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TORONTO (Reuters) - On one side, the founder of top miner Goldcorp Inc (G.TO), his young apprentice, an aggressive securities lawyer, and a tiny company based in a Quebec mining town. On the other, the chief executives of two leading Canadian gold miners, fresh off one of the biggest deals of their careers.
Some of Canada's best-known mining executives are sparring over the early-stage but promising Odyssey gold discovery in Quebec, near Canadian Malartic, the country's biggest gold mine.
The legal fight has its roots in the C$3.9 billion ($3.6 billion) takeover of Osisko Mining Corp, the mine's builder, this year. Yamana Gold Inc (YRI.TO) and Agnico Eagle Mines Ltd (AEM.TO) teamed up to beat a hostile bid by Goldcorp (G.TO), taking control of Canadian Malartic.
At the heart of the dispute is who, if anyone, will profit from Odyssey, one of Osisko's assets. If early drilling results at the exploration site pan out, it could be a choice addition to the Canadian Malartic mine, extending its life.
Abitibi Royalties Inc RZZ.V, listed on Venture, the Toronto Stock Exchange's market for small, growth companies says it was Osisko's minority partner, and the deal has triggered its right to take control of part of Odyssey. Yamana and Agnico dispute that claim.
Tiny Abitibi was little known before it challenged the two mining heavyweights, but it has a big backer in Rob McEwen, who ran Goldcorp until 2005, and it has doubled down even as Yamana and Agnico dismiss its challenge as opportunistic.
In June, McEwen's protege Ian Ball joined Abitibi's board, along with Joe Groia, a lawyer and former head of enforcement at Canada's top securities regulator. In July, McEwen invested C$2 million in Abitibi. In August, Ball became president.
Canada's tightly-knit gold industry, home to three of the world's top five gold producers, has been split by conflict in the wake of major deals before. Barrick Gold Corp (ABX.TO) tussled with Goldcorp for two years over the El Morro project in Chile until 2012.
"The point here is a point of principle," Yamana Chief Executive Peter Marrone said, discussing Abitibi's challenge on a July 31 conference call. "You cannot make actions like this, certainly with a company of the stature of Agnico and Yamana, without consequences."
He did not say what the consequences would be, and Abitibi's Ball is undeterred.
"You don't work for Rob McEwen for ten and a half years without learning that sometimes good things come with a battle," Ball told Reuters.
McEwen showed his combative side shortly after he left Goldcorp, criticizing his successor's plan to buy a rival miner and later trying to block the deal in court as a shareholder.
Abitibi, which is based in the Quebec town of Val-d'Or, French for valley of gold, could become a top gold miner, said Ball, emulating legendary growth stories such as Barrick predecessor American Barrick and Goldcorp.
Shares of Abitibi have more than tripled since April 14. The shares traded at C$3.40 on Thursday.
Abitibi says it has a 30-percent interest in the property that contains the northern section of Odyssey, and that the interest is "free carried," meaning it would not have to fund development to enjoy its proceeds.
It took Osisko to court over that interest before the conclusion of the takeover, which Abitibi says has triggered its right of first refusal to acquire the 70 percent it does not own. Yamana and Agnico reject that claim.
"It seemed to me that there was a large rush to buy Osisko and sometimes, well, when you buy something, I've found there's always something hiding in the closet that you didn't expect," McEwen said in an interview at his Toronto office.
"Abitibi Royalties is on pretty solid ground. They had contracts, and those were just swept aside when these larger companies came in and said 'let's get this deal done'."
Agnico and Yamana declined to comment for this story.
Yamana and Agnico closed the Osisko deal in June, taking over Canadian Malartic and several other properties and hiving off other prospects into a new company.
The deal focused on Malartic, but on a call shortly after its announcement Yamana noted that early drilling results indicated "a significant underground deposit" at Odyssey.
Exploratory drilling at Odyssey was halted by Yamana and Agnico in July, "pending determination of the project's financial viability and the resolution of ongoing disputes."
Abitibi has appealed a Quebec court decision that would send it into arbitration with Yamana and Agnico. It will have a chance to make its case either way, and it is not yet clear how long it might take to get a ruling.
($1 US = $1.09 Canadian)
Additional reporting by Euan Rocha; Editing by Amran Abocar and Tomasz Janowski