This case involved the interpretation of an option
Murphy, a mineral prospector, granted Crosshair Exploration and
Mining Corp. (Crosshair) an option to acquire a 90% interest in
certain mineral licences which granted the right to explore lands
in Labrador. Under the option agreement, the licenses would
automatically vest in Crosshair, if Crosshair – among
other things – incurred specified exploration
expenditures, made certain cash payments, and completed a bankable
feasibility study. While the other conditions had been satisfied,
Crosshair had not yet completed the feasibility study, and by
letter agreement the parties had agreed to extend the time for
By that same letter agreement, Crosshair had confirmed its
obligation under the option agreement to begin making annual
$200,000 advance royalty payments on or before November 10, 2009.
Crosshair subsequently refused to make the payments. Crosshair took
the position that, among other things, the letter agreement amended
the option agreement so as to provide that the licenses vested upon
the completion of everything but the feasibility study, and that it
had refused to make the royalty payment because of Murphy's
assertion that the licenses had not yet vested in Crosshair.
Crosshair also argued that a force majeure provision in the
agreement allowed Crosshair to defer making payments until the
expiry of a moratorium on uranium mining imposed by the Nunatsiavut
government. The moratorium did not preclude exploration, nor did it
apply to all the land covered by the licenses.
After careful consideration of the agreement, the Court
confirmed that Crosshair was required to start paying the advance
royalty of $200,000 on or before November 10, 2009.
In interpreting the option agreement, the Court noted that there
was no mention in the agreement of vesting as a precondition to the
advance royalty being paid, or of other restrictions or
qualifications on the obligation to make the advance royalty
payment. The letter agreement clearly and unambiguously confirmed
Crosshair's obligation to make the payments on or before
November 10, 2009. The Court also determined that the force majeure
provision of the agreement clearly excluded from its ambit any
obligation by Crosshair to pay cash and therefore did not apply to
the advance royalty payment.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).