Star DIAM Mentioned (Fri, 04 Jun) - Summary by Will PurcellStar Diamond had another day in court, looking to stall Rio Tinto's drive to call a joint venture meeting at FalCon. Rising diamond prices could be a boon to Ken MacNeill's Star Diamond Corp. (DIAM) and Rio Tinto Exploration Canada Inc. (RTEC), its co-venture on the Fort a la Corne (FalCon) diamond project in central Saskatchewan. First, the two companies will have to resolve their legal dispute or have a Court of Queen's Bench justice settle the case for them at some point, probably not until next year.
The two companies did meet in court today, however, as Justice G.M. Currie heard a request from Star Diamond that the court require RTEC to complete a comprehensive diamond breakage study of the gems recovered from the 10-hole Bauer trench-cutter program, excavated in 2019 and processed last summer and fall, with the last hole completed early this year.
Star Diamond's lawyers filed over 100 pages of new documents to make its case, which essentially boils down to an assertion that RTEC had initially agreed that a diamond breakage study would be a part of the "complete results" that RTEC undertook to provide. Star says that RTEC thereafter changed its stance once Justice Currie had accepted the undertaking as a basis for denying Star's request for an injunction. In presenting its argument, Star's legal team pointed to a question-and-answer document written by RTEC last July, in which it said that breakage studies would have to be completed in Yellowknife or Antwerp, as the Saskatchewan Research Council (SRC) was not so equipped.
RTEC, for its part, kept the "brief" in brief, submitting just a few pages to counter Star's argument. RTEC denied that there was any ambiguity in the undertaking it offered to the court, stating that it clearly said that the results would be complete once all data was available from the SRC. RTEC says that this position was clearly stated, reiterated last September and again in February, when the SRC last results became available.
A subtle legal argument could be a key to the decision. Star Diamond says that while it disagrees with RTEC, it is certainly not accusing RTEC of callously ignoring its commitment to the court -- no, that would be contemptuous, a charge that it is not raising against RTEC as it is just a difference of opinion. RTEC, on the other hand, is saying that Star Diamond's action does rise to the level of contempt. Those might appear to be strange positions for the two companies to take, but if contempt is in play, then Star Diamond faces a higher legal hurdle than if not.
That aside, RTEC essentially is arguing that Star Diamond is attempting to relitigate last year's failed request for an injunction as the means to further stall RTEC's effort to advance the FalCon project. RTEC says that Star Diamond waited months -- until the last possible minute, it says -- to lodge its latest complaint, one that looks to reset the 120-day clock before RTEC can call a joint-venture-committee meeting and set an exploration budget.
Indeed, RTEC reminded the court that 16 months have passed since it first attempted to call a joint venture meeting, a situation not contemplated by the option to joint venture agreement or the subsequent joint venture agreement. Therefore, Star Diamond should not be allowed a "do-over" that would tack on several more months of delay. Star, in its final rebuttal, said that in its opinion "there was a pretty clear meeting of the minds in July" that a breakage study was to be part of the undertaking, and so that is the "do-over" that it is seeking.
As expected, Justice Currie reserved his decision, but he did offer a rough indication of when a written decision will be available. He promised an answer before July 8 -- the earliest date on which RTEC can hold a meeting -- suggesting that late this month would be a reasonable target. And so, the wait goes on for Star, which lost one-half cent to 26 cents on 790,000 shares today.