The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor A lawsuit involving the Reed deposit is not expected to hinder Hudbay's development of a mine at the Snow Lake area property. VMS Ventures, part owner of Reed, is being sued by another junior miner, W. Bruce Dunlop Ltd., which wants VMS give up its ownership stake and instead take a far less lucrative two per cent net smelter royalty (NSR). 'To date there have been no interruptions in the current development of the Reed site,' said Brad Lantz, vice-president, Manitoba business unit, for Hudbay. 'We do not anticipate any delays related to the lawsuit between the two parties.' Through a 2008 agreement, the Winnipeg-based Dunlop sold to Vancouver-based VMS certain claims comprising the Reed joint venture. This past spring, Dunlop filed a statement of claim in court stating that VMS had 'breached its contract, duty of good faith and agency obligations by favouring its interests over Dunlop's' in negotiations Hudbay. 'Specifically, it obtained a 30% interest in the project for itself, when it should have focused first on obtaining a NSR to hold in trust for Dunlop...' reads the claim. Suffered As a result, the claim states, 'Dunlop has suffered, and will suffer, expense, loss and damage.' VMS has already filed a statement of defense against the lawsuit. In an e-mail to investors, VMS called the lawsuit 'a thinly veiled attempt to remake, solely in Dunlop's favour,' the 2008 agreement. VMS said Dunlop 'willingly entered' the agreement, receiving three million VMS shares, a payment of $375,000 and a potential future payment of $600,000 in revenue from mining operations on the purchased property. The 'facts alleged and relied upon by Dunlop to give rise to this action are supported only by unsubstantiated and inaccurate allegations,' VMS said. 'It is important to note that the agreement and the consequent payment and share issuance were made long before there was any demonstrable proof that the property, or combined properties, might contain any economic ore body,' VMS said, 'and at a time when copper prices were in the $1.60 per pound range, which is less than half of the current price of the commodity.' Not only will VMS 'vigorously' defend itself, the company said it is also seeking reimbursement of legal costs from Dunlop 'given the nature of Dunlop's claim.' Hudbay, which owns 70 per cent of Reed, has said it expects first production at the property by the fourth quarter of 2013. Located about 50 km west of Snow Lake, the mine is expected to last five years and employ nearly 80 people at full production. Ore from Reed is to be transported by truck to Flin Flon, where it will be crushed. The ore will be batched independently through the Hudbay concentrator. Access to Reed's underground mineral resources will be via a trench, portal and decline located near the centre of the surface site.
