I won't get too deeply into the technical details of the case, but in brief, Corona sued Lac Minerals for using confidential information gained during a site visit to Corona's exploration project. (I should note that when a junior company like Corona is looking for financing they will promote site visits where they disclose a lot of information not available to investors.) Lac's misbehaviour was to purchase the Williams claims, adjacent to Corona's project after examining drill core and knowing that Corona was actively attempting to acquire those claims. (Lac's behaviour was about as close to claim jumping as damn is to hell.) The case went all the way to the Supreme Court where the court decided 3/2 that Lac was in the wrong and had to return the property to Corona for the cost Lac had incurred to that point, which was about $210 million dollars.
The initial decision was handed down in 1986, on a Friday, after markets closed. It caused pandemonium within Lac's Toronto headquarters (and at the mine) where the executive team were expecting vindication at best and loss of a portion of the mine at worst. But it was worse than they expected..worse than their worst nightmares. Judge Holland awarded the mine in total to Corona as compensation for Lac's misdemeanour. Site personnel were stunned, wondering what would happen to us? Did we still have jobs? Would Corona show up and boot us out? Our questions were answered by Harry Rutetzki, Lac's VP of Operations, who came to site the following Monday and met with everyone to calm the waters and provide what little information he could on the path forward in the near future. Naturally he said Lac planned to appeal. He offered reassurance that we would all remain in our jobs in the short term, which was reassuring for most of us who had purchased homes in Marathon and had bills to pay. Eventually we learned that the mine would continue under Lac's management but that a trust would be set up with a managing trio consisting of one Lac representative, one Corona and one independent to oversee and approve mine operations until the litigation was finally over. I've forgotten who the Lac and Corona reps were but the independent person was Graham Farquarson, a highly respected mining engineer from Toronto who would eventually be involved in and expose the Bre Ex scam. The "three wise men" as they became known to us would come to site every few months for a tour and an update, but otherwise they supported us, stayed out of local decisions and let us run the operation as best we could.
At the time of the first court decision the mine had been in production for roughly a year with ore coming from the open pit and from the "A" Zone underground. I was responsible for "A" zone production. The mill was processing about half its ultimate 6,000 tpd throughput with full production planned for 1988. In the meantime a shaft was completed and off shaft development was occurring at high rates in order to begin production from the main "B" Zone orebody. To support this we needed to spend large amounts of capital dollars for equipment and underground development. It was up to the three wise men to approve our expenditures. Lac had decided no further Lac treasury dollars would be spent, so we were forced to self finance from operating revenues. Luckily the price of gold was good enough to fund the expansion but full production was delayed until late 1989.
In the interim all of the new owners wanted to visit their new property so we had plenty of visitors. Since Teck had done the deal with Corona that Lac could have done when they first visited Corona, we saw a number of their executives. Gordon Keevil (Teck) came with his beautiful wife. Peter Steen, from Corona visited several times. Peter eventually became the president of Lac shortly before it was consumed by Barrick but that was long after the court case. Gil Leathley was manager at the Golden Giant mine but he left to work for Corona and was a frequent visitor. Gil was a stand up guy who eventually wound up in San Francisco with Homestake.
In 1988 the Ontario Appeals Court upheld Judge Holland's original decision and we all thought the case was over. Lac asked leave to appeal to the Supreme Court and to everyone's surprise they agreed to hear the case. We still held out hope that Lac would prevail but the Supreme Court ruled 5/0 in Corona's favour on the issue of confidential information and 3/2 in favour of the remedy of returning the mine to Corona. No one from Lac head office visited us to say good-bye. Peter Allen, Lac President used the money from the court decision to buy Bond Gold, a purchase that attracted the attention of Peggy Witte, of Royal Oak, who made an offer to buy Lac. But Barrick made a better offer, integrating Lac's operations into their own. And Lac was no more.
By this time we knew that Teck/Corona had confidence in the mine staff and there were no plans to replace anyone except the General Manager, Paul Donaldson. He was a long term Lac employee with retirement on his mind. He stuck around long enough for his replacement to show up. The replacement in the short term was Mike Lipkewich, Teck's VP of Operations. Mike was a great guy to work with as I would learn during his months at the mine. But he had other mines to take care of and eventually he hired Peter Rowlandson as our GM.
Looking back on that time I am grateful to have been able to work for three very different companies at the same mine. It was a great learning experience. When Teck/Corona took over we had about $150 million in our trust account and were up to design throughput of 6,000 tpd. The best production year I can recall was 1990 when we produced just shy of 600,000 oz of gold. Shortly after that, in 1991 I left Williams to begin working for Lac again at another operation.
One final story about Mike Lipkewich. William's standard policy was for gate security to do random searches on vehicles exiting the mine. In the Lac days this meant everyone, including the manager. One evening, shortly after assuming command Mike was stopped at the gate by security who demanded to search his vehicle. The next morning he related the incident to senior staff. "What were they going to do if they found something. Report me to the manager?" he quipped. We all chuckled when he said the search policy no longer applied to the mine manager.
The initial decision was handed down in 1986, on a Friday, after markets closed. It caused pandemonium within Lac's Toronto headquarters (and at the mine) where the executive team were expecting vindication at best and loss of a portion of the mine at worst. But it was worse than they expected..worse than their worst nightmares. Judge Holland awarded the mine in total to Corona as compensation for Lac's misdemeanour. Site personnel were stunned, wondering what would happen to us? Did we still have jobs? Would Corona show up and boot us out? Our questions were answered by Harry Rutetzki, Lac's VP of Operations, who came to site the following Monday and met with everyone to calm the waters and provide what little information he could on the path forward in the near future. Naturally he said Lac planned to appeal. He offered reassurance that we would all remain in our jobs in the short term, which was reassuring for most of us who had purchased homes in Marathon and had bills to pay. Eventually we learned that the mine would continue under Lac's management but that a trust would be set up with a managing trio consisting of one Lac representative, one Corona and one independent to oversee and approve mine operations until the litigation was finally over. I've forgotten who the Lac and Corona reps were but the independent person was Graham Farquarson, a highly respected mining engineer from Toronto who would eventually be involved in and expose the Bre Ex scam. The "three wise men" as they became known to us would come to site every few months for a tour and an update, but otherwise they supported us, stayed out of local decisions and let us run the operation as best we could.
At the time of the first court decision the mine had been in production for roughly a year with ore coming from the open pit and from the "A" Zone underground. I was responsible for "A" zone production. The mill was processing about half its ultimate 6,000 tpd throughput with full production planned for 1988. In the meantime a shaft was completed and off shaft development was occurring at high rates in order to begin production from the main "B" Zone orebody. To support this we needed to spend large amounts of capital dollars for equipment and underground development. It was up to the three wise men to approve our expenditures. Lac had decided no further Lac treasury dollars would be spent, so we were forced to self finance from operating revenues. Luckily the price of gold was good enough to fund the expansion but full production was delayed until late 1989.
In the interim all of the new owners wanted to visit their new property so we had plenty of visitors. Since Teck had done the deal with Corona that Lac could have done when they first visited Corona, we saw a number of their executives. Gordon Keevil (Teck) came with his beautiful wife. Peter Steen, from Corona visited several times. Peter eventually became the president of Lac shortly before it was consumed by Barrick but that was long after the court case. Gil Leathley was manager at the Golden Giant mine but he left to work for Corona and was a frequent visitor. Gil was a stand up guy who eventually wound up in San Francisco with Homestake.
In 1988 the Ontario Appeals Court upheld Judge Holland's original decision and we all thought the case was over. Lac asked leave to appeal to the Supreme Court and to everyone's surprise they agreed to hear the case. We still held out hope that Lac would prevail but the Supreme Court ruled 5/0 in Corona's favour on the issue of confidential information and 3/2 in favour of the remedy of returning the mine to Corona. No one from Lac head office visited us to say good-bye. Peter Allen, Lac President used the money from the court decision to buy Bond Gold, a purchase that attracted the attention of Peggy Witte, of Royal Oak, who made an offer to buy Lac. But Barrick made a better offer, integrating Lac's operations into their own. And Lac was no more.
By this time we knew that Teck/Corona had confidence in the mine staff and there were no plans to replace anyone except the General Manager, Paul Donaldson. He was a long term Lac employee with retirement on his mind. He stuck around long enough for his replacement to show up. The replacement in the short term was Mike Lipkewich, Teck's VP of Operations. Mike was a great guy to work with as I would learn during his months at the mine. But he had other mines to take care of and eventually he hired Peter Rowlandson as our GM.
Looking back on that time I am grateful to have been able to work for three very different companies at the same mine. It was a great learning experience. When Teck/Corona took over we had about $150 million in our trust account and were up to design throughput of 6,000 tpd. The best production year I can recall was 1990 when we produced just shy of 600,000 oz of gold. Shortly after that, in 1991 I left Williams to begin working for Lac again at another operation.
One final story about Mike Lipkewich. William's standard policy was for gate security to do random searches on vehicles exiting the mine. In the Lac days this meant everyone, including the manager. One evening, shortly after assuming command Mike was stopped at the gate by security who demanded to search his vehicle. The next morning he related the incident to senior staff. "What were they going to do if they found something. Report me to the manager?" he quipped. We all chuckled when he said the search policy no longer applied to the mine manager.
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