Circumstances:

You are a new exploration geologist for a major mining company (BIGCO). The exploration manager has sent you to the office of a junior mining company (JRCO) to make a preliminary evaluation of a proposal to purchase a land position that is less than 200 meters from BIGCO's land position.

You soon discover that the project geologist for JRCO is an old classmate and you spend the first half hour catching up on old friends. Your friend then offers to go out bring in pizza for lunch and leaves you in the office - in your casual look around the office you see a project map on the wall (actually peeking out from behind the door that slightly covers it when the door is open) that shows a number of proposed drill holes near the boundary of JRCO's property that is nearest BIGCO's land position. You know that BIGCO has drilled a hole on its property very near to these proposed holes and the results have indicated significant mineralization and the likelihood is that if any of the holes are drilled, good results will follow.

During lunch, your friend confides that he hasn't been paid in three months and JRCO doesn't have any money for drilling and that if JRCO can't make a deal within three months, the property will be dropped. You then look over the available information that shows modestly interesting information. Before you go, your friend asks you if BIGCO has had any encouragement from its drilling and after hesitating a bit you say that BIGCO has drilled some holes near JRCO's property, but results are still being evaluated. Your friend also discloses to you that the ground between BIGCO and JRCO is controlled by a third party and that JRCO has reached a preliminary non-binding agreement but if things don't turn around, the negotiations will probably be dropped. You tell your friend you'll get back to him within the week.

Question: You now go back to your boss - what do you tell him and what sort of a deal will you propose? What should be disclosed to your friend?