Citing issues that arose during its due diligence, Golden Phoenix Minerals (GPXM-O) has rescinded the letter agreement to sell its Borealis gold project, near Hawthorne, Nevada, to Seabridge Resources (SEA-V)
On Friday, Golden Phoenix advised Seabridge that they, “have uncovered some issues with the underlying lease that requires us to cancel the scheduled due diligence and to further cancel the letter agreement, signed on February 11, 2002.”
On Monday, Seabridge said in a prepared statement that it, “believes that its agreement with Golden Phoenix, which was approved by the Golden Phoenix Board of Directors, is binding upon Golden Phoenix, ” and that its unaware of any terms or conditions in the underlying lease, which would prevent completion of the acquisition.
Seabridge is seeking clarification from Golden Phoenix of its position and will then look at its options.
Seabridge had agreed to 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.
Borealis is situated in the prolific Walker Lane gold belt. Gold was discovered on the property in 1978 by Houston Oil & Minerals Co. Tenneco Resources and Echo Bay Minerals operated an open-pit, heap-leach mine and produced 635,000 oz. gold between 1981 and 1991. Reclamation activities have been completed.
Gold mineralization is characterized by large areas of silicification, hydrothermal brecciation and advanced argillic alteration in Tertiary andesite flows, breccias and tuffs. Economic deposits are structurally controlled along a series of north-to-east-striking normal faults that dip steeply to the northwest, with gold occurring as sub-micron-size particles in highly altered andesite and tuff.
The Borealis property is divided into three mineralized zones — Borealis, Polaris and Orion. Each in turn comprises three separate targets, some of which have been mined. Several other target areas have yet to be explored.
At last report, the project’s measured and indicated resources were 33.4 million tons averaging 0.044 oz. gold and 0.228 oz. silver per ton, or 1.45 million contained ounces gold and 7.6 million contained ounces silver. Seabridge plans to commission an independent review of the resource base.
Golden Phoenix had hoped to use the proceeds from the sale to help bring its Mineral Ridge mine in southwestern Nevada back into gold production.
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