Maximum sues for Western Prospector’s Mongolian projects (March 03, 2006)

Vancouver – Western Prospector Group (WNP-V) has been hit with a lawsuit from Maximum Ventures (MVI.H-V, MXRVF-O), challenging rights and title to certain of its Mongolian mineral properties.

Maximum’s lawsuit, commenced in the Supreme Court of British Columbia, targets Kenneth de Graaf, his controlled companies and Western Prospector as defendants, alleging certain Mongolian mineral projects (including portions of the Saddle Hills uranium project) were to be acquired on its behalf but have been wrongfully transferred to Western Prospector or retained by Mr. de Graaf.

In its statement of claim, Maximum alleges it entered into a partnership with Mr. de Graaf and Anthony Beruschi in mid-2002 whereby it would cover the cost of a Mongolian reconnaissance program for first rights on any acquired projects. From mid-2002 to mid-2004, Maximum reports it advanced over $340,000 to fund the effort that resulted in the staking or acquisition of more than 30 separate mineral properties throughout the country.

In late 2003, Maximum reported it entered into an option agreement with Ken de Graaf’s private company (Brant Enterprises), to acquire up to 75% interests in the Edren and Ulaan properties located in the in the Gobi Altai Aimag of southwestern Mongolia.

The Edren gold-copper property portfolio consists of exploration licences covering about 12,600 hectares over an area of known porphyry copper-gold-molybdenum mineralization. The Ulaan gold properties encompass 20,500 hectares of exploration licences covering an area of potential for gold-rich volcanogenic massive sulphides, skarns, structurally-hosted and stockwork-intrusive related mineralization.

Maximum further alleges that in late-2003, Mr. de Graaf initiated a restructuring of his partnership agreement with Mr. Beruschi whereby he and his private company (Brant) would relinquish its interest in the Mongolian claims, except for the two projects (Edren and Ulaan) already optioned to Maximum. Beruschi was to become the sole beneficial owner of all Mongolian claims, which would be held in trust for him by Ken de Graaf and Brant. Mr. de Graaf was to then become president of Maximum and assist in raising funds to advance the projects.

Subsequent to this plan, the company also alleges that Mr. de Graaf wrongfully caused certain claims within the Mongolian package to be vended to Western Prospector, including sections of the Saddle Hills uranium project, and also failed to take the helm of Maximum to assist in management and raising of capital, thwarting required Edren and Ulaan property payments.

Further allegations by Maximum assert that assay results from samples from taken from the Edren and Ulaan claims were not supplied by Mr. de Graaf to either the company or to Mr. Beruschi.

A recent agreement, struck March 2nd, 2006, has Mr. Beruschi assigning all his rights and claims against the defendants to Maximum. He will receive a 30% carried interest in the properties, through to feasibility study, and is provided with exclusive marketing rights to any uranium production from the Mongolian claims, a 2% net smelter royalty and a further royalty to his private company of US$1.50 per pound for uranium sales at less than US$20 per pound of U₃O₈, increasing with higher sale prices.

Ken de Graaf, who became a director of Western Prospector in early-2004, has operated in Mongolia since the mid-1990s. His private company Cascadia Mining assembled dozens of prospective mineral projects throughout the country.

In September 2005, Maximum’s exchange listing was downgraded from TSX Venture – Tier 2 to the NEX Board following cease trade orders issued earlier in the year by the British Columbia and Alberta Securities Commissions, for failure to file financials. The company was reinstated for trading in early-2006. Trading in Maximum surged on the news of the lawsuit, with its shares jumping 127% to close at 67 on small volume of just 76,000 shares.

Trading in Western Prospector was halted, by the company’s request, following the issuance of the legal suit. It views the charges and allegations by Maximum as “without foundation or merit and will vigorously defend the action and take all appropriate steps to protect the Company’s interests.”