Unhappy with its lot in the aborted Windy Craggy project, Falconbridge (TSE) is reportedly mulling possible legal action.
The company holds a 22.5% net profits interest in the property, which was expropriated from owner Geddes Resources (TSE) by the British Columbia government in 1993.
The province has since agreed to a compensation package as part of a combined deal with Royal Oak Mines (TSE) to develop the Kemess South copper-gold project in north-central British Columbia.
That agreement will see Royal Oak acquire all of Geddes, as well as El Condor Resources (VSE) and St. Philips Resources (TSE), 60-40 owners, respectively, of Kemess South.
Falco is not included in the compensation agreement.
Royal Oak’s information circular on the takeover agreement reported that Falco intended to commence litigation proceedings against Geddes, Royal Oak and the provincial government unless an acceptable offer of compensation was received before Sept. 8, 1995.
Graham Eacott, a spokesman for Royal Oak and Geddes, says Falco has yet to launch legal action, and he stressed that the company’s claim is without merit and that Royal Oak and Geddes would defend any action.
Eacott points out that the net profits interest has value only if the property is brought into production.
Geddes’ compensation for Windy Craggy amounts to $29 million in cash plus $20 million toward an exploration fund. The deal calls for Geddes to match the government’s contribution to the fund, which can then be used for exploration and development of company properties in British Columbia.
The government will provide a further $50 million for infrastructure at South Kemess in return for a 4.8% royalty on all copper production. An additional $49 million will be paid over a 3-year period for construction of a 320-km powerline.
Additional funding of $14 million in the future brings the government’s total compensation and economic development assistance to $104 million.
Shareholder meetings on Royal Oak’s proposed takeovers are scheduled for Oct. 16.
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