Inland Gold and Pegasus terminate proposed merger

Due to a lack of shareholder response, Inland Gold and Silver (NASDAQ) and Pegasus Gold (TSE) will not proceed with a previously proposed merger.

Pegasus offered Inland shareholders the equivalent of US50 cents per share in Pegasus stock for each Inland share.

After reviewing shareholders’ votes, Inland found that although over 67% of the proxies were in favor of the merger, the proxies in favor did not total the required 65% of outstanding shares needed to receive regulatory approval. Robert O’Brien, a spokesman for the company, said Inland is now reviewing its future plans.

Inland is in good financial shape with about US$5.4 million in working capital and no long-term debt. The company does, however, have a long-term liability relating to its Toiyabe heap leach gold project in Nevada. With known reserves exhausted, mining has ceased and the company is completing residual leaching operations.

O’Brien said the company estimates detoxification and reclamation costs at about US$620,000 at the mine, although he added that estimates are difficult to make since no precedence has been set.

O’Brien added that reclamation efforts may be delayed if exploration on the 34,000-acre property outlines additional reserves.

Santa Fe Pacific (NYSE) is about to begin a minimum 15-hole drilling program on the property under an earn-in agreement signed last year. Santa Fe can earn up to a 70% interest in the property by spending US$4 million on exploration to March, 1997. Inland’s share of further costs to commercial production will be carried by Santa Fe and paid back out of cash flow.

Drilling in and around the current pit area last year failed to turn up any significant results.

O’Brien said Santa Fe’s drilling program will test a number of targets in other areas of the property.