Inco US subsidiary in Alaska gold deal

American Copper & Nickel (ACNC), a subsidiary of Inco’s (TSE) U.S. wing, has entered into a joint venture agreement with Silverado Mines (VSE) to develop Silverado’s Ester gold property in Alaska. While 78,000 tons of grade 0.15 oz. gold per ton has already been reported from both open pit and underground, ACNC is attracted by the possibilities presented by the size of the 14-square-mile property.

According to Phillip Rush, ACNC’s exploration manager, gold mineralization occurs in steeply dipping quartz veins in a flat-lying pre-Cambrian schist. However, no estimate has been published and a lot of work must be done before the project’s potential is known, he said.

Under the 70% American Copper (ACNC), 30% Silverado deal, the latter company will receive US$125,000 in cash and ACNC will spend a minimum of US$1 million over an 18-month period. The agreement also provides for Silverado to receive an additional US$2 million within 30 months if ACNC elects to receive its 70% interest.

Also, Toronto-based Inco has agreed to purchase 500,000 Silverado common shares for 25 cents per share, and to receive 500,000 “A” warrants exercisable within 18 months at 50 cents per share and 500,000 “B” warrants, exercisable within 30 months at $1 per share.

Both agreements are subject to regulatory approval and a number of conditions which must be fulfilled by June 1. By that time, Silverado must obtain a standstill and subordinate agreement from its major creditor. ACNC must also be happy with the results of an examination of Silverado’s financial affairs and all aspects of the property.

If those conditions are met, exploration will begin on or about June 1, said Rush.