Prime, Homestake home in on Red Mountain

Encouraged by preliminary trenching results from the Red Mountain area discovery near Stewart, B.C., Homestake Mining (NYSE) and Prime Resources Group (TSE) have moved to acquire an equity interest in Teuton Resources (VSE) and Minvita Enterprises (VSE).

Teuton and Minvita are the joint owners of the property, situated 12 miles southeast of Stewart within an 80,000-acre package south of Royal Oak’s Red Mountain deposit.

Homestake and Prime have agreed to purchase, on a respective 51%-49% basis, 500,000 flow-through common shares of Teuton at $2.64 per share, and 350,000 flow-through shares of Minvita at $3.79 each. A minimum of 90% of the $2.6 million in proceeds must be spent by Teuton and Minvita on exploration of the property.

As part of the agreement, Homestake and Prime have been granted a right of first refusal on the disposition of the property and on any financing relating to further exploration and development.

Teuton and Minvita began a grassroots exploration program in the Red Mountain area in 1994, and prospecting and reconnaissance work this year has identified a 500-ft.-wide area of highly chloritized volcanic and intrusive rocks exposed over a minimum strike length of 1,600 ft.

The area contains numerous sub-parallel, mineralized shears. Initial trenching on one of these returned 18 ft. of 3.59 oz. gold per ton for trench 4. Five other trenches tested the structure over a strike length of 220 ft., returning: 9.2 ft. of 0.38 oz. for trench 13; 8.8 ft. of 0.71 oz. for trench 11; 22 ft. of 0.56 oz. for trench 12; 10.2 ft. of 3.77 oz. for trench 14; and 24.6 ft. of 0.76 oz. for trench 15.

Several other sub-parallel shears carried similar mineralization, yielding: 14.8 ft. of 2.08 oz. for trench 10; 4.9 ft. of 7.18 oz. for trench 16; and 19.7 ft. of 0.22 oz. for trench 18.

Dino Cremonese, president of both Teuton and Minvita, says a drill rig has been mobilized to the property and a program of 6 to 8 holes is set to begin on the trench 4 zone. Results from 70 additional trenches, placed at regular intervals along a strike length of 984 ft., are expected shortly.

Upon completing private placement transactions, Teuton will have 10.7 million shares outstanding on a fully diluted basis and Minvita will have 6 million.