American Gem acquires technology to treat sapphires

A deal has been signed allowing American Gem (TSE) to purchase Crystal Research, a private California company that was instrumental in developing a heat-treatment process for Montana sapphires. Sapphires, one of the world’s four precious gems, has traditionally been heat-treated to enhance value by improving color and clarity.

American Gem is currently developing a number of properties in Montana that host alluvial sapphires. Company Chairman Gregory Dahl says that this acquisition is very important to American Gem as it now controls the heat-treatment technology for its Montana sapphire deposits, and “this agreement opens the door to the development of technology, which may greatly enhance the commercial value of many other sapphire and ruby deposits around the world.”

Under the agreement, all of Crystal Research’s assets will be transferred to American Gem for US$3 million. Payment terms are US$300,000 down and US$1.3 million once American Gem completes a US$5-million private placement, which must be prior to Dec. 31, 1994. The balance of US$1.4 million is due at the time American Gem has raised a total of US$10 million, and prior to Dec. 31, 1995.

In addition, Crystal Research principals John Emmett and Troy Douthit are to be paid a retainer of US$250,000 each for the term of a 10-year consulting contract, and a small royalty on sapphire and ruby processed by American Gem. The company will also pay US$50,000 yearly for purchase of research equipment for their use.