Chilian to appeal suit ruling and continue gold exploration

After losing a court battle which has cost his company about $1.25 million, Metalore Resources (TSE) President George Chilian could be forgiven if he chose to quit the mining game. When an Ontario court judge handed Metalore’s 18-claim Brookbank gold property in northern Ontario back to Ontex Resources (ASE) on Dec. 18, the value of Chilian’s stake in Metalore dropped to $1.92 million from $5.5 million.

Chilian, who holds approximately 550,000 of Metalore’s 1.6 million outstanding shares, could only watch as the price of the shares dropped to $3.50 from $10 in a single day’s trading.

“It’s certainly a setback but we are still in the exploration business and we plan to stay,” said Chilian, who has spent 35 years in mining. Instead, he is appealing the decision and will attempt to regain some of the money spent on the Beardmore, Ont., property that was awarded to Ontex.

“We have been pressed financially to pay the legal bills. Our first priority is to get ourselves back on our feet financially and do some drilling next summer,” he said.

Chilian said he was surprised when the Ontario court ruled that Metalore had breached its fiduciary duty to Ontex and was guilty of fraud. Following the ruling, the court judge rescinded two contracts signed in 1981 and 1983 between Ontex and Metalore on the Brookbank property which is now held 100% by Ontex.

While the claims host preliminary reserves of 1.4 million tons grading 0.26 oz. gold per ton, Chilian said he hopes to find more gold deposits on claims located near Brookbank.

“What the judge did was to award Ontex everything that was staked after the first discovery hole was drilled between February, 1984, and March, 1986,” said Chilian. According to his interpretation of the court ruling, everything else is exempt.

As a result, there are 39 claims located on either side of the Brookbank property, which Chilian said are still under option by Metalore to Placer Dome (TSE).

Having staked a lot of ground in the region since the ruling was handed down, Chilian said he plans to conduct exploration on 64 claims in nearby Leduc and Watters twps.

Meanwhile, Chilian maintains he is no stranger to either adversity or law suits. “In the mid-1960s when we first started our gas operations in southern Ontario, two directors tried to sue me for diverting funds from mining properties to less important gas prospects,” he said.

Two proxy fights and a court fight later, the gas properties are still in production and last year they contributed $220,124 in revenues to Metalore’s financial results. “Metalore was just a penny stock at that time,” he said.