Adrian to spin off Eskay Creek interest

TSE-listed Adrian Resources has retained Yorkton Securities to arrange the sale of its interest in the Eskay Creek gold project north of Stewart, B.C.

As a result of a staking gap, Adrian holds a portion of the deposit containing about 210,000 oz. gold equivalent. Yorkton estimates the value of Adrian’s share from mining production in the gap is about $20 million, on an undiscounted basis.

This sale would allow Adrian to focus on its key asset — the Petaquilla copper-gold project and accompanying land package in Panama. This project is at the prefeasibility stage and is attracting the attention of senior mining groups.

Adrian proposes that a holding company for the Eskay Creek asset be created and that shares of this new company be transfered to Adrian’s existing shareholders as a dividend.

This step will allow a potential buyer greater ease in acquiring the Panamanian mega project, where reserves exceed 1 billion tons grading 0.6% copper and 0.005 oz. gold per ton (at a cutoff of 0.3% copper). Adrian holds rights to 52% of the Petaquilla project, with Metall Mining of Canada (TSE) holding the remaining 48% interest.

Adrian’s Eskay Creek interests are 100%-owned. However, Prime Resources Group (TSE) has an option to acquire a half interest by spending $5 million on exploration ($4.4 million has been spent) and by taking on all production-related costs. As part of its option, Prime holds the right of first refusal on any disposition of Adrian’s interest in Eskay Creek. Prime’s largest shareholder, Homestake Mining (NYSE), is overseeing the development of a mine at Eskay Creek, where stated reserves for the 21B deposit are 1.2 million tons grading 1.91 oz. gold and 85.55 oz. silver per ton, 5.64% zinc, 2.89% lead, and 0.77% copper. Production is expected to begin in the first quarter of 1995.

Homestake has calculated reserves for the portion of the Eskay 21B deposit lying within the claim gap. The gap contains 102,500 tons grading 1.12 oz. gold, 30.6 oz. silver, 1.6% zinc, 1% lead and 0.18% copper. A second zone contains 19,900 tons grading 1.66 oz. gold, 112.8 oz. silver, 2.29% zinc, 1.39% lead and 0.41% copper.

The remainder of the staking gap is believed to have good exploration potential, along with Adrian’s claims which surround most of the reserves on Prime Resources’ Eskay Creek property. Prime is planning a $600,000 exploration program this summer on Adrian’s Eskay Creek holdings.