TECK CORP. Hemlo Mine’s Future in Judges’ Hands

By the time you read this, the Ontario Court of Appeal may have handed down one of the most important decisions ever made by a Canadian court concerning the mining industry — Lac Minerals vs. International Corona Resources.

But the court is under no timetable to reach its decision, even though ownership of the largest operating gold mine in Canada hangs in the balance. In March, 1986, an Ontario Supreme Court judge awarded to Corona the Page-Williams mine at Hemlo — upon payment of $154 million to Lac. The basis of that decision was that Lac had violated a fiduciary duty to the junior mining company when it acquired the rights to the patented claims on which the mine is located. Lac has appealed the decision.

The decision, if upheld, will have an affect far beyond the Page- Williams mine. The basis of the trial judge’s decision — the violation of a fiduciary duty — will have implications for many other dealings in the mining industry and in other areas of the law. In effect, it puts a much broader interpretation on what is considered to be a position of trust.

Corona is the company credited with making the initial Hemlo discovery in 1980 — the major Canadian gold discovery in this half of the twentieth century. Although its efforts to acquire the Page-Williams property were stopped when that property was acquired by Lac in mid-1981, Corona still controlled the ground where the David Bell gold mine was subsequently developed. In 1981, however, Corona didn’t have the resources to develop the David Bell mine itself, so it teamed up with Teck.

Since then, Teck and Corona have agreed to share, on a 50-50 joint-venture basis, all their interests within two miles of the David Bell mine. In other words, if the trial judge’s decision is upheld and Corona is awarded the Page-Williams mine, Teck will become an equal partner in that operation, too.

The Page-Williams mine and mill is designed to initially handle 3,300 tons of ore per day with a planned expansion to 6,600 tons per day in 1988. In 1987 the mine is expected to produce 250,000 oz of gold. Proven ore reserves are more than 4.5 million tons grading about 0.17 oz gold per ton. Probable reserves include a further 30 million tons grading 0.20 oz and 10 million tons of possible ore grading 0.18 oz.