CEOL
Miner denies settlement aim over Hungary cyanide spill

Sydney, Australia, Sep 1, 2000 -- (Reuters) Australian mining company Esmeralda Exploration Ltd has denied reports it was seeking an out-of-court settlement with the Hungarian government over a cyanide spill in the Tisza River.

"Esmeralda has not gone seeking a settlement," Kim Strickland, of accountancy Hall Chadwick, administrator of Esmeralda, told Reuters on Friday.

Chadwick said he was aware of a news report in Hungary about Esmeralda seeking a settlement.

Australian Radio Broadcasting Corp said Hungarian government spokeswoman Eva Montsko was reported to have said Esmeralda had sent representatives to Hungary for talks to find out if it would bend toward an out-of-court settlement.

More than 100 cubic meters of cyanide-tainted water from the Aural gold mine flowed into the Tisza River, Hungary's second biggest waterway, killing fish and other wildlife in January.

Strickland said an attorney for Hall Chadwick who traveled to Hungary last week sought further details from the government over a claim lodged by Hungary on July 10 asking Esmeralda for AUD 179 million (USD 103 million) in compensation.

"We are in no position to seek a settlement," he added.

The attorney had since returned to Australia.

Esmeralda owns 50 percent of the shares in a Romanian company, Aurul SA, which owns the Aurul SA Tailings Retreatment Project at Baia Mare in Romania. The Romanian government owns 45 percent of Aurul and Romanian business interests hold five percent.

Esmeralda appointed Hall Chadwick in March when it voluntarily entered into administration. Its shares have been suspended from trading at the Australian Stock Exchange since February 10.

Administration is a form of bankruptcy under which a company or its creditors appoint administrators to establish if the company can emerge from its difficulties or should be liquidated.

Esmeralda has admitted cyanide overflowed on January 30 into the Tisza River, which leads into the Danube, from dams designed to hold hazardous mine waste from a gold smelter.

But Strickland said since Esmeralda was only a shareholder in Aurul it should not be expected to admit liability for the disaster.

"Since when is a shareholder held liable," he said.



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