Seabridge in 3 Aces deal with Golden Predator

Seabridge Gold Inc. [SEA-TSX, SA-NYSE] said Monday March 30 that it has struck a deal to acquire a 100% interest in Golden Predator Mining Corp.‘s [GPY-TSXV; NTGSF-OTCQX] 3 Aces gold project in the Yukon, Canada.

Under the agreement, Seabridge will issue 300,000 common shares and deliver $2.25 million to Golden Predator, which will continue to hold an interest in the project via a royalty. In addition, Golden Predator will receive a cash payment of $263,000 as a reimbursement for project-related payments made by the company.

In the event that the transaction does not close, $218,000 of the cash becomes a loan payable to Seabridge, which saw its share price advance by 4.8% or 66 cents to $14.33. The shares trade in a 52-week range of $7.37 and $21.98.

Golden Predator fell 9% or $0.02 to 20 cents on light trading volume. The shares are trading in a 52-week range of 16 cents and 50 cents.

Seabridge Gold holds a 100% interest in several North American gold resource projects. The company’s principal assets are the KSM and Iskut properties near Stewart, northwestern B.C., and the Courageous Lake gold project in the Northwest Territories. KSM is one of the world’s largest undeveloped gold projects as measured by reserves. It is estimated to contain 38.8 million ounces of gold and 10.2 billion pounds of coper in proven and probable reserves.

The 3 Aces Project is one of two key assets in the Golden Predator portfolio. The other is the Brewery Creek gold project, which is also located in the Yukon. The 3 Aces Project is a district-scale, orogenic-gold deposit, consisting of 1,734 claims, covering 357 km². It is located in a readily accessible part of the Yukon, northeast of Watson Lake.

Seabridge Gold Chairman and CEO Rudi Fronk described the 3 Aces Project as a first-rate exploration play with the potential to host a high grade commercially-viable orebody. “We think 3 Aces is a worthy addition to the three outstanding exploration opportunities we already own in British Columbia, Nevada and the Northwest Territories,” Fronk said.

“Golden Predator has done an excellent job of demonstrating the exploration potential at 3 Aces, confirming the project’s positive metallurgy and establishing excellent relationships with local First Nations and communities,” he said.

The acquisition agreement provides for additional payments to Golden Predator of $1 million upon confirmation of a 3 Aces NI 43-101-compliant Mineral Resource of 2.5 million ounces of gold and a further $1.25 million upon confirmation of a Mineral Resource of 5.0 million ounces.

The deal also grants Golden Predator a 0.5% net smelter return royalty on the project.

Golden Predator made an early decision to bulk sample at its 3 Aces Project when it realized that much of the gold contained in its veins is high-grade and nuggety. The ‘nugget effect’ occurs when the gold is not distributed evenly throughout the deposit but rather is accumulated in clumps within the veins with visible gold often sitting loosely in open spaces and along fractures, making it difficult for diamond drilling to obtain representative samples.

To eliminate the cost of shipping bulk sample materials outside of Yukon, and to effectively manage the processing costs, Golden Predator built its own closed system processing plant.

The agreement is expected to allow Golden Predator to focus on its Brewery Creek gold mine, also in the Yukon.

The company recently released an updated technical report for Brewery Creek. The report is highlighted by a sharp increase in the estimated oxide gold resources in both the indicated and inferred categories.

The company said the Yukon government is allowing the company to proceed with the restart of the Brewery Creek gold mine without having to re-enter the permitting process. However, the company has not said when production will actually resume.