Just caught this Aber N.R fresh off the press.
Winspear denies Aber's key allegations
Aber Resources Ltd ABZ
Shares issued 45,802,883 Apr 26 close $9.70
Mon 26 Apr 99 Street Wire
See Winspear Resources Ltd (WSP) Street Wire
WINSPEAR DISMISSES "FICTIONAL" REPRESENTATIONS
by Brent Mudry
Winspear Resources and Camsell Lake partner-turned-nemesis Aber Resources
are gearing up for a hard-fought court battle, judging by Winspear's
defence to Aber's recent high-stakes suit. In an amended statement of
defence filed April 21 in the Supreme Court of British Columbia, Winspear
repeatedly asserts the Camsell Lake joint venture is based on "strict
compliance" documenting annual exploration commitments and not the looser
"informal practice" that Aber claims marked the two companies' working
relationship. In its response to Aber's March 30 suit, Winspear also claims
that Aber first offered to sell its Camsell Lake interest just five days
after the last management committee meeting of the joint venture in
December. Aber filed suit three weeks after Winspear notified Aber of its
deemed non-participation in the 1999 exploration program for the promising
diamond property.
The key legal question is whether Aber deserves to be cut out of further
participation in the Camsell Lake project after failing to provide official
confirmation of its stated intentions in writing. At the conclusion of the
1998 Camsell Lake core and supplementary exploration programs, Winspear
held a 67.76 per cent interest in the joint venture and Aber held a 32.24
per cent interest. Relations between the two companies have been
sporadically rocky since a disputed partnership meeting last July, and
collapsed on March 3 when Winspear dropped its bombshell. Aber's suit
revealed it spurned Winspear's offer to buy out Aber's interest for
$50-million in cash and shares. Aber claims Winspear has been "motivated by
malice and ill will towards Aber" stemming from the 1998 dispute and the
spurning of the $50-million buyout offer. "The allegation is spurious,"
states Winspear lawyer Robert Ward of Edwards Kenny & Bray in the defence.
The amended defence was filed one day after Winspear's original statement
of defence, with minor alterations.
Winspear steadfastly counters Aber's key contentions and allegations,
offering a starkly contrasted version on some points and leaving out
several pieces of the puzzle on others. One of the most intriguing issues
relates to Winspear's buyout offer. Aber claims that in February, on an
undisclosed date, Winspear director Hugh Morris requested a meeting with
Aber president and chief executive Ken Hanna, but Mr. Hanna rejected the
$50-million buyout offer. Aber notes the two companies had discussed a
possible sale of Aber's interest for several months. Winspear's version is
that it received an unsolicited proposal from Aber on Dec. 21, offering
Aber's interest in the Camsell Lake joint venture. Winspear claims it
rejected Aber's sale offer on Jan. 13, but the defence makes no mention of
the details, including such key terms as price. The defence is also silent
on Winspear's $50-million buyout offer the following month, providing no
insight into any negotiations after Jan. 13.
Winspear also offers a different version of the disputed management
committee meeting last July. The meeting was called after Winspear, the
project operator, had positive exploration results and it wished to
implement a supplementary program. In the suit, Aber lawyer Howard Shapray
claims Winspear called the meeting for July 21, 1998, at a time and place
it knew Aber officials could not attend. The meeting went ahead without
Aber representation, and Winspear purported to approve its supplementary
program. Aber claims that after it protested the meeting, Winspear withdrew
the 1998 supplementary program and budget, and the two sides agreed on a
meeting at a later date. Mr. Shapray claims that Aber stated orally and in
writing on July 26 that it regretted holding the meeting in Aber's absence
and it pledged to work diligently to "develop a cordial relationship."
Winspear's version is that it tabled the proposed supplementary program on
July 7 and the management committee discussed funding at a July 14 meeting,
which was adjourned. Winspear lawyer Mr. Ward offers no direct response to
Aber's claim that the July 21 meeting was purposely set to foil Aber's
attendance. "Aber's representatives failed to attend that meeting, although
due notice thereof had been given," states the defence. A month later, on
Aug. 19, both companies agreed on the supplementary program at the reset
meeting. Aber relies on Winspear's July 26 "cordial relationship" letter to
shore up its case of "informal practice," an assertion Winspear soundly
rejects. "If Aber relied upon any representations as indicating that Aber
need not comply with its obligations under the joint venture agreement, the
reliance was unreasonable and Aber's conclusions completely unwarranted,"
states Mr. Ward in the court filing.
The most contentious issues are those surrounding the Dec. 16 management
committee meeting, which discussed and adopted a budget and exploration
program for Camsell Lake for 1999. "At that meeting, Aber orally notified
Winspear that Aber elected to participate in the 1999 exploration program
and asked Winspear whether Winspear required Aber to sign any document in
that regard," states Aber's suit. Aber claims that Winspear "stated words
to the effect" that no such documentation was then required and that a copy
of the approved 1999 budget and exploration program would be sent to Aber.
Mr. Shapray, Aber's lawyer, also asserts that Winspear did not subsequently
prepare and provide Aber with any document for execution to further confirm
Aber's election to participate.
Winspear's version marks a sharp contrast. Mr. Ward, Winspear's lawyer,
asserts that these Aber allegations are "entirely fabricated and untrue."
"Winspear denies making any oral representations which could modify or
waive the requirements imposed upon both Aber and Winspear pursuant to the
joint venture agreement," states the defence. Winspear also denies it had
any obligation to provide Aber with documentation to record Aber's
election. "At all times, Aber had the contractual onus of preparing its own
documents in order to serve notice upon Winspear of Aber's intention to
participate in the 1999 exploration program," states Mr. Ward.
Aber also claims that the "purport and intent" of Winspear's contested Dec.
16 representations was to induce Aber to rely on the pair's informal
practice, in which commitments were sometimes confirmed in writing and
sometimes not. Aber relies particularly on the informal practice of only
signing and delivering to Winspear whatever confirming notices it received,
and after this fateful meeting, no such notices were sent by Winspear. In
its defence, Winspear alleges that these Dec. 16 representations "are
fictional and were never made." Winspear asserts that "there was no
informal practice as involved." In a closing attack, Winspear claims in its
defence that Aber intentionally elected not to participate in the 1999
exploration program to further Aber's position regarding its negotiations
to sell its interest to Winspear. If true, this may prove to an
embarrassing blunder for Aber. Judging by the two companies' vastly
different positions, however, there is likely to be extensive discovery
before this high-stakes suit ever appears before a judge for trial.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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