Ontex-Metalore lawsuit resolved

After seven years of legal battles, the lawsuit between Ontex Resources (ASE) and Metalore Resources (TSE) over the Brookbank gold property in northwestern Ontario has finally been resolved.

The end comes after the dismissal of an application by Ontex to the Supreme Court of Canada for leave to appeal a decision made by the Court of Appeal for Ontario in June, 1993, with respect to Metalore and its President George Chilian.

In June, the Ontario Court of Appeal reinstated a 1981 agreement on the property, under which Metalore has the right to earn a 100% interest in Ontex’s Brookbank property by making cash payments and funding exploration work. In addition, another 478 claims adjacent to the property were returned to Metalore and an award of $80,000 in punitive damages against Chilian was deemed inappropriate.

The revived agreement calls for Metalore to produce a production proposal for Brookbank by June, 2001. Reserves stand at 1.4 million tons grading 0.26 oz. gold per ton.

If Metalore spends less than $5 million on the property, Ontex will retain a 30% net profits interest. If Metalore spends more than $5 million, Ontex has the option of retaining a 40% joint-venture interest by paying a portion of Metalore’s expenditures.

To date, about $6 million has been spent, but more than 35% of that was spent by Placer Dome (TSE) and Hudson Bay Mining and Smelting (TSE) under previous agreements.

“Now we’re ready to bury the hatchet and try to develop the land,” Ontex President Salvatore Fuda told The Northern Miner.

Chilian says he is glad the matter has finally been put to rest and Metalore has made some proposals to Ontex about continuing with work on the project. In addition to the 18-claim Brookbank property, Metalore has outlined three other gold-bearing zones on its holdings in the Beardmore area: Fox Ear, Golden Highway and Shady Lady.

“Our immediate objective is to develop tonnage on the other three projects,” Chilian said. Chilian feels that although the projects are at an early stage, the potential to develop significant reserves is quite good. At the Golden Highway zone, previous drilling by Placer intersected 18.7 ft. grading 0.355 oz. gold per ton in a shallow drill hole. Shallow drilling has also intersected significant gold values at the Shady Lady zone. Metalore plans to drill these prospects this spring as soon as financing has been secured.