EDITORIAL PAGE Auction for Eskay long overdue

The greatest surprise about Placer Dome’s recent bid for Stikine Resources is that it has taken so long to come about. Readers of The Northern Miner know only too well that the Eskay Creek project, of which Stikine owns half, is shaping up as one of the biggest finds since Hemlo — and that’s pretty big.

What is truly astonishing, however, is how long it has taken for any kind of fireworks to develop over the whole play.

It was way back in November, 1988, that we first ran a big, bold headline: “Calpine cuts 96 ft. of 0.7 oz. gold” and called the find “a significant new gold discovery.”

Even back then, Margaret Mackay, widow of Tom Mackay who staked the property in 1932 and president of the company that owned the whole property at the time, told us that Placer Dome (among others) was looking at it.

Prime Resources eventually earned a 50% interest in the property from Stikine which, eight months ago, began to publicly seek a buyer for its half interest.

Now two bidders have shown up chasing after the property’s preliminary reserve that indicates there are more than 3.5 million oz. gold and more than 91 million oz. silver contained (how much is recoverable is uncertain, of course), not including a new zone found earlier this year and possible discoveries in the future.

Corona has been moving in steadily to gain full control of the deposit for the past year. It controls Prime and recently offered a share swap that would result in it taking over Stikine as well. That bid amounted to about $60-70 per Stikine share. Placer’s offer is for $67.50 in cash for each Stikine share (or 3.5 Placer shares).

That puts an implied value on the deposit of $460 million.

A year ago, Stikine was trading on the open market for just over half of what Placer has offered. Today the stock is trading higher than the offered price in anticipation of another bid.

The Canadian mining industry prides itself for being fast on its feet, but it took a remarkably long time for Eskay Creek to come into play. That could be simply because, Hemlo notwithstanding, investors “out East” are wary of deals that originate in Vancouver.

Regardless of why the majors were reluctant to get into Eskay Creek initially, an exciting story is beginning to unfold and the industry will enjoy watching how the story unfolds.

British Columbia has come down firmly in favor of the mineral resources industry by approving construction of a 72-km road into the Iskut River area.

In making the announcement, it was good to hear a provincial premier support mining without the “ifs” or “maybes” that seem to accompany any such endorsement elsewhere in the country.

“It’s the miners and loggers of this province who create the wealth and prosperity we enjoy,” said Premier Vander Zalm. “That’s something you should be proud of and the rest of us should respect.”

Most declarations of support for the industry are muted at best. They are certainly pronounced with less gusto than declarations for more politically fashionable issues, declarations such as former federal environment minister Lucien Bouchard’s that Canada will become the most environmentally friendly nation in the world, whatever that means.

Remarks such as Vander Zalm’s are more than a pat on the head for mining. They are refreshing because they make clear just how valuable resource industries are.

Mining has taken it on the chin for too long. Those who find it so easy to knock the industry would be hard pressed to match the contribution mining makes to our society’s well-being.

The British Columbia premier does not always say the right thing, but in this instance we can only respond to Vander Zalm’s comments with a hearty “Hear, hear.”