Dickenson, Hunter seek Casino property through merger

After over a year-long search for a major project, Pacific Sentinel Gold (VSE) announced it plans to merge with Big Creek Resources (VSE).

The companies expect to merge on a one-for-one basis subject to the completion of a due diligence review as well as shareholder and regulatory approval.

Big Creek’s primary asset is its option to earn a 50% interest in the Casino copper-gold property in southern Yukon from Casino Silver Mines (VSE). Based on drilling in the late 1960s and early 1970s, the property contains an estimated preliminary open-pit reserve of about 170 million tons grading 0.37% copper and 0.039% molybdenum at a strip ration of about 1.7-to-1. At the time of the original drilling, gold was not generally assayed although the project’s mineral inventory is estimated at 417 million tons grading 0.30% copper, 0.01 oz. gold per ton and 0.038% molybdenum.

Big Creek hopes to boost reserve grade on both the copper and gold based on the theory that poor core recoveries in the previous narrower gage drilling understated grades.

Drilling to date in 11 holes returned values of up to 0.039 oz. gold and 1.55% copper over a 185-ft. section in the best hole.

Work is continuing with one rig on the property drilling on a 400-ft. grid, primarily infilling between old drill holes with some holes twined. A reserve estimate based on the new drilling has not yet been completed. In order to earn the 50% interest in the project from Casino Silver, Big Creek is required to spend $3.5 million on exploration and development by Nov. 1, 1994 plus an additional $4 million by May 1, 1998.

Big Creek has the right to sell the entire property at any time prior to June 1, 1995 for a minimum of $15 million.

Proceeds will be split 80/20 in favor of Casino on the first $15 million, 50/50 on the portion between $15 million and $100 million, and 60/40 in favor of Big Creek on the sale amount exceeding $100 million.

Consultant Archer Cathro & Associates, vendors of the earn-in to Big Creek, is entitled to 5% of big Creek’s share of the proceeds on the first $100 million, and 10% on the balance.

Big Creek has the option to reduce Casino’s interest to a 10% net profits interest by paying the company $1 million at the end of 1992; a further $2 million by the end of 1993; and $12 million by the end of 1994. Robert Dickenson, president of Pacific Sentinel, said he is “very pleased” with the deal, noting that the company has reviewed literally hundreds and hundreds of projects since dropping its option on the Golden West property in Arizona back in April of 1991.

Dickenson said the company will continue drilling with one rig on the property for the time being, although the program will likely be accelerated at some point in the future. He said the most likely route for the company is to acquire 100% of the property from Casino by making the $15 million in payments before finding a buyer.

The promotional power of the group heading up Pacific Sentinel was evident following the release of the news. Pacific Sentinel and Big Creek jumped a dollar to the $2.70-level while Casino touched a high of $1.00 from the 65-cent level.

Pacific Sentinel is managed by Robert Hunter, Robert Dickenson, Jeffrey Franzen and Douglas Forster. The Hunter-Dickenson team orchestrated the sale of Continental Gold to Placer Dome at $20 per share in September 1990.