Whatever happened to... Lac Minerals v. International Corona Resources.

Posted By: Peter Bowal

Introduction

We expect people to show good faith and fairness to each other. Corporate morality, on the other hand, is harder to put into law. Corporations, whose primary purpose is profit maximization, seek any advantage to gain on their competitors. Where does the law draw the line? In 1989, the case of Lac Minerals Ltd. (Lac) and International Corona Resources Ltd. (Corona) began to answer that in the context of the misuse of confidential information.

Facts

In 1980, David Bell was a geologist with Corona, a junior mining company incorporated and publicly listed only one year earlier. He conducted assays on land owned by Mrs. Williams in the Hemlo area of Northern Ontario. He published some of the results in news releases and newsletters. Lac, a senior mining company in Vancouver, saw the published results and arranged with Corona to view the property on May 6, 1981. Lac was shown detailed confidential documents such as geological findings and maps, assay results, area geology, drilling plans and the potential of large gold reserves over a large area. No confidentiality measures were discussed at this meeting. Lac advised Corona to pursue the Williams property.

After the meeting, Lac conducted additional research on the Williams and adjacent properties. They obtained more government maps, reports, publications and assessments for the area. Lac geologists determined that about 600 claims should be staked in the area and immediately began staking claims.

Two days after the first meeting, Corona managers met at Lac's head office in Toronto. The geology of the area was further discussed along with potential high level terms of an agreement between the two companies. Adjacent lands and strategies were also discussed. Lac followed up with a letter describing various options on how Lac could partner with Corona to exploit the resources on Corona's land. Lac was already staking rights in the area and was aware of Corona's financial limitations. It welcomed Corona in the overall exploration strategy and proposed collaborating with Corona on this project. Lac would finance it, and create a subsidiary to form a joint venture with Corona to develop the property.

While these discussions were ongoing, further assay results were published. Corona never imposed confidentiality on the information it was sharing with Lac. Likewise, Lac never said it would not purchase the property.

Corona approached Mrs. Williams to acquire the...