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Under the terms of a Mining
Lease Agreement dated November 15, 2000, as amended,
between Seabridge and Platoro West Inc., Platoro
leased its 100% interest in the Hog Ranch Project
to Seabridge upon receipt of an up-front payment
of US$75,000 plus 500,000 common shares of Seabridge.
Seabridge also agreed to pay Platoro a further
US$250,000 upon the earlier of (i) confirmation
by an independent third party of a measured and
indicated gold reserve of more than 1.0 million
ounces, or (ii) completion of a positive bankable
feasibility study which demonstrates a mine capable
of producing at least 100,000 ounces of gold per
annum. The agreement also provides for Seabridge
to pay Platoro West a sliding-scale net smelter
royalty ranging from 3% when gold is less than
US$300 per ounce, to 5% when gold is greater than
US$500 per ounce, subject to Seabridge being entitled
to buy back 40% of the royalty at any time for
US$2 million. Commencing on the 4th anniversary
of the agreement, Seabridge has agreed to pay
Platoro an annual advance royalty payment starting
at US$10,000 and escalating by US$2,500 per annum
to a maximum of US$25,000 per annum. Additionally,
Seabridge is required to maintain the property
claim block in good standing at an estimated annual
cost of US$35,000.
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