Goldrich Mining Provides Arbitration Update
SPOKANE, WA – December 11, 2020 - Goldrich Mining Company (OTCBB: GRMC) (“Goldrich” or the “Company) provides an update on its arbitration proceedings concerning Goldrich NyacAU Placer, LLC (“GNP”), a 50:50 joint venture company formed between Goldrich and NyacAU, LLC (“NyacAU”) to operate Goldrich’s Chandalar placer mine. GNP is in the process of being liquidated with NyacAU as the liquidator. The following is a summary of additional rulings recently received from the arbitration panel.
2018 Profitability and 2018 Interim Distributions
Under the GNP Operating Agreement, Goldrich was entitled to receive certain interim distributions based on GNP’s profitability. Goldrich received such distributions for 2016 and 2017. Goldrich challenged the Panel’s understanding of facts related to GNP’s profitability for 2018 as presented in the arbitration proceedings and made a motion for GNP to distribute interim distributions for 2018 after applying the arbitration rulings made to date. Goldrich submitted a claim to the arbitration panel for approximately $680,000 plus prejudgment interest thereon at 5%. The arbitration panel denied Goldrich’s claim. Based on the panel’s ruling, the paydown by NyacAU, as manager of GNP, of Line of Credit 1 (“LOC1”) with GNP funds, rather than the payment of a 2018 interim distribution to Goldrich, is not considered a misappropriation of funds. LOC1 is a related party loan between GNP and NyacAU.
The panel ruled that GNP was dissolved at the end of the 2018 mining season (September 28, 2018) by failing to meet the Minimum Production Requirement of the GNP Operating Agreement rather than May 2019, when NyacAU published a formal notice of dissolution to the State of Alaska and to creditors. Based on this and other evidence, the Panel found that GNP was dissolved by no later than October 9, 2018, which precedes the date by which any interim distribution would otherwise have been due under the GNP Operating Agreement (October 31 - December 31, 2018). Accordingly, the panel ruled that Goldrich is precluded from receiving any interim distributions for 2018 under the GNP Operating Agreement, which provides that “[m]embers have a right to Distributions from the Company before the dissolution and winding up of the Company.”
Goldrich’s Portion of Interest Paid on LOC1
Under the GNP Operating Agreement, Goldrich is to receive 50% of any interest on LOC1 paid by GNP to NyacAU. Goldrich made a claim to the arbitration panel that GNP had paid interest to NyacAU and that Goldrich was entitled to 50% of the amount paid. The panel ruled that NyacAU is obligated to pay Goldrich 50% of $241,797 in interest “received” by NyacAU up to October 2018, when GNP was dissolved and commenced liquidation, in the total principal amount of $120,883. Goldrich is also entitled to recover 5% prejudgment interest on unpaid LOC1 interest as it fell due. The panel further ruled that LOC1 interest totaled (cumulatively) $3,394.21 as of December 2012; $22,663.46 as of December 2013; $55,632.71 as of December 2014; $101,823.60 as of December 2015; $155,337.06 as of December 2016; $205,817.76 as of December 2017; and $241,797.20 as of October 1, 2018. Goldrich is awarded 12 months of accrued prejudgment interest at 5% per annum on each of these year-end amounts. Goldrich has no entitlement to a share of LOC1 interest beyond this.
Clarification of Award
In the Partial Final Award given in 2019, the arbitration panel made an award to NyacAU of $377,253 in damages and pre-award interest relating to 2012 reclamation expenses incurred on Goldrich’s behalf. Goldrich made an “Application for Modification and Correction of Arbitration Award, for Vacation of Award, or for Resubmission to Arbitration Panel for Clarification”, requesting an order from the Alaska court, under the Alaska Arbitration Act, that the damages awarded for unpaid 2012 reclamation expenses were to be paid to GNP, not NyacAU, and that the panel clarify the appropriate amount of damages and interest to be paid. The panel ruled that it will resolve these issues after the parties submit evidence and argument supporting their respective positions on the merits.
About Goldrich Mining
Goldrich Mining (OTCBB: GRMC) is a U.S. based resource company focused on developing the Chandalar gold district in Alaska, USA. The Company controls a land package spanning 23,000 acres of highly prospective gold targets and historic mines. Goldrich is focused on building shareholder value by monetizing placer assets, generating non-dilutive funds, and working towards building a lode gold mine at Chandalar in addition to the existing placer gold mine already producing on site.