Agnico-Eagle denies claims of withholding information

Claims by Noranda Inc. that exploration information about a gold property in northwestern Quebec was withheld prior to the sale of shares in one of the companies involved have been denied by Agnico-Eagle Mines, Mentor Exploration and Development and Dumagami Mines.

Noranda launched a lawsuit last November in the Supreme Court of Ontario seeking, among other alternatives, rescission of the sale in 1986 of the 1.5 million shares of Dumagami it dealt to Agnico-Eagle for $2 per share. The Dumagami property at the centre of the dispute comprises 26 claims and is located between Rouyn-Noranda and Val d’Or, next to the Bousquet project of Lac Minerals. Dumagami could have the property in production by this summer.

In their statement of defence, the Agnico-Eagle companies say Noranda was kept informed on a timely basis of all exploration work at the Dumagami property and that Noranda chose to rely on the former’s conduct of the exploration without critical comment or on-site inspections.

Noranda was well aware at the time of the sale of shares, the defendants claim, that the Agnico-Eagle companies were proposing to continue the exploration program in an effort to boost reserves and grade. They say Noranda was given all available engineering data, and that instead of agreeing to fund jointly the continuing exploration, Noranda chose to sell its shares. January meeting

The Agnico-Eagle companies say that on or about Jan 22, 1986, the two sides met, with the Agnico- Eagle representatives expressing the belief “that the property was one which could ultimately be put into production notwithstanding the current position of the technical consultants who felt that further exploration to prove additional ore reserves was needed.”

It was at that meeting, the Agnico-Eagle companies say, that Noranda took the position it no longer was interested in advancing further funds towards the project.

In its statement of claim, Noranda says the Agnico-Eagle companies withheld exploration information pertaining to the western part of the property, where a gold deposit bridges the boundary between the properties of Dumagami and Lac. Noranda says it would not have sold its shares in Dumagami to Agnico-Eagle had the information been disclosed.

The Agnico-Eagle companies deny any misrepresentation, misleading statements or failure to disclose information. They say “only after the fact, when through their continuing exploration program known to the plaintiff (Noranda), the defendants located significant additional mineralization, did the plaintiff have vendor’s remorse.”

At the time of the sale of the shares in February, 1986, Noranda’s shareholding represented a 21% interest in Dumagami; Agnico- Eagle had an approximate 10% interest and Mentor an approximate 18% interest. Currently, Agnico- Eagle has a 22% interest in Dumagami and Mentor 13%, with the balance of the shares publicly held. Agnico-Eagle has a 47.1% interest in Mentor.

Legal counsel for the Agnico- Eagle companies is I. W. Fefergrad of Fefergrad and Associates, while Ronald Slaght and Alan Lenczner of McCarthy and McCarthy are acting for Noranda.