Base Metals: Consolidated Zinc scores legal win against 'intimidation' tactics by former contractor

If recent news is anything to go by, there’s rarely a dull moment for Consolidated Zinc (ASX:CZL) at its Plomosas mining operations in Mexico.

Shares in the company got a boost this morning after it announced a legal victory as part of a dispute with a former contractor at the site.

It caps off a week of volatility for the resources minnow, which surged on January 30 following the discovery of a “high-grade gold in a mineralised system” at Plomosas.

The stock then slumped on Monday, with markets seemingly unimpressed with Consolidated Zinc’s quarterly results update. But today’s announcement gave rise to another 30 per cent gain for the company, which has a market capitalisation of around $10m.

Getting spicy in Chihuahua

Caminos y Construcciones Ganti (Ganti) carried out construction work for Consolidated Zinc’s fully-owned Mexican subsidiary (MLAZ) until November 25 last year, when the contract was “terminated”, Consolidated Zinc said.

However, according to the company’s announcement the matter didn’t end there.

Ganti skipped the usual mediation procedures and took MLAZ straight to the Federal District Court of Chihuahua. That action was met with a counterclaim by MLAZ.

Then on January 31, Ganti took things into its own hands.

Representatives from the company arrived unannounced at the MLAZ offices, “seizing control of financial records and physical inventory”.

According the Consolidated Zinc, the board was advised that this behaviour “significantly exceeded” the orders granted to Ganti by the District Court, in connection with Ganti’s initial complaint.

Then on February 4, the court rescinded those orders — a development which formed the crux of today’s announcement. Consolidated Zinc flagged the news as a victory against Ganti’s “intimidation and excessive actions”.

In the end, the move by Ganti reps to storm the MLAZ offices proved to be only a “minor and temporary disruption”, and Consolidated Zinc’s Plomosas mine was unaffected, the company said.

In other ASX base metals news today:

Minerals explorer Cullen Resources (ASX:CUL) provided an exploration update for its Wongan Hills project, 180km north of Perth. The company said recent drilling had intersected a “zone of anomalous copper”, while re-assay results for tungsten composites were “significant and supportive of VHMS-type mineralisation”. Shares in the company were unchanged at 1.2c.