Vancouver's Klondex Mines Ltd. (TSX: KDX) saw its share price fall 24% to $1.34 late last week after the company said it was terminating a deal to merge with an Ottawa-based mining firm.
Klondex said it was scrapping the $80-million merger with Paramount Gold and Silver Corp. after discovering that Paramount provided inaccurate information and omitted other information in a technical report about an exploration project in Mexico.
Klondex believes it is entitled to a reverse break fee of US$2.85 million plus damages after discovering that certain mineral resources in the San Miguel project were actually located on a neighbouring property that Paramount does not own.
Paramount is demanding a break fee of the same value.
Klondex believes the prospects for the San Miguel Project are now limited and denies it has any obligation to pay the break fee.
Klondex, which owns and is exploring the Fire Creek gold deposit in Nevada, anticipates Paramount will likely make a retaliatory claim of breach of agreement against Klondex for backing out of the deal.
Klondex' share price this week ranged between $1.88 and $1.34; 52-week high: $2.12; 52-week low: $0.30.