Seabridge regains Kerr-Sulphurets gold-copper project

After completing a drill program to test six potential copper targets, Falconbridge (FAL.LV-T, FAL-N) has opted to allow Seabridge Gold (SEA-V, SA-X) to regain 100% ownership of the Kerr-Sulphurets gold-copper project situated near Stewart in the rugged Iskut-Stikine region of northwestern British Columbia.

Falco will sell its option to earn a 65% interest in the project to original owner Seabridge in exchange for 200,000 common shares and up to 2 million “conditional” common share purchase warrants exercisable for five years at a strike price of $13.50 per share. One warrant will be issued for each new ounce of gold discovered at the project, to a maximum of 2 million oz.

The deal was struck after Falco discovered potential for gold resource expansion at Kerr-Sulphurets instead of the high-grade copper targets it was seeking. The company spent $2.4 million on exploration, including 4,000 metres of drilling, from 2003 through 2005.

Tony Green, Falco’s general manager of copper and zinc exploration, said the company asked for the warrants as part of its consideration for the option in order to “capture the potential upside” of any additional gold resources. The company agreed to provide an exploration team for Seabridge to pursue the gold targets this summer.

All six targets drilled by Falco yielded gold-copper mineralization. The most promising was the Mitchell zone, where a 2005 hole intersected 217 metres averaging 0.77 gram gold per tonne and 0.19% copper.

Sulphurets hosts an indicated resource of 39.3 million tonnes grading 1.05 grams gold and 0.32% copper, plus an inferred resource of 15.5 million tonnes of 0.92 gram gold and 0.33% copper. The nearby Kerr deposit hosts an indicated resource of 74 million tonnes of 0.74% copper and 0.34 gram gold, plus an inferred resource of 66.8 million tonnes at 0.37 gram gold and 0.76% copper.

Seabridge owns eight gold projects in North America, including the Courageous Lake project situated 240 km northeast of Yellowknife, N.W.T. The company recently launched a 15,000-metre drill program at the Fat deposit, which hosts a measured and indicated resource of 50.4 million tonnes grading 2.3 grams gold, plus a further 77.4 million tonnes of 2.1 grams in the inferred category.

Of the 26 holes drilled to date, 10 were aimed at testing potential high-grade zones. Each of these holes intersected high-grade structures and returned assays significantly higher than the grades predicted in the resource model for the Fat deposit.

Selected highlights from the latest round of drilling include: 47.5 metres of 5.74 grams gold; 10.5 metres of 3.61 grams; 62.7 metres of 6.17 grams; 75.2 metres of 6.08 grams; 42 metres of 5.3 grams; 21 metres of 4.24 grams; 30 metres of 4.73 grams; 102.5 metres of 8.17 grams; and 104.5 metres of 4.06 grams gold.

Results are pending for 16 additional holes that tested for potential extensions to the west and south. The balance of the drill program will be completed over the summer.

An independent preliminary study completed last fall concluded that existing resources could support an estimated mine life of 12.5 years. Metallurgical work has shown that the refractory deposit could produce a high-grade flotation concentrate that would be further processed for ultimate recoveries of 90-92% of the mill-feed gold content.