Ontex and Metalore settle legal dispute

One of the longest running legal disputes in recent mining history has come to an end.

Ontex Resources (ONT-T) and Metalore Resources (met-t) began their legal battle over the Brookbank property in 1986. Ontex, which optioned the gold property to Metalore in 1981, alleged that in 1983 Metalore withheld material information and induced Ontex to enter into a new agreement. Ontex also alleged that Metalore continued to withhold material information and staked more claims without informining its partner.

Ontex won the first round of the battle in 1990, when an Ontario Court rescinded two contracts between the companies and returned the property to Ontex.

In a bid to regain control of the project, Metalore President George Chilian appealed the ruling to the Ontario Court of Appeal. A year later, Placer Dome dropped out of a plan to earn 60% of the gold project, which, at last report, contained a resource of 1.4 million tons grading 0.26 oz. gold per ton.

Metalore won its appeal in mid-1993, and regained the right to earn a 100% interest in the property under the original 1981 agreement. The judge, however, set aside the 1983 agreement between the companies after finding that Metalore and Chilian had “deliberately and knowingly secreted and witheld” a geological report from Ontex, which was “manifestly improper” and “incompatible with the standards of fair dealing.”

Ontex sought leave to the ruling to the Supreme Court of Canada but was denied.

The latest development was related to this year’s judgment which required Metalore to pay Ontex $1.16 million, plus accumulated interest. Accordingly, an appeal and cross appeal of

a judgment for costs were withdrawn.

Ontex currently owns 100% of the Brookbank property, which is under option to Metalore. Under the agreement (and providing that Metalore brings forward a program and written commitment to place the property into production), Ontex may transfer Brookbank to Metalore for a 30% net royalty interest, or maintain a 40% participating interest and grant 60% to Metalore.

If Metalore fails to bring forward such a program by early 1999, Ontex may elect to develop the property and grant Metalore a 60% interest. If none of the above occur, Brookbank will revert to Ontex by July, 2001.