A Northern Ontario mine construction company has taken legal action against a Timmins-area mine developer.
Gowest Gold announced July 4 that it has received a statement of claim issued under the Construction Lien Act by Cementation Canada.
The North Bay-headquartered mining service company is seeking payment of $7.4 million for certain services and materials provided to Gowest under a contract between the two parties from March, 2017.
The statement of claim also named Greenwater Investment of Hong Kong, Gowest's financier and largest shareholder, as a defendant.
Cementation has also registered a lien against Gowest's Bradshaw gold deposit, 32 kilometres north of Timmins, the mining company's only asset.
In a statement, Gowest said it's "currently evaluating the merits of the claim, its defence and other potential options available to it in response to the action."
Gowest said it's in discussions with Greenwater about closing a much-needed equity investment in the company, including the costs associated with this legal action.
The company announced back in January that Greenwater would invest up to $19 million for ongoing development work at the Bradshaw gold deposit. Now, an additional $8 million may be in the offing, subject to certain terms and conditions.
A certain portion of the proceeds will be used to accelerate payments under a loan agreement with Greenwater.
"The company remains committed to moving forward with its efforts to restart mining activities at Bradshaw and intends to continue its activities in this regard," Gowest said in a news release.
Gowest's Bradshaw gold deposit contains an indicated resource of 422,000 ounces, grading 6.19 grams per tonne within 2.1 million tonnes, and an inferred resource of 755,000 ounces, grading 6.47 grams per tonne within 3.6 million tonnes, based on a pre-feasibility study done in 2015.