In June, Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) completed the acquisition of the Snowstorm project in Nevada from PFR Gold Holdings, which was formerly known as Paulson Gold Holdings, a company controlled by veteran investor and hedge-fund manager John Paulson.
According to Seabridge Gold, "the Snowstorm Project consists of 31 square miles of land holdings strategically located at the projected intersection of three of the most important gold trends in Northern Nevada: the Carlin Trend, the Getchell Trend and the Northern Nevada Rift Zone."
Seabridge noted that it completed the acquisition by "purchasing all of the outstanding shares of the private company that owns a 100% interest in the Snowstorm Project in exchange for issuing PFR 700,000 Seabridge common shares plus 500,000 common share purchase warrants exercisable for four years at $15.65 per share. In addition, Seabridge has agreed to pay PFR (i) a conditional cash payment of US$2.5 million if exploration activities at Snowstorm result in defining a minimum of five million ounces of gold resources compliant with National Instrument 43-101; and (ii) a further cash payment of US$5.0 million on the delineation of an additional five million ounces of gold resources."
Paulson & Co.'s President John Paulson commented on the deal, stating, "We chose Seabridge as the best home for the Snowstorm project because they share our vision of the project's geologic potential and their exploration team has done an outstanding job of growing the resources and reserves on their existing projects. Moreover, Seabridge's projects, particularly KSM, provide us with significant leverage to a higher gold price."
Seabridge Chairman and CEO Rudi Fronk said: "We are very pleased to gain Paulson & Co. as a shareholder. The Paulson team has a deep understanding of our business and the opportunities that lie ahead. We look forward to their advice and assistance as we grow the value of our Company. Seabridge has been an industry leader in finding additional gold resources over the past decade. For some time now, we have been looking for a large-scale asset in Nevada which remains one of the world's best environments for finding large gold deposits. The Snowstorm acquisition accomplishes this objective. This project has all the earmarks of an outstanding exploration play and we appreciate the opportunity to capitalize on its exceptional potential."
The Snowstorm property, according to Seabridge Gold, "consists of 700 mining claims and 5,800 acres of fee lands carefully assembled in a private company over a 15 year period and explored over the past 10 years." Seabridge also has staked an additional 260 claims totaling 5,200 acres that are contiguous to the claims purchased from PFR. Seabridge Gold noted that previous operators of Snowstorm generated extensive exploration data, which is now available to the company.
Work advances at Seabridge's other projects. The company announced on June 27 that the Canadian government has issued a regulatory amendment to Schedule 2 of the Metal Mining Effluent Regulations for the KSM project in British Columbia. According to the company, "the regulatory amendment, which required a change in Canadian law, approves the construction of KSM's TMF [Tailings Management Facility] subject to strict bonding and fishery habit compensation requirements, which were identified during the three year amendment review process. In the KSM Project design, the TMF is located in the upper tributaries of Teigen and Treaty Creeks, which form part of the Nass River drainage. The TMF will store the Project's ore-processing by-products in order to minimize environmental impacts downstream."
Fronk noted that "receipt of this amendment represents a significant permitting milestone for KSM, equivalent in many ways to our receipt of environmental assessment approvals from the Provincial and Federal Governments in 2014. This approval further validates that KSM's TMF is well-designed and environmentally responsible."
This follows news released on June 21 that drilling was set to begin at KSM's Iron Cap deposit. The company noted that the drilling would be at "two highly prospective targets: the down plunge projection of the Lower Iron Cap zone and a new target which could represent a fifth, higher grade deposit at KSM." Both targets were discovered during the 2016 drill program.
Iron Cap is one of four large gold-copper deposits that comprise the KSM project.
Fronk noted that "we now expect Iron Cap will become considerably larger, much like Deep Kerr over the past three years. We are also keen to see how the new discovery proves up, given its exceptional grades and the possibility that it may extend to the north, west and east."
Analyst Don MacLean of Paradigm Capital, writing in an earlier research note, commented that "with the summer drilling season approaching, Seabridge is focusing on two key exploration programs: continuously improving the massive 100%-owned KSM project; and exploring the nearby Iskut project for higher-grade epithermal mineralization with deep porphyry potential."
"Management has done remarkably well building discovery ounces at KSM, and we expect the momentum to continue this season at the company's flagship project," stated MacLean.
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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