October 6, 2014, Vancouver, BC: Teuton Resources Corp. (“Teuton”) (“TUO”-TSX-V) (“TFE”-Frankfurt) (“TEUTF”—OTCBB) is pleased to provide this update on the tunnels which Seabridge Gold proposes to build through the Treaty Creek property, connecting Seabridge Gold’s KSM mineral deposits with its planned mill and tailings site some 17km to the northeast.
On Sept. 29, 2014, Seabridge Gold put out a news release which stated: “Seabridge Gold Inc. has received early stage construction permits for its KSM project from the Province of British Columbia. The permits issued include: (1) authority to construct and use roadways along Coulter Creek and Treaty Creek; (2) rights-of-way for the proposed Mitchell-Treaty tunnels connecting project facilities; (3) permits for constructing and operating numerous camps required to support constructions activities; and (4) permits authorizing early stage construction activities at the mine site and tailings management facility.”
The Seabridge Gold news release is, unfortunately, not as clear as it could be. The rights-of-way granted with respect to the Mitchell-Treaty tunnels are prefaced under the rubric of “early stage construction permits”, which could be read as implying that construction permits have been given to build the tunnels (an interpretation taken by many shareholders of Teuton Resources) . Teuton’s reading of the relevant government documents which support the approvals suggest this interpretation is incorrect. No such construction permit has been granted. Rather, the government simply gave Seabridge Gold a Licence of Occupation (“LoO”) along the proposed tunnels route. Moreover, that LoO contains an important limitation which is as follows:
“this agreement is subject to the prior rights of the holder of the mineral claims 392436, 251232, 392435, 251229, 251231, 251230, 390924, 392362, 392463, 392464 and 560221;”
The mineral claims enumerated above underlie the proposed tunnel route and are part of the Treaty Creek property. Teuton’s reading of the limitation is that Seabridge Gold must first address the prior rights of the owners of the Treaty Creek property before construction can begin. To this end, the Company has had, for the past several years, on and off discussions with Seabridge Gold for access rights. At present no negotiations are ongoing and no access rights have been granted.
Also, Seabridge Gold, in a letter to the Ministry of Forest, Lands and Natural Resource Operations dated Sept. 24, 2014, agreed that it would not undertake construction along the LoO until it had received a permit pursuant to the Mines Act (British Columbia). Under the Mines Act, a condemnation drilling report demonstrating that no resources will be sterilized through infrastructure development is routinely required as part of a mine project application. Teuton expects that the tunnels will be considered infrastructure and will have to be drilled off to ensure that no mineral deposits are sterilized.
In addition, Teuton Resources has discovered a local precedent covering the case of one company seeking to construct a tunnel through another company’s claims. In the 1980’s Newhawk Gold wanted to put a tunnel through claims held by Catear Resources. The area covered by these mineral claims is in the Brucejack Lake area, which borders Seabridge Gold’s KSM property to the east (the Newhawk Gold property is the one that is today owned by Pretium Resources and the Catear Resources’ property at that time was called the Gold Wedge). The government required that two condemnation holes be drilled by Newhawk Gold along the tunnel route through Catear’s ground. This was done and all information, drill logs and assays, were handed over to Catear Resources.
Teuton’s position on the tunnel access rights is that permission will only be granted to Seabridge Gold after condemnation drilling has been carried out to ensure the tunnels do not sterilize any viable deposits. Some form of reasonable compensation must also be paid by Seabridge Gold to the Company, the quantity of which will depend, among other factors, principally upon the results of such condemnation drilling.
In order to lessen the confusion on this issue, Teuton will be publishing on its website at www.teuton.com (available here) copies of the LoO and the accompanying Revised Management Plan, as well as letters written by the Company to the Ministry of Lands, Forests and Natural Resource Operations, which explain in detail the Company’s position. These letters include various figures and attachments, including a report by E. R Kruchkowski, P.Geo. on the Treaty Creek property and a report by geophysicist, K. Killin, P. Geo. Also published with these documents is a proposal by Mason on behalf of American Creek Resources (“AMK”) for sale of its interest in the Treaty Creek property to Seabridge Gold in connection with securing tunnel access rights.
Ownership of the Treaty Creek property was apportioned earlier in the year at 51% AMK, 49% TUO by the Supreme Court of British Columbia. The company has filed an appeal of this decision. If the appeal is successful 100% of the property could be returned to Teuton.
The Treaty Creek property is located 80 miles north of Stewart, British Columbia at the north end of the Sulphurets mineralized system which hosts the many mineral deposits of Pretium Resources and Seabridge Gold.
In other corporate developments, E. R. Kruchkowski will be taking over the role of Teuton’s Chief Financial Officer from Amanda Mullin.
“Dino Cremonese, P.Eng.”
Teuton Resources Corp.
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