April 27, 2012 TSX-V: AMK OTCBB: ACKRF
American Creek Resources Ltd. (TSX-V: AMK) (“American Creek”) reports that today an Offer of Settlement was delivered to Teuton Resources Corp. (TSX-V: TUO) (“Teuton”) in an effort to resolve the current litigation regarding the Treaty Creek property in northwestern British Columbia. The Offer of Settlement letter in its entirety as delivered to Teuton is presented below:
April 27, 2012
By fax: 778-430-5681
Teuton Resources Corp.
202, 2187 Oak Bay Avenue
Attention: Dino Cremonese, President
Re: Offer to Settle
Exploration season is fast approaching. We owe it to our shareholders to settle our law suit. Neither American Creek shareholders nor Teuton shareholders want to see the Treaty Creek project sit dormant for another exploration season.
As you are well aware, Seabridge Gold and Pretium Resources together have one of the largest gold / copper deposits in the world, and our Treaty Creek property is clearly on trend. We should be conducting an exploration program on Treaty Creek this summer but cannot do so because of the litigation. It is very likely we could get a resource on Copper Belle if we were to conduct step out drilling around our discovery hole. We have also been having ongoing discussions with Quantec Geoscience regarding conducting a magnetotelluric survey over select target zones including the Copper Belle, GR2 and Eureka as well as an area close to the Iron Cap where Seabridge is now focusing on finding and proving up high grade. At the very least we should do these two things this summer.
We notified you on September 8, 2009 that we had completed our initial earn-in by spending in excess of $5 million dollars exploring Treaty Creek and asked that you transfer title to us according to the terms of our earn-in agreement. At your request, on December 1, 2009 we provided you copies of expenditure invoices totaling approximately $6.2 million. You refused to tell us what expenditures, if any, you disagreed with, and refused to transfer title to American Creek. As a result, we lost the 2010 and 2011 exploration seasons. It would be tragic to lose a third season and miss the opportunity to develop what is likely a world-class property.
In an effort to bring this matter to a conclusion, over the past few weeks we have once again carefully reviewed our exploration expenditures. As a result of our review we have made some adjustments to the figures originally provided to you, taking into account all of the items raised by your legal counsel during discoveries. Some adjustments increased the expenditures, while others decreased the expenditures. Earlier this week our lawyers provided your lawyers with our final adjustments, together with the documents explaining the adjustments. The adjusted expenditures total $6,573,357.48 (a net increase of $89,289.29). We are confident that these expenditures can be proven in court.
We spent over $6.5 million, when we were obligated to spend only $5 million. We are confident that we will win the law suit and will be awarded title, damages and costs, which could be substantial. In the event Teuton is unable to pay any judgment awarded to American Creek, Teuton’s assets, including its 49% interest in Treaty Creek, could be sold to satisfy the judgment as a result of judgment execution proceedings. By proceeding with the lawsuit you are, therefore, risking your 49% interest in Treaty Creek.
We are, however, willing to make an offer of settlement in hopes of being able to put the litigation behind us and to have an exploration program on Treaty Creek this summer. Accordingly, we offer to settle our lawsuit on the following terms and conditions:
1. On or before May 11, 2012, American Creek and Teuton will jointly retain KPMG, Deloitte, or Ernst & Young to conduct an audit of the exploration expenditures incurred by American Creek between April 4, 2007 and March 31, 2010.
If the audit concludes that at least $5 million was incurred, then:
a. Within 5 business days of receiving the results of the audit, Teuton shall transfer title to the Treaty Creek mineral claims such that the registry will show American Creek holding a 51% legal interest and Teuton holding a 49% legal interest;
b. Teuton will be responsible for paying the full cost of the audit; and
c. Within 5 business days of receiving the results of the audit, Teuton will pay American Creek the sum equal to the legal costs to which American Creek would at that time have been entitled pursuant to the British Columbia Supreme Court Rules.
If the audit concludes that less than $5 million was incurred, then:
d. American Creek will be responsible for paying the full cost of the audit; and
e. Within 5 business days of receiving the results of the audit, American Creek will pay Teuton the sum equal to the legal costs to which Teuton would at that time have been entitled pursuant to the British Columbia Supreme Court Rules.
2. On or before May 11, 2012, American Creek and Teuton will jointly retain one of Canada’s major legal firms and instruct them to forthwith prepare a joint venture agreement incorporating industry standard terms and including the following terms:
a. American Creek’s interest will be 51%. Teuton’s interest will be 49%. American Creek will waive its right to earn an additional 9%.
b. One of Vancouver’s leading geological consulting firms will be designated operator of the Treaty Creek project.
c. Each year American Creek and Teuton may submit exploration programs to the operator, but the operator will have the authority to both plan and carry out programs in its sole discretion unless American Creek and Teuton jointly submit an exploration program, in which case the third party operator shall conduct the program jointly submitted.
d. Unless mutually agreed otherwise, the budget for the 2012 exploration program must be between $1 million and $3 million. The exploration budget for each consecutive year shall not exceed 120% of the prior year’s budget unless mutually agreed otherwise.
e. The cost of the program, including planning, permitting, reporting, etc. will be borne by American Creek and Teuton according to our respective interests (51/49), or the non-participating party’s interest will be diluted.
f. The operator will control the generation, assimilation, analysis and distribution, of all data.
g. The joint venture agreement will be binding on all successors and assigns.
h. The effective date of the joint venture agreement will be June 1, 2012.
Neither American Creek nor Teuton will have any input into the terms of the joint venture agreement.
If the audit report concludes that American Creek completed its 51% earn-in, then American Creek and Teuton will be bound by the terms of the joint venture agreement and each party must provide the other party with a duly signed copy of the joint venture agreement no later than 5 business days following receipt of the audit report, and costs of preparing the agreement will be borne by the parties: 51% American Creek and 49% Teuton.
If the audit report concludes that American Creek did not complete its 51% earn-in, then the parties will not be bound by the joint venture agreement and costs of preparing the agreement will be borne by American Creek.
3. Within 5 business days of receiving the auditor’s report, each party will discontinue the current legal action.
We believe our offer is fair and workable. We are making several concessions, including:
a. Giving up our right to act as operator of the project;
b. Giving up our right to have legal title 100% in American Creek’s name, holding Teuton’s 49% beneficial interest in trust;
c. Giving up our right to earn an additional 9% interest in the property;
d. Waiving any right American Creek may have to damages arising from Teuton’s failure to transfer title in 2009;
e. Waiving exemplary or punitive damages; and
f. Waiving any solicitor / client costs that may be awarded by the court.
We are prepared to have our expenditures reviewed by a qualified, independent party as soon as possible. Having an audit completed by an accounting firm will be cheaper and quicker than continuing the litigation. It should allow both parties enough time to raise money for an exploration program this summer. Any of the “big four” accounting firms would be able to determine if there were any irregularities in any of our expenditures. We are willing to have every penny accounted for.
While we sincerely hope to settle this matter, we are prepared to move the lawsuit ahead as expeditiously as possible. In March we obtained a court order compelling you to attend discoveries in May. You are also aware that some time ago trial was set for three weeks beginning December 3, 2012. We recently scheduled July 9 through 13, 2012 for summary trial. We will make every reasonable effort to avoid court, but failing your acceptance of this offer we will continue to press ahead with the litigation to obtain for our shareholders what is rightfully theirs.
We look forward to hearing from you, and hope we can work well together in the future to advance the Treaty Creek project to its full potential.
Allan G. Burton
President & CEO
Allan Burton, President and CEO stated: “The object of publicly releasing this Offer of Settlement is to allow the shareholders of both American Creek and Teuton to have all of the facts available to them and to clear up any misinformation that may be out there. Ongoing developments by both Seabridge and Pretium continue to highlight the world class potential of the Treaty Creek Project. We feel strongly that an exploration program should be conducted this summer, and time is running out.”
American Creek Resources Ltd. is a Canadian junior mineral exploration company focused on the acquisition, exploration and development of mineral deposits within the Province of British Columbia, Canada.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.