Company must get access to drilling site, court told

 

Company must get access to drilling site, court told

 

KATE HARRIES

SPECIAL TO THE GLOBE AND MAIL

All material copyright Bell Globemedia Publishing Inc. or its licensors. All rights reserved.

 

SEE CORRECTION AT END OF TEXT

 

THUNDER BAY — A junior mining exploration company says it will go under unless it gets an injunction ensuring access to a Northern Ontario drilling site, its lawyer told a Superior Court judge yesterday.

 

The investors in Platinex Inc. are “up to their necks financially,” lawyer Neal Smitherman said. “Without access to this property, the company simply will not exist; it will become insolvent.”

 

Platinex needs to start drilling this summer to produce evidence that there's potential value in mining claims and leases covering 4,892 hectares, 580 kilometres north of Thunder Bay. Then it will be able raise funds to complete a two-year drilling program, Mr. Smitherman said.

 

Platinex is seeking an injunction to keep members of Kitchenuhmaykoosib Inninuwug First Nation (commonly known as KI) away from the Big Trout Lake site where, the company asserts, protesters frightened a drilling crew off in February. It is suing the band for $10-billion.

 

KI has countered with its own application for an injunction prohibiting Platinex from engaging in any exploration activities in the area and is countersuing for $10-million. In a legal move that could affect mining across the country, it has launched a challenge to the Ontario Mining Act for failing to provide for constitutionally mandated consultation.

 

In the front row of the courtroom sat James Trusler, the president, chief executive and principal shareholder of Platinex, which he founded in 1998 and which hasn't made money since it was incorporated.

 

In an interview, Mr. Trusler rejected KI's argument that there wasn't sufficient consultation on the Platinex exploration and noted that what happened is typical of practice across the province. “If we don't get this injunction, the mining industry in Ontario will collapse because there won't be one claim that's in good standing,” he said.

 

Platinex describes the property as a potential world-class deposit for platinum and palladium. Mr. Trusler said around 200 people, mostly family and friends, have invested in the company, but everything fell apart in February and there's been virtually no trading in the company's stock since then.

 

Around 30 KI residents watched the proceedings from seats farther back. The reserve, home to about 900 people, struggles with the poverty that afflicts aboriginals across the North, spokesman John Cutfeet said in an interview. There's a housing waiting list with 105 families on it, unemployment is at around 70 per cent and there's an increase in cancer rates that Mr. Cutfeet said is due to PCB spills from a former government weather station.

 

Mr. Justice Patrick Smith will not make any decision on the constitutionality of the Mining Act in the hearing that concludes today. That matter will go to trial in a year or two; Judge Smith has to decide whether an injunction is warranted.

 

KI is claiming irreparable harm from disruption to harvesting and hunting, environmental damage and prejudice due to the possible exclusion of Platinex lands from those it can reserve under a treaty entitlement claim. That claim, filed in 2000, is for an extra 516 square kilometres in reserve lands, based on the Crown's failure to allocate sufficient reserve lands under a formula set out in Treaty 9, signed a century ago.

 

Platinex's claim is simpler: the company's extreme financial jeopardy. But in court documents, KI argues that the company is the author of its own misfortune, having raised close to $1-million in December of 2005, and stated in a disclosure document that “the band has verbally consented to low-impact exploration.”

 

It is potential liability arising from those deals with the December, 2005 investors — deals that were based on these misrepresentations by Platinex — that are now putting Platinex in financial peril,” the KI factum alleges.

 

In fact, Platinex received two letters, one in August of 2005, from a band official, and one in November of 2005, from Chief Donny Morris, which stated that previous agreements with Platinex were null and void and the band did not consent to the exploration.

 

Platinex officials chose to ignore those letters in favour of support expressed by individual band members who were receiving payments from the company, the KI factum states.

 

Yesterday, Mr. Smitherman rejected allegations of misrepresentation and explained that Platinex officials felt communications with the band conveyed “mixed messages.”

 

CORRECTION

 

(Tuesday, June 27, 2006 on page A2)

 

The lawyer for Platinex Inc., which is suing Kitchenuhmaykoosib Inninuwug First Nation over a drilling dispute, is Neal Smitheman. Incorrect information appeared in a story last Friday.