Seabridge Gold nabs 3 Aces for portfolio
Seller of highly prospective project turns attention to bringing online historic Brewery Creek Mine, shuttered nearly 20 years ago
Last updated 4/30/2020 at 10:58am
One of the most prospective, if not the potentially richest, recent gold discoveries in Yukon Territory is changing owners.
Seabridge Gold has agreed to purchase the 3 Aces Project in southeastern Yukon from Golden Predator Mining Corp. for 300,000 Seabridge common shares, contingent future cash payments totaling C$2.25 million and a 0.5% net smelter return royalty on the entire 3 Aces project, the companies reported March 30.
The deal also includes an immediate cash payment to Golden Predator of C$263,000 for reimbursement of previously incurred expenses.
Closing of the transaction is subject to completion of due diligence by Seabridge and the approval of applicable stock exchanges.
Golden Predator has aggressively pursued various Yukon gold projects during the past decade but recently narrowed its focus to bringing online new production from the historic Brewery Creek heap leach gold mine located 55 kilometers (28 miles) due east of Dawson City, Yukon.
Seabridge, meanwhile, is looking north after spending much of the past decade chasing massive deposits of gold and copper in British Columbia and Northwest Territories.
Terms of sale
In addition to the Seabridge shares and grant of royalty, the transaction provides for additional payments to Golden Predator of C$1 million upon confirmation of a mineral resource of 2.5 million oz of gold on the 3 Aces property, and a further C$1.25 million upon confirmation of an aggregate mineral resource of 5 million ozs of gold.
The deal excludes Golden Predator's 50 metric-ton-per-day cyanide-free test processing plant, its Secondary Recovery Unit (SRU), stockpiles of unprocessed gold-bearing material and proprietary research into cyanide-free gold extraction currently being developed by Golden Predator in partnership with Group 11 Technologies Corp.
The junior also will retain the Yukon Mint Corp., which has produced award-winning coins using gold recovered from test mining at 3 Aces.
The sale of 3 Aces is subject to final due diligence by Seabridge and the approval of applicable stock exchanges. If the sale does not close, however, C$218,000 of the upfront cash payment of C$263,000 will become a loan, payable to Seabridge.
Seller focuses on Brewery Creek
"This non-dilutive transaction strengthens our balance sheet and allows the company to focus entirely on our advanced permitted Brewery Creek Mine," said Golden Predator Mining CEO Janet Lee-Sheriff.
The junior purchased the 187-square-kilometer (72 square miles) property from Alexco Resource Corp. in 2011. A previous operator, Viceroy Resources Corp. shuttered the Brewery Creek mine in 2002 due to depressed gold prices, after producing 278,484 oz of gold in six years from seven, near-surface oxide deposits along the property's Reserve Trend
Golden Predator has increased the gold resource at Brewery Creek as recently defined in a 2019 NI 43-101 report, which incorporated drilling data through 2014. This impressive growth continued in a 2019 drill program of 177 step-out and infill holes, which expanded gold mineralization down dip and along strike, thereby connecting a number of resource areas originally thought to be separate and discrete into one much larger resource with further expansion potential, the company said.
"A new resource estimate incorporating more than 212 holes not included in the 2019 resource is underway along with a feasibility study for reprocessing the existing heap leach material mined and partially processed by Viceroy, the original operator," Lee-Sheriff said.
Buyer's track record impresses
Seabridge currently holds a 100% interest in several North American gold resource projects. The company's principal assets are the KSM and Iskut properties located near Stewart, B. C. and the Courageous Lake gold project located in Canada's Northwest Territories
At the advanced KSM Project, the NI 43-101 measured and indicated resources total 49.7 million oz of gold, plus 13.9 billion pounds of copper (at 0.52 grams per metric ton gold and 0.21% copper) and an additional 56.3 million ounces of gold plus 32.0 billion pounds of copper (at 0.38 grams per metric ton gold and 0.32% copper in the inferred category, making it one of the world's largest undeveloped gold/copper resources.
Seabridge April 27 reported an updated preliminary economic assessment for the KSM project that confirmed the potential for a dramatic improvement in project economics by incorporating its recently expanded, higher grade Iron Cap deposit into its mine development plans.
The junior undertook the 2020 PEA to assess an alternate approach to developing the KSM project by incorporating a much larger Iron Cap block cave mine into the production schedule accompanied by smaller open pits, compared to prior studies and developing this opportunity much earlier in the project's mine life.
"The benefits of incorporating Iron Cap into mine plans at an early stage have exceeded the upper end of our expectations, not only for the improvements in projected economics but also for the reduction in environmental impact," said Rudi Fronk, chairman and CEO of Seabridge Gold.
During the past decade, Seabridge also has aggressively explored the remote Courageous Lake property in Northwest Territories where it delineated the FAT deposit, a gold resource with 8.0 million oz, grading 2 g/t gold in measure and indicated resources, plus another 3.9 million ounces grading 2+ g/t gold in inferred resource.
In 2017 and 2019, the junior acquired the Snowstorm and Goldstorm projects, respectively. These two highly prospective gold projects are in the historic gold-producing region northern Nevada.
3 Aces: A winning hand?
Fronk called the 3 Aces Project a first-rate exploration play with the potential to host a high-grade, commercially-viable ore body.
"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," he said in a statement reporting the sale agreement.
3 Aces is a district scale, orogenic-gold project consisting of 1,734 claims covering 357 square-kilometers (35,700 hectares) located near the community of Watson Lake in southeastern Yukon.
Local prospector Alex McMillan discovered gold on the original 3 Aces claims in 2009 and was awarded the distinction of "Yukon Prospector of the Year in 2012" for his achievement.
In 2017, Golden Predator acquired the adjacent Reef, and Hy-Jay properties located to the north and south of 3 Aces, from Precipitate Gold and Bearing Resources Ltd., respectively, expanding the project to its current size.
3 Aces, which encompasses the two highest-grade surface outcrops discovered to date in Yukon, has 30 mineralized veins which have been discovered through sampling, trenching, roadwork and drilling with different gold-bearing veins occurring throughout 762 meters (2,500 feet) of vertical elevation within its Central Core area.
The project is located along an all-season road near Yukon's border with Northwest Territories, which the Canadian government agreed to upgrade in 2017 as part of the C$360 million Yukon Resource Gateway, an infrastructure improvement program aimed at providing ground transportation access to remote mineral resources-rich areas of the territory.
Seabridge said the target concept for the 3 Aces project is consistent with some of the largest and richest gold deposits in the world, including the California Mother Lode Belt, Juneau Gold Belt, Murentau in Uzbekistan and Obuasi in Ghana.
Historical work has identified a broad area of gold-in-soil anomalies extending more than 20 kilometers (12.4 miles) along strike and recent drilling in the Central Core Area has progressed to a point where, with additional exploration drilling, the property could potentially advance to an initial resource with exceptional grade, according to the explorer.
The property is located on the eastern margin of the Selwyn Basin, a thick package of sedimentary rocks extending across the Yukon and host to several enormous base metal deposits, including Howard's Pass District, Hyland Group host rocks, the basal unit of the Selwyn Basin and interbedded clastic and carbonate sedimentary rocks exposed near a regional tectonic boundary. Polyphase fold and fault systems overprint the stratigraphy, creating ideal traps for gold-bearing fluids expressed as quartz veins.
"At 3 Aces, discrete quartz veins containing arsenopyrite-pyrrhotite-pyrite and free gold are found within a broad zone of gold-bearing iron carbonate-clay alteration envelopes, which will be targeted in our exploration." Fronk said.
Past drilling has encountered a significant number of gold rich zones on the stratigraphic/structural contacts at 3 Aces. By early 2019, the project had about 300 completed holes, with 37% intersecting greater than 5 g/t gold and 27% returning more than 8 g/t gold. Many of these holes were close-space off-sets on high-grade veins that crop out, but all veins identified in the Central Core Area have encountered high-grade intersections.
Seabridge said Golden Predator expended considerable effort to ensure that sampling of these high-grade, nuggety intervals produced reliable and repeatable assay results. A sampling protocol is now in place to achieve reliable results.
"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," Fronk said. "Our exploration team is keen to get going on 3 Aces, beginning with a review of the extensive data generated by Golden Predator."