The common shares of Metalore Resources (TSE) have fallen by $6 to $13 since the company went to court on Sept. 4 against Ontex Resources (ASE) in a trial over the Brookbank gold deposit in northern Ontario. Shares of Ontex, of which there are 8.7 million outstanding, have recently climbed to $2.25, up from $1.85 two months ago. The trial is expected to wind up in mid- November but a final decision from the judge may not come down until early in 1991.
The two firms originally began their legal dispute back in 1986. It now appears shareholders of Metalore are losing faith in the battle, and have begun to unload their stock. Gold bullion has also lost some lustre in recent weeks, dipping to a low of US$363 per oz. in October before recovering to US$377.
Since the trial with Ontex began two months ago, Metalore’s share price has plunged to a low of $13 from $19 on The Toronto Stock Exchange. About one-third of the company’s outstanding shares are held by Metalore President George Chilian.
Under cross-examination at the trial, Chilian told the court how drill results from the Brookbank gold deposit were kept secret for more than a year after its discovery. Ontex’s lawyer also pointed out how Metalore staked additional claims to surround the deposit following the original discovery.
According to Ontex, which is seeking to have a 100% ownership right to the property restored, the gold deposit hosts preliminary reserves of 1.38 million tons grading 0.26 oz. gold (0.23 oz. cut) per ton.
Placer Dome (TSE), which has an option agreement with Metalore, can earn a 50% interest in the property by spending $7 million on exploration over a 33-month period. The company has already spent nearly $1 million of that amount on more than 35,000 ft. of exploration drilling.
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