Seabridge and Pretium to Cooperateon Gold Projects
Seabridge Gold and Pretium Resources have signed two cooperation agreements relating to development of Seabridge's KSM project and Pretium's Snowfield project, which share a common boundary in northern British Columbia. The KSM project has proven and probable reserves totaling 38.5 million oz of gold in four deposits; the Snowfield project has 25.9 million oz of measured and indicated gold resources and 9 million oz of inferred gold resources. Together, the projects represent the largest undeveloped gold resource in North America.
Neither project can be mined to its maximum extent without encroaching on the other's land position. The agreements establish terms for such encroachment, assuming the projects are developed separately, and outline a plan to explore the potential for joint development of the two projects.
Under a mutual access agreement, each company will be allowed to conduct necessary stripping activities on the other's property. Ore extracted during cross-border activity will be processed by the company that mined it, and the value of the contained metal will be returned to the property owner, less a processing fee.
A mutual cooperation and confidentiality agreement provides for preparation of an engineering study to examine the economics of combining the KSM and Snowfield projects into a single operation. Seabridge will have responsibility for managing the study under the direction of Jay Layman, its executive vice president and COO. Ian Chang, vice president of project development for Pretium, will work with Layman on the study. The study is expected to be completed in the fourth quarter 2011.
On May 2, 2011, Seabridge released an updated preliminary feasibility study it said confirms KSM as a robust, stand-alone, 52-year-mine-life project, with operating and total costs per ounce below the current average of the major gold producers. The study assumes development of an open-pit mine producing 120,000 mt/d of feed for a flotation mill that would produce a combined gold-copper-silver concentrate for transport by truck to the deep-water sea port at Stewart, British Columbia. A separate molybdenum concentrate and gold-silver doré also would be produced at the KSM processing facility. Project design provides for a 50% expansion of production in the early years of operation.
Start-up capital costs, including contingencies of $576 million, are estimated at $4.68 billion. Average mine, processing, and G&A operating costs are estimated at $13.29/mt, including waste mining and on-site power credits.