An exploration company who struck gold in Co Mayo yesterday began an action seeking more than £2 million pounds in damages over the imposition by Mayo County Council of a mining ban in parts of the county.

Mr Paul Sreenan SC, for Glencar Exploration Company, said the damages claim was "very modest" and represented only his client's expenditure and overheads. Glencar was not coming into court saying how much they might have earned from gold prospecting in Co Mayo if the mining ban had not been imposed in 1991, he said.

While the mining ban was eventually overturned in 1992, his clients had lost their £2 million investment, counsel said.

A joint venture agreement reached with Newcrest, a specialist gold mining company in Australia, who undertook to pay another £1.6 million in return for a 51 per cent stake in the prospect, had also collapsed as a result of the mining ban.

The value of Glencar's shares on the Dublin Stock Exchange had also fallen from 30p a share before the ban to 12p in 1991.

Mr Sreenan said the company had tried to get a new joint venture partner but, notwithstanding the overturning of the ban, great damage had been done in the marketplace to confidence in mining in Co Mayo and negotiations with potential partners were unsuccessful.

The court was told the action for damages arose out the amendment of the Mayo County Development Plan which ultimately became the 1992 Development Plan for the county.