From the northern miner.
==================================================================
By Rob Robertson
Vancouver
La Teko Resources (LAO-T) and Kinross Gold (K-T) have entered into a proposed merger whereby shareholders
of La Teko will receive one Kinross share for every 2.65 shares held.
The offer represents a 54% premium over La Teko's closing share price of $1.30 the day before the offer was made. La Teko
has 25.8 million shares outstanding, or 29.5 million on a fully diluted basis, plus about US$1 million in working capital.
The proposed merger has yet to be approved by La Teko's shareholders, the directors of Kinross, and regulators.
An information circular will be forwarded to La Teko shareholders prior to a meeting, which would probably not be held until
February.
La Teko's flagship property is its joint-ventured True North project, situated just 10 miles from Kinross's
350,000-oz.-per-year Fort Knox gold mine outside of Fairbanks, Alaska. Newmont Mining (NEM-N), the project operator,
is earning a 65% interest in True North by spending US$21 million on exploration and development. As of Dec. 31, 1997, the
Denver-based major had spent US$10.5 million and paid La Teko US$6 million. Newmont's 1998 budget of US$3.6 million
was earmarked for prefeasibility studies, metallurgical testing and further exploration work involving mainly geochemical
sampling.
The mineral resource at True North stands at 18.2 million tons grading 0.072 oz. gold per ton, equivalent to 1.3 million
contained ounces. About 80% of the resource is oxidized and amenable to heap-leach extraction.
La Teko's other advanced project is the past-producing Ryan Lode deposit, 8 miles west of Fairbanks. According to Mark
Fields, corporate affairs manager for La Teko, it was the Ryan Lode property that caught Kinross's eye. He said the company
had been looking for additional feed for its Fort Knox mill. Both Ryan Lode and True North are within trucking distances of
Fort Knox.
Proven and probable reserves for Ryan and the adjacent Curlew shear are estimated at 14.5 million tons grading 0.056 oz. at a
stripping ratio of 3.8-to-1. This is equivalent to 822,200 contained ounces.
Fort Knox is an open-pit, milling operation.
La Teko also controls more than 75,000 acres of early-to-mid-stage gold exploration properties in and around the Fairbanks
district and the adjacent Yukon. A recent, widely spaced, 7-hole drill program on the Scheelite Dome property in the central
Yukon intercepted significant gold mineralization in five holes. The drilling tested an east-westerly trending system defined by
anomalous gold-in-soils and bedrock over an area measuring 2.5 by 0.9 miles.
Selected highlights include: * 25.3 ft. of 0.11 oz., starting at a down-hole depth of 53.7 ft., in hole 12; * 49.1 ft. of 0.03 oz.,
beginning at 263.3 ft., in hole 10; * 39.8 ft. of 0.031 oz., starting at 328.5 ft., in hole 11; and * 65.9 ft. averaging 0.03 oz. at a
down-hole depth of 215.9 ft., in hole 14.
La Teko can earn a 100% interest in Scheelite Dome from Kennecott Canada Exploration by spending $800,000 on
exploration over four years. Kennecott retains a 49% back-in-right.
Kinross holds an 8% interest in La Teko, which it acquired by subscribing to a US$1.7 million private placement of 2 million
units at US85 cents each this past May.
In early June, Kinross merged with Colorado-based Amax Gold. As a result, the new Kinross became the sixth-largest North
American gold producer, with an annual production estimated at more than 1 million oz.
The merger resulted in Kinross's acquisition of Fort Knox, an open-pit mine and milling operation that had entered commercial
operation in March 1997. Over its first 10 months, Fort Knox produced 320,522 oz. at a total cash cost of US$170 per oz.
Mine construction was completed at a capital cost of US$373 million, which included US$28 million in capitalized interest.
Fort Knox contains proven and probable gold reserves of 170.2 million tons grading 0.024 oz., equivalent to 4.1 million
contained ounces. The mine life is pegged at 12 years. In 1998, production is expected to reach 380,000 oz. at a total cash
cost of US$175 per oz.
In related news, Kinross increased its ownership of Greystar Resources (GSL-T) by purchasing 300,000 shares through the
facilities of the Toronto Stock Exchange to hold 9.7 million shares, representing a 20.6% interest. Greystar is currently
advancing its wholly owned Angostura gold project in Colombia.
|
