Through a cash payment of US$5 million, Battle Mountain Gold (NYSE) has obtained an option to acquire a 51% interest in the Crown Jewel property owned by Crown Resources (VSE) in Washington State. Battle Mountain has until Jan. 4, 1991, to exercise the option at which time it expires. On exercise the company must pay an additional US$5 million to Crown and fund all future expenditures on the property through to commencement of commercial production in order to earn the 51% interest.
The agreement also stipulates that Battle Mountain must bring the property into production at a rate of at least 3,000 tons of ore per day by July 1, 1993. Crown will collect a penalty of US$1 million for each quarter that production is not achieved past that date.
The Crown Jewel property, in northeastern Washington, covers about 9,000 acres. Independent engineering firm James Askew Associated recently calculated an uncut open pit minable reserve on the property of about 5.5 million tons grading 0.11 oz. gold per ton.
A 100,000-ft. drilling program was recently started on the property. Battle Mountain will take over operations at the property immediately and fund all expenditures.
Mark Jones, president of Crown Resources, noted Battle Mountain plans to accelerate the exploration program, adding one or more further rigs to the rig currently drilling the property.
Most of the program will concentrate on drilling 100-ft. step-out holes in an attempt to determine the ultimate size of the deposit, which remains open to the west and to the south.
Only 50 acres of a total 2,000 acres of what the two companies term as highly prospective skarn geology has been drill-tested to date.
Crown reported a loss of US$1.4 million for the year ended Dec. 31. The company had no significant revenues during the year as its 30% owned Kettle River gold mine in northeastern Washington did not come on stream until the first quarter of 1990.
Because this was the first year of operations for Crown Resources, no comparative figures were given for the previous year.006
Crown Resources (VSE) — $000s* Year ended Dec. 31 1989 Revenue nil Net loss $1,400
per share 0.12 *US dollars.004
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