Tenajon, Royal Scot in merger talks

Associated companies Tenajon Resources (VSE) and Royal Scot Resources (VSE) recently agreed to start negotiations aimed at merging the two companies.

Both companies have gold properties near Stewart, B.C., near and likely to be processed at Westmin Resources’ Premier Gold mill.

Tenajon already has a joint venture agreement with Westmin to process its SB property reserves at Premier, and Royal Scot recently began discussions with Westmin aimed at milling its Summit Lake property reserves. Recent metallurgical testing has indicated the Summit Lake deposit (a former producer known as the Scottie Gold mine) is compatible with the mill and “excellent” recoveries can be achieved.

Don McLeod, president of both Tenajon and Royal Scot, said independent directors of both companies will negotiate the share exchange ratio and seek a fairness opinion if required. The proposed amalgamation will require both shareholder and regulatory approvals.

McLeod said the resultant company, to be known as Tenajon Resources, would be debt-free and receive cash flow from production at the SB gold property. Westmin is earning a 50% interest in SB and will process its reserves at the Premier Gold mill.

Royal Scot will also bring interests in various exploration projects in the Stewart region where extensive programs are planned for 1991. These include the Summit Lake mine mentioned above, the Summit joint venture (with Homestake), the Bend gold showing and the Ashwood property.

Royal Scot’s major creditor agreed in principle to convert its remaining debt to a nominal net smelter return on production from the SUMMIT Lake mine. More details will be released to Royal Scot and Tenajon shareholders before the proposed meeting in mid-July.