Eastmaque expands American Girl holdings

Partners Eastmaque Gold Mines (TSE) and Morrison-Knudsen (NYSE) recently agreed to explore and develop the newly acquired Oro Cruz property adjacent to their joint venture gold mining operation in the Cargo Muchacho mining district of California. The American Girl joint venture is acquiring the Oro Cruz property under an arrangement that will see Eastmaque own a 44% and Morrison-Knudsen a 56% interest.

In consideration of the uneven split, Morrison Knudsen will pay the acquisition costs which include US$200,000 to the underlying leaseholder, and US$250,000 plus 300,000 shares of Knudsen to Pikes Peak Mining, the owner.

Previous exploration on the Oro Cruz identified preliminary, geological reserves of 1.7 million tons grading 0.089 oz. gold per ton.

Lukas Lundin, president of Eastmaque, noted that the mineralization is open in all directions. The joint venture plans to begin a 75,000-ft. drilling program designed to upgrade and expand the reserve. He estimated that the overall stripping ratio would likely be in the order of 4-to-1 waste-to-ore.

The outlining of further open pit reserves would be welcome news to the joint venture which had expected to deplete open pit reserves at their existing mine in about three years.

Lundin also said that the company expects to begin a number of drilling programs in July on its Nevada Gold joint venture. The project is a joint venture with Pikes Peak, giving Eastmaque a 50% interest in 41,000 acres of property in Nevada in return for incurring US$1 million in exploration expenditures. Lundin noted that at least four drill targets have been identified.

On the corporate front, Eastmaque’s plans to initiate the conversion of the company’s preferred shares to common shares have been put on hold. The company had received shareholder approval allowing preferred holders to convert their shares into 1.2 common shares per preferred share for a period of 30 days from a date to be announced.

Lundin noted that due to the current low market price of the common, only 33% of the preferred shares would be tendered, representing those held and committed to conversion by Ventures Trident.

The preferred shares are normally convertible into 0.833 common shares per preferred share and since the company has not paid any dividends since the original issue, there are more than $1 per share in dividend arrears.