U.S. REPORT Canyon cuts deal with Kennecott

In a deal potentially worth US$35 million, Canyon Resources (NASDAQ) recently granted Kennecott Corp. the right to earn a 51% interest in the Briggs property located in the Panamint Range of California. In order to earn the interest Kennecott, must spend US$25 million on the property and purchase a total of four million shares of Canyon common stock at US$2.50 each.

Kennecott committed to a US$1 million exploration program for the first half of 1991 along with the purchase of two million shares from Canyon for US$5 million.

Kennecott has the right to withdraw from the farm-in prior to May 31, 1991, which would require it to buy back one million of the shares by April 1, 1994. If the stock is repurchased before June 1, 1993, the price is set at US$2.50 but increases to US$3 thereafter.

To continue on the property, Kennecott must spend a further US$1 million on exploration by Dec. 1, 1991, and purchase an additional two million shares by Dec. 15, 1991, at US$2.50 each.

A further US$3 million must be spent by June 1, 1993, to be followed by US$20 million in expenditures in order to earn the full 51%.

The Briggs property contains a number of surface exploration targets as well as a known deposit estimated to contain 17 million tons grading 0.035 oz. gold per ton.

As of Sept. 31, 1990, Canyon had 21 million shares outstanding, a working capital deficit of more than US$900,000 and long term debt of US$13.3 million. The company reported a loss of US$4.4 million for the 9-month period on revenues of US$6.6 million.