Dispute ends over private mining claims inside Denali

Posted: Thursday, June 20, 2002

FAIRBANKS (AP) -- A dispute over some of the remaining privately-owned mining claims within the borders of Denali National Park has ended in federal court.

Both sides in the lawsuit that pit the Kantishna Mining Co. against the Interior Department have agreed to drop their appeals of U.S. District Court Judge James Singleton's verdict.

The mining company will receive a little under $1 million from the government as compensation for the National Park Service effectively repossessing its claims in the park.

The amount is considerably less than the almost $8 million the company sought. However, it is substantially more than the $98,000 the government had offered for the claims before trial.

Chuck Gilbert, chief of the lands division for the Park Service in Alaska, said the ruling set a precedent for the prices afforded the remaining claimholders.

''It basically set expectations,'' he said. ''It basically facilitated settlements on the other claims.''

The lawsuit revolved around 14 mining claims filed by Kantishna Mining on Caribou Creek, in an area 16 1/2 miles past the end of Denali National Park's only road.

Missouri orthodontist John Hayhurst and Talkeetna pilot Leonard Kragness founded the company in 1981, purchased the claims in 1982 for roughly $185,000 and pulled more than 3,400 ounces of gold out of the creek between 1983 and 1985.

But in 1985, a court injunction filed against the government by environmental groups put a halt to all mining in Denali to study the practice's environmental impact.

The park was reopened to mining in 1991, but Kantishna Mining contended that the government was going through the motions and mining was effectively barred.

Kantishna Mining's lawsuit charged the Interior Department with repossessing its claims in 1991 and failing to compensate the owners for it. They placed the value of the claims at $7.93 million, an estimate based largely on the considerable amount of gold they believe remains on the property.

The Interior Department argued that the claims are mostly played out.

Singleton ruled that the land was worth $700,000 plus interest, which ultimately led to a total award of almost $1 million.

With the verdict lying between the two sides' offers, Singleton had to determine who was the actual victor in the case. At stake was Kantishna's $2.4 million legal bill.

The government was obliged to foot the bill if it was determined that Kantishna Mining in fact won the suit and that the government was not justified in bringing it in the first place.

Singleton in June 2001 denied Kantishna mining's request for the attorney fees. Appeals of the case were filed by both sides. In May, both sides agreed to drop their appeals and declare the case closed.

The Park Service has spent more than a decade and spent $11.2 million buying up the remaining claims in the park in an effort to restrict development within its boundaries.

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