Corona, Placer continuing talks on Eskay development

Negotiations are continuing between Placer Dome (TSE) and International Corona (TSE) relating to possible funding by Placer of a portion of costs to develop the Eskay Creek gold mine project north of Stewart, B.C.

Placer still has a 22% indirect interest in Eskay Creek through its 44% holding in Stikine Resources, which owns 50% of the project. But Corona controls Stikine and also Prime Resources Group (VSE), which holds the remaining interest in Eskay Creek and is operator.

The two companies were involved in lengthy discussions to finance and develop the project, which culminated in last year’s staged joint venture agreement whereby Placer could have increased its direct interest in the project to 50% by spending $240 million.

But after completing a due diligence review, Placer said the deposit’s tonnage would not sustain a mine that would satisfy its financial objectives under the terms of its agreement with Corona. The major then elected not to proceed to the feasibility stage.

At presstime, Corona President Peter Steen would only say that talks were “progressing,” and “it would make sense if a deal could be worked out.” Because both companies are still at the bargaining table, Placer Dome agreed to extend to the end of January the date (Jan. 15) by which Corona can exercise an option to issue to Placer Dome $100 million of its preferred shares.

About the same time, Corona notified Placer that it had elected not to exercise its option to purchase Placer Dome’s Stikine shares for about $105 million. The companies intend to use their efforts to cause a merger of Prime and Stikine by the end of September, 1992.