its
joint venture with Goldstake Explorations (S.D.) Inc.
("Goldstake") for non-payment by Goldstake of its joint venture
payment obligations. The joint venture had been formed in 1988
with respect to the possible mining of tailings along Whitewood
Creek. In connection with that termination, WDC exercised its
right under the joint venture agreement to purchase Goldstake's
interest in the joint venture for appraised value less amounts
owed by Goldstake to WDC. WDC also commenced an arbitration
proceeding to confirm the existence of Goldstake's breach. In
its answer, Goldstake denied that it was in breach and raised
various defenses and counterclaims, including alleged fraud by
WDC in connection with formation and continuing activity under
the joint venture agreement, and allegations that WDC had failed
to obtain permits to permit Goldstake to engage in mining of
joint venture owned and leased property.
<PAGE>
This is the third arbitration between the parties. In the
first arbitration, Goldstake had claimed that WDC had
fraudulently induced Goldstake to enter into the joint venture
agreement and sought damages in the amount of $79 million. The
fraud allegation was rejected by the arbitrators. The
arbitration award in the first arbitration also provided that WDC
was to apply for permits to construct and operate a mine and
mill, and for WDC to pay to Goldstake up to $1.5 million if the
permits were not secured by December 31, 1996. All amounts
payable under that order have been paid. In the second
arbitration between the parties, the arbitrators confirmed that
Goldstake was obligated to pay 20% of all costs incurred in
connection with applying for permits and 50% of all other costs
incurred by the joint venture. WDC believes that Goldstake's
defenses and contentions are without merit and WDC intends to
vigorously pursue its claims and to defend against Goldstake's
claims.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99.11 Press Release dated December 10, 1997
announcing Homestake Mining Company and its 50.6%-
owned subsidiary, Prime Resources Group Inc., will
not proceed with the purchase of the Troilus gold
mine from Inmet Mining Corporation.
Exhibit 99.12 Press Release dated November 26, 1997 issuing
Homestake Mining Company's response to the federal
government's announcement regarding Whitewood
Creek.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: December 16, 1997
HOMESTAKE MINING COMPANY
(Registrant)
By: /s/ Gene G. Elam
Gene G. Elam
Vice President, Finance and
Chief Financial Officer
By: /s/ David W. Peat
David W. Peat
Vice President and Controller
EXHIBIT 99.11
Homestake Mining Company
650 California Street
San Francisco, CA 94108
Phone: 415/981-8150
Fax: 415/397-5038
Contact:
Michael A. Steeves
Director, Investor Relations
415-983-8169
HOMESTAKE AND PRIME RESOURCES WILL NOT COMPLETE
TROILUS ACQUISITION
San Francisco, CA, December 10, 1997 -- Homestake Mining Company
(NYSE:HM) ("Homestake")and Prime Resources Group Inc.
(TSE,VSE,AMEX:PRU, a 50.6% owned subsidiary of Homestake)
("Prime") announced today that they will not proceed with the
US$110 million purchase of the Troilus gold mine ("Troilus") from
Inmet Mining Corporation. Homestake and Prime had previously
announced their intention to purchase respectively a 51% interest
and a 49% interest in the Troilus mine.
Homestake and Prime have determined on the basis of due diligence
studies that the conditions of the offer to purchase the Troilus
mine will not be satisfied and accordingly they will not proceed
with the transaction as announced.
Homestake Mining Company is an international gold mining company
with substantial operations and exploration in the United States,
Canada and Australia. Homestake also has active exploration
programs in Latin America, and development and/or evaluation
projects in Chile and Bulgaria. Homestake has received numerous
industry environmental and safety awards for its responsible
environmental health and safety stewardships.
EXHIBIT 99.12
Homestake Mining Company
650 California Street
San Francisco, CA 94108
Phone: 415/981-8150
Fax: 415/397-5038
Contact:
Harold F. Barnes
Director, Environmental, Health,
Safety & Govt. Affairs
415-983-8109
HOMESTAKE RESPONDS TO FEDERAL GOVERNMENT ACTION ON
WHITEWOOD CREEK
San Francisco, CA November 26, 1997 -- Homestake Mining Company
(NYSE:HM) today issued the following statement in response to the
federal government's announcement regarding Whitewood Creek:
Homestake's extensive rehabilitative efforts and expenditure of
more than $100 million have made Whitewood Creek a healthy,
reproductive ecosystem that includes a trout fishery. While
Homestake recognizes the federal government's responsibilities,
we believe that this lawsuit is tantamount to double jeopardy.
We have worked with the Environmental Protection Agency ("EPA")
and all other appropriate federal and South Dakota agencies on
Whitewood Creek for more than two decades and have gone above and
beyond the federal government's prescribed remedy. After
exhaustive studies and evaluation, the EPA deleted the Whitewood
Creek Superfund site from the EPA's National Priority List
("NPL"), marking the first time that a Superfund mining site has
ever been deleted from the NPL. In fact, the EPA commended
Homestake's efforts that fulfilled the required remediation under
the Record of Decision.
Homestake has always acted in accordance with all governing laws
and standards at Whitewood Creek, which was designated as a
disposal stream for mine tailings and municipal waste for nearly
100 years. As the law changed concerning Whitewood Creek,
Homestake acted as a responsible corporate citizen, funding and
constructing a $70 million tailings impoundment and a $26 million
biological wastewater treatment plant.
<PAGE>
The State of South Dakota filed a similar action against
Homestake in September 1997. In its legal response, the Company
noted that South Dakota arranged for Homestake and other mining
operators to place tailings into Whitewood Creek. Homestake has
counterclaimed against the State seeking reimbursement from South
Dakota for the Company's multi- million dollar investment in the
restoration of Whitewood Creek and for future costs incurred in
connection with the site.
While Homestake remains hopeful of a constructive resolution to
this issue, we fully intend to vigorously protect our legal
rights and to seek contribution, indemnity and recovery from the
federal and other government agencies that were involved with the
licensing and operation of the site and who also have disposed of
material in the site. The Company does not anticipate that this
lawsuit will have any material impact on its financial results.
Homestake Mining Company is an international gold mining company
with substantial operations and exploration in the United States,
Canada and Australia. Homestake also has active exploration
programs in Latin America, and development and/or evaluation
projects in Chile, Russia and Bulgaria. Homestake has received
numerous industry environmental and safety awards for its
responsible environmental health and safety stewardships.
