Aur, Louvem dispute makes operator status unclear at Louvicourt

Under the original 50/50 joint venture agreement between the two companies, project management reverts from Aur to Louvem once they elect to go underground.

At a special Aur shareholders meeting in Toronto, Gill admitted that Louvem could try to get a court injunction to prevent Aur from starting an underground exploration program at the discovery site.

But Gill said he didn’t know whether or not such an attempt would be successful.

Having outlined potential reserves of more than 20 million tonnes grading about 3.5% copper, 2% zinc and 0.04 oz (1.24 g) gold per tonne, Aur could begin an underground program within six months.

But lawsuits launched recently by both companies against one another could put a snag in the property’s future development.

However, an alleged default by Louvem on a $40,000 joint venture payment gives Aur the right to remain as operator while Louvem’s interest is diluted from 50% to 25%, according to Gill.

Louvem denies that a default ever occurred and it is attempting to win full ownership of the entire Louvicourt Twp. property via a lawsuit filed recently in the Quebec Superior Court.

“No one wants to see the underground program put on hold,” said Gill, who admitted that he could live with Louvem if the Val d’Or- based company retains the right to be underground operator at Louvicourt. Under that scenario, “Noranda Minerals would be involved in a heavy way,” said the Aur president, who was referring to a recent private placement agreement involving Noranda and Louvem.

Under a similar deal that will increase Aur’s cash position to around $50 million, Vancouver companies Teck Corp. (TSE) and Cominco Ltd. (TSE) agreed to purchase a 19% stake in Aur for $35.5 million.

“It is unlikely that the property will be in production before the end of 1992,” Gill said. Capital cost of a 6,000-ton-per-day operation would be $150-200 million, he predicted.

At the meeting, Aur got shareholders’ approval for a 1-million share private placement and a plan to transfer its head office to Val d’Or from Toronto. Aur’s executive offices will remain in Toronto.

Shareholders also voted to elect Owen Owens, Cominco’s vice- president of exploration to the Aur board of directors.

Gill said he is receptive to any proposal from Louvem before the dispute is heard in court. “But I have heard nothing yet,” he said.

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