CELTIC Resources, the AIM-listed Irish mining company with extensive interests in the former Soviet Union, is seeking $200m (€166.4) in damages from the Russian-based Bank Zenit, a former creditor, for alleged breach of trust, according to a writ issued in the London High Court of Justice.

The case centres around a small loan made by the bank in 2001 to South Verkhoyansk Mining Company (SVMC), a then 50/50 joint venture between Celtic Resources and IG Alrosa, which owns the Nezhdaninskoye gold mine in the east of Russia, sources close to Celtic Resources said. Celtic offered 30% of SVMC — or 60% of its own stake — as collateral for the loan.

SVMC repaid the loan on time in October, 2002. However, the shares, which Celtic claim Bank Zenit was supposed to hold in trust, are alleged to have been transferred to two Cayman Island-registered companies — Goldinvest Corp and Davenport, the sources said.

That year, Celtic Resources started legal action in the Cayman Islands to “reinstate its rights” over the shares. This case has not been completed and the action in London represents a widening of the long-drawn battle, sources said.

Bank Zenit was not available for comment. Meanwhile, it was announced last month that IG Alrosa has sold its 50% stake in SVMC to Polyus, the largest gold producer in Russia, which belongs to Norilsk Nickel, the world’s biggest nickel producer. Celtic Resources had originally been interested in the stake — however, it is now keen to begin talks with its new partner on Nezhdaninskoye.