DOING SOME DIGGING – The Dis-Jointed Venture

Canadians are not strangers to the idea of divorce. StatsCan found that in 2002 slightly more than 70,000 couples c...
Canadians are not strangers to the idea of divorce. StatsCan found that in 2002 slightly more than 70,000 couples called it quits across the country. Or from another angle, there were 37.6 divorces per 100 marriages that year.

But what happens when joint venture partners have a falling out?

FAIRSTAR EXPLORATIONS and INTERNATIONAL TAURUS RESOURCES are at odds over their Fenelon joint venture. It is a fight that is going to court, and the custody of the Fenelon gold project is at stake.

Fenelon is a high-grade gold project in the Casa Berardi area of northwestern Quebec. The Central Discovery zone is estimated to contain a measured resource of 4,002 tonnes grading 18.36 g/t Au and an indicated resource of 52,255 tonnes grading 19.71 g/t Au. Together the measured and indicated resources contain 35,107 oz of gold, and a further 11,204 oz are believed to be present in the inferred resource. Taurus is the operator and 62% owner. In September, 8,300 tonnes of ore from test mining was treated at the Camflo mill. A dor bar weighing 3,428 oz was sent to the refinery.

On Nov. 1 Fairstar issued a press release saying that it had issued an action against Taurus in the Ontario Superior Court. Fairstar is seeking approximately $700,000 in damages, which it says is its share of the recent gold pour. Further, Fairstar is seeking to replace Taurus as the operator and recover money which it alleges Taurus spent improperly. Lastly, Fairstar seeks to keep Taurus from selling its interest in the Fenelon property without Fairstar's consent.

"Without merit," says Taurus. Saying it had not been served with the action and only had Fairstar's press release for reference, Taurus issued its own press release later the same day. The company says the suit is without merit and that it will vigorously defend its position, including a counter-suit. Fairstar has not met its financial obligations for the project, Taurus claims.

So the argument will be decided in the courts. We all know how expensive and time-consuming such actions can be. Meanwhile, a desirable high-grade gold property may languish undeveloped.


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