Canadian miners scrap over gold discovery after mega deal

Fri Sep 5, 2014 1:00am EDT
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By Allison Martell

TORONTO, Sept 5 (Reuters) - On one side, the founder of top miner Goldcorp Inc, 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 and Agnico Eagle Mines Ltd teamed up to beat a hostile bid by Goldcorp, 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, 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 tussled with Goldcorp for two years over the El Morro project in Chile until 2012.   Continued...