Eskay players study options in light of Placer’s decision

The share prices of all public companies involved in the Eskay Creek project weakened slightly on news that Placer Dome (TSE) had elected not to increase its interest in the project to 50% under the terms of a joint venture agreement with International Corona (TSE).

Placer Dome still has a 22% indirect interest in the property, held through its 44% interest in Stikine Resources, which in turn owns 50% of the Eskay Creek project north of Stewart, B.C.

On Dec. 17, the day after the announcement was made, Placer Dome shares closed at $11.60, a modest decrease from the previous Friday’s close of $12. Corona owns 40.9% of Stikine and 49.8% of Prime Resources Group (VSE), which owns the other half of Eskay Creek and is operator. Corona shares closed Dec. 17 at $5, down from Friday’s close of $5.25, while Prime Resources Group fell to $2.05 from $2.35 during this period.

Corona President Peter Steen said the company is still working out what its next step will be in light of Placer Dome’s recent decision. The company has a number of options, as does Placer Dome.

For example, Corona has the right for 90 days to acquire all of Placer Dome’s Stikine shares for about $105 million (it can even borrow the money from Placer to buy the shares). If it does not exercise that right — Placer Dome, Corona, Prime and Stikine will use their best efforts to cause a merger of Prime and Stikine by the end of September, 1992.

If the merger is not achieved, Corona is to offer to acquire all of Placer Dome’s Stikine shares in exchange for common shares of Corona. If Placer Dome doesn’t accept the offer, Corona at Placer Dome’s request is to cause Stikine to prepare a prospectus to permit Placer Dome to sell its Stikine shares by way of a secondary offering.

In the meantime, Corona intends to start a $10-million feasibility study for Eskay Creek which will be used as a bankable document for project financing.