This case involved the interpretation of an option agreement.

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 doing so.

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.

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