El Condor, Covenant drop plans to acquire St. Philips

Merger partners El Condor Resources (VSE) and Covenant Resources (VSE) have decided not to proceed with a previously announced intention to acquire St. Philips Resources (VSE).

In early May the companies announced their intention to offer St. Philips shareholders one common share of the merged company in return for two shares of St. Philips.

El Condor and Covenant expect to receive shareholder approval for their proposed 1-for-1 merger at shareholders’ meetings scheduled for June 24.

The companies are also ratifying the earn-in agreement on the South Kemess property in the Toodoggone region of north-central British Columbia.

Although El Condor had a definitive agreement with St. Philips to earn a 60% interest in St. Philips’ South Kemess property, there was no specific joint venture agreement. The jagreement outlines such details as operatorship and dilution.

The companies, in conjunction with Rio Algom (TSE), are now negotiating the details of a joint venture.

Rio Algom’s involvement stems from a previously announced proposal (T.N.M., April 8/91) which, if approved, will result in Rio Algom owning five million shares of St. Philips or about 48% of the company’s outstanding shares.

The parties now have an agreement-in-principle giving the company with the largest single interest (namely El Condor) operatorship of the joint venture.

In addition, El Condor has agreed not to reissue or revise its previous bid for St. Philips. El Condor also agreed to withdraw the litigation relating to St. Philips’ acquisition of Stork Ventures. Stork had a 25% interest in the South Kemess property prior to El Condor’s earn-in.

St. Philips acquired all the issued shares of Stork earlier this year in return for a total of 600,000 shares. El Condor alleged that it had a right of first refusal on the interest and brought court action against St. Philips.

Of the $1.1 million in expenditures required to earn the 60% interest in the South Kemess, El Condor has spent about $800,000.

Exploration plans for the coming season include work on both the South Kemess and the adjacent North Kemess for an estimated total budget of $3.5 million.

El Condor holds a 100% interest in the North Kemess property following the recent buyout of Kennecott’s 40% interest for $3.5 million in cash.

Drilling on the North and South Kemess properties last year identified a number of large gold-copper porphyry systems.

The highest grades were encountered on the South Kemess property where a total of about 6,100 metres of drilling was completed. Preliminary estimates of South Kemess reserves total about 75 million tonnes grading an average of about 0.90% copper equivalent. South Kemess remains open in three directions. Drilling on the North Kemess property outlined a similar tonnage of porphyry mineralization grading 0.50% copper equivalent.