After negotiating for more than a year, Homestake Canada and Placer Dome (TSE) have reached a stalemate on a proposal to convert Placer’s 44% interest in Stikine Resources to a direct interest in the Eskay Creek project.
Neither company is publicly saying why negotiations have bogged down. Situated near Stewart, B.C., the advanced gold project is owned equally by Stikine and Prime Resources Group (VSE). Homestake Mining (NYSE) has a 55% indirect interest through its share ownerships in both Prime and Stikine. Placer and Homestake have an existing agreement which now calls for them to try to merge Prime and Stikine. Shareholders of both juniors will be asked to vote on the proposal. The proposed merger would simplify ownership of the project and make it easer to finance, said Jack Thompson, president of Homestake Canada. A feasibility report is expected this summer, engineering is under way and a contract was recently awarded to Davy International. Prime Resources is paying its share of development costs from several transactions, including the sale of its holding in Homestake Mining for $9.4 million. The funds will also be used to repay advances previously received from Home
stake Canada. Meanwhile, Prime expects to receive $9.1 million from an unrelated transaction whereby Homestake Canada will redeem 130,000 preferred shares plus accrued dividends.
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