B.C. stalls Eskay mining lease until land title question settled

The battle for control of the Eskay Creek deposit north of Stewart, B.C., is no longer confined to two majors vying to develop what is expected to become one of the province’s richest and highest-grade polymetallic mines. It appears now that Prime Resources Group (VSE) and Stikine Resources (VSE) will need to secure clear title to claims hosting the deposit before the British Columbia government will issue a mining lease to the juniors, or to their backers, Corona (TSE) and Placer Dome (TSE).

British Columbia Mines Minister Jack Davis recently informed Tagish Resources, a private company challenging title to certain claims hosting the bulk of reserves at Eskay Creek, that it will not issue a mining lease to Stikine or Calpine Resources until disputes made under Section 35 and court action brought under Section 44 of the Mineral Tenure Act are resolved.

Calpine is a wholly owned subsidiary of Prime, which in turn is held about 45% by Corona. Placer Dome and Corona each hold an approximate 43% interest in Stikine.

The mining lease in question is for the TOK 3-6 mineral claims which host the bulk of reserves at Eskay Creek. Tagish is arguing that because a staking gap exists between the TOK 3-6 claims, assessment work filed against the claims (on the basis of grouping with the remaining claims) is not valid and therefore title should be cancelled.

“If this thing succeeds, it will throw the whole claim-staking business in this province in the air,” said John Ivany, president of Prime Resources Group and a director of Stikine.

Ivany said Prime and Stikine were advised by counsel that the claim against title to the TOK 3-6 claims “is without merit.”

The Gold Commissioner’s ruling on the validity of the TOK 3-6 claims is expected “imminently,” Ivany said. A government inspection report has already recommended the complaint against the TOK 3-6 claims be dismissed, and Tagish was unsuccessful in its bid to have the inspection report quashed by the British Columbia Supreme Court.

In addition to the challenge to the TOK 3-6 claims, Tagish is seeking to secure title to other claims (covering over 20,000 acres) in the rugged Eskay Creek region which it overstaked on the basis of section 35 complaints. These claims are held by a number of companies, including several associated with Murray Pezim’s Prime Equities.

Tagish is arguing that previous stakers did not make bona fide attempts to comply with the Mineral Tenure Act, and its efforts have already met with some success (T.N.M. Dec. 3/90). The private company’s efforts are being backed by Toronto-based Lytton Minerals (TSE), which currently owns 50% of Tagish.

The most serious challenge, however, is to claims hosting Eskay Creek reserves as this clearly has potential to hold up development of the project.

But even should Tagish be successful in the TOK 3-6 dispute, title would pass to Adrian Resources (VSE) by virtue of it having overstaked the ground before Tagish. The Chief Gold Commissioner recently upheld Adrian’s strategic IKS-1 claim (which covers or surrounds the four TOK claims including the TOK staking gap), although this order has been appealed to the Supreme Court of British Columbia.

“We intend to go all the way with this,” said Fred Christensen, president of Lytton Minerals. “Our position is that we will win IKS-1 and that the TOK 3-6 claims are not valid.

“But we are not the real story,” he added. “The real story is mineral tenure in the province in British Columbia, and how a few people have been taking significant advantage of the situation to tie up huge blocks of ground by simply ignoring the Act.”

But other industry sources told The Northern Miner that the Mineral Tenure Act must protect prospectors and junior companies which stake claims in good faith, but which lack financial resources to carry out expensive surveys. It was also pointed out that under the province’s staking system, gaps between claims are often found when claims are surveyed, particularly in rugged areas where weather conditions can be difficult.