Genco Resources

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National Post says Genco resolves boardroom battle amicably

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Genco Resources Ltd.'s independent mining consultant, Kappes Cassidy & Associates of Reno, Nev., is nearing completion of the feasibility study respecting expansion of Genco's La Guitarra mine. The study is now anticipated to be completed and announced in mid-October.

In anticipation of receipt of the finished study, Genco continues to explore several financial relationships it has developed this year with a view to financing the expansion. In light of current financial conditions, Genco is also engaged in discussions with financial advisers regarding all strategic alternatives.

James R. Anderson and Robert C. Gardner, co-chairmen, stated, "We believe that the board's and management's significant ownership stake gives Genco the strength to implement the optimal course, and maximize shareholder value, during these unsettled economic times."

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Genco Resources Ltd.'s production at its La Guitarra mine has been temporarily suspended due to a walkout by employees of its mining contractor, SIMSA. Genco does not anticipate the walkout to have a significantly negative impact, although metal production may be below projected levels depending on length of the work stoppage.

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Genco Resources Ltd. has commenced legal action in the U.S. District Court of Arizona against Andover Ventures Inc., Gordon Blankstein, Robert Blankstein and Paul Eagland. The U.S. Court action is in addition to a lawsuit filed in the Supreme Court of British Columbia against Andover Ventures Inc. for alleged breaches of agreements respecting Andover's purchase from Genco of shares, representing a controlling interest in Chief Consolidated Mining Company. Chief owns the formerly producing Burgin and Trixie silver mines near Eureka, Utah.

Genco alleges that it has suffered damages as a result of the defendants' conduct in their dealings with Genco, Andover and Chief.

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Genco Resources Ltd. has retained Salman Partners Inc. as financial adviser to assist Genco as it considers potential opportunities in the areas of divestitures, acquisitions and mergers.

Salman Partners will work closely with the board of directors to analyze any inquiries Genco has received, or may receive, from third parties regarding potential business combinations or the disposition of existing assets, and will advise the board on strategies to maximize shareholder value.

Genco's acting chief executive officer, Robert Gardner, states, "We look forward to working with Salman Partners as we continue to explore opportunities to add value for Genco's shareholders during this period of market turbulence and uncertainty for many mining companies."

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Genco Resources Ltd. has settled all outstanding disputes and litigation with Andover Ventures Inc., Chief Consolidated Mining Company and W. Gordon Blankstein.

Genco's Acting CEO and Co-Chairman Robert Gardner states, "We are pleased that, with these disputes behind us, we can now move forward with financing and developing our core silver/gold asset in Mexico. In these uncertain economic times, precious metals are a highly desirable sector of the mining business."

The settlements stipulate a payment to Genco by Andover of CDN $5 Million within 18 months, with interest payable quarterly at US prime plus 2% (subject to a minimum rate of 4% per year), for the purchase of all shares of Chief owned by Genco, and the transfer of 2,000,000 Common Shares of Andover owned by Genco.