Akiko and Gold Canyon dispute back-in right for Springpole project

Former joint-venture partners Akiko Gold Resources (VSE) and Gold Canyon Resources (VSE) are at odds over a back-in right on the Springpole gold project in northwestern Ontario.

Akiko holds the right to back-in for 40% of Gold Canyon’s interest in the property, which, in turn, is held under a 50-50 joint venture with Santa Fe Pacific Gold (NYSE).

Gold Canyon alleges that Akiko has relinquished its rights to the back-in because it failed to exercise the right following delivery of a feasibility study.

Akiko adamantly disputes that position, stating the back-in right can be terminated only upon completion of a positive feasibility study. Akiko called Gold Canyon’s assertions “a transparent attempt to terminate prematurely its rights,” pointing out that “Gold Canyon purported to commission and complete a study well in advance of the discovery of economically recoverable reserves, in clear contravention of industry practice and the agreement between the two companies.”

Akiko says legal advice confirms that its back-in right remains intact, and, until such time as work on the property justifies a bona fide production feasibility, that situation will not change.

The feasibility commissioned by Gold Canyon determined that Springpole contains a large resource of low-grade gold mineralization that is uneconomic under present conditions.

Historic work on the property, dating back more than 10 years, focused on the Portage zone, outlining 27 million tons grading 0.035 oz. gold per ton.

The resource lies under a large lake, which, the feasibility said, rendered the project uneconomic.

Santa Fe has been concentrating its efforts on the northern area of the property, where grassroots exploration in 1995 identified new areas of gold mineralization.

Eight holes drilled during the winter of 1995 returned mixed results from three different targets. Results ranged from 0.041 oz. gold over 5 ft. up to 233.4 ft. grading 0.021 oz. gold (including 9 ft. grading 0.11 oz. gold).

In addition, Gold Canyon reports that channel sampling on the East Extension zone returned up to 0.5 oz. gold over 5 ft., 0.26 oz. gold over 12 ft. and 0.064 oz. gold over 12 ft. The zone remains open on strike to the east and has been tested by only one drill hole, which returned 1.8 oz. gold over 7.4 ft.

Santa Fe is sufficiently encouraged by work to date to have started a 20,000-ft., $1.1-million program of winter drilling.

At presstime, results were in from three of six holes drilled to test the Camp zone. Hole 156 returned 50 ft. of 0.08 oz., 25 ft. of 0.032 oz. and 23.3 ft. of 0.06 oz. Hole 157 returned a 25.4-ft. interval of 0.022 oz. and a 5-ft. interval of 6.03 oz., while hole 158 hit 10 ft. of 0.239 oz. and an 86.1-ft. intersection of 0.035 oz. (which includes 5 ft. of 0.379 oz.). In addition to its disputed back-in right on Springpole, Akiko is earning a half interest in a silver-lead-zinc-gold project in Utah from Chief Consolidated Mining.