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Seabridge Gold has entered a non-binding letter of intent (LoI) to acquire a 100% interest in the Snowstorm Project from Paulson Gold Holdings.

The 31-mile² Snowstorm Project is situated at the projected intersection of three of the most important gold trends in Northern Nevada. These are the Carlin Trend, the Getchell Trend and the Northern Nevada Rift Zone.

The LoI sets that Seabridge will acquire all outstanding shares of the private company that holds full interest in the Snowstorm Project.

Paulson & Co president John Paulson said: “We chose Seabridge as the best home for the Snowstorm project because they share our vision of the project's geologic potential and their exploration team has done an outstanding job of growing the resources and reserves on their existing projects.

“Moreover, Seabridge's projects, particularly KSM, will provide us with significant leverage to a higher gold price.”

Under the transaction, Paulson will receive 700,000 Seabridge common shares and 500,000 common share purchase warrants exercisable for four years at $15.65 per share as consideration.

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Seabridge Gold will also pay $2.5m to Paulson if the current Snowstorm exploration defines a minimum of five million ounces of gold resources compliant with National Instrument 43-101.

"The Snowstorm Project has all the marks of an outstanding exploration play in one of the world's best environments for finding large gold deposits."

Seabridge needs to pay further $5m in cash for the delineation of an additional five million ounces of gold resources.

The closing of the transaction is subject to further review of the private company's affairs and the execution of a definitive agreement and the receipt of stock exchange approvals.

Paulson has agreed for a 60-day exclusivity and non-solicitation period, when the parties can complete further review and enter a definitive agreement.

Seabridge chairman and CEO Rudi Fronk said: “We are very pleased to gain Paulson & Co as a shareholder. The Paulson team has a deep understanding of our business and the opportunities that lie ahead.

“We look forward to their advice and assistance as we grow the value of our company. The Snowstorm Project has all the earmarks of an outstanding exploration play in one of the world's best environments for finding large gold deposits. We appreciate the opportunity to capitalise on its outstanding potential.”

The Snowstorm property comprises 700 mining claims which have been explored over the last ten years.

The existing data of the property indicate high exploration potential.

Geological and geochemical evaluations of the property have indicated hydrothermal alteration zones consistent with large Northern Nevada deposit types. Geophysical surveys confirmed the presence of structural settings that host large Northern Nevada deposit types.