American Gem, Teck form alliance

Vancouver-based Teck (TSE) has gained the right to participate in future joint ventures with American Gem (TSE).

In addition, Teck agreed to buy 1 million shares of American Gem at $5 per share and, in all likelihood, a Teck representative will become a director of the other company.

American Gem will use a portion of the $5-million Teck placement to buy the historic Gem Mountain sapphire property in Montana, and will begin sapphire production on a third operation in that state. Proceeds will also be used to develop a large inventory of cut sapphires of calibrated sizes for sale to the jewelry industry.

Teck also holds a right of first refusal to participate in joint ventures to develop sapphire and ruby deposits worldwide.

When asked why Teck became involved, the company’s chief geoscientist, Art Soregaroli, told The Northern Miner that “American Gem looks as if it could be a real winner.” He added that “they have a good strong team from mining right through to marketing,” and he sees real potential for corporate growth. At present, American Gem is producing sapphires at Moffat Gulch and Dry Cottonwood Creek, and a third operation is in the works. Total sapphire resources on a small portion of the company’s holdings in Montana are estimated at 50.5 million carats.

The Teck transaction is subject to regulatory approval and final due diligence considerations.