Seabridge continues shopping spree (February 12, 2002)

With the ink just dry on a deal to pick up North American Metals‘ (NAM-V) Red Mountain project in northwestern British Columbia, Seabridge Resources (SEA-V) has agreed to acquire Golden Phoenix Minerals‘s (GPXM-O) Borealis gold project near Hawthorne, Nevada.

To do so, Seabridge will pay Golden Phoenix US$500,000 in cash, US$500,000 in two interest-free promissory notes, and issue the company 250,000 common shares. The first US$250,000 promissory note is payable one year from closing, the second two years from closing. Seabridge has the option of paying the notes in shares valued at the 10-day average before the payment dates.

The deal is subject to final technical due diligence and approval of the Canadian Venture Exchange.

Seabridge plans to commission an independent review of resource estimates to generate a classified resource, which conforms to National Instrument 43-101.

Situated in the prolific Walker Lane gold belt, gold was first discovered at Borealis in 1978 by Houston Oil and Minerals Company. Tenneco Resources and Echo Bay Minerals operated an open-pit, heap-leach mine, which produced 635,000 oz. of gold between 1981 and 1991. Reclamation activities have been completed.

Gold mineralization at Borealis is marked by large areas of silicification, hydrothermal brecciation and advanced argillic alteration in Tertiary andesite flows, breccias and tuffs. The gold deposits at Borealis are structurally controlled along a series of north-easterly-trending normal faults that dip steeply to the northwest. Gold occurs as submicron-size particles in highly altered andesite and tuff.

At last report, Golden Phoenix put the project’s measured and indicated resource at 33.4 million tons averaging 0.044 oz. gold and 0.228 oz. of silver per ton for 1.45 million contained oz. of gold and 7.6 million contained oz. of silver.

The Borealis property can be divided into three separate mineralized zones — Borealis, Polaris and Orion, each of which in turn comprise three separate targets some of which have been mined. Several other target areas have yet to be explored.

Seabridge CEO Rudi Fronk said in a prepared statement, “The Borealis project has a significant reported resource which we will announce if it is confirmed by our due diligence.”

Golden Phoenix’s president Michael Fitzsimonds said, “This sale allows Golden Phoenix to better focus on bringing its Mineral Ridge mine back to gold production, which is where the near term value of the company lies for its shareholders. Once we get the mine operational, then we plan to acquire other gold properties that also have near term production possibilities.”

In March of 2001, the U.S. Bureau of Land Management and the Nevada Division of Environmental Quality approved a revised reclamation plan for mineral Ridge. The company also has in hand permits for water pollution control, storm water and air quality.

Golden Phoenix estimates Mineral Ridge’s mineable reserve at more than 2.6 million tons running 0.079 oz. gold, equivalent to 209,000 oz.

Full-scale mining operations at 1,800 tons per day to produce 40,000 oz. per year are scheduled to begin with posting of the revised reclamation bond, completion of financing agreements, and finalization of an acceptable mining contract.

Under a deal announced in earlier February, Seabridge can acquire Red Mountain, including $500,000 worth of mining equipment and a $1.5-million cash reclamation deposit lodged with the British Columbia Mines Ministry for 800,000 shares. The agreement is subject to a series of net smelter return royalty agreements ranging from 2% to 6.5%.

Situated 19 km east of Stewart, the property hosts a measured resource of 1.3 million tonnes grading 8 grams gold per tonne, as well as an inferred resource of 340,000 tonnes averaging 7 grams gold. The overall resource is pegged at 12 million tonnes grading 2.54 grams gold — an estimate based on 127,000 metres of drilling and 2,000 metres of underground workings, including a 1-km-long decline completed by now-defunct Royal Oak Mines and previous operators Lac Minerals and Barrick Gold (ABX-T).

Last month, Seabridge acquired the Quartz Mountain gold project in Lake County, Oregon from Quartz Mountain Resources (YQZ-V). A mid-1980s independent resource model estimated the project’s total unclassified resource at 67.3 million tons grading 0.026 oz. of gold per ton, at a cut-off grade of 0.01 oz. gold. The company has commissioned a resource estimation review.

Back in mid-June, the company picked up the Kerr-Sulphside copper-gold project, in the Iskut-Stikine region of northwestern British Columbia, from Placer Dome (PDG-T). The project comprises two distinct deposits. Placer estimated that the project’s Sulphurets gold zone hosts a total resource of 1.8 million ounces of gold contained in 54.8 million tonnes grading 1.02 grams of gold per tonne, at a 0.5 gram per tonne cut-off. The Kerr deposit’s total resource is pegged at 140.8 million tonnes grading 0.75% copper and 0.36 grams of gold at a 0.4% copper grade cut-off, for 1.6 million contained ounces of gold.