Hrkac hints at date with Golden Rule in federal court
Gerle Gold Ltd GGL
Shares issued 22,411,858 Nov 21 close $0.48
Fri 21 Nov 97 Street Wire
Also Glenmore Highlands Inc (GMH)
Also Tyler Resources Inc (TYS)
Also Golden Rule Resources Ltd (GNU)
Also Mountain Province Mining Inc (MPV)
IT'S A MATTER OF A DEFINITION
by Stockwatch Business reporter
If the comments from Gerle Gold president Ray Hrkac are anything to go by,
Golden Rule Resources and Inukshuk Capital have not heard the last about
their victory over Gerle concerning a disputed diamond property in the
Northwest Territories.
Following an administrative review by the Ministry of Indian Affairs and
Northern Development, ownership of a 38,000-acre strip of land just south
of Mountain Province-Glenmore Highland's 5034 discovery has reverted to
Inukshuk Capital, a private company owned by John Dupuis and associated
with Glen Harper's Golden Rule.
"The minister has made a gross error," Mr Hrkac told Stockwatch on November
21, one day after Ottawa's decision was made public. "This is a gross
miscarriage of justice; the minister ignored our evidence." Gerle Gold's
only avenue of appeal is to challenge the minister's decision in the
Federal Court of Canada, but Mr Hrkac says he has not yet had an
opportunity to discuss this option in detail with his legal counsel.
The administrative ruling overturns the Supervising Mining Recorders'
decision of May 10, 1996, which ruled in favour of Gerle Gold.
Specifically, the minister ordered the reinstatement of title of the RIM
1-24 and MK 1-15 mineral claims to Mr Dupuis' Inukshuk Capital.
In March 1993, transfer of title at the property was transferred from
Golden Rule to a closely associated company Tyler Resources. That, plus
another transfer two years later, under Section 89 of the Canada Mining
Regulations, became the points of contention in the long-running affair.
Gerle Gold alleged Golden Rule and Tyler attempted to circumvent Section 49
of the mining act which stipulates the legal means of retaining title when
a lapsing may have occured. These obligations involve working the property
in a specified time period (or cash in lieu of work) or risk the title
lapsing officially.
According to a chronology of events provided from Ottawa by John
Hodgkinson, the ministry's chief of mining legislation and resource
management, Yellowknife-based mining recorder Ed McLeod sent to Tyler by
registered mail a notice of lapsing. The July 26, 1994 notice gave the
company 60 days to file the required work on the claims, "failing which the
KM 1-48 and MIR 1-24 mineral claims would lapse."
These claims lapsed on schedule on September 26, 1994. "At that time, Tyler
was the holder of the claims," Mr Hodgkinson says. On October 14 to 16,
1994, J.W. Essery, a contract staker working for Boyd Warner staked the RIM
1-24 and the MK 1-15 mineral claims on ground previously occupied by the KM
1-48 and the MIR 1-24 claims. The RIM 1-24 and the MK 1-15 claims were
recorded at the Mining Recorder's Office in the name of Boyd Warner on
October 24, 1994. Mr Warner applied to transfer the RIM 1-24 and the MK
1-15 mineral claims to Inukshuk on July 29, 1995. The application to
transfer was refused by the mining recorder.
Around Christmas 1994, Mr Hrkac's son, Chris, was searching through the
Yellowknife records office when he noticed that the AK 120-144 mineral
claims had lapsed. Chris Hrkac had the strip staked and were recorded on
January 16, 1995 as the LA 1-25 claims.
On May 10, 1995, supervising mining recorder Annette McRobert delivered her
decision: RIM 1-24 and MK 1-15 claims were ruled invalid and were
cancelled. Eighteen days later, counsel for Golden Rule and Inukshuk
applied for a ministerial review of the recorder's decision under Section
84.
Gerle Gold believes Golden Rule was in violation of Section 49, which
prohibits companies, individuals or their affiliates from restaking claims
within a year of letting them lapse.
The ministry, however, saw it otherwise. In a summary of the ruling,
assistant deputy minister James Moore says Tyler did not try to relocate
the claims during the one-year period; such manoeuvres are prohibited under
Section 49. "The Form 3 applications mineral claim recorded on October 24,
1994 in the Mining Recorder's Office clearly show that the claims were
located by J.W. Essery," a subcontractor or employee of Mr Warner, Mr Moore
wrote in the November 20 decision.
Mr Moore also considered whether either Mssrs Essery or Warner relocated
the claims on behalf of Tyler. Mr Warner states in his statutory
declaration that the MK-RIM claims were located at the request of Golden
Rule. "Warner's statement is supported by a number of trade invoices made
out to Golden Rule," Mr Moore states.
The supervising mining recorder also determined that Golden Rule was
controlled by Tyler and as such there was a further infringement of Section
49. Mr Moore subsequently interpreted "control" to mean whether or not a
person or company owns more than 50 percent of another company's shares. He
pegged the stake Golden Rule holds in Tyler at 11 percent.
Gerle Gold's Ray Hrkac hotly disputes Mr Moore's interpretation of control,
noting that Golden Rule and Tyler share both a president -- Glen Harvey
Harper -- and office space in Calgary. In addition, Mr Harper also is a
director of both companies.
"They used the Alberta definition, a very narrow definition about
shareholding at 50%," Mr Hrkac complains. "We used another definition --
the Income Tax Act." In that act, the persons who control the company are
in control of the company, irrespective of actual shareholding.
Mr Hrkac also says Golden Rule sold the property to Tyler in 1993 for $1.
The Gerle Gold president sticks by his claim that the lines between Mr
Warner, Tyler and Golden Rule are so blurry they do not exist. "Boyd Warner
staked it and first he told the supervisor for mining recorder he staked it
for Tyler, then he changed his mind and said he staked it for Golden Rule,"
Mr Hrkac alleges. "Glen Harper told me on a piece of paper that he signed
that Tyler would get an interest in his ground. We went through the whole
process with the supervising mining recorder who found that they were in
cahoots with each other and ruled against them."
In the April 4, 1995 edition of the Kaiser Bottom-Fishing report, John
Kaiser wrote that a decision against Gerle Gold "would completely
destabilize the NWT's mining recorder system."
Mr Hrkac today concurs, outlining a scenario whereby Gerle could set up
another company controlled by Gerle that locates in the Northwest
Territories, stake claims but never file and work. "And what was the scheme
here was that Golden Rule staked it, sold it to Tyler for $1, restaked it
and they were going to keep those claims for four years without doing any
work." He notes that such a saving amounts to $800,000. And we have always
done the work on our claims or let them lapse and I'm madder than hell
because we're honest and those guys are not."
Golden Rule director Lesley Hayes told Stockwatch that despite its close
association with Tyler, the companies were actually separate and, in fact,
Golden Rule only owns 8.27 percent of Tyler.
Ms Hayes denied the ruling may lead to shell games being played out as a
cost-saving measure for NWT explorers. "If these were shell companies, that
may have been the case," she says. "But these are not shell companies.
These are actual operating mining companies. Tyler has been operating for
over 10 years. This is not a company that was started to play a game with a
mining claim."
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