Frank Callaghan, who is being sued by Barkerville Gold Mines Ltd. (TSX:BGM), the company he founded, for allegedly using proprietary information to stake a potentially valuable claim next to Barkerville's property, is countersuing.
Last month, Barkerville filed suit in BC Supreme Court against Callaghan and Angelique Justason of Tenorex Geoservices.
The company alleges in that suit that Callaghan and Justason colluded to stake a claim that falls “within the geographic scope” of Barkerville’s property using proprietary information from a technical report that Barkerville had commissioned before Callaghan was forced to resign as CEO is 2014 and as director in 2015.
Barkerville claims that Tenorex was obliged to either hand over a technical report that it had done for Barkerville or destroy it, but instead used that information to stake a claim next to Barkerville’s property.
Barkerville alleges that Justason transferred the claim to Callaghan, who then tried to sell it to Barkerville.
But Barkerville had another contract, with a company called Standard Drilling and Engineering. Callaghan was the owner of Standard Drilling.
The fact Callaghan, as CEO of Barkerville, had hired his own drilling services company to conduct drilling for Barkerville was something that raised some eyebrows in the B.C. exploration sector.
While some industry insiders say it’s highly unusual for a company CEO to essentially hire himself to do work an independent contractor would normally do, others have defended Callaghan, saying that, at times when no one was doing exploration work in B.C., Callaghan kept his rigs operating and often paid for the work out of his own pocket.
In July 2014, Callaghan resigned as CEO of Barkerville, after the BC Securities Commission (BCSC) halted trading while it conducted an investigation into claims Callaghan made about Barkerville’s reserves – claims that proved to be unsubstantiated by technical reports.
In February 2015, he also resigned as director, and a few months later, in August 2015, Barkerville terminated the contract it had with Standard Drilling.
Callaghan’s countersuit claims that Barkerville terminated the contract without proper notice and without paying Standard and Callaghan what they were owed.
Callaghan claims Barkerville owe standard Drilling $340,017, and owes him personally $19,647 for expenses he paid out of his own pocket.
A bulk of the claim for standard Drilling is for “demobilization” expenses, after the company was forced to move equipment from exploration sites. It also includes rent for a building that Standard owned and which Barkerville used.
