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Mining company sues Klondex over failed acquisition plan Ontario-based Paramount Gold and Silver Corp. has sued Vancouver’s Klondex Mines Ltd. after alleging Klondex did not plan on following through with being acquired despite entering an agreement to do so. It allegedly used Paramount as a white knight to thwart a unsolicited takeover bid from another mining company, Silvercorp Metals Inc. According to the statement of claim filed in B.C. Supreme Court on September 30, Klondex has allegedly acted in bad faith and in breach of a binding letter agreement with Paramount to be acquired. It is further alleged that Klondex refused to take any meaningful steps to advance the acquisition transaction. In September 2009, Klondex notified Paramount that its board had withdrawn support for the transaction and would not honour its obligations under the letter agreement. According to court documents, Klondex subsequently issued a press release that misrepresented certain facts regarding Paramount and Paramount’s assets in order to wrongly give the appearance that Klondex had justification to terminate the letter agreement. The Klondex release contained numerous malicious falsehoods that damaged its business and were defamatory, according to Paramount. Paramount is seeking a US$2,850,000 break fee, or, damages equivalent to US$2,850,000, as well as damages for breach of contract, US$1 million for transaction-related costs incurred; damages for malicious falsehood and defamation; damages; and injunctions. A statement of defence had not been filed by press time.
This article from Business in Vancouver November 24-30, 2009; issue 1048
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