Nerco DeLamar to joint venture War Eagle claims

The agreement in principle is with Nerco DeLamar, a wholly- owned subsidiary of Nerco Minerals. Nerco DeLamar operates an open pit silver-gold mine from several deposits near the War Eagle properties.

Under the terms of the joint venture, the American company can earn a 51% interest by spending $2 million (US) on about 18,000-sq-mi of properties, including the area where a gold discovery was made last year.

In November of 1988, War Eagle intersected 75 ft of 0.114 oz gold and 0.30 oz silver and 275 ft of 0.161 oz gold and 1.58 oz silver from two vertical holes. At the time, the company said these and other drill results “confirm the potential of a large tonnage deposit.” The project’s open pit potential was also suggested.

War Eagle’s stock price soared dramatically on heavy promotion based on these intersections, only to fall equally as dramatically upon subsequent and less spectacular results.

Nerco DeLamar will take over as operator during the earn-in phase, and it has committed to spend a minimum of $400,000(US) each year. A significant drill program is planned for the discovery area, as well as initial evaluation of the remaining lands.

The joint venture lands do not include some claims at the north end of the property which are subject to a separate joint venture with Corrigan and Assoc. of Boise, Idaho.

War Eagle also said Nerco DeLamar plans to buy $300,000 of its common shares, although this is still subject to the signing of formal documents and regulatory approval.

In the meantime, Nerco DeLamar has loaned War Eagle $150,000 of this amount, with the funds convertible to common shares at $1.00 per share. The price per share for the remaining $150,000 equity purchase will be determined at the market price prevailing at the time of formal documentation.

Nerco DeLamar also has an option on an equal number of shares for a period of three years, plus it has the right of first refusal for future equity financings for a one-year period after the signing of joint venture documents. If the option is exercised, the company would have the right to appoint one person to War Eagle’s board.

Nerco DeLamar owns 100% of the DeLamar mine situated about six miles to the west of the War Eagle properties. At 1988 year-end the operating mine had reserves reported at 32.24 million tons of 0.024 oz gold and 1.07 oz silver. This includes Nerco’s 100%-owned Florida Mountain deposit adjoining the War Eagle joint venture lands.

]]>