HudBay/Metalore deal still requires Ontex’s blessing

Rumors that a deal has been struck between Ontex Resources, Metalore Resources and Hudson Bay Gold Inc., concerning the Brookbank gold property near Beardmore, Ont., have been discounted by Ontex President Dominique Monardo.

In June, Ontex, under the reins of a new board of directors headed by Mr Monardo, launched a legal suit against Metalore seeking $500 million in damages or return of the property. Metalore filed a countersuit seeking $44.6 million from Ontex.

Up for grabs is a gold deposit, the discovery of which was first announced by Metalore in March. What the legal battle effectively stalls is a $15 million shaft sinking and underground exploration program which will be started by Hudson Bay Gold — but only with Ontex’s consent to the Metalore/ Hudson Bay option agreement. Details of the option agreement have been scanty. If Hudson Bay meets certain financial obligations and places the property into production, Metalore would be left with a royalty interest. Ontex currently holds a 10% net profits royalty.

“Our main interest is the recovery of our property,” Mr Monardo explained to The Northern Miner in an interview. “There is no deal and Ontex has not signed any consent agreement.” In August, Hudson Bay vice president Peter Martin told The Northern Miner that his company would start its program within 30 days of completing an agreement.

The deal however, is conditional on consent being granted by Ontex.

A representative of Metalore was unavailable for comment. In the past, the company has stated that the Ontex action is “entirely without foundation and an abuse of judicial process.”

Despite the fact that the Brookbank discovery is deep, (more than 1,500 ft), has no proven reserves, is clouded by a court action and at best will not see production for several years, the share price of Ontex has taken an impressive climb.

In early spring, the issue, then unlisted, hovered in the 30 cents range. Following the ousting of the previous board, headed by William P. Dickie and H. Vance White, launching of the suit and listing on the Alberta Stock Exchange, the issue has surged to $4.50. The new board, consisting primarily of close acquaintances of Mr Monardo who made their fortunes in the construction contracting business, hold a tight rein on the stock. Float is believed to be approximately 500,000 shares.