Adrain shareholders to vote on fate of SKI property

Shareholders of Adrian Resources (VSE) will be meeting June 27 to vote on a special resolution to option the company’s SKI project north of Stewart, B.C., to Prime Resources Group (VSE) and Stikine Resources (TSE). But Vancouver-based junior, U.S. Precious Metals (TSE), has already upped the ante by submitting an offer to Adrian to earn a 50% interest in the SKI project by spending $6 million over four years. The company has a 40% interest in the producing Mother Lode gold mine in Nevada, which is expected to produce 25,000 oz. gold this year.

“We felt we were in a position to better the offer made by Prime and Stikine,” said Richard Ketchen of U.S. Precious Metals.

Prime and Stikine, to be merged into a new company owned 44.6% by Corona (TSE), recently entered into an option agreement to earn a combined 50% interest in the SKI project by spending $5 million over four years.

Adrian’s 100% owned SKI project is strategically located adjacent to the high-grade Eskay Creek gold deposit owned equally by Prime and Stikine. In addition, Adrian has reserves of 65,000 tons grading 0.92 oz. gold and 57.4 oz. silver, 1.1% lead and 2.2% zinc for a portion of the Eskay Creek deposit on a claim gap which is covered by its SKI project.

Although the yet-to-be executed formal option agreement is subject to regulatory and shareholder approvals, it has already been criticized as “a sweetheart deal” for Prime, Stikine and Corona. Those opposed to the deal maintain that Adrian should have no trouble raising adequate funds to continue exploration on its own, at least for the crucial 1990 season.

So far, the alternative offer from U.S. Precious Metals has not generated much of a positive response from Adrian. Murray Pezim and John Ivany, both directors of Prime, resigned from Adrian’s board several weeks ago to avoid any potential conflicts of interest.

But John Brock, a newly appointed director, told The Northern Miner that the alternative offer “was not acceptable” and the board will likely recommend shareholders accept the Prime-Stikine offer.

“We find the offer made by Prime and Stikine more favorable because of their established presence in the Eskay Creek area,” Brock explained. “Adrian’s reserves could be more logically mined as part of an overall Prime- Stikine development plan.”

In any event, Adrian has received requests for further information and clarification of the option with Prime and Stikine. Details of the option, title status to the claims, and the forthcoming exploration program will be set out in an information circular sent to shareholders this month.

Before making its alternative offer, Ketchen said U.S. Precious Metals assessed the legal aspects of the staking and property ownership disputes involving the three claims that make up the SKI project.

“There’s an element of risk in any transaction,” he said. “But based on our knowledge, we don’t think the risk is that substantial.”

As it stands now, Adrian has title to two of three claims that make up the SKI project, including the important SKI 1 claim which contains Adrian’s current reserves. A drill program is planned for this season.

One of the claims is held by Ken McKenzie, although Adrian is challenging this, and ownership of all three claims is being challenged by a group that lost title to previous claims on the basis of Section 35 complaints.

Also, Adrian added a number of new properties in northwestern British Columbia to its exploration portfolio. And to no one’s surprise, Prime Resources Group recently increased its interest in Adrian to about 15.23%.