Canamax, Belmoral settle out-of-court over Ketza River

An out-of-court settlement has been reached between Canamax Resources (TSE) and Belmoral Mines (TSE) over Belmoral’s decision last year not to purchase Canamax’s half-interest in the Ketza River gold mine in the Yukon.

Terms of the settlement were not disclosed. Canamax filed a lawsuit last April alleging breach of contract by Belmoral, which filed a countersuit.

Toronto-based Belmoral had announced its intention to acquire both Canamax’s 50% interest and the outstanding shares of the owner of the other 50% of the mine, Pacific Trans-Ocean Resources (TSE). Belmoral was also set to pay off a bank debt owed by Pacific.

After taking three months to complete its due diligence, Belmoral called the deal off. President Ken Dalton said the Ketza mine’s production potential was misrepresented.

The Ketza mine went into production in July, 1988. The mine suffered from startup problems; reserves had been miscalculated during the feasibility stage and had to be down-sized.

Canamax, subsequent to the initiation of the lawsuits, struck a deal to purchase Pacific’s 50% interest in the mine, which produced about 38,000 oz. gold in 1989.

Meanwhile, Belmoral recently raised $1.5 million in a flow- through financing with Middlefield Resources Fund II. The agreement involved the issuance of about 1.49 million shares by Belmoral.