Reunion says Barrick court claim has no merit

Reunion Gold Corp. [RGD-TSXV] said it was named as a party in a statement of claim issued by Barrick Gold Corp. [ABX-TSX, NYSE] in the Ontario Superior Court of Justice on February 10, 2023.

Reunion says the claims relates to the company’s termination of its strategic alliance agreement with Barrick dated February 3, 2019, as amended.

Reunion Gold is a leading gold explorer with a portfolio of projects in the Guiana Shield in South America. Two years ago, the company formed a strategic alliance with Barrick to explore, develop and mine mineral properties in the Guiana Shield.

Under the deal, the two companies pledged to form a 50:50 alliance that will cover certain mineral projects in Guyana, Suriname, French Guiana and the north and northeast regions of Brazil. Barrick committed to increase its stake in Reunion to 19.9% from 15%.

Reunion’s contribution to the alliance was the Waiamu, the Aremu, the Arawini, and the Oko projects, all of which are located in Guyana. In return, Barrick agreed to provide US$4.2 million to fund the initially included projects. This amount represents credit for the historical exploration and money already spent by Reunion. Subsequent funding will be on a 50:50 basis.

In December, 2020, Reunion announced that the NW Extension project in Suriname would be included in the strategic alliance.

However, by notice of termination dated December 5, 2022, Reunion said it terminated the alliance agreement effective, February 3, 2023.

“In 2022, the only project remaining in the alliance was the NW Extension project, Barrick having previously elected to exclude all other projects from the alliance,’’ Reunion said in a press release.  “In October, 2022, the parties agreed on a rehabilitation and demobilization plan and budget for the NW Extension project,’’ the company said. “In terminating the alliance agreement, the company offered to assign its rights in the NW Extension to Barrick.’’

Meanwhile, Reunion said it is focusing all its efforts on continued exploration and development of its Oko West project in Guyana, a project that Barrick excluded from the alliance in January, 2020, Reunion said. The company has a 100% interest in the Oko West project and Barrick has no back-in rights, it said.

Reunion said Barrick alleges, among other things, that the alliance agreement should continue in perpetuity and that the company’s termination of the alliance agreement is invalid. Reunion went on to say that Barrick is seeking relief in the form of, among other things, declarations affirming its position, orders compelling the company to perform its obligations under the alliance agreement, related injunctive relief and damages.

Reunion said it believes the claim is without merit and intends to vigorously defend itself against it.

On February 13, 2023, Reunion Gold shares closed at 38.5 cents and currently trade in a 52-week range of 48 cents and 17.5 cents.