Dispute at Hemlo’s Golden Giant

Toronto stock promoter Charles Stuart has threatened to get a court injunction to stop Hemlo Gold Mines (TSE) from mining a group of northwestern Ontario claims which he says are rightfully his. In a bid to test an Ontario Mining Act which some exectives have called antiquated and in need of reform, Stuart recently had 148 claims along the Hemlo gold belt restaked. Located on the claims is a small area of land that houses Hemlo Gold’s Golden Giant mine which produced 369,300 oz gold last year. Noranda Inc. (TSE) holds a stake in Golden Giant through a 50% interest in Hemlo Gold Mines.

According to Stuart, 128 of those claims were restaked by a Noranda Inc. subsidiary back in 1982 after irregularities were pointed out by a mine claims inspector. Since the claims were registered on Dec 3, 1982, the same day that they were abandoned, Noranda acted illegally, in Stuart’s opinion.

Under the Ontario Mining Act, claims that are abandoned must come open for prospecting and staking 11 days after the mine recorder posts a notice of abandonment.

To prove Stuart’s theory, the claims were staked once again by prospector Ozias Theriault, during an undercover operation which began late last month. Records office

But because they are currently under lease from the province of Ontario by Noranda Inc., the mining records office in Thunder Bay Ont., refused to register the claims when Theriault attempted to have them recorded June 17.

“The lands are under a valid lease to Noranda and there are no other rights there to be staked,” said Stephen Stepinac, legal director for the Ontario Ministry of Northern Development and Mines.

While Toronto lawyer James McCartney says Stuart is wasting his time in trying to lay claim to the Hemlo ground, the controversial stock promoter remains undaunted.

“You cannot restake ground that has already been staked,” said Stuart who claims that under the Ontario Mining Act, a mining recorder does not have the authority to cancel one claim and substitute it for another.

For that reason, he believes the Hemlo claims are his.

“I will get an injunction to stop Hemlo from mining my ground and then we will sit down and discuss the matter,” said Stuart. He is currently vetting a number of Toronto lawyers before hiring a 6-man legal team to act as advisors, but refused to name any of those involved. Prized asset

But John Harvey, president of Hemlo Gold doubts that his company is in danger of losing its prized asset. Based on advise from lawyers at Toronto-based McCarthy and McCarthy which acts as legal counsel to Hemlo Gold, Harvey is confident that there is nothing to be concerned about.

“We have had our legal people look at it and they have recommended that we take no action at this time,” Harvey told The Northern Miner.

Nevertheless, he blames a loophole in the Ontario Mining Act for the controversy in which Hemlo Gold now finds itself. He said the Act, as it now stands doesn’t fully protect companies which have staked their claims via proxy. Under the proxy system, mining companies arrange for an agent to do their claim staking.

“The only way around the act is to restake claims, originally staked via proxy, by going around and putting the stakes in yourself,” he said.

According to Harvey, the Mining Act was designed at a time when prospectors were staking only a couple of claims at a time, whereas the larger companies now stake up to 30 claims at one attempt.

Meanwhile, if he fails to have the Hemlo claims registered in Thunder Bay, Stuart has a number of alternatives open to him, according to Stepinac. Baslen issue

“He can either appeal the mining recorder’s decision not to register the claims with the Mining and Lands Commissioner in Toronto,” said Stepinac. If that fails, he can seek a court declaration that there are mining lands still open for staking.

If Stuart is successful, he said he will deal the claims to International Baslen Enterprises which has been one of the volume leaders on the Alberta Stock Exchange.

Sparked by news that the company will be offered a participation in the disputed Hemlo claims, the Baslen issue closed at $2.45 June 17 (when trading was halted). A mere three months ago, it was trading in the 50 cents range.

“We’re in a modern era and the Ontario Mining Act hasn’t been brought up to date,” said Harvey. “Perhaps this business will persuade the Ontario government how antiquated the mining act really is,” he said.