Aur suing for $81 million as Louvem mum on law suit

Aur and Louvem are joint venture partners at the Louvicourt Twp. base metal project, east of Val d’Or, Que., which is thought to contain at least 18 milli on tons of grade 2.8% copper and 2.8% zinc.

Back in April, Aur initiated legal proceedings against Louvem, St. Genevieve Resources (TSE) and Cambior Inc. (TSE) after a bid by Aur to purchase 12 million Louvem shares fell through. St. Genevieve holds a 56% stake in Louvem.

Had it gone through, the $8.3- million agreement would have given Aur a 65% stake in Louvem and control of a number of properties including the Chimo gold mine.

Aur decided to sue for alleged breach of contract after Louvem agreed to sell a 50% stake in the Chimo mine to Cambior. According to Aur Vice-president Peter McCarter, his company has increased the compensation it is seeking to $81 million from $75 million to allow for a substantial hike in the price of Louvem shares.

When the proposed agreement was announced in March, Louvem shares were trading at around 50 cents on the Toronto Stock Exchange. Drilling results from Louvicourt Twp. has since driven them up to $5.63.

In a separate development, Aur is also seeking a declaration from a Quebec Superior Court that Louvem’s 50% working interest in the Louvicourt Twp. discovery can be reduced to a 25% net profits interest.

Aur has said all along that a clause in the joint venture agreement gave it the right to dilute Louvem’s interest after the latter company defaulted on a $40,000 exploration payment. Louvem Chairman Pierre Gauthier claims that the alleged default resulted from a cost overrun which wasn’t approved by a joint venture committee and that he will defend Louvem’s right to a 50% interest in court if necessary. If Aur gets a favorable decision, its stake at Louvicourt would increase from 50% to 100%.

The second lawsuit won’t prevent Aur and Louvem from settling out of court, but the fact that the dispute is now before the courts means that it will be settled sooner rather than later, McCarter told The Northern Miner. “If we can’t get the thing settled out of court we will have a quicker resolution than if we had waited,” he said.

The outcome of the Louvicourt dispute will be of interest to Vancouver-based Cominco Ltd. (TSE) and Teck Corp. (TSE) which have options to acquire a 19% stake in Aur. An affiliate of Noranda Inc. (TSE), which has agreed to take down 11.3% of Louvem’s outstanding shares, will also be monitoring the situation.

Asked if Louvem was going to launch a countersuit, Gauthier said, “We are going to do everything we need to do to protect our rights.”

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