Total Erickson entry will spur B.C. bet

The Dome Mountain precious metals project near Smithers, B.C. has moved one step closer to production with the entry of Total Erickson Resources as a partner in the play. Development of the property has been delayed by a bitter dispute between the two principal juniors involved in the project, Canadian United Minerals and Teeshin Resources.

Noranda Exploration was also involved in the corporate melee. But Noranda recently sold its 50% interest in Dome Mountain for $3.1 million. Two Vancouver juniors, Reako Exploration and Panther Mines, exercised their right to purchase Noranda’s 50% back-in interest which was then sold to Total Erickson and Canadian United.

The agreement between the parties is extremely complicated and could be the subject of further revisions, depending on the outcome of the dispute between Teeshin and Canadian United. But whatever the outcome, it appears that Total Erickson will have the lion’s share of the project.

In a nutshell, Noranda acquired the property from Reako and Panther for work commitments and royalty payments. Canadian United then came into the picture, acquiring a 100% interest from Noranda for $3 million in work expenditures. But Noranda retained the right to back in for 50% at production by electing to fund or repay certain expenditures.

Now if this seems complicated, there’s more to come yet. Teeshin then entered the picture, agreeing to acquire 75% of Canadian United’s interest in return for making all the expenditures the latter had under its agreement with Noranda.

Canadian United, which is carried for 25% until production and was operator, then went on to define what appears to be a viable orebody at Dome Mountain. Noranda is then alleged to have set up a numbered company which, in early September, agreed to acquire its back-in rights. At this point, Noranda approached Teeshin with a proposal to provide financing to take the property to production.

Reako and Panther successfully challenged Noranda’s right to assign that interest to a numbered company and Total Erickson then came into the picture.

Now Teeshin and Canadian United are battling it out and the matter could end up in court although the case should not effect Total Erickson’s participation in the venture. The question of operatorship has gone to arbitration and in the meantime Total Erickson will be known as project manager. Claiming that it has provided over $1 million “exceeding its required expenditures for 1986,” Teeshin accuses Canadian United of denying it access to data on the property as well as financial accounts and records of the monies advanced to Canadian United by Teeshin. Other serious allegations include: failure to spend money advanced by Teeshin to maintain underlying agreements and Teeshin’s option; unauthorized expenditures off the property; entering into a non-arms- length agreement with its directors to the detriment of Teeshin, and providing unreliable information which frustrated Teeshin’s ability to raise money and deflated its stock.

Canadian United alleges that Teeshin missed a cash call Aug 1 which precipitated a meeting that Teeshin didn’t attend. Canadian United notes that Teeshin has “major option payments” in the first quarter and must finance the property to production by the end of 1988 in return for a 75% interest, subject to Total Erickson’s back-in rights.

When all the dust settles, Total Erickson may acquire directly or through a subsidiary up to 64% in the Dome Mountain project. Earlier reports of a 500,000-ton ore reserve on the property were unsubstantiated by an independent consultant who calculated a “mineral inventory” of 240,000 tons grading 0.458 oz gold and 2.3 oz silver over an average width of 8.8 ft. This is a mineable reserve in the Boulder Creek zone which has since been extended to the west for another 1,500 ft by trenching and drilling. Eight drill holes were completed in the extension but by presstime Noranda had not released any assay results.

Underground exploration is planned for the Boulder Creek zone to firm up and increase reserves. At least 14 significant gold-silver quartz carbonate vein showings have been located on the property, two of these in the Forks zone. Five drill intersections in the zone returned widths in excess of 5 ft and gold values ranging from 0.29 oz to 0.7 oz gold plus 2.1 to 3.7 oz silver. More work is planned for this zone.