Supreme Court rejects motion filed by Metalore

An application filed by Metalore Resources to have certificates relating to a claim filed by Ontex Resources against Metalore removed, has been rejected by the Senior Master of the Supreme Court of Ontario.

Ontex filed a suit against Metalore in 1986 alleging that Metalore withheld important exploration information from Ontex which ultimately led to Ontex’s interest in the Brookbank gold property being reduced to a 10% net profits royalty. The property, near Beardmore, Ont., became the focus of investor interest following Metalore’s announcement in March, 1986, of a deep gold discovery on the claims.

“While the plaintiff’s case appears to me to be weak on the facts, particularly as to the alleged non-disclosure and misrepresentations, I cannot say, notwithstanding the considerable amount of hearsay evidence properly objected to by Tait, that the plaintiff has not raised a triable issue,” Senior Master A. F. Rodger concluded (Burton Tait is Metalore’s lawyer).

Ontex officers are pleased with the decision. “The fact of the matter is that they (Metalore) lost,” Rein Kliczka, an Ontex director, told The Northern Miner. Metalore counters by saying that the court refused to remove the Ontex certificates on technical grounds relating to the fact that Metalore proposes to convey a portion of the leases and claims to Hudson Bay Gold, an affiliate of Hudson Bay Mining & Smelting. “The recent ruling makes it more likely that the counterclaim will ultimately succeed,” George W. Chilian, Metalore’s president says.

Ontex President Sam Fuda says that “any comment about the strength of the case was made at a very early stage of the action. Only a small portion of the discoveries have been completed.”

Hudson Bay has an option agreement giving it the right to earn a 100% interest in the property. The company must sink an 1,800-ft shaft and perform underground exploration on the deposit as part of its deal with Metalore. Hudson Bay, however, is reluctant to begin such a capital intensive project while Ontex continues disputing ownership of the property.

Ontex is asking for return of the property or $500 million in damages. A counter claim by Metalore is seeking $20 million in damages.