URANIUM NEWS FLASH: SHABOT OBAADJIWAN WITHDRAWS FROM MEMORANDUM OF UNDERSTANDING BETWEEN GOVERNMENT, FVC AND FN, AS A RESULT OF UNDISCLOSED DRILLING AT ROBERTSVILLE SITE

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Steev Morgan

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Jun 14, 2009, 2:22:48 PM6/14/09
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URANIUM NEWS FLASH: JUNE 14, 2009

SHABOT OBAADJIWAN FIRST NATION WITHDRAWS FROM
MEMORANDUM OF UNDERSTANDING BETWEEN THE PROVINCIAL GOVERNMENT, FRONTENAC VENTURES CORPORATION AND FIRST NATIONS,
AS A RESULT OF UNDISCLOSED DRILLING AT ROBERTSVILLE SITE


March 6, 2009

Mr. Doug Carr
Ministry of Aboriginal Affairs
720 Bay St., 4th Floor
Toronto, ON  M5 G 2K1

Attention: Mr. Doug Carr,

Re: Shabot Obaadjiwan First Nation

Dear Mr. Carr,

I am writing on the instruction of my client to advise you of our position regarding certain matters that have transpired since the execution of the Memorandum of Understanding (MOU) in November, 2008.

As you know, since the beginning of this dispute in June 2007, the Shabot Obaadjiwan First Nation has insisted that Ontario implement its duty to consult regarding the proposed uranium exploration on their territory by Frontenac Ventures Corporation (FVC). Our demands ultimately resulted in a failed mediation in January, 2008 and a further consultation process that commenced in June, 2008. Culminating in the about mentioned MOU. Throughout the dispute the Shabot Obaadjiwan First Nation has conducted itself with the utmost good faith and was instrumental in the genesis of the MOU. Shabot engaged itself in the consultation process based on the representations of the parties involved, including FVC and Ontario, and committed to resolve issues based on full and frank disclosure, honesty, respect and good faith. Shabot further endorsed and supported the continuation of the consultation process throughout Phase 1 of the drilling program.

Shabot have since been made aware that Frontenac Ventures Corporation (FVC) has diamond drilled approximately 15 holes on lands known as lease 104597 located in the Algonquin Nation land claim area. This lease is comprised of numerous individual claims and is outlined on the values map produced during the consultation process. The drilling operation ceased June 17, 2008.

What is extremely troubling to Shabot is that this drilling operation took place and was taking place while FVC and its representatives had assured both Shabot and Ontario at the initial meetings regarding the consultation process that no drilling had taken place. Indeed Shabot approached the consultation process in good faith based in part on representations that drilling had not yet taken place. However, and as Shabot has since discovered, FVC filed a Notice of Diamond Drilling with your government on or about May 14, 2008. The impugned drilling operation commenced in May 22, 2008 and was inspected by your government on or about June 23, 2008. Not only did FVC and Ontario have knowledge that drilling had occurred, Shabot was categorically advised that drilling had not yet taken place.

It is true that drilling appears to have taken place on "leased lands". However, the fact that the lands are leased does not in any way excuse or legitimize representations that were knowingly false. Ontario not only has a legal and constitutional duty to consult in good faith with Shabot, as a fiduciary and as a matter of good faith bargaining, it is required to disclose that it had knowledge that drilling was taking place. What is equally troubling is that representatives of FVC advised Shabot that no drilling had taken place even though they had drilled and were actively drilling while these representations were being made to Shabot. The conduct on the part of Ontario is clearly a breach of its fiduciary duty and its duty to consult with Shabot in good faith. The conduct of the FVC is misleading, unconscionable and is an affront to the spirit and intent of the consultations process.

In addition to the above, Shabot was recently provided with a press release wherein George White advises that a "large new zone" of uranium was discovered in the late fall of 2008. Mr. White further indicates in this release that "a private placement is planned to provide for further exploration and other corporate undertakings". We were not consulted in any way with regard to the discovery of this "new zone" and the purported concentrations of uranium as reported therein nor have we been consulted about the "further exploration" that is referenced in the press release. The report of G.A Harron & Associates as referenced in the press release recommended the commencement of a multi million dollar drill program allowing for 43 to 101 drill holes. This recommendation does not, in any way, resemble the number of allowable drill holes as agreed in the MOU. We can only surmise that the reference is to different holes in addition to the holes already limited by the MOU.

As you know, we have only agreed to allow limited drilling with regard to Phase 1 of FVC's exploration project. Any additional or purported drilling has not been agreed to and will not be agreed to. The FVC press release is viewed by Shabot as a veiled attempt to undermine the MOU and to mislead the public with regard to the specifics of MOU and the limitations and requirements it imposes on Phase 1 of the drilling program. Furthermore, FVC's honesty, integrity and good faith must also be questioned in light of the fact that this "new zone" appears to have been discovered during the negotiation of the MOU but was not disclosed the Shabot at the time.

Having said the above, I am instructed to advise you that the Shabot Obaadjiwan First Nation views these two incidents, at a minimum, as breaches of the spirit and intent of the MOU and the consultation process/duty to consult. Shabot is of the further view that the recent press release by FVC undermines the spirit and intent of the MOU and may violate the terms and conditions of the MOU. In this regard, any attempt to engage in additional or further drilling is clearly a breach of the MOU.

I am instructed to advise you that in light of the above noted incidents and the fact that, at minimum, the spirit and intent of the MOU has been compromised, Shabot are withdrawing from the MOU until further notice. I am also instructed to advise you that under no circumstances will Shabot permit drilling on the impugned lands at this time. I wish to advise that Shabot is currently considering its options, which may include placing these matters before Justice Cunningham and/or returning to the land, without notice, to protect it from any further drilling.

In the meantime, Shabot is prepared to meet and discuss these and other matters in keeping with the true spirit and intent of the MOU and in good faith it has shown throughout this dispute, the mediation and the consultation process. If you have any questions, do not hesitate to contact either Chief Davis or myself.

Yours truly,

Stephen G. Reynolds
Reynolds, Dolgin LLP

cc. Chief Doreen Davis
     Chief Randy Malcolm
     Bob Potts

(Editor's Note: This letter will be available on the CCAMU website within the next few days. Look under the FIRST NATIONS tab http://www.ccamu.ca )


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