Accolades to Fred Pletcher, an attorney with Borden Ladner Gervais LLP, and Anthony Zoobkoff, Senior Council for Teck Cominco, on the best delivery of a presentation I have ever seen at a conference. The topic could be dry and dull: confidentiality agreements in the mining industry. But they got the audience up and interested with horror stories of confidentiality agreements gone wrong and a risque joke about Paris Hilton and the the prison priest. The joke is confidential so I cannot repeat it. But the substance of the law is well set out in their paper and the story they told worth repeating on this blog.
It is a true story, documented in the court case Aquiline V. IMA Exploration. In brief, IMA’s geologist was looking over the information about a deposit in Argentina as part of a review to decide if IMA should get involved with the then owners of a property. IMA had signed a Confidentiality Agreement before looking at the data. The inquisitive geologist looked around the office and saw and got information about resources in the area surrounding the deposit, and as he and IMA contend outside the area covered in the Confidentiality Agreement. To be precise, the geologist noticed on a map hanging on the back of a door a bunch of silver anomalies about 40 kilometer away from the deposit in question and the subject, so they thought, of the Confidentiality Agreement.
The ownership of the deposit that was unquestionably the subject of the Confidentiality Agreement changed hands. IMA, on the basis of the geologist’s observations, staked claims to the silver deposit causing the anomalies and opened a mine. Aquiline Resources Inc, now the owners of the data that the geologist had observed, filed suite against IMA in British Columbia. The court issued a declaration that IMA hold the Navidad Project (the new silver mine) in trust for Minera–thereby effectively stripping IMA of ownership and awarding the mine to Minera. On the day of the decision, IMAs shares dropped, loosing about $130 million in market capitalization. Minera’s shares went up in value by $135 million. (The five million dollar difference being legal fees?)
IMA appealed and lost. IMA has announced its intention of appealing to the Supreme Court of Canada, so the story continues. The lesson to be learnt, at least this is what I heard from the presentation, it to get the terms of your Confidentiality Agreements right before you look at somebody else’s mining data, or before you let anybody look at your mining data. You could loose your mine, or better still get somebody elses mine.
PS. You can read the court’s decision at this link.