Big Creek to acquire option in Casino Silver prospect

Archer, Cathro & Associates (ACA) recently agreed to assign Big Creek Resources (VSE) its option to earn a 50% interest in the Casino property owned by Casino Silver Mines (VSE).

The property, in the west-central Yukon Territory, was estimated to contain a preliminary reserve of 170 million tons grading 0.37% copper and 0.039% molybdenite based on 59,000 ft. of diamond and reverse circulation drilling done in the late 1960s and early 1970s.

The average gold grade for the reserve was not calculated, but is estimated at over 0.01 oz. gold per ton. The deposit remains open on three sides as well as to depth.

ACA’s option, based on a staggered deadline, allowed the consulting company to earn a 50% interest in the property from Casino by spending a total of $3.5 million by Nov. 1, 1994. The first $1 million must be spent by Nov. 1, 1992.

In order to acquire the ACA option, Big Creek must fund the $3.5 million in expenditures, plus an additional $4 million in exploration costs by May 1, 1998.

According to the assignment agreement with ACA, Big Creek must raise the first $2 million in exploration funds by May 2, 1992. The assignment agreement also gives Big Creek the right to sell its interest — as well as Casino’s interest — for a minimum of $15 million.

Proceeds from the sale of the property will be split 80% to Casino and 20% to Big Creek for the first $15 million, 50% each for the portion over $15 million and up to $100 million, and 60/40 in favor of Big Creek for the portion over $100 million.

ACA will manage the drilling program and is entitled to 5% of Big Creek’s share of sale proceeds up to $100 million, plus 10% of any proceeds exceeding $100 million.

Alan Archer, president of ACA and a director of Big Creek, said the company planned to begin a drilling program next June with three or four rigs. Big Creek has about five million shares outstanding, about $75,000 in working capital, and is now reviewing its financing plans to raise the required $2 million by May 1.

Casino has about 4.4 million shares outstanding of which Teck (TSE) owns 1.7 million, or about 38.4% of the company.