Vancouver Stock Exchange Prime Equities, Teck swing deal

Both the VSE resource and composite indices pulled back during the week ended April 16. The resource index posted a 9.14-point drop to finish at 561.20, while the composite index closed at 573.27 for a decline of 7.34 points. Gold managed to hold above the US$360-per-oz. level during the week, finishing at US$361.

Prime Equities and Prime Resources Group, along with a number of other Prime-related companies, had their trading halted near presstime on April 17.

Prime Equities announced it had arranged a financing deal with Teck allowing the latter company to earn a 50% interest in any of the former’s property interests.

Prime Equities will issue to Teck four million shares at $1.25 per share, plus six million warrants to buy an equal number of shares at $1.25 each to the end of 1991, $2.25 to the end of 1992 and $3.25 to the end of 1993.

If Teck elects to earn a 50% interest in any of the company’s property interests, it must fund the property to production. Teck can recoup its investment from the project’s operating profit.

Prime Equities traded at 99 cents prior to the halt, up 11 cents on the week. Prime Resources Group closed down 30 cents over the period, sitting at $4.20 before the halt in trading.

Teck completed identical earn-in deals with a number of other Prime companies. Included is the Rock & Roll property owned by Eurus Resource and Thios Resources in northwestern British Columbia.

Varitech Resources was halted over the period as well. The company announced it had completed a deal to earn a 100% interest in the Big Onion deposit near Smithers, B.C. The issue reached a high of $1.09 before finishing the week up 21 cents at 95 cents.

Previous drilling on the property in the 1960s and 1970s resulted in a preliminary estimate of reserves of 80-100 million tons grading 0.42% copper and 0.02% molybdenum. The company believes the grade could be as much as 50% higher than that indicated in previous percussion drilling. The company hopes to raise funds for further drilling.

Silver Drake Resources got a big boost over the period, jumping by more than $1.50 to close at $2.50. The company recently announced that John Reynolds, former British Columbia environment minister, is joining the company as chairman and chief executive officer.

War Eagle Mining has plans to begin a US$300,000 drilling program in June at its War Eagle Mountain property in Idaho. Nerco Inc. had the right to earn a 51% interest in the property by spending a total of US$2 million but it recently announced it intends to withdraw from the project while retaining a 2% net smelter return. Nerco has spent about US$1.8 million on the property to date. War Eagle finished the week up a nickel at 72 cents.