River, Vencan end legal dispute (February 28, 2000)

A long-standing dispute over the profitability of the Edwards gold mine, near Wawa, Ont., has been settled.

River Gold Mines (RIV-T) has paid Vencan Gold (VCG-M) $1.5 million in cash and a 3% net smelter return royalty for mining leases covering the Edwards mine and adjacent Plowman claim.

The dispute between the companies was related to ore mined and custom-milled by River from the Edwards mine since 1996. Vencan claimed it was owed $1.5 million because the profits had been wrongly calculated up to the end of 1997. Both sides have now agreed to drop all legal action.

Under the deal, 43 claims on the Edwards property, previously covered by a 1996 option agreement between the two companies, have been returned to Vencan. Vencan was paid $500,000 at closing and was to have received the balance by presstime.

The company will use the proceeds to pay back its current working capital deficit and finance drilling aimed at extending gold-bearing quartz zones at the Edwards-Chine shear zone on the Edwards property. Vencan maintains a large chunk of land along the shear zone.

In the Vencan boardroom, Bruce Edgar was elected to the board of directors in January, replacing C.T. Wilson, who resigned.

Vencan still faces another legal battle: on April 17, the Ontario Court of Appeal is scheduled to hear an appeal by Extender Minerals of Canada against a 1998 decision by the Ontario Court to dismiss a $75-million claim against Vencan. The court had previously ordered Extender to cover Vencan’s $195,000 legal bills for a case involving Extender’s allegations of wrongful dealing by Vencan concerning a 50% interest in production from the Edwards mine.