Mining company files for NAFTA arbitration

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Asks for $50 million, claiming sacred site law devalued property

SACRAMENTO, Calif. - A mining company previously at the center of
controversy over the proximity of a project to an American Indian sacred
site is now seeking $50 million under the North American Free Trade
Agreement (NAFTA).

Vancouver, British Columbia-based Glamis Gold Ltd. has filed an arbitration
claim alleging that the company suffered huge financial losses after
legislation and regulation was passed in California prohibiting the company
from extracting gold from a site in the southern California desert.

The move is the latest chapter in a nine-year-long dispute pitting Glamis
against the Quechan tribe, whose members reside on the Fort Yuma
Reservation in southeastern California. In the late 1990s the tribe
objected to Glamis' proposed 880-foot-deep and mile-wide open pit cyanide
leaching gold mining operation, claiming the mine would be too close to an
area near Indian Pass that they held sacred.

This is part of a network of points and braided trails known by the Quechan
as the "spirit trail" which ultimately links two mountains in the southern
California desert: Avikwaame, or Indian Pass, in the north and Avikwala, or
Pilot's Knob, in the south.

Though Glamis claimed the mine would actually sit a few miles away from the
site, the tribe countered that it would still sit within the bounds of an
area regarded by the tribe as sacred.

A 1996 company claim on the property said the mine was projected to average
103,500 ounces of gold annually over a 10-year period.

Glamis Senior Vice President Chuck Jeannes, who works out of the U.S.
company headquarters in Reno, Nev., contends that the state laws and
regulations - passed after Glamis proposed the mine - constitute a seizure
of property. He cited the property's devaluation in light of the new
regulations.

Jeannes said the company had three possible avenues to file a suit. One
option would have been in federal court, another in state court and the
third through the NAFTA tribunal. He said Glamis opted for NAFTA because he
believed it would produce a quicker result.

"We didn't want to be a Canadian company suing the state of California in
California courts," said Jeannes.

Jeannes explained that the suit's $50 million figure was derived from an
unnamed third party's property assessment.

The move has drawn fire from not only the Quechan but from environmental
and labor groups as well, including the Sierra Club and Public Citizen, an
organization headed by noted consumer advocate and former presidential
candidate Ralph Nader. The Associated Press reported that these groups and
two California lawmakers claim that such moves through NAFTA serve to
undermine state and local laws aimed at protecting environmental and labor
concerns.

Quechan has waged an aggressive public relations campaign to protect the
area in question, even having the area listed as one of the 11 Most
Endangered Historic Places in the United States by the National Trust for
Historic Preservation. Their efforts paid off with a proposed legislation
that passed the state legislature in 2002, only to be vetoed by then-Gov.
Gray Davis. That legislation had called for sweeping protections for
California sacred sites.

Although he vetoed the bill, Davis promised Quechan Tribal Chairman Mike
Jackson that he wanted to find a way to specifically protect the Indian
Pass area. Legislation was then crafted and signed by Davis in 2003
specifically targeting open-pit mines.

The language of that bill dealt directly with open pit mining operations
near sacred sites, requiring all such projects to be backfilled and
restored to pre-mining conditions. This move and the California Mining and
Geology Board's subsequent regulatory actions rendered the project
unfeasible for Glamis, and the company filed for arbitration.

In NAFTA arbitration, each of the parties involved in the arbitration
action, in this case Glamis and the U.S. Department of Justice, gets to
choose one of the arbitrators on the panel. A third arbitrator, accepted by
both parties, serves as the president of the panel. Unlike federal and
state courts, panel members do not have to be judges or even attorneys.
However, they are likely to have backgrounds in foreign trade.

"What you don't see on these kinds of panels are many Indians or even
environmentalists, for that matter," said Quechan tribal attorney Courtney
Coyle.

Coyle said the tribe sent the federal government a letter indicating that
the tribe will be involved with the proceedings, although its level of
involvement is still unknown at this early stage since the case will not be
likely be heard until next year.

Federal officials would not comment specifically on the case, saying they
would post more information on their Web site after meeting with other
government agencies. They said they would defend against the arbitration
"vigorously."