Euro-Nevada wants royalties in return for Stikine block

Euro-Nevada Mining (TSE) admitted recently that it owns a small block of Stikine Resources (TSE) shares that could play a pivotal role in the struggle between Placer Dome (TSE) and Corona (TSE) for control of the Eskay Creek gold discovery. Stikine is the Vancouver company whose shares have risen to $75 on the strength of its 50% interest in the exciting Eskay project in British Columbia. Operator Prime Resources (VSE) holds the other 50% interest in the project.

While Euro-Nevada says it acquired 130,000 Stikine shares as a “long-term investment,” it may be prepared to sell them in return for a royalty interest in the Eskay claims.

“Our stated policy is to hold royalties, and if we can make a deal one way or another with a future operator, the shares would be sold,” said President Pierre Lassonde.

If sold, those shares (representing about 3.8% of Stikine) could tip the scales in favor of either Placer Dome and Corona as they attempt to tie up control of the Eskay project.

Following a recent bidding war, Corona has amassed 45% of Stikine’s 3.5 million outstanding shares plus a 44% voting interest in Prime. At presstime, Placer Dome has succeeded in acquiring approximately 45.3% of Stikine.

According to Lassonde, negotiations between Euro-Nevada and potential buyers of the Stikine block have already taken place and more discussions are scheduled this week.

Meanwhile, Lassonde attributed the strength of his company’s share price to speculation on drill results at American Barrick Resources’ “purple vein” gold discovery near Elko, Nev.

The purple vein is located on a group of claims north of Barrick’s Goldstrike mine, which last year produced 207,000 oz. gold. As Euro-Nevada holds a 4% net smelter royalty and 5% net profits interest in the North block, its share price has been affected by drill results, including a stepout hole that intersected 540 ft. of grade 0.41 oz. gold per ton.

Euro-Nevada recently reached a high of $17.50.