Homestake signs agreement to purchase Esso holdings

A wholly-owned Canadian subsidiary, Homestake Mineral Development, recently concluded a memorandum of agreement to purchase most of Imperial Oil’s Canadian exploration and development properties, over 50 in total. The properties are held in a subsidiary, Esso Minerals Canada. Both companies anticipate a definitive agreement will be entered into within a few weeks.

The deal includes a 24% interest in the Musselwhite gold deposit in northwestern Ontario, currently the subject of a major underground exploration program with Placer Dome as operator.

Esso’s producing assets, including a 35% interest in Les Mines Selbaie in Quebec and a royalty interest in the Midwest uranium deposit in Saskatchewan, will be sold separately. The parent company’s coal assets, namely Byron Creek Collieries, will not be affected by the sale.

Esso Minerals President, Mike Berthelsen, noted they originally intended to sell all the assets as a package. But he conceded from a business standpoint it made better sense to sell producing assets separately. Mines Selbaie is making plenty of money and Esso doesn’t mind hanging onto it a while longer, he added.

The exact number of properties involved is subject to rights of first refusal by joint venture partners in the respective projects. Sorting that out will probably take a few months, he predicted.

Homestake has become an aggressive player on the Canadian metals scene, having taken over North American Metals (VSE), owner of a 50% interest in the Golden Bear project in northwestern British Columbia. In the past, Homestake has stated it was seeking low cost gold production to leverage down its relatively high unit costs, most of which relates to the high cost of doing business at its 110 year old Homestake mine at Lead, S.D.

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