Ontex, Noranda making similar claims

Two lawsuits involving members of the mining community currently under way revolve around claims of withheld information.

In the more recent of the two lawsuits, Noranda Inc. is suing Agnico-Eagle Mines, Dumagami Mines and Mentor Exploration and Development over the sale of about 1.5 million shares of Dumagami in February, 1986. Basically, Noranda is seeking return of the shares or its profits on those shares.

The property in question lies next to Lac Minerals’ Bousquet property in northwestern Quebec, between Rouyn-Noranda and Val d’Or; Dumagami says it hopes to be mining gold there by June or July, 1988.

In the second lawsuit, launched in June, 1986, by Ontex Resources against Metalore Resources, Ontex is seeking $500 million in damages or the return of the Brookbank gold property near Beardmore in northwestern Ontario. Metalore has filed a countersuit in which it is seeking $20 million in damages from Ontex for delay of the project.

Metalore in 1983 acquired a 100% interest in the Brookbank property from Ontex, with Ontex retaining a 10% net profits interest. Ontex alleges Metalore made a significant gold find on the property in 1983 and withheld that information; Metalore denies the allegation.

“At no time in 1983 did Metalore have information demonstrating the existence of any significant orebody,” Metalore says in its statement of defence.” No economically significant orebody has yet been positively delineated, although by the end of Metalore’s winter drilling program in February, 1986, the substantial possibility of an important discovery on one of the 18 leasehold claims was apparent.” Exploration stalled

The lawsuit is holding up further exploration of the property by Hudson Bay Gold, which has acquired, from Metalore, the right to earn a 100% interest in the property by sinking an 1,800-ft shaft and undertaking an underground exploration program. Hudson Bay has performed some surface drilling at the site.

Meanwhile, on land adjoining the Brookbank property, Metalore reports encouraging results from a deep-drilling program.

Central to the Noranda suit is exploration of the western part of the Dumagami property, where a gold deposit which bridges the boundary between the Dumagami and Lac properties was discovered.

“Full disclosure of the western program was not made,” Noranda alleges in its statement of claim. “Such disclosure as was made was tardy, inaccurate, incomplete and misleading, and led Noranda to the wrong belief about the potential for the property and that it would not be economic, and thus to the sale of its shares in Dumagami to Agnico-Eagle.” Follow-up drilling

Noranda says the western program was a follow-up to the results obtained from hole 85-23 drilled in August, 1985, and the program “included to the date of the sale agreement at least the drilling, assaying and analysis of some or all of underground drill holes 6-237 to 6-246 and surface drill holes 86-1 to 86-3.” Noranda says the program should have commenced “in or about August, 1985, when the results of drill hole 85-23 were known to them, but not to Noranda, instead of in December, 1985, and January, 1986.”

Noranda says it would have retained its shares in Dumagami, which it sold to Agnico-Eagle for $2 each. Noranda’s shareholding at the time represented 21% of Dumagami’s common shares. Noranda, Agnico-Eagle and Mentor were all principal shareholders of Dumagami.

Currently, Agnico-Eagle has a 22% interest in Dumagami and Mentor a 9% interest, with the remaining shares being publicly held. Agnico-Eagle has a 47.1% interest in Mentor. Agnico-Eagle, Dumagami and Mentor are operated out of the same Toronto office.