American Reserve buys final 20% interest in Kutcho Creek

Ownership of the Kutcho Creek massive sulphide project is moving increasingly into the hands of American Reserve Mining (VSE).

Situated near Dease Lake in northwestern British Columbia, Kutcho Creek is reported to contain preliminary reserves of 15.77 million tons grading 1.76% copper, 2.54% zinc, 1.0 oz. silver and 0.01 oz. gold per ton.

American Reserve reached an agreement with a unit of Homestake (NYSE) to acquire the remaining 20% interest in the property. Earlier this year, the Vancouver-based junior purchased 60% of the property from Homestake for an aggregate of $7.6 million and obtained the right to earn a further 20% by spending $3 million over three years.

The remaining 20% interest is being acquired for 2.2 million American Reserve shares, with a further 290,275 being delivered to Homestake in partial settlement of previous commitments. Prior to this agreement, Homestake held 870,000 common shares and 6.5 million preferred shares.

In a separate development, American Reserve reached an agreement-in-principle with another major mining company allowing the undisclosed company the right to acquire up to a 60% interest in the Kutcho Creek property. To earn this interest, the major is required to spend $7.5 million and make a cash payment of $1 million.

A company spokesman said the identity of the this major mining company will not be disclosed until a formal agreement is concluded.