In May, an agreement was finalized transferring 199 state mining claims on the Big Chunk "Super Project" site from Liberty Star Uranium and Metals to Northern Dynasty, the sole owner of the Pebble Mine project north of Iliamna.
Along with 95 mineral claims transferred in 2010, Northern Dynasty now owns 294 claims on the Big Chunk copper and gold deposit, which lies a few miles north of Pebble.
The transfer settles a 2010 cash loan from Northern Dynasty, which Liberty Star was never able to repay.
The deal began when Northern Dynasty staked Liberty Star $1 million in cash in return for the direct purchase of 95 Big Chunk claims. Liberty Star put the 199 claims up as collateral for an additional $3 million loan from Northern Dynasty.
When Northern Dynasty called for repayment of that loan in the fall of 2012, Liberty Star was bound to transfer the remaining claims in lieu of the cash payment. With interest, the balance of the loan had risen to $3,730,174.
The deal was put on hold, however, by another company also owed money by Liberty Star. MBGS LLC, an Alaska Native-owned contracting firm, had put a lien on the 199 claims after alleging Liberty Star had failed to pay some $320,000 for services provided during the drilling season of 2012.
MBGS LLC filed suit against Liberty Star in December 2012. The lawsuit was settled in March 2014, when Liberty Star agreed to give MBGS 1 million shares of company stock and all of the equipment and property at the camp site.
When the lien was removed, Liberty Star was able to transfer the 199 claims to Northern Dynasty to satisfy the loan terms. Their agreement was signed May 12.
There are other signs that Liberty Star, an "exploration stage" mining company based out of Tucson, Ariz., is in poor financial shape. A 2013 year-end statement filed in May reports the company had only $55,089 cash on hand, and had a net loss of $2,318,047 for the 12-month period ended Jan. 31, 2014. The company reported a net loss the previous year of about the same amount. It continues to borrow heavily, and its stock price is trading at just over $0.01 per share.
According to a December 2013 press release, Liberty Star has dumped all but 54 mineral claims (12 square miles) at Big Chunk. Just a year prior, the company held 612 state mining claims (177 square miles) at the site and was continuing geologic work to try and prove the deposit was perhaps similar in scope and value to Pebble.
The company says it has "reduced all land that previous studies confirm lack anomalies for porphyry copper deposits," and that the remaining 54 claims are directly centered over the "promising anomalies."
In that December release, CEO Jim Briscoe said the "problems that have caused Anglo American to withdraw from the area" were similarly bad for Liberty Star, and that the money that would have been used for holding costs on the dumped claims will be used to shore up other prospects in Arizona.
This story first appeared in The Bristol Bay Times/Dutch Harbor Fisherman and is republished here with permission.
By DAVE BENDINGER
Bristol Bay Times