pretty, shiny stones (reprise)

To celebrate the announcement by Constitution Mining (CMIN.ob) to move forward on its deal with fellow scam stock Seabridge Gold (SA) (SEA.to) last night, on the 300k oz Au gold asset (that's as dubious as a 43-101 could ever be without lapsing into regulatory default) IKN offers a reprise of the post first published about this deal back in late 2009, "Pretty Shiny Stones".

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What you have to imagine are two people sitting opposite each other, both with a pile of things next to them. One has a pile of 20,000 smooth, pretty pink stones. The other has a pile of 20,000 smooth, pretty blue stones.

The first one says, "I'll swap 10,000 of my pink stones for 10,000 of your blue stones."

The second one says, "OK", and they do just that.

Then the first one says, "Hey, sell me one of your blue stones for a dollar."

The second guy does that. Then the guy looks down, sees the other 9,999 blue stones he has left and thinks, "Hey! I'm rich! If those are worth a dollar each, that means i have U$9,999. Cool!".

Then second guy thinks some more. "HEY! I got 10,000 pink stones too! I just swapped them 1-for-1 with the blue stones...they must be worth a dollar each, too! I got U$19,999 here...WAY COOL!".

So second guy decides to try and buy a few more pink stones. "Hey, sell me one of your pink stones for a dollar", he says to guy number one.

But guy one says "Nope...i want $2 cash for my stones."

Second guy says, "Not Fair!".

First guy says, "Yes it is...think about it. If you pay $2 for one of my pink stones, you can say that those 10,000 you already have are worth $20,000, not just $10,000."

Second guy sees the logic and buys a pink stone for two dollars.

So then the first guy says, "Hey, how much for another one of your blue stones?"

Second guy is catching on quickly and says, "Three dollars!"

1st guy: "DEAL!"

Then a third guy comes walking along. He sees the two friends having a good time and laughing with each other and says, "Hey, what you doing?"

1st guy: "We're selling pretty shiny stones. Want to buy one?"

3rd guy: "How much?"

1st guy: "Well, here's the deal. You buy one of mine for $5, but then he'll pay you $6 for the same stone as soon as we've done the deal."

3rd guy looks at 2nd guy and says, "Really?"

2nd guy: "Yep...you make a dollar, just like that."

So the three guys do the deal and 3rd guy is really happy. "Hey!", he says...I gotta tell my friends about this! Do you mind if I invite some other people to play?".

"NOT AT ALL!" say guy 1 and guy 2 in unison, smiling big, wide smiles.

Etc etc etc etc etc

And now a news release from today.

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Seabridge Gold reports that it has entered into a non-binding Letter of Intent to sell all of its interests in certain Nevada exploration properties, including Seabridge's Castle-Black Rock Project, to Constitution Mining Corp. for consideration exceeding US$7 million consisting of: (i) staged payments of US$3.0 million in cash; (ii) a US$1.0 million convertible debenture; and (iii) 3.0 million common shares of Constitution Mining. Closing of the transaction (expected on or about January 22, 2010) is subject to completion of final due diligence by Constitution, regulatory approval and execution of a binding definitive agreement. A previous agreement to sell these properties to another party for US$5 million has expired.

The US$3.0 million in cash is payable as follows: US$200,000 immediately, US$800,000 on Closing of the sale of the properties, US$1.0 million on February 28, 2010 and the obligation to pay the final US$1.0 million will arise under a secured promissory note due on the first anniversary of Closing together with accrued interest at 8% per year.

The US$1.0 million two-year debenture is due on the second anniversary of Closing and accrues interest at 8% per year payable quarterly. The debenture can be redeemed by Constitution at any time prior to maturity upon payment of US$1.25 million. If not redeemed, the debenture and any accrued interest are convertible by Seabridge into common shares of Constitution at US$1.00 per share.

Constitution's obligations under the promissory note and the debenture will be secured by the properties.

The 3.0 million common shares of Constitution will be issued as follows: 1.0 million common shares on Closing, and an additional 2.0 million common shares on February 28, 2010 but held in escrow and released to Seabridge on the third anniversary of Closing or upon confirmation that the properties host a measured and indicated gold resource of 1.0 million ounces or greater, whichever is earlier.

Constitution Mining is a publicly-traded exploration company with large holdings of alluvial gold deposits in the Gold Sands district of Peru. The Company is currently engaged in a program of pitting and test-mining to determine the feasibility of large-scale mining of this resource.

Seabridge holds a 100% interest in several North American gold resource projects. The Company's principal assets are the KSM property located near Stewart, British Columbia, Canada and the Courageous Lake gold project located in Canada's Northwest Territories.

As the old saying goes, two scams are better than one.