The Sulphurets gold zone is part of a high-level gold-bearing acid alteration system. Placer pegged the zone’s total measured, indicated and inferred gold resource at 54.8 million tonnes grading 1.02 grams gold per tonne at a cutoff grade of 0.5 gram per tonne. About 72% of the gold resource is classified as drill-indicated. The zone consists of at least four intrusive gold-enriched zones extending over a strike length of 3 km. Placer’s resource calculations covered only 1,000 metres of strike length. A primary exploration target, identified by Placer Dome, is a potential higher-grade pipe in the Breccia gold zone.
Placer has modeled the Kerr deposit as a copper-gold porphyry system, with total measured, indicated and inferred resources of 140.8 million tonnes grading 0.75% copper and 0.36 gram gold per tonne at a cutoff grade of 0.4% copper. About 52% of the total resource is drill-indicated.
Seabridge can acquire the property by issuing 500,000 shares and 500,000 warrants exercisable at $2 per share for two years. The property is subject to a 1% net smelter return royalty (NSR), which is capped at $4.5 million. If Seabridge produces a positive feasibility study indicating a 10% internal rate-of-return after tax and financing costs, Seabridge must buy back the NSR for $4.5 million. Holding costs for the project are about $75,000 per year.
To close the deal, Placer Dome must obtain regulatory approval and a release of its environmental obligations associated with the project.
“Quite clearly, the Kerr-Sulphside deposits are not economic at current metal prices,” says Rudi Fronk, Seabridge’s president. “However, our strategy is precisely to acquire this kind of asset as a perpetual call option on gold for our shareholders.”
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