BC Court rules in favour of First Majestic
TORONTO (miningweekly.com) – The Supreme Court of British Columbia (BC) this week ruled in favour of Mexico-focused silver producer First Majestic after lengthy litigation against Hector Davila Santos (not related to the company's COO Ramon Davila) and Minera Arroyo Del Agua, which subsequently became Minerales y Minas Mexicana.
In November 2007, First Majestic and its subsidiary First Silver Reserve (FSR) started an action against Davila, the previous director, president and CEO of FSR, alleging, among other things, that while Davila held the company positions, he violated his fiduciary duty to FSR and that subsequently, through Minera Arroyo, he acquired the Bolanos mine from Grupo Mexico for his own personal interest.
FSR became a wholly owned subsidiary of First Majestic in September 2006.
The Honourable Justice Myers concluded that the Bolanos opportunity belonged to FSR and that Davila did in fact breach his fiduciary duty by acquiring the Bolanos mine.
Justice Myers calculated in his ruling a net opportunity loss in favour of First Majestic of $89.6-million, after reducing an initial amount of $111-million for the post-acquisition investments of Davila at the Bolanos mine and applying a 15% reduction contingency.
The $89.6-million judgment did not include prejudgment interest or legal costs, of which a portion was recoverable, nor had the court ruled on Davila's counterclaim for, among other things, interest charges on the about C$14.25-million that had been held in Davila's lawyer's trust account since July 2009.
Justice Myers was still to rule on these issues, together with other outstanding issues, on a date yet to be scheduled. Under BC law, Davila had 30 days to appeal the judgment.
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