Legal actions abound at Hemlo gold camp

The Hemlo camp located along the northern shore of Lake Superior in northern Ontario is probably as well known today for the legal squabbles it has engendered as it is for the gold it contains.

Supporting three mines which are among the largest gold- mining operations in Canada, the Hemlo camp in 1987 produced about 750,000 oz of the yellow metal.

Largest of the mines in terms of output (369,300 oz last year) is the Golden Giant, owned by Hemlo Gold Mines (TSE), which is controlled by Noranda Inc. (TSE). The other two mines are the Williams, which was put into production by Lac Minerals (TSE), and the David Bell, a joint operation of Teck Corp. (TSE) and Corona Corp. (TSE).

Best known of the legal fights is likely the ownership dispute over the Williams mine, between Lac and Corona (formerly International Corona Resources). This year, however, the David Bell mine (and an adjacent quarter claim being mined by Hemlo Gold) also became the focus of an ownership dispute, and a stock promoter announced he has designs on the Golden Giant mine property. As well, two prospectors closely associated with the Hemlo claims, John Larche and Donald McKinnon, have figured prominently in the court proceedings.

The following is a brief outline of the Hemlo activity to date.

— October, 1981 — Then Corona Chairman Murray Pezim files a lawsuit in the Supreme Court of Ontario challenging ownership of the Williams mine.

— October, 1985 — Lac/Corona trial under way.

— March, 1986 — Supreme Court of Ontario awards the Williams mine to Corona upon payment of $154 million; Lac appeals.

— April, 1987 — Scintilore Explorations (TSE) sues Larche, McKinnon and four companies (Teck, Corona, Hemlo Gold and H.G.M. Inc., a wholly-owned subsidiary of Hemlo Gold), claiming all benefits and proceeds owing to the two prospectors from the major claims staked by or on behalf of them at Hemlo.

— October, 1987 — Ontario Court of Appeal unanimously upholds ruling of Supreme Court of Ontario; Lac says it will seek leave to appeal to the Supreme Court of Canada.

— December, 1987 — Lac receives permission to appeal to the federal court.

— February, 1988 — Supreme Court of Canada hearing dealing with Lac appeal set for Oct 11, 1988.

— March, 1988 — McKinnon charged by Thunder Bay city police after documents go missing from the mining recorder’s office located in that northwestern Ontario city.

— June, 1988 — Word gets out that Toronto stock promoter Charles Stuart has had a prospector restake 148 claims in the Hemlo camp, the claims taking in the land on which the Golden Giant mine stands. Stuart alleges the Hemlo Gold claims were staked illegally by Noranda in 1982. Stuart then offers International Baslen Enterprises (ASE) an interest in the “free” claims in return for funds to launch a legal battle.

— August, 1988 — Royalties owing to Larche and McKinnon from the Hemlo claims staked by them, held up by the Scintilore lawsuit and totalling about $4.7 million, may be paid to the two prospectors, a Supreme Court of Ontario judge rules.

— Criminal charges of theft and forgery filed against McKinnon in Thunder Bay are dropped in provincial court because of lack of evidence.

— Lac files a motion in the Supreme Court of Ontario seeking a new trial in the Williams mine ownership dispute, alleging contradictions in Mckinnon’s testimony during the 1985 trial. Hearing is scheduled for Sept 8, 1988.

— Alleging the claims covering the David Bell mine and an adjacent quarter claim (forming part of the Golden Giant mine property) were forfeited under the Mining Act of Ontario, Scintilore has the claims restaked. A second lawsuit launched by the company disputes property ownership.