An agreement has been reached between St. Philips Resources (VSE) and Rio Algom (TSE). It gives Rio the option to purchase up to 3.8 million treasury shares of St. Philips plus 1.2 million shares (existing shares) held by certain shareholders on a graduated price scale to April, 1993. The placements should allow St. Philips to meet its financing needs during the development of the South Kemess copper-gold property in north-central British Columbia.
El Condor Resources (VSE) and Kennecott, in a 60-40 joint venture, are earning a 60% interest in the South Kemess from St. Philips. The joint venture can earn the interest by spending a total of $1.1 million, $800,000 of which has already been expended. The initial private placement by Rio Algom will take place this month at $1.50 and will include 500,000 treasury shares and 300,000 existing shares owned by certain shareholders.
Options on further shares include 400,000 existing shares at $2 to October, one million treasury shares at $2 to December, 1.3 million treasury shares at $3 and 500,000 existing shares at $3 to April, 1992, and one million treasury shares at $4 to April, 1993.
A winter drilling program on the South Kemess was successful in outlining a large porphyry copper-gold deposit with all 22 holes encountering copper-gold mineralization from near-surface to depths of up to 675 ft. The area of mineralization as indicated by drilling measures 1,500×2,000 ft. and is open in all directions.
If two lower-grade holes on the east side of the drilling area are omitted, the average grade of the other 20 holes is 0.019 oz. gold per ton and 0.26% copper over an average interval of 373 ft.
El Condor and St. Philips are currently in dispute over the ownership of a 25% interest in the property.
As it stands now, the property is owned 75% by St. Philips and 25% by private company Stork Ventures.
St. Philips recently completed a transaction to acquire all the issued and outstanding shares of Stork Ventures in return for 600,000 shares of St. Philips, effectively giving the company full ownership of the property before the joint venture’s earn-in.
El Condor is opposed to the company’s purchase of Stork Ventures, claiming it has the right of first refusal on the property interest. St. Philips takes the view that it only purchased Stork’s shares, not the interest in the property. El Condor attempted to get an injunction on the deal but its application was dismissed.
St. Philips intends to continue to oppose El Condor’s alleged right of first refusal and said it was advised by legal council that the claim is without merit.
El Condor director Harold Forzley said the company is confident it has legal right to Stork’s 25% interest in the property. He noted that St. Philips effectively purchased the property interest when it bought all the outstanding shares of Stork and a court of law will look through the deal to this net result.
He also noted the dismissal of El Condor’s injunction was not important and should not be taken as an indication that St. Philips is in the right.
Forzley said an injunction would be successful if St. Philips begins dealing in the assets of Stork. A court date for the dispute has not been yet been set.
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