Murphy v. Crosshair Exploration And Mining Corp., 2011 NLTD(G) 14

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,