A judge has dismissed a company’s allegations that VenCan Gold (VCG-M) wrongfully dealt a 50% interest in production from the Edwards gold mine near Dubreuilville, Ont., to River Gold Mines (RIV-T).
Extender Minerals, a private firm controlled by former VenCan director Robert Hill, had contended that its alleged right of first refusal on VenCan’s disposition of the Edwards property was ignored by VenCan when it agreed to permit River Gold to develop and operate the mine.
In March 1996, VenCan and River worked out a lease agreement whereby River would pay VenCan $500,000 and a $3-per-ton royalty on all production greater than 100,000 tons for the right to develop and mine the Edwards deposit. The deal permitted River to recoup its construction costs using profits from the mine; thereafter, River was required to split the profits equally with VenCan.
After a 9-day trial, Extender’s $75-million claim against VenCan was dismissed. According to a VenCan release, the judge determined that the right of first refusal claimed by Extender did not cover the transaction between VenCan and River Gold. The judge also noted that even if it had the right to finance and develop the Edwards mine, Extender did not have the wherewithall to do so.
“The company is relieved and pleased that the courts were in agreement with the position VenCan has had all along,” says VenCan President Ken Baird.
“Now the company can focus on rebuilding its balance sheet and pursuing its exciting exploration opportunities.”
The Edwards mine, the first ore from which was milled in August 1997, is expected to produce 30,000 oz. gold and a profit in its first full year of production. At the end of 1997, proven and probable reserves at Edwards totalled 156,000 tonnes grading 12.09 grams gold, equivalent to 60,000 contained ounces.
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