SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT UNDER TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 25, 1997
Commission File Number: 0-10104
LA TEKO RESOURCES LTD.
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(Exact Name of Registrant as Specified in its Charter)
BRITISH COLUMBIA 87-0483319
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
625 HOWE STREET, SUITE 500
VANCOUVER, B.C. V6C 2T6
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, including Area Code:
(604) 688-0833
NOT APPLICABLE
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(Former name, former address, and formal fiscal year, if changed since
last report)
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ITEM 5: OTHER EVENTS
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La Teko Resources Ltd. (the "Company") announced on November 25, 1997, that it
has signed a letter agreement with Kennecott Exploration Company and Kennecott
Canada Exploration, Inc. (collectively, "Kennecott") for the acquisition of two
drill stage gold exploration projects, Scheelite Dome in the Yukon and Mt.
Distin in Alaska. Both projects occur in geological environments which are
similar to the Company's True North joint venture with Newmont in the Fairbanks
Mining District and both have excellent potential for the discovery of major
gold deposits. These projects complement La Teko's key assets, the True North
project, which is continuing to make rapid progress toward the definition of a
minable ore body.
SCHEELITE DOME, YUKON
The Scheelite Dome project, consisting of 575 claims covering approximately
14,375 hectares, is accessible by 25 kilometers of road from Mayo, central Yukon
Territory. This is a new discovery made by Kennecott in 1994 at the headwaters
of two active placer mining creeks, Highet Creek and Sabbath Creek. Gold
mineralization occurs disseminated in schist and quartzite of the Proterozoic
Hyland Group adjacent to 90 million-year old granitic intrusions of the
Tombstone plutonic suite. Both of the metamorphic host rocks and the intrusions
are of similar age and character as those occurring with gold mineralization at
Fairbanks, particularly at True North.
Kennecott has defined a strong gold in soil geochemical anomaly which extends
for over three kilometers along strike and averages one kilometer wide. Within
this anomaly, soils average several hundred ppb (parts per billion) gold, with
values as high as 1,640 pbb. Trenching within this zone yielded values as high
as 84.3 g/ton (gpt) gold and over 4 m and 20.6 gpt gold over 4.5 m. One ridge
line trench averaged .33 gpt gold along its total length of 744 m.
During the summer of 1997, Kennecott completed a small reverse circulation drill
program, including 13 holes for a total of 1052 m, within two restricted parts
of the anomaly. All the holes were mineralized and individual holes ranged from
.02 gpt over 25 m to .48 gpt over 29 m and .24 gpt over 107. The highest value
encountered was 4.88 gpt over 1.5 m.
La Teko has the right to earn a 100% interest in the property by completing
Cdn$800,000 in exploration over the next four years and by making payments to an
underlying claim holder of Cdn$135,000 over the next two years. The underlying
vendor also retains a 2% NSR on part of the claim block, which can be purchased
for Cdn$2 million. Kennecott retains a one time right, at feasibility, to back
in for a 49% interest in the project by paying La Teko 150% of La Teko's
expenditures on the project to that date or otherwise receive a 2% NSR.
This gold soil geochemical anomaly is extremely large and strong, representing a
tremendously large, low grade gold mineralized system as evidenced by initial
trenching and drilling. The Company believes that there is an excellent
opportunity for the discovery of large sized, enriched zones of economic gold
mineralization within this system, which will only be identified by drilling.
The Company plans an early summer 1998 mapping, trenching, and geophysical
program on the property to refine drill targets, to be followed by a larger
diameter reverse circulation drilling program.
MT. DISTIN, ALASKA
This 30 square kilometer project is accessible by road 32 kilometers north of
the famous placer gold mining center of Nome, Alaska, which has produced over 6
million ounces of gold. Kennecott acquired the project from the Bering Straits
Native Corporation ("Bering Straits") in 1995 as part of an ongoing regional
gold exploration program, which resulted in the identification of the Mt. Distin
block as a key center for potential lode gold mineralization.
Mt. Distin is underlain by the Paleozoic Nome Group schist and quartzite,
overlain by marble which forms the top of Mt. Distin. Gold occurs disseminated
with quartz, arsenopyrite and stibnite in faults and shear zones within the
schists immediately beneath the marble contact. Geochemical sampling by
Kennecott has defined two areas of strongly anomalous gold, arsenic, and
antimony in soils. The Steep Creek zone is 4,000 m long by 750 m wide.
Kennecott drilled only one hole in this anomaly and encountered 15.2 m of
disseminated gold mineralization grading 2.06 gpt gold. The structure believed
to be controlling the mineralization has been mapped for one kilometer along
strike and is open in both directions. Other potential gold bearing structures
have been identified. The second zone, Fred Creek, measures 1,500 m by 600 m
and has not been drilled. A single trench across the zone averaged 274 ppb gold
over 64 m.
Through an assignment of an agreement with Bering Straits from Kennecott, La
Teko will have the right to earn a 100% interest in the project by making annual
payments to Bering Straits of US$15,000 in year one and US$20,000 for the next
four years and completing US$875,000 in exploration over the same five year time
frame. Annual cash payments on adjoining claims included in the project are
US$10,000 for the first two years and US$25,000 thereafter, with a 2% NSR.
After five years, the agreement with Bering Straits will convert to a mining
lease. Advance royalty payments are US$50,000 on January 31st of the first year
(2003), US$100,000 in the second year, and US$150,000 annually thereafter. Work
obligations during the lease period are US$500,000 annually. Bering Straits
retains a 2.5% NSR and an 8% Net Profits Royalty, plus the right to purchase a
10% property interest.
In return for the assignment, La Teko will issue 30,000 shares to Kennecott upon
closing of this transaction and receipt of regulatory approval, 40,000 shares on
the first anniversary, 50,000 on the second anniversary, and 80,000 on the third
anniversary. In addition, La Teko will issue 500,000 shares to Kennecott upon a
production decision for a gold mining operation on the property.
This agreement is subject to La Teko advancing Cdn$30,000 to Kennecott on or
before January 9, 1998, to signing a definitive agreement on or before February
13, 1998, and to necessary regulatory approval.
[Map attached indicating location of new acreage.]
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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The following is filed as an exhibit to this report:
SEC
Item No. Reference No. Title of Document
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10 10.01 Letter Agreement dated of 24 November, 1997, between
Kennecott Canada Exploration, Inc., and La Teko
Resources Ltd., relating to Mt. Distin and Scheelite
Dome Projects
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SIGNATURES
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Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LA TEKO RESOURCES LTD.
Dated: December 10, 1997 By /s/ Gerald G. Carlson, President
[LETTERHEAD OF
KENNECOTT CANADA EXPLORATION, INC.]
24 November, 1997
Mr. Gerald Carlson
President
La Teko Resources Ltd.
625 Howe Street
Vancouver, British Columbia V6C 2T6
Canada
Re: Mt. Distin Project, Cape Nome Recording District Alaska
Scheelite Dome Project, Mayo Mining District, Yukon Territory
Dear Mr. Carlson:
Further to the previous discussions between Kennecott Exploration Company and
Kennecott Canada Exploration, Inc. (collectively, "Kennecott") and La Teko
Resources, Ltd. ("La Teko"), this letter confirms the intent of Kennecott to
negotiate an agreement granting to La Teko a transfer of one hundred percent
(100%) of Kennecott's interests in the above referenced projects (collectively,
the 'Projects"). The projects are more particularly described in Exhibit "A"
hereto. An agreement between Kennecott and La Teko should include, but not be
limited to, the following terms:
1. Kennecott shall assign to La Teko one hundred percent (100%) of Kennecott's
right, title, and interest (the "Assignment") in the Mt. Distin Project
("MD Project"), subject to the conditions set forth in that certain
Exploration Agreement and Option to Lease dated 15 May, 1995 by and between
Bering Straits Native Corporation, Golden Glacier, Inc., and Kennecott; and
that certain Mineral Lease Agreement dated 5 August, 1996, by and between
David L. Lajack, Daniel J. Lajack, William C. Lajack, and Kennecott
(collectively, the "MD Agreements").
2. As consideration for granting such Assignment, La Teko shall assume all
obligations of Kennecott for payments and expenditures required by the MD
Agreements as follows:
Payments Expenditures
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Lajack Bering Straits ------------
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1998 US$10,000 US$15,000 US$125,000
1999 US$10,000 US$20,000 US$150,000
2000 US$25,000 US$20,000 US$150,000
2001 US$25,000 US$20,000 US$200,000
2002 US$25,000 US$20,000 US$250,000
Total US$95,000 US$95,000 US$875,000
As additional consideration for making such Assignment, La Teko shall issue
to Kennecott common shares of La Teko on the following schedule:
30,000.........Closing
40,000.........First Anniversary of Option Agreement
50,000.........Second Anniversary of Option Agreement
80,000.........Third Anniversary of Option Agreement
500,000.........Production Decision
Kennecott's right to receive such shares shall be contingent upon La Teko
not surrendering the MD Project to Bering Straits Native Corporation.
3. Kennecott shall also grant to La Teko an exclusive option to purchase (the
"Option") all of Kennecott's right, title, and interest in the Sheelite
Dome Project ("SD Project"), subject to Kennecott's right to reacquire an
interest in the SD Project as set forth in Paragraph 6 below. As
consideration for Kennecott granting such Option, La Teko shall make
payments to the underlying landowner, and Exploration Expenditures for the
benefit of the SD property in the following amounts:
Year Payments Expenditures
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1998 C$ 70,000 C$150,000
1999 C$ 65,000 C$200,000
2000 C$ 0 C$200,000
2001 C$ 0 C$250,000
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Total C$135,000 C$800,000
4. If at any time after exercising its Option, La Teko intends to initiate
development of the SD Project, La Teko shall notify Kennecott in writing
and concurrently provide Kennecott with a copy of the feasibility study
recommending the operation of a mine on the SD property. Kennecott shall
have the right to advise La Teko within sixty (60) days whether it wishes
to reacquire a forty-nine percent (49%) interest in the SD Project. If
Kennecott wishes to exercise its reacquisition right, it will do so by
providing written notice of its intent to La Teko, and within thirty days
thereafter providing La Teko with payment of an amount equal to one hundred
and fifty percent (150%) of forty-nine percent (49%) of the expenditures
incurred by La Teko on the SD Project.
5. After Kennecott has exercised its reacquisition right, Kennecott and La
Teko shall operate the SD Project as a joint venture, incorporating such
terms as well be negotiated before execution of the Option Agreement.
Thereafter, each party shall contribute its share of development
expenditures in relation to its current participating interest. La Teko
shall have the option of managing the joint venture, or appointing
Kennecott as manager.
6. In the event Kennecott notifies La Teko that Kennecott will not exercise
its right to reacquire an interest in the SD Project, Kennecott's interest
in the SD Project shall be converted automatically to the right to receive
two percent (2%) of net smelter returns from any mine located thereon.
7. Exploration Expenditures shall be made at La Teko's sole discretion and on
such parts of the Projects as La Teko may deem appropriate. For the
purposes of satisfying the Option, Exploration Expenditures shall mean
cash, expenses, and obligations spent or incurred by La Teko on exploration
and development activities on or for the Projects, including but not
limited to, all fees and assessment work required to keep the Projects in
good standing, all expenditures for geophysical, geological, and
geochemical work of direct benefit to the Projects, all surveys, drilling,
assaying, metallurgical testing and engineering, administration, and all
other expenditures directly benefiting the Projects. If La Teko fails to
make the required Exploration Expenditures or Payments in any given year,
the Option Agreement will terminate automatically. The parties agree that,
except for year one (1), which shall be a firm commitment, the Exploration
Expenditures set forth above shall be a requirement to extend the contract
from year to year, and not an obligation to make expenditures. La Teko may
terminate the Option Agreement at any time for any reason or no reason,
upon sixty (60) days written notice to Kennecott.
8. Until La Teko exercises its Option, Kennecott shall retain title to the
Projects, as appropriate. La Teko shall reimburse Kennecott for the
payment of all taxes and fees required to keep the Projects in good
standing. Payment of such taxes and fees shall be included in Exploration
Expenditures. Upon La Teko exercising its Option, Kennecott shall
immediately transfer title of the Projects to La Teko. Such transfer shall
be subject to the provisions of Paragraphs 4,5, 6, 9, and 10.
9. La Teko may relinquish title to the Projects, or any part thereof, at any
time upon written notice to Kennecott. Kennecott shall have the right to
retain, or after the Option is exercised, reacquire such claims at no cost.
10. Kennecott shall have a right of first refusal on any transfer of La Teko's
interest in the SD Project. In the event Kennecott exercises its right to
reacquire an interest in the SD Project, the preemptive rights contained in
the joint venture agreement shall apply to transfers of interests by either
party. Such preemptive right restrictions shall not apply to any transfer
to an affiliated company.
11. Closing of Option and Assignment Agreements shall be subject to:
(a) VSE regulatory approval; and
(b) Amendment of the agreement with Bering Straits Native Corporation on
terms acceptable to both parties.
12. The paragraphs set forth above are intended by the parties to be the terms
of the final Option and Assignment Agreements. The parties intend to be
immediately bound by this paragraph 11 and those set forth below.
Immediately upon the execution of this Letter Agreement and until such time
as a final Option Agreement is executed between the parties, Kennecott
shall grant to La Teko the right to:
(a) Enter in, under, and upon the Projects as La Teko's sole risk; and
(b) Inspect and copy any geological or other data in Kennecott's
possession relating to the Projects.
13. Kennecott represents and warrants that as of the effective date of this
Letter Agreement that:
(a) It has title to the claims comprising the Projects, subject to the
paramount title of the United States of America and Canada;
(b) To the best of its knowledge, it has paid all taxes, assessments,
charges, fees, and other levies imposed upon or required with respect
to the Projects, and has filed all returns and reports required
therefor;
(c) To the best of its knowledge, there are no actual, pending, or
threatened lawsuits or administrative actions affecting the Projects;
and
(d) It has full authority to enter into the transaction contemplated
herein.
14. The parties agree to meet at such times and places as are mutually
convenient or necessary to negotiate the Option Agreement. Each party
shall bear its own costs for the negotiation and registration of such
Option Agreement. The parties shall close the option Agreement prior to
the close of business on 13 February, 1998. La Teko shall have until 9
January, 1998 to conduct due diligence on the Projects. On or before 9
January, 1998, La Teko shall give Kennecott written notice of its intent to
close the Option Agreement. If La Teko intends to close, it shall forward
a bank draft for C$30,000 to Kennecott to cover land costs on the SD
Project due on 13 January, 1998. In the event that Kennecott does not
receive such bank draft in the time specified, this Letter Agreement shall
automatically terminate and, subject to VSE approval, La Teko shall issue
15,000 of its common shares to Kennecott as a break-up fee. In the event
that VSE approval is not given, La Teko shall reimburse Kennecott for its
direct expenses in relation to the proposed transaction in cash.
Thereafter, the parties shall have no further liability or obligation to
one another.
15. Either party may assign its rights under this Letter Agreement to an
affiliated company.
16. The parties agree that any confidential information exchanged shall not be
disclosed to any third party without written permission. Neither party
shall issue any press release or other public announcement concerning the
subject matter of this letter without the written permission of the other
party.
17. This Agreement shall be construed under the laws of the Province of British
Columbia, Canada, without regard to conflicts of law.
If these terms are acceptable to you, please execute this Letter Agreement in
the appropriate space below.
KENNECOTT EXPLORATION COMPANY
/s/ F.D. Hegner Director, Strategic Development
KENNECOTT CANADA EXPLORATION, INC.
/s/ F. D. Hegner, Vice President
ACCEPTED: LA TEKO RESOURCES LTD.
/s/ Gerry G. Carlson
Date: 24 November, 1997
