First majestic silver corp. (AG, FR.TO) announced that on April 24, 2013, the Supreme Court of British Columbia ruled in favour of First Majestic with respect to the previously reported litigation against Hector Davila Santos (not related to the company's Chief Operating Officer, Ramon Davila) and Minera Arroyo Del Agua, S.A. de C.V., which subsequently became Minerales y Minas Mexicana, S.A. de C.V.
In November 2007, the company and its wholly-owned subsidiary, First Silver Reserve Inc. or "FSR" began an action against Hector Davila, the previous director, President & Chief Executive Officer of FSR. The company had alleged that while Hector Davila held the positions of director, President and Chief Executive Officer of FSR, he violated his fiduciary duty to FSR and that subsequently, through Minera Arroyo, he acquired the Bolanos Mine from Grupo Mexico for his own personal interest. FSR became a wholly owned subsidiary of First Majestic in September 2006.
The court concluded that the Bolanos opportunity belonged to FSR and that Hector Davila did in fact breach his fiduciary duty by acquiring the Bolanos Mine.
The court calculated in its ruling a net opportunity loss in favour of First Majestic in the amount of US$89.6 million, after reducing an initial amount of US$111 million for the post-acquisition investments of Hector Davila at the Bolanos Mine and applying a 15% reduction contingency.
The US$89.6 million judgment does not include pre-judgment interest or legal costs, of which a portion is recoverable, nor has the court ruled on Hector Davila's counterclaim for, among other things, interest charges on the about C$14.250 million which has been held in Hector Davila's lawyer's trust account since July 2009.
Under British Columbia law, Hector Davila has 30 days to appeal the April 24, 2013 judgment.
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