Mr. Brian Grant reports
GOLDBROOK ANNOUNCES NOTICE OF ARBITRATION
Goldbrook Ventures Inc., on Sept. 6, 2011, commenced arbitration proceedings in British Columbia against Jilin Jien Nickel Industry Co. Ltd. and its affiliates in respect of Jilin Jien's handling of rebates received from the Quebec government for expenditures on the property subject to an option joint venture agreement between Goldbrook and Jilin Jien and other disputes relating to Jilin Jien's actions as operator of the joint venture between Goldbrook and Jilin Jien. Goldbrook is seeking remedies in the arbitration proceedings, including orders declaring Jilin Jien in breach of the option joint venture agreement and damages.
In 2009, Jilin Jien received rebates in the amount of $3,631,975 from the Quebec government in respect of 2008 expenditures on the property. The 2008 rebates were used for expenditures on the project. The amount payable in respect of 2008 rebates was later reassessed and reduced, and both Goldbrook and Jilin Jien paid $937,426 to remedy the overpayment. In a prior arbitration proceeding relating to the establishment of the joint venture, the tribunal ordered that future rebates received in respect of 2008 and 2009 expenditures must be used to finance expenditures on the project. In August, 2011, Jilin Jien received $2,400,404.47 from the Quebec government in respect of 2009 expenditures.
Jilin Jien proposes to establish an environmental contingency fund unilaterally and to appropriate the 2009 rebates to be contributed to that fund. Goldbrook's position is that the establishment of the environmental contingency fund and appropriation of the rebated funds thereto are not authorized and are contrary to the option joint venture agreement. Goldbrook further takes the position that the arbitration order requires that the 2009 rebates be used for expenditures on the project, including reimbursement of funds previously advanced by Goldbrook and Jilin Jien toward project expenditures.
There is no basis for the creation of an environmental contingency fund at the Raglan joint venture property. The option joint venture agreement permits an environmental contingency fund to be created in conjunction with a mine maintenance or mine closure plan. This project has not yet progressed to the feasibility stage, much less to a mine maintenance or closure situation. In addition, the 2011 program and budget put forward by Jilin Jien as operator, and approved by the management committee on Aug. 5, 2011, did not contemplate an environmental contingency fund, nor was the topic raised at the Aug. 5 meeting.
Goldbrook is seeking remedies, including damages, an order that Jilin Jien use the 2009 rebates to pay Goldbrook the sum of $1,062,933 in respect of expenditures incurred on the property by Goldbrook during the currency of the option and an order that the remaining balance of the 2009 rebates ($1,337,471.47) be used to repay Goldbrook and Jilin Jien for the amount each advanced to the project to remedy the overpayment in the 2008 rebates. If this order is granted, Goldbrook would be entitled to one-half of the remaining balance of the 2009 rebates, or $668,735.73. Goldbrook also seeks an order that Jilin Jien pay Goldbrook the sum of $487,188 in respect of expenditures incurred on the property by Goldbrook following the deemed establishment of the joint venture.
This dispute is in addition to the current arbitration and litigation proceedings that are continuing between Goldbrook and Jilin Jien and have been previously announced.
We seek Safe Harbor.