Royal Oak Mines and Geddes Resources Withdraw Purchase Proposals due to Government Compensation Disagreement

Strategic Insights -

Royal Oak Mines Inc. and Geddes Resources Limited have withdrawn their proposals to purchase El Condor Resources Ltd. and St. Philips Resources Inc. due to a disagreement with the government of British Columbia over compensation for the appropriation of the Windy Craggy copper-gold property. The property, a Class A provincial park since June 1993, was valued by a Canadian investment bank in excess of $225 million. The government's offer of approximately $34 million was deemed insufficient by the companies, which had planned to proceed with the development of the Kemess South project, creating over 1,650 jobs and generating approximately $800 million in tax revenues over 15 years.

Key Takeaways:

  • Royal Oak Mines Inc. and Geddes Resources Limited withdrew their proposals to purchase El Condor Resources Ltd. and St. Philips Resources Inc. due to a disagreement over compensation for the appropriation of the Windy Craggy copper-gold property.
  • The government of British Columbia's offer of approximately $34 million was deemed insufficient by the companies, which had valued the Windy Craggy project in excess of $225 million.
  • The companies had planned to proceed with the development of the Kemess South project, which would have created over 1,650 jobs and generated approximately $800 million in tax revenues over 15 years.
  • The government's lack of support has left Geddes Resources Limited to evaluate its alternatives with respect to its claim for reasonable compensation.
  • The companies' withdrawal of the proposals has resulted in a missed opportunity for economic development and job creation in the region.

Statistics:

  • The Windy Craggy project was valued in excess of $225 million by a Canadian investment bank.
  • The government of British Columbia offered approximately $34 million in compensation for the appropriation of the project.
  • The companies had expected to create over 1,650 jobs through the development of the Kemess South project.
  • The project was expected to generate approximately $800 million in tax revenues over 15 years.
  • The government's compensation offer fell short of the $150 million the companies had requested.

Sources:

  • Royal Oak Mines J. G. Eacott, 206/822-8992 206/822-3552 (Fax)
  • Business Wire, "Royal Oak Mines and Geddes Resources Withdraw Purchase Proposals due to Government Compensation Disagreement"
  • Canadian investment bank (name not specified), "Fairness opinion valuing the Windy Craggy project in excess of $225 million"