KPM suing BIG over Shoal Lake project

The legal action, launched last week by KPM, came as a surprise to BIG. Discussions between the two companies continue in an attempt to resolve the dispute.

Bond is operator of a 50/50 joint venture exploration program on the 139-claim Shoal Lake property which was optioned from KPM in 1985. Still at the drilling stage, the property hosts a promising gold deposit about 30 miles west of Kenora.

In KPM’s statement of claim, filed in the Supreme Court of Ontario, it is seeking a declaration that Bond has no interest in the property. It also alleges that Bond failed to spend $2.45 million on exploration, as required by the option agreement.

In a press release issued last year, KPM stated: “Bond Gold has expended over $2.45 million since entering into the agreement.” The claim filed this month appears to contradict KPM’s earlier statement.

The junior company also seeks repayment of $87,122 previously paid to Bond, as part of a cost overrun and general damages in the amount of $1 million.

The first day of this month marked the anniversary date of a 4-year option agreement that saw Bond outline drill-indicated reserves of 850,000 tons grading 0.35 oz gold per ton on the Kenora area prospect.

Sethu Raman, a director of KPM, said his company made several requests for financial statements from Bond showing proof of the amounts spent at Shoal Lake. But certain expenditures claimed by Bond were found not to have been made on the property, and a request for an audit was made, he said. KPM is anxious to have the issue resolved before control of BIG passes to LAC Minerals (TSE) in a deal set to close later this month. That deal will give LAC a 65% stake in BIG.

“We were looking for fairness from Bond Gold and we feel we haven’t received it,” said KPM President Sue Dobson Green, who owns about 60% of the company’s 1.7 million issued shares.

“We reviewed Bond’s accounting and found many items that were questionable,” she said. “It’s our view that the company hasn’t spent the money required under the agreement we signed four years ago.”

A spokesman for Bond Gold in Toronto said his company hasn’t filed a statement of defence or a counterclaim yet. “We are still talking to KPM with a view to reaching an amicable settlement,” he said.

“We don’t want to litigate,” he added. “But if we have to, we will.”

Both partners agreed that an underground exploration program would be the next logical step at the Shoal Lake property, but declined to speculate when that program might get under way.

“We’re still talking,” said Dobson. “This is a situation where both sides are still friendly, but if we can’t resolve the issue, then we go to court.”

The two companies are holding private discussions in an attempt to resolve the matter. “We would like to settle this issue amicably,” said Desmond Kearns, President of Bond Gold Canada.

Meanwhile, two other gold deposits in the Kenora area, owned separately by Consolidated Professor Mines (TSE) and Nuinsco Resources (TSE), have been struggling with problems of their own recently. Environmental problems are plaguing Consolidated Professor’s Duport deposit at Shoal Lake, while a change of management has occurred on the Cameron Lake project with Deak International Resources acquiring control.

]]>