Nov 27 MD&A are out on sedar.comYou will find this on
www.sedar.com dated Nov 27 2009.
The Mary March Property
The Corporation has the right to earn a 100% interest in an underlying interest in the property held by Phelps
Dodge Corporation of Canada Limited (“Phelps”), pursuant to a letter of intent entered into with Phelps. By virtue
of an underlying agreement, Phelps may earn a 50% interest in the property from Falconbridge Limited by
incurring expenditures of $1,500,000 over five years.
Under the terms of the letter of intent, the Corporation will
assume the remaining exploration expenditures of approximately $755,000 and will issue 100,000 common
shares to Phelps, together with 100,000 common share purchase warrants exercisable at a price of
.50 for a
period of twenty-four months. The Corporation is also required to make a cash payment of $2,000,000 to Phelps
within six months of commercial production. The Corporation’s interest is also subject to a 1% NSR royalty due
upon commencement of commercial production. The remaining 50% interest in the property is held by Xstrata
plc, on which the Corporation maintains a right of first refusal.
The Mary March Property is comprised of 18 staked claims, 2 licenses, 1 lease and 2 patented lots totaling 1,616
hectares and is located approximately 20 kilometres east of the past producing Buchans mine, near Buchans
Junction, Newfoundland. High grade Cu-Pb-Zn-Ag-Au massive sulphides of economic significance were
discovered on the Mary March Property by Phelps in 1999, but the core discovery areas of the property had been
dormant since August 2000. A TDEM survey completed was completed by Candor, the Corporation’s
predecessor, on a non-core portion of the property during the first quarter of 2004 and four holes totaling 925.4
metres were drilled to test these targets during the three months ended July 31, 2004. In February 2006, an
infiniTEM survey was completed over the eastern portion of the property. No significant anomalies were
identified.
Title to the core discovery areas of the Mary March Property is currently being contested. In September and
October 2000, Vinland Resources Limited, a privately held Newfoundland company filed applications with the
Mineral Claims Recorder for the Government of Newfoundland and Labrador (the “Mineral Claims Recorder”)
seeking Map Staking Licenses over the core Mary March discovery areas. On the basis of evidence
demonstrating that the lands in question were not open for staking, the applications were rejected by the Mineral
Claims Recorder. On December 20, 2000, the party in question filed a grievance with the Mineral Rights
Adjudication Board (the “Board”), asking that the Mineral Claims Recorder’s decision be overturned. In a ruling
handed down December 17, 2003, the Board ruled against the Province and titleholders. On January 8, 2004,
the Province filed an appeal on behalf of the Mineral Claims Recorder before the Supreme Court of
Newfoundland and Labrador, Trial Division. The Supreme Court hearing on the matter commenced on January
23, 2006 and concluded on January 27, 2006. On July 26, 2006, the Supreme Court of Newfoundland and
Labrador set aside the decision of the Mineral Rights Adjudication Board and referred the matter back to a rehearing.
Following an appeal by Vinland Resources of this ruling, The Mineral Claims Recorder, in conjunction with
Canstar-Phelps Dodge and Xstrata filed a cross appeal to overturn the decision by Newfoundland and Labrador
8
Supreme Court. The cross-appeal asked that the dispute be finally settled during the appeal, as the matter rests
on points of law which are best decided by the courts.
The appeal and cross appeal hearing were completed on November 9thh, 2007 and a decision was handed down
on February 18th, 2008 dismissing Vinland’s appeal and Canstar-Xstrata-Phelps’ cross appeal. The decision
upheld the Supreme Court of Newfoundland’s ruling overturning the Mineral Right’s Board decision, favouring
Vinland, and called for a re-hearing. The Supreme Court ruling favours Canstar, as does the Appeal Courts
decision. The second adjudication hearing ended on January 25th, 2009 and final summations were completed
on May 29, 2009. On October 23rd, 2009 the Adjudication Board handed down a unanimous decision recognizing
the current title holder, Phelps Dodge Canada, as the owner of the Mary March property. This positive decision in
favour of Phelps Dodge, and therefore Canstar, was expected to signify the end of this long dispute, however, on
November 20, 2009, Vinland filed a Notice of Appeal with the Newfoundland and Labrador Supreme Court (Trial
Division) to the October 23, 2009 decision of the Mineral Rights Adjudication Board. It should be noted that the
matter has already been considered by the Court of Appeal and the re-hearing by the Board followed the direction
of that Court. A comprehensive drilling program had been planned to commence on the property pending receipt
of necessary permits and equity financing. Management is currently evaluating all options.