Louvem asks for injunction to stop Aur drilling plan

Societe Miniere Louvem (TSE) and parent company St. Genevieve Resources (TSE) have applied to a Quebec court for a provisional injunction to halt surface exploration at the Louvicourt Twp. massive sulphide project east of Val d’Or, Que.

If the court rules in favor of the injunction Jan. 26, Louvem’s joint venture partner Aur Resources (TSE) would be forced to cease drilling operations on the property and lay off about 25 contract workers.

A lawyer acting for Louvem said the company is attempting to protect its interest in the Louvicourt discovery until the Aur-Louvem dispute is settled either in or out of court. The application for an injunction was filed on Dec. 22, almost a month after Louvem was informed by Aur that its interest in Louvicourt has been diluted to a 25% non- participating interest from 50%.

In a legal dispute which is now in the pre-trial stage, Aur is claiming the right to dilute its partner’s project interest because of an alleged default by Louvem on a joint venture payment during an earlier phase of explora tion.

As a result, Aur says it holds a 100% stake in the project (subject to a 25% net profits interest to Louvem) and can remain as project operator once the decision is taken to go underground.

Under the original 50/50 joint venture agreement, operatorship was scheduled to switch to Louvem from Aur when the underground phase commences. Noranda Exploration has since been given the option to be underground operator on behalf of Louvem.

In a countersuit, Louvem denies that a default ever occurred and it is attempting to have the original joint venture agreement torn from the records.

When asked to comment on the injunction request, lawyer Michel Menard replied: “While acting as sole owner of the project, Aur is incurring expenses and doing work in which we have no say. If Aur loses the case, Louvem is responsible for at least 50% of exploration costs.” He added: “This is in direct violation of the original joint venture agreement.”

Toronto mining analysts interviewed by The Northern Miner say it is unlikely that Aur will be asked to cease drilling operations at the Val d’Or project where it has outlined 36 million tons of grade 3.11% copper and 1.34% zinc in possible reserves.

“Aur was designated to be surface explorer and they are living up to the letter of the agreement,” said a prominent analyst who believes that Louvem Chairman Pierre Gauthier is attempting to force Aur to settle out of court.

“The investment community would like to see them settle up and get on with it,” added mining analyst Sandy Mutch of Toronto-based Deacon Morgan McEwen Easson.

In a recent statement, Aur said exploration work at Louvicourt Twp. would continue until a court ruling is announced. But Vice- President Howard Stockford declined to speculate on whether the next batch of drill results would be released before Jan. 26.

“We can’t release any results until we receive the assays,” he said. Gauthier was on vacation recently and, therefore, unavailable for comment.